« Zone Makeover: Steamfont Edition | Home | Gold Buying is a Service: The Cliffs Notes »
Trading Gold for Cash: It’s a Service, Not a Good
By Cameron Sorden | October 24, 2007
Virtual property law is rapidly becoming a big deal. Gold sellers are cashing in on the current grey markets, consumer to consumer sales are providing revenue for hundreds of players, and even the game companies themselves are starting to get involved (the station exchange, or companies that offer micro-transactions are an example). While I’m not a lawyer, I find this area of MMOGs (along with the economics of them) extremely interesting and I try to read as much as I can. There are actually a few blogs I’ve added to the blogroll lately that focus exclusively on this area.
A central issue in most of the disputes arising from these transactions is the question of ownership. Who owns the virtual goods, do they actually own anything, and do these individuals have the right to transfer anything to another individual? There are many factors which complicate these questions. One in particular is the concept of the valuation of owned virtual assets. The problem is that if you assign value to virtual assets, it’s an all or nothing thing. The intent of the owner to sell or not to sell does not change the value of the item. So if we say virtual items are real assets, we start getting into tax law issues (which is a big problem in the minds of many gamers who have no interest in selling virtual assets and just want to play a game).
But many of the game companies say that you don’t actually own anything. How can you own a database entry, after all? It’s not a good– you can’t hand it off to someone. A common defense that players have used (not sure if they still do) is that they’re selling the time spent to acquire the money and items, not the items themselves. I don’t like that idea either. While it is possible to contract out labor, I can’t think of any other instances where you perform an activity in advance and then find a purchaser for the labor, which is what these sellers purport to be doing. The few analogous examples that come to mind (coders, for example) have a product to sell at the end of the labor. Clearly, without the transfer of an item, these sellers’ time would have been worthless. Nobody wants to buy the time you spent grinding… they want to buy the result (which the companies say you don’t own).
After a lot of thought about this issue, I think the problem is that we view the idea of virtual property the same way we view personal property, when it’s not the same thing at all. We’re just tricked into thinking it is because the illusion of a tangible world is so convincing and so comparable to the physical world that the idea of goods becomes cemented in our minds. This is where I think things get interesting…
I think that a player has a legal right to trade items to another player for compensation outside of the game, and I believe that the player is being compensated for performing a service instead of for transferring an item.Â
To defend this, look at what actually happens when you complete a trade within a game. X and Y are players in a game. X wants to give Y an item (J). X opens a trade window, and gives Y item J. But that’s not what really happened. What happened is that a database entry under Y got changed and database entry under X got changed, due to actions initiated by Y. In real life, player Y has performed a service for player X which resulted in the alteration of database values in the game’s database.
Now, this database alteration is perfectly within the terms of service of the game. As part of paying the monthly fee, you necessarily gain access to the game’s database and are allowed to change the values within certain parameters outlined by the designers (we call that playing without cheating, in layman’s terms). There are no restrictions on your ability to do this provided you perform within the rules of the game. In other words, you can make hundreds of trades per day, if you like, and the game company can’t stop you (nor would they have any reason to).
This is where the agreement between you and the company ends. They have no legal right to exert control on any of your other actions outside of the game. They can’t control who you do or do not make contracts with, and they can’t prevent you from accepting or delivering money to other parties. For example: Blizzard can’t stop me from accepting $5 from my friend to uninstall it from my computer.
So if my friend pays me $10 to make a change to the database entries, which I am entitled to do under my play contract with Blizzard, I’m performing a service for him. I had no previous legal obligation to make the database change, but I did have a legal right. I perform a service which I am legally entitled to perform and which my friend desired performed, and I received $10 for my performance. There’s no exchange of goods, nor are there any assets transferred (or possessed in the first place).
This where things get a little fuzzy and where I need to do some more research (I need to find a lawyer I can ask about this). In my opinion, if Blizzard bans our accounts, they’re a third party obstructing my performance under the terms of my contract with my friend. Without our external contract, our accounts wouldn’t be banned and the transfer could take place. Because of the service contract, they’ve chosen to ban our accounts. I’m not convinced they’re allowed to do that.
Furthermore, I think that looking at the transactions in this way would eliminate part of the need for clauses like that. If you view it as a service performed instead of as a valuable asset, it sidesteps a lot of the issues involving the acquisition, trade, and possession of virtual items. I see this as a potential solution to many of the legal issues rumbling around the gaming environment right now.
