Making the Case That Virtual Property Is a Bad Idea

pacergh writes "Many legal commentaries on virtual property argue that it should exist. Others argue why it can exist. None seem to explicitly spell out what virtual property will look like or how it will affect online worlds. Lost in the technology love-fest are the problems virtual property might bring. The Virtual Property Problem lays out a model for what virtual property might look like and then applies it to various scenarios. This highlights the problems of carving virtual property out of a game developer's rights in his creation. From the abstract: '"Virtual property" is a solution looking for a problem.' The article explains the 'failure of property rights to benefit the users, developers, and virtual resources of virtual worlds.'"

Comments

It's Already Legally Governed, Drop It

[eldavojohn]

Whether or not you 'own' anything in a game or on a server is already defined on a per game or site basis. Slashdot says I own my comments. Star Wars Galaxies' Terms of Service says Sony owns my items and characters. I have an account but I don't 'own' the virtual things that Sony puts in the game.

The paper starts out with two real world analogies:

Imagine owning Fenway Park. You sell tickets to Red Sox games. These tickets allocate seats in Fenway to individual spectators. Some of these tickets are sold by the entire season â" guaranteeing the same seat to the buyer for each game of the season.
Season ticket holders are able to renew their purchase each year. Some have done so for years and years and years. Others have had their tickets passed down amongst family members. The tickets once owned by a grandfather are now owned by the grandson.
These season ticket holders have put tremendous time and money into being able to sit in these same seats each year for each game. Should these fans be granted a property right in their seats?

If the people who sold them to you signed a contract saying you were building some sort of equity by buying those seats year after year, then you have that. That's not the case and they could probably drop your right to them for next year when they decide to resell everything in a lottery or auction. Tough luck for you if they get greedy. If you don't like it, stop buying Fenway Park tickets. Americans love to have a sense of undeserved entitlement and this is no different. Next analogy:

Now imagine living near a city park. You and a number of residents have taken it upon yourselves to help beautify the park. You plant grass, replenish flower gardens, and repair jungle gyms. The park is now a jewel in your city because of your effort.
The city, however, has decided to sell the land to a property developer. Despite your wishes, and the wishes of your friends who helped beautify the park, there is nothing you can do to stop the sale. Should you have a property right in the park you spent so much time restoring?

Again, you don't have anything in writing so you're out of luck. If you didn't realize what you were doing to begin with, you're a moron. You didn't own the park in the first place and sprucing it up doesn't give you any ownership of it. Cleaning my neighbor's yard doesn't entitle me to it; cleaning public property doesn't entitle you to it. Get a petition or run for election to change things. You don't own it because you cleaned it. Unfortunate how things played out but there it is.

In World of Warcraft, I feel I 'own' Ampere on Thunderlord server but Blizzard's Terms of Use sets me straight:

Ownership. All rights and title in and to the Service (including without limitation any user accounts, titles, computer code, themes, objects, characters, character names, stories, dialogue, catch phrases, locations, concepts, artwork, animations, sounds, musical compositions, audio-visual effects, methods of operation, moral rights, any related documentation, "applets" incorporated into the Game Client, transcripts of the chat rooms, character profile information, recordings of games played using the Game Client, and the Game Client and server software) are owned by Blizzard or its licensors. The Game and the Service are protected by United States and international laws, and may contain certain licensed materials in which Blizzard's licensors may enforce their rights in the event of any violation of this Agreement.

(emphasis mine) I know I feel the right to him but Blizzard owns it. This has always been laid out for me and this paper is pointless in arguing for virtual property rights or against them. If you own them, they will say (like Slashdot). If you don't own them and you want to, find another game or site. I don't understand how the paper men

Re:It's Already Legally Governed, Drop It

[genner]

Slashdot says I own my comments. Star Wars Galaxies' Terms of Service says Sony owns my items and characters.

Personally, I find the entire concept of someone saying they own your stuff to be strange. Or, indeed, someone else saying they don't own your stuff.

It's called a rental. Why do you think you have to send them money on a monthly basis.

Re:It's Already Legally Governed, Drop It

[fuzzyfuzzyfungus]

"Again, you don't have anything in writing so you're out of luck. If you didn't realize what you were doing to begin with, you're a moron. You didn't own the park in the first place and sprucing it up doesn't give you any ownership of it. Cleaning my neighbor's yard doesn't entitle me to it; cleaning public property doesn't entitle you to it. Get a petition or run for election to change things. You don't own it because you cleaned it. Unfortunate how things played out but there it is."

