There’s a long-standing debate within the virtual world developer/fan community over whether players own (in a legal sense) anything in a virtual world. I fall strongly on the “the players do not own anything” for sheer practicality reasons. What would ownership over a virtual sword actually mean? A developer could give you the binary 1s and 0s that make up the data structure that represents the sword, but you couldn’t do anything with it. It’d be utterly and completely valueless unless you enjoy staring at some binary code that is meaningless outside of the context of the game the sword came from.

There’s a thread on Terranova currently about a lawsuit against Linden Labs and I wanted to respond to a post Randy Maslow made. I’ll quote the relevant bit below. Disclosure: Randy Maslow is either the current or former (can’t tell) Senior VP and General Counsel for IGE, the largest operator in the grey-market for gold and items in the big MMORPGs, so he is (like I am) hardly an unbiased party. The legality of what users do with IGE’s service depends on the idea that users own in-game property and that they’re free to ignore the Terms of Service they agree to when signing up for a game.

Randy writes:

It seems to me that courts can find minimum protectable interests in virtual assets on the part of the account holder and impose reasonable restrictions on arbitrary and excessive interference with such assets on the part of publishers without stifling the economic incentives of publishers to meet the demand for MMOGs.

That seems like a very reasonable, lawyerly thing to say, doesn’t it? But let’s look at a series of hypotheticals that involve a player “buying” a virtual widget in a situation where the player supposedly, legally “owns” the item, and you tell me how a court could possibly sort these kinds of issues out without simply killing off gamey MMORPGs (since Randy wants to claim that players own things even if the Terms of Service say they don’t, and even if the players haven’t paid for them), which I’m certain won’t happen?
Case #1

Game is wildly unpopular and is losing the company bucketloads of money. Company shuts the game down, basically cutting off access to the virtual widget.

Case #2
The game supports the ability for players to steal things from each other, including these widgets. Someone uses a bug in the game code (written by the company) to steal the widget from the widget owner.

Case #3

The game supports PvP and corpse looting, and the widget is taken this way from the purchaser (ie using capabilites intentionally built into the service by the developers).

Case #4
Company provides a ‘dispose of item’ command, which permanently destroys an item, but which does not require confirmation. Player accidentally destroys his widget this way.

Case #5

Company seizes the widget because player pissed someone at the Company off.

Case #6

Company seizes the widget because player violated the Terms of Service, prohibiting foul language.
Case #7

Game supports stealing, and company urges Player B to steal the widget from Player A.

Case #8

Widget is functional, and company nerfs that function because it miscalculated how powerful the item would be.

Case #9

Power of the widget is inversely proportional to the number of people who own it. Company drops price of item, encouraging more people to buy, and thus causing it to have less utility to previous purchasers.

Beyond these cases, think about expanding each of them to include ALL items “acquired” (whatever that means in a digital environment) by players through the course of play. Think about the near-infinite mutations and variations of game rules by which items might be forcibly transferred from one character to another, or destroyed. Are courts really going to get into the business of judging what is and what isn’t a “fair” way to lose an item in a game? I’m not a lawyer, but I sure doubt it.

Now, having said that, worlds like Second Life and Entropia Universe could be carved out as exceptions since they explicitly promote their services as ways to make money. Unlike our games, for instance, where you must explicitly deny that you’re making an investment of any sort when you purchase credits from us, Second Life and Entropia Universe promote the idea that you can make money via their service. Some might argue, and I’d give some credit to those arguments, that when Second Life and Entropia Universe promote their services as ways to make money, it’s entirely reasonable to regulate them as banks and force them to treat player purchases as investments.

Of course, while that seems reasonable at first, one quickly realizes that items have some sort of resale value whether you can officially cash out or not. Hundreds of millions of dollars of World of Warcraft gold have been traded despite Blizzard’s prohibition and stomping on tens of thousands of supposed violators.

There’s no telling what kinds of out-of-touch decisions a court might make, of course, but until someone can define what it would actually mean to actually own something in a virtual world, there’s little point in even discussing it further. If Second Life shut down tomorrow, does ownership mean that each user just gets a print out of 1s and 0s? Probably not, as that is utterly meaningless. But what could ownership lead to in that case? Would Linden Labs be required to open source their software so people could run emulators? What if, as is the case with Linden, the technology requirements are so steep as to be impractical for these object/land “owners” to run their own emulators. And what about the fact that the service the developer provides is a key part of the value, and some hobbyist running an emulator likely causes the widget to have less value?

Regardless of what happens, I’d be quite wary of considering any money spent in virtual worlds as an investment. Do it because it’s fun. Do it as a past-time, as a hobby. But don’t do it as an investment, because at the end of the day, the developer completely controls the context that gives the virtual items 100% of their value. The physical equivalent might be something like owning an electric sewing machine but having no electricity. Even that’s not a perfect equivalent, as physical items have a context that exceeds their general purpose. You could throw a sewing machine at someone or something, for instance. You can’t do -anything- with the substance that makes up a virtual item, because it’s not actually a separate thing. It is part and parcel of a service (not a product) and not a separate ‘item.’

This must sound awfully cynical and tyrannical considering we sell credits to players, but I want to emphasize that all this means it that you, the player, shouldn’t put money into a virtual world unless you can afford to permanently part with it and are willing to trust that the virtual world operator is responsible and ethical. Luckily, it is completely in the operators best interest to generate and maintain that trust with users. There is absolutely nothing to be gained long-term by setting one expectation for how virtual items will be treated in your world and treating them in a different manner. Just be up front with your customers.