Please, if you have any knowledge of IP law, come and discuss this. I’d be extremely interested to hear opinions on this topic from people who actually have more than my tiny smattering of legal knowledge…
Topics: Random |
October 24th, 2007 at 6:07 pm
If I bought a can of beans in a grocery store (which makes them legally my beans), could I then stand in the canned goods aisle and sell my beans to another person there inside the store? No. Could I sell my beans just outside the store’s front door? No.
Could I sell my beans if I was not on the store’s property? If we’re talking about just one can of beans, then it would be equivalent to selling some old books in a garage sale. So, yes, though I’m not sure if that’s really protected by law or just by custom. But if I was making a lot of money off those beans, then the government would definitely expect me to have a business license.
As for services, rather than products…
Could I legally stand at the front of someone else’s grocery store and offer to fetch a customer’s groceries for a fee? Without the store’s consent, I doubt it. Could I stand in the parking lot and take back customers’ shopping carts for free? Probably not.
I bet a grocery store has the legal right to be the sole operator of any and all transactions on its property, regardless if those transactions are for products or services. If so, a game publisher should have the legal right to be the sole operator of all transactions on its servers.
But what about off-server transactions related to game content? Well, I know it’s illegal to buy tickets to a sports game and sell those tickets outside the arena. If companies like Ticketmaster can own the rights to be the sole provider of ticket sales to certain events, why couldn’t a game publisher have the same rights to services for its own game?
I’m not a lawyer, of course. I’m guessing as much as you are.
October 24th, 2007 at 8:45 pm
The beans example is irrelevant to the discussion here because it’s a goods transfer.
As for the comments on services, I think the answer to all of your questions is “it depends.” Taking them one by one…
For the fetching groceries part, anyone has the legal right to walk into the store and purchase groceries. While there are probably restrictions on when and where you can advertise a shopping service (probably not on the store’s property without their consent), anyone can go shopping on someone else’s behalf. The whole concept of home grocery delivery or personal shoppers are based on this idea. So yes, I would think it’s legal to offer to sell the service of grocery retrieval to someone unwilling or unable to do so.
A grocery store probably does have exclusive rights to grocery-related transactions on its property, but a service transaction as described takes place off of its property. It can’t stop me from buying groceries just like any other customer simply because it knows I’m selling the service of grocery retrieval.
Ticket scalping and ticket sales, again, don’t apply because we’re talking about the sale of goods. I don’t look at gold sales that way. There can’t be an “exclusive provider” of gold, because there’s nothing to provide. Everyone is allowed to trade items in the game (AKA modifying the database). There’s no legal reason why the rules should change based on our external agreement to perform the same service I’m otherwise entitled to perform (as far as I know).
The idea behind describing gold sales as a service rather than a good is more to avoid tax and property issues that arise from the possession of assets (and potentially tax gamers who have no intention of selling their items). You can’t tax someone on the potential to perform a service, though, which neatly sidesteps those issues.
October 24th, 2007 at 9:00 pm
Here’s an example from the real world that’s closer to what actually happens:
There’s an ugly plot of land, owned by Jim, next to Sally’s house. Sally gets tired of looking at it and wants to landscape it so that it’s prettier. Sally rents the land from Jim for $50/month and as part of the rent she pays she receives the right to arrange the landscaping however she wants.
Mary, who also lives near the land, offers Sally $10 if Sally agrees to cut down the dead tree in the northwest corner. Sally had been considering doing that, so Mary’s offer makes sense to her and she accepts it.
Notice that nothing has changed ownership and that no terms of the contract between Sally and Jim have changed. Mary is simply offering Sally money to do something which she has a legal right to do in a specific way.
Now, observe:
Jim = Game Company
Sally and Mary = Players
The Plot of Land = The database of numbers that gets changed when you “trade” an “item.”
Items, ownership, and exchange of possession are all fictions which are created by the game environment.
October 24th, 2007 at 9:18 pm
[...] Trading Gold for Cash: It’s a Service, Not a Good [...]
October 25th, 2007 at 11:45 am
Your land analogy works for developers/publishers who invite RMT into their game. But RMT in games like WoW, where RMT is prohibited, is more like someone who is renting a house and paints the kitchen without permission from the owner. That’s illegal.