In this case, or in the case of similar analogies, you are correct. However, it is worth noting that in a fair variety of times and legal systems, there has actually been explicit legal recognition of a form of property rights transfer that does occur along these lines.

Adverse possession is perhaps the most notable example, various flavors of homesteading are also similar, as are(in some jurisdictions) laws pertaining to squatters. The case you give seems fairly clear cut; but the broader issue to which it is related has, historically, not been so, nor has it always been decided along the lines you propose.

Re:It's Already Legally Governed, Drop It

[2obvious4u]

Actually... There is something called "squatters rights" or Squatting. So in the case of the residents taking care of the park for years, they would have a legal claim of ownership, at least in some states. There are also property laws in regards to "right of way" or Easement.

The important quote from the article:

In common law, through the legally recognized concept of adverse possession, a squatter can become a bona fide owner of property without compensation to the owner. Adverse possession is the process by which one acquires the title to a piece of land by occupying it for the number of years necessary, dictated differently by each state. A necessary component of this transfer of ownership requires that the landowner is aware of the land occupation and does nothing to put an end to it. If the land use by the new occupant goes unchecked for the said number of years, the new occupant can claim legal rights to the title of the land. The occupant must show that the "possession is actual, open, notorious, exclusive, hostile, under cover of claim or right, and continuous and uninterrupted for the statutory period."[53]As Erin Wiegand notes, the most difficult part of claiming adverse possession on the part of squatters is the continuous part. Squatting is a very transient lifestyle and many are evicted on a frequent basis. [54] In an article regarding recent foreclosures in the United States, a current squatter in Miami stated of her housing, "It's a beautiful castle and it's temporary for me, if I can be here twenty-four hours, I'm thankful."[55] Thus, while adverse possession allows for the legality of a squatter's situation, it is not easy to win a case of adverse possession.

Re:It's Already Legally Governed, Drop It

[arth1]

Personally, I find the entire concept of someone saying they own your stuff to be strange. Or, indeed, someone else saying they don't own your stuff.

Personally, I find the entire concept of unconditional ownership strange.
Where there is a scarcity of objects to be "owned", ownership should follow usage -- if you don't use it, you should lose it. Society isn't enriched by hoarding.
In a digitial world, however, there is no scarcity of resources as such, and anything can be duplicated effortlessly and for almost free. What does ownership matter then?

Re:It's Already Legally Governed, Drop It

[fuzzyfuzzyfungus]

In virtual worlds, "game economics" apply. The rules of soccer could, for instance, state that "Each team shall automatically receive infinite points and be declared 'King of all Cosmos and Universal Omniwinner." If that actually were the case, though, the game wouldn't be worth playing. In the virtual context, scarcity is artificially created(for that matter, every property of an object is artificially created) for the purpose of making the virtual environment more entertaining, interesting, or pedagogically useful.

Re:It's Already Legally Governed, Drop It

[dangitman]

Wonder where the 'original' ownership came from; the first 'owner' of a particular piece of the world ...

A big guy with a rock.

Re:It's Already Legally Governed, Drop It

[mrchaotica]

In America, the British (and other colonial powers) took the land from the indigenous people by force and claimed it in the name of the Crown. The Crown, in turn, granted/leased/sold (not sure of the terminology) it to the colonists (such that colonists had non-alloidal ownership, which they could sell amongst themselves but reverted to the Crown if they failed to pay taxes, died without heirs, etc.). Then the colonists became revolutionaries and took the land from the Crown by force, which works out the same as I just explained before except that the ownership ultimately reverts to either the Federal government or the government of each state (I'm not sure which, and it could vary between states) instead of the British Crown.

There is such a thing as "alloidal title," where property is owned absolutely (in that not even the government has legal authority to take it away, no matter what), but that's extremely rare (at least in the U.S. -- it's more common in "civil law" countries) and, of course, it could still be taken by force.

It's existed for a long time

[genner]

All software everywhere is virtual property. All databases are virtual property. All the information on a database is virtual property. Your WOW charatcer is an entry in a database. It belongs to someone. This is not a new idea. There's just a lot of argueing over who owns what.

Re:It's existed for a long time

[Mad Merlin]

Your bank account's balance is an entry in a database.

Re:It's existed for a long time

[fuzzyfuzzyfungus]

It'll be trickier than that, though. A virtual object's value is derived, more or less, from its "scarcity context": that is, within the confines of a given virtual environment(swords in WoW are not worth less just because CoD2 has guns), how many copies of the item exist, how hard it is to make new ones, what percentage of the population has one, or has something better, or has something worse, how likely it is that you will lose your copy, etc.

This isn't too different from real property, which is also affected by scarcity, complementary and substitute goods, etc., except for one crucial detail: In a virtual world, basically all elements of the "scarcity context" are purely matters of choice and under the complete control of somebody. In the real world, the scarcity context can change; but it is possible to make reasonable inferences about how it will change(because changes require scientific advances, political changes, market movements, or the like). In virtual environments, the scarcity context is entirely dictated by the whim and pleasure of whoever controls the virtual environment.

This makes "ownership" more complicated. If, for instance, Ford could change the color, passenger capacity, cargo room, and gas mileage of any car, by any amount, at any time, what it means to "own" a car would be quite different. In the virtual world, every single item is like that.

Re:It's existed for a long time

[genner]

Your bank account's balance is an entry in a database.

Technically no. A banks database only keeps track of how much of the green stuff they're holding on to for you. Your bank balance is made up of physical currency. That's why they hand you a little envelope when you make withdrawls and not a floppy disk.

Metaverse from Snow Crash

[Ksevio]

Of course the value in virtual property by itself is not worth much. It's trivial to add another server to expand the property available. What is more valuable is the property's relation to other properties. In Snow Crash there was the Metaverse with a virtual city. It was mentioned that the most expensive property was at the center where all the hip places to hang out (as well as the geek/wealthy neighborhoods). At the other side of the world there was lots of emptiness - suggesting that the property value, while in supply, was not in demand.

It's not a failure of property rights

[MikeRT]

It's that traditional property rights law and jurisprudence is overkill. The companies that run these services are more than competent at adjudicating disputes between users, and should be the ones doing it since the "goods and services" neither really leave their company property, nor can exist outside of their property/products.

One of the reasons the law is so fubared is because everyone wants everything laid out in advance, in exacting detail. Well, between that and the unwillingness to accept the arbitration of mediators, elders, family, neighbors, etc. is why society is so litigious. It is now de rigueur to immediately start lawyering up because the only authority that most people will truly accept is the government and its courts.

Virtual Property is an old concept

[popo]

Stocks, Pension plans, Intellectual property rights, Bank accounts -- all of these things are virtual.

We can try to pretend that they represent something tangible -- but that tangible thing is only a piece of paper which in turn, represents the intangible.

When we talk about "virtual property" today, we're talking about something very similar: a right or access to something intangible which you control.

This is a very old concept. Some might say, "yes, but this property has no bearing on the 'real' world". But this is a shortsighted argument, and one that any insightful person can see will become increasingly blurry with time.

The only thing that makes "in game" property different is that the "right" or "access" exists within a framework and/or platform which in turn is the intellectual property of another/larger entity.

But virtual property has always been a "good" idea, and it isn't anything new.

Re:Virtual Property is an old concept

[nine-times]

But virtual property has always been a "good" idea, and it isn't anything new.

Yes, but in the past, virtual property was generally some kind of representation of real property somehow. Stocks are "virtual property" except that they represent ownership in a real company. If that company goes out of business and they liquidate all their assets, your stocks will still be worth some non-zero amount of money, which represents the value of your share of those liquidated assets. We could shut down the stock exchange and, insofar as you still own shares of ownership of various companies, those stocks are still worth something. If, on the other hand, one of these games shuts down their servers, there's nothing.

Now I'm not saying it's as simple as that. As long as people are perceiving value in "virtual property" and are willing to pay for it, there's going to be some kind of economy about it. But still, it's not quite exactly the same as the "virtual property" that we're used to.

Re:Virtual Property is an old concept

[avandesande]

The simplest example of this is money or check, which is virtual in the sense that it represents a promise.