Raph has said what you said about game items being merely a change in programming code and therefore not goods, but I disagree.
Look at newspapers. Newspapers are hard goods, but what separates one issue from another is essentially the type and placement of information. Just as two bookends can be sold as separate products merely because they were made to face different directions, simply moving information around in a newspaper copy or book copy would qualify it as a separate good. The type of information is more important, but the placement of information is enough to distinguish one good from another.
Just because something is online and, therefore, intangible does not mean it is not a good; intangibility does not make something a service. A service is an act, while a good is an object. A service can be mental (ex: consulting) or physical. Why not a good, too? Even if the gameplay manifestation of a particular line of code (be it virtual gold or virtual armor) depends partially on its placement within a code-context, that line of code is a specific object discernible from other, similar objects. Hence, it’s a good.
Of course, I’m speaking purely from logic. If this debate has already been settled in a legal case somewhere, logic doesn’t change the fact.
October 25th, 2007 at 1:35 pm
Nope, I have to disagree with the painting concept because it misses a key part of the equation. You’re comparing living in the house with paying for the game; fine. However, if the owner says you can’t paint, then you can’t paint. Lets call that hacking. You could do it, but it might get you kicked out (and rightfully so). The difference with trading another player in-game items is that you have permission to do the activity that you’re doing. You’re just doing it because of an external reason.
To make the example comparable, it would be more like if you were renting a house AND had permission to paint the kitchen any color you wanted. One of your friends likes green and offers you $100 to paint the kitchen green for some reason. The fact that you accepted money to do something which you were allowed to do anyway shouldn’t change the fact that you’re allowed to do it. The owner shouldn’t kick you out because you chose green based on your friend’s payment as opposed to your own whim. Painting in this case would be analogous to trading virtual items in a game.
Re: newspapers, I don’t see your point. Sure, moving stuff around can make something a separate good. But you’re talking about turning a good into a good, not an intangible into a good. If you’re talking about online delivery of news stories, that would be more like a service. Goods are transferable. You can move them from one person to another.
You might argue that you can do the same thing with items, but that’s what I was talking about earlier as being a convincing illusion. When you think you’re moving a virtual item from your character’s possession to another character’s possession, you’re not. It’s fiction. None of those things actually exist. There are no characters to own the items that aren’t there. It’s all numbers.
As for your last paragraph, describe a mental good to me. Saying, “Why not a good?” isn’t sufficient. Objects in games are representations of lines of code. You never possess any of those lines of code. What you think of as “owning a virtual good” is actually you being able to manipulate a specific section of code (your character) in relation to other sections of code (your items) on a remote server. What do you own? Nothing.
But you can perform a service with that code for someone, and that service is manipulating the code in such a way that numbers pass from the bit of code you can control to the bit of code he can control. You could do this normally without any objection or issue from a game company. Why do they have a right to object if you do it for external reasons not approved by them? If my brother asks me for 100g and I give it to him, the actions that take place are exactly the same as if a stranger pays me $100 for the same thing to happen.
I don’t own anything at any point in this process, and neither do the people who “receive” the gold. I’m just performing the service of moving numbers around that I’m allowed to move in a way that the person who asked me to move those numbers can’t (because they don’t have access to the same numbers).
October 25th, 2007 at 7:40 pm
I see your point with the house analogy. Thanks.
“It’s all numbers.” Ahh, but it’s not just any numbers. It’s a specific series of numbers/figures which results in a specific object. Hell, even physical objects can be said to be “just” numbers and elements. Any object can be broken down into a mathematical formula. But a specific arrangement of those elements makes a specific thing. Whether you identify something as a whole or as a particular arrangement of elements, it’s still the same item/good.
My point with the newspaper is that part of what distinguishes one newpaper issue from another is the information presented on it, not just the paper and ink. Code is like the paper and ink — it’s a medium by which an idea/information (the player’s character, for example) is made presentable.
Let’s say there were two very different lines of code which could produce the same idea… in this case, the Pac-Man game. You created Pac-Man, then someone presented the same idea (the visualization, the AI, the controls, etc) by a different combination of code. Could that person legally sell his version of Pac-Man? Hell no! You own the rights to the idea (IP), not just the code that made that idea visible and playable. I’d consider that idea a good, since it’s a definite object (which is what I meant about a mental good); but I can accept that the law wouldn’t classify it that way, so I guess my definition doesn’t matter in that sense.