Re:Virtual Property is an old concept

[brkello]

Umm, my bank account doesn't pretend to represent something tangible. It does represent something tangible. I can go in and get stacks of $100 bills any time I want.

When we are talking virtual property, one example is your MMORPG characters. I can't withdraw anything from Blizzard without violating the ToS since it belongs to them as is clearly stated. In this instance, this property has no bearing on the real world (at least in the sense that I have no rights to it). If it did, then I would be taxed on my loot from Ulduar. That would be stupid. And unless a game is set up to do real world money trade with its consumers, it should stay that way.

It annoys me that you state your arguments as "any insightful person can see". Virtual property is only blurry when you talk about it in a general sense. When you are talking about a specific instance, it shouldn't be blurry. It should be stated in the legal documents what rights you do and don't have.

Wrong kind of properties to explore here.

[girlintraining]

Virtual property may have a tangible value in a few circumstances, which are mostly tech-dependent; But rather than list hard rules, let's give some examples where there's a real cost;

The Domain Name System (DNS). The system has the constraint that only certain combinations of words or letters are easily remembered. For example, "www.fjoi323r9023vvnd.com" fails the test, while "www.buy-my-cheap-useless-crap.com" is not. The limits are mostly due to limitations of language, human memory, and legal considerations (ex. trademark and copyright law). As a result of this -- a domain name can have a real, material cost.

IP Address space. ipv4 doesn't have enough available addresses to account for every device that can/will be/is connected to the internet. It's a finite resource. This is a technical constraint caused by early planning decisions and the cost of infrastructure upgrades. Once that limit is met, the laws of supply and demand state that a price-point will be established. The infrastructure won't be upgraded until the cost of those IP addresses exceeds the cost of the upgrade to a different protocol (ipv6) -- despite the fact that most equipment today is capable of transitioning. The real cost is administrative, not technical.

Examples where "virtual property" is entirely or largely artificial; MP3s. Videos. Multimedia. The cost here is in terms of licensing -- the cost of storing and using such intangibles has almost no economic cost. Examples where "virtual property" is explicitly limited to create a cost point; Comcast, bandwidth restrictions, etc.

The problem isn't whether virtual property exists, or if it should exist (or not). The problem is that technical limitations are often used to justify the creation of an artificial market -- and in many cases this isn't due to entrenched infrastructure costs or a marginal need to upgrade or change it to remove those limitations, but rather is rather a deliberate act in order to monetize something that otherwise would have a marginal cost of near zero.

I would argue that virtual property is valid and needs some legal controls; But that laws should be carefully crafted to disallow constraints being intentionally created to create artificial markets. Changes in copyright law would address most of this problem. Changes in how our utilities operate and forcing businesses to set aside a portion of their profits for infrastucture upgrades (and then do so!) would solve most of the rest.

Virtual property is no bad idea.

[Hurricane78]

Because it *doesn't exist*!

There. I killed the whole discussion. ;)

Why Virtual Property is a bad idea

[Locke2005]

Any time you have good that is infinitely reproducible at negligible cost, it inevitably leads to a bubble, followed by a meltdown. The global economic meltdown just demonstrated that this principle was true for Credit Default Swaps; it was just as true for the Tulip Bubble and Internet Bubble. Any attempt to monetize virtual property will inevitably result in this same boom/bust cycle. That's good if your one of the first to cash out, but very bad if you wait until later in the cycle...

A paste from a linden lab email

[stimpleton]

My account in second life was terminated due to billing issue.

That email states:
"What happens to your Second Life account holdings? When terminating Second Life accounts, we remove all associated holdings. There will be no refunds or exchanges for any unused time on your subscription, Island purchases, Linden Dollars, or inworld objects, items, or content."

The slightly longer explanation is was that my CC expired, which in turn forced me to "basic" membership with virtually no support rights.
If i'd owned virtual land then hundreds if not thousands could have been lost.
I know of one direct example. 6 sims x $195/month. Gone bill to billing dispute, and people see the tier(land tax) quickly exceed their saleable land value so just walk away.

I consider this article the definitive summary of how things can turn to custard very quickly.

Being a pioneer in a 3d world is risky and unfeasible.

Wait, stock is real property

[JSBiff]

When you buy stock in a company, as a stock owner, you are a partial owner of all land, factories, office buildings (and any other facilities owned by the corporation), furniture, equipment (vehicles, manufacturing machines, etc) that company owns. All that stuff is quite tangible. I can go touch a building, and if I own stock in the company that owns the building, then I (in part), own that building.

As to your main point, virtual property in the 'game world' sense is different. How? You might theoretically 'own' a particular instance of a building in a game, but you most likely do not own the artwork which represents that building (models, textures, shaders, etc), nor the game server in whose memory it resides, nor even the client running on your machine (remember kids, you *license* software copies, you don't *own* software unless you wrote it or payed someone else to right it for you as an employee or contract work-for-hire and have the paperwork to document that fact).

I have a hard time saying you own *anything* if everyone else owns the stuff it's made up of. That's like saying you own your house, but someone else owns the land under your house which you rent, and the materials your house was constructed from (so they could take back the 'materials' any time they wanted).

Do you really own your house if someone else owns the land and materials?

Re:Wait, stock is real property

[TubeSteak]

That's like saying you own your house, but someone else owns the land under your house which you rent,

Try this: stop paying your property taxes.
You'll find out very quickly just who owns the land under your house.

There's also the matter of mineral rights, which you more than likely don't own.

Real money is virtual

[FunkyELF]

If you have direct deposit and a debit / credit card linked to your checking account, all your money if virtual property.
Not to mention the fact that the Federal Reserve System can create it out of thin air... it might as well be completely virtual.

Wife Thanks You All

[Stenchwarrior]

I was supposed to cancel WOW but I kept forgetting. This article reminded me and now my wife deeply appreciates the existence of /. (feel free to mod me OffTopic).

Complete misunderstanding of the law

[argent]

Second Life grants its users the right to copyright their creations.

This is neither true nor relevant to the situation described in SL.

* In US law, you have a copyright in your creations when you create them, unless you grant that copyright to another. The Terms of Service in Sony's "Little Big World" state that to access the service you have to give up your rights in what you create, YOU grant YOUR rights TO Sony. The terms of Service in SL grant Linden Labs a right to your creations... Linden Labs isn't granting you anything... they are merely limiting the rights you grant them in the Terms of Service.

* The grant allows Linden Lab to use your works within the SL service. What they do with those rights is to set up a mini-economy based on a permissions model that controls the copying and transfer of objects in the game. The mechanism of duplicating objects in SL does not depend on a bug in the permissions system, but on the realities of copy protection in the real world... what you're doing is the equivalent of taping a song from the radio and selling copies of that tape out of the back of your car. The applicability of the law in this situation is clear, and it doesn't matter whether the so-called virtual property consists of two minutes of music or two megabytes of texture files.

This paper's analysis only applies to a situation where either (a) the content of the virtual world is only created by the game developer, or (b) where the terms of service require a transfer of copyright to the game developer. It's completely irrelevant to content in SL where real-life copyright laws are in play.

There is an analogy in SL, ownership of virtual land, but the existing case law is at best unsettled (Bragg vs Linden Lab).

Virtual vs physical Property

[ehud42]

I can't help but think of the say "Possession is nine tenths of the law" or something like that. If the property is virtual then who has it in their hands? who can lick to get first dibs?

In the end, virtual property is neither good nor bad - it's ugly.

Unlimited supply, arbitrary value, abuse

[Fearan]

What I've always wondered about relating to virtual property is how its value will is decided on a large scale, and the potential risks for abuse. Virtual property has these 2 issues:

1. Unlimited supply -> Basically anything with unlimited supply should be a price point close to 0. Assigning an arbitrary value goes against the basic rules of an economy, where demand here will not dictate price. In some economies like WoW's gold economy, there is the appearance of limited supply, and value was derived according to this supply. This is fine as long as no one acts in greed and abuses the system.

2. Which brings me to my 2nd issue, abuse. The WoW gold economy is only good until an admin gives himself millions and starts selling it, now it's in Blizzard's best interest not to let this happen, but eventually some virtual property owner will be greedy and game their own system for profit.

What has been done in the past, and what is planned for the future to overcome these 2 issues with virtual property?

Re:IP

[Foobar of Borg]

What about "intellectual property" (an unusual choice of words given that most discussion of it these days seems to involve Hollywood movies or the audio output of the likes of Britney Spears).

Indeed. It's as bad as "South Park" being rated "for Mature Audiences"!