Anyway, it seems I’m misunderstanding how games work. From the way you describe it, it sounds like there’s no movement of object-code when a player creates a character (no code that represents only that player’s character). Instead, the player’s computer is merely directed toward an immobile line of code, and every feature of that character likewise represents only a link between the client computer and the server code… rather than code being moved and rearranged into a new code-object.
haha, I hope at least some of that makes sense. If you can’t tell, I’m mostly conceding your argument, but I think I disagree on whether or not a particular code arrangement can be considered a good. Honestly, I’m tired and confused, and I’m having trouble figuring out what all we agree and disagree on, lol. I love analogies, but it looks like too many leads to chaos. =/
October 25th, 2007 at 8:49 pm
I don’t know much about how the code in an MMOG works (nor much about code period– only a smattering). You make several good points and we could probably go back and forth on this endlessly, given that it hasn’t been resolved yet. It’s merely different ways of looking at it.
Heh, don’t worry about being tired and confused. Me too. This is a confusing topic, and we’re discussing real world concepts through several layers of abstraction. This would probably be a better conversation to have in person when we could burn through point-counterpoint much more quickly and better explain what we’re trying to say.
We’ll have to pick it up again over drinks sometime at an expo or something.
October 25th, 2007 at 9:01 pm
And I think the thrust of my argument is that while a line of code probably could be considered a good in some cases, in the case of virtual game items it’s not a good that you own (even if it is a good), nor does it actually get transferred to anyone when your character trades it (the company owns all the code– you don’t own your character either).
Hrrm. I have an even better analogy now! Think of it all like toys that you can pay a fee to go play with. Lets say I have a GI Joe collection. They all have little plastic weapons. When you come over to my house, I charge you ten bucks and I make a special GI Joe that only you can play with, and you can play with him any time you come over. If you stop paying me, you can’t play with him, but neither can anyone else. He just sits on a shelf with any weapons you find.
There are little weapons for the GI Joes all over my house. If you find one, you can use it with your guy. Also, you can give or trade any weapons you find to other people who are paying to play with my GI Joes, but everything has to stay at my house when you’re done playing, because they’re still my toys. You’re just paying for the right to use them.
Your friend George also pays to play at my house. He sees that your GI Joe has a cool gun. He offers you $20 if you’ll give his GI Joe the gun that you found. You say sure, take his money, and hand it over. I still own all of it, but he paid you to play with the gun that you had the exclusive right to play with previously. You didn’t sell him anything. He paid for the service of you performing an action which you had every right and no obligation to do. By paying you, he created that obligation. The situation between me and either of you hasn’t changed at all.
Think of the Gi Joes and guns as bits of code, and that’s about as close to a perfect analogy as you can get. I guess it doesn’t actually matter if they’re goods or not.
Like I said, this would be easier in person.
October 25th, 2007 at 9:33 pm
Ahh, but what if you decide that all the toys you own and we’re paying you to play with can only be played with in a particular way? Would it be reasonable (and legal) for you to tell us in the beginning what we can do with your toys and any deviation from that could result in us getting kicked out of your house or you taking back your toys? I think it would.
If George paid me to play with the toy I rented, and if that was against the rules you set out in the beginning, then it’s fair for you to be able to remove the toy from George or kick him (or both of us) out of the house before he gets what he paid me for. If we’re doing something in your house that you don’t like, it’s acceptable for you to kick us out. If you warned us of what not to do and we do it, then kicking us out is fair, too.
It’s your house. Perhaps it would be more charitable or more just for you to leave us to our private transactions. But in your house, you decide what’s private. There are certainly limits to how far that authority goes. But in regard to typical RMT, at least, I think that to control or not control them should fall under the owner’s discretion. It should be up to individual developers/publishers to decide whether RMT is an option in their games.
December 17th, 2007 at 7:52 pm
[...] value and can be legally considered transferable goods (as opposed to services, which I argue for here — cliffs [...]
March 31st, 2008 at 11:03 am
[...] Unfortunately, there’s no great answer that’s totally free of problems. I’ve argued before that RMT should be allowed, but treated as a service. I’m not sure how much that would really [...]