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Pulling Off the Bandaid of Virtual Value
By Cameron Sorden | March 31, 2008
As usual, a comment at another blog has blown into a full-fledged blog post. Eric at Elder Game referenced a post that Tobold wrote where he discussed some of the problems surrounding player possession of game items and characters, and the reasons why the game companies are very interested in keeping this issue away from a judge for as long as possible. I tend to agree with Eric that we don’t want someone with little knowledge of MMOGs and virtual worlds making a ruling on this, however, I do think we need to have a ruling made just so people can figure out where they stand and decide what they want to do.
Right now we’re in this terrible gray area where everyone is just kind of keeping quiet and trying to lay low. Everyone knows that gold farmers and gold sales run rampant, and the companies fight them with ban hammers and filtering technology while settling the court cases out of court so the question of virtual property never actually gets answered. Frankly, having that question answered is going to have to dramatically change the way designers make and the way players play these games, which is one big reason why the game companies don’t want it answered. It could very well be like, “Goodbye freedom to create, hello legislation on virtual currency.”
There was a decent amount of discussion of this very topic at IMGDC this weekend and it’s something I’ve given a lot of personal thought to as well. 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 fix the issues, but I imagine it would give us some more wiggle room for those people who don’t want to cash out. I’ve also talked about how to design an RMT-proof game– I think you’d have to lock it down in such a way that it would hardly be fun for a gamer used to the current paradigm.
I do think it’s interesting and relevant to the whole discussion that Eric makes the comparison to a save game file, though.
Suppose that the company had instead chosen to make an epic single-player RPG. But the storyline has a tragic twist (not unlike the one in Ultima 6 or Final Fantasy 7): about 100 hours into the game, one of your most powerful characters dies. Did the company take away something you owned? Can you sue? Most gamers instinctively know the answer is ânoâ â they no more own the characterâs possessions than they own their favorite character on Lost. They are playing through a story told by the game developers. If Mr. Eko dies, you might feel sad, but you didnât suffer material loss.
He and Tobold are talking about the company destroying value, but I’m more interested in the sale of that save file to begin with. Imagine that you couldn’t keep your save file when you sold it, and that’s precisely what selling a character is. You’re selling your saved progress in the game to someone else.
If I sell you a save file, what am I really selling you? Obviously not the characters or items in the single player game– those exist outside of either of our control and whether or not I sell. I am selling you my access to “playing with” those characters and items, something for which I’ve worked very hard. You don’t want to spend the time and effort to get to where I am, so you just pay me for my progress.
Now, I don’t think either of us would be under the illusion that you just bought anything within the game, but clearly something of value was exchanged (or you wouldn’t have paid me money). You can call it time, effort, access– whatever. The point is that we’re both happy; everyone wins. Of course, it gets more complicated in an online game where doing just that is against the EULA, but EULA’s are another hot-button topic right now.
Do companies really have the right to restrict a player’s ability to transfer their progress (however you want to define it) to another player via an agreement external to the game? It’s not a question of EULA. Theoretically, they could write whatever they want and you’d still sign it and play the game. What are you really paying for in your monthly fee? That’s the real question. If it’s just for access to a service (and I’d argue it is), that’s fine… but does the company also own the time and effort you’ve put into your personal advancement just because they say they do?
The problem right now is that no one knows the answer to that question. Everyone has an opinion and they vary widely, but until it gets settled in court, the truth is that we just don’t know. For now, everyone is content to wait, see what happens, and keep making money. Game companies and grey market sellers play their little game of cat and mouse but both continue to profit, while you (the player) end up getting the shaft. Want to buy or sell gold and characters and just make a buck from all the time and sweat you’ve put in? You can’t without risking having your account banned. Want all those types to just go away and leave you alone? Too bad. You get spam, spam, and more spam to buy truckloads of gold, while Rich Johnny spends $200 to leap ahead of you and take your raid slot.
Until the question gets answered, we just have to keep going around in circles and no one is happy. You know what? It’s going to suck, but this needs to be figured out. That way, those that don’t want to deal with it can get the hell out of the industry and figure out another way to make cool and creative products, and those that don’t mind will either deal with it or design around it.
The issue of virtual value is just lying there festering at the moment, and it’s not going to go away if we hide our heads in the sand long enough. Lets get this bandaid ripped off and move on with our virtual worlds.
Topics: game development, law, mmorpg, politics, real money transactions |
March 31st, 2008 at 11:32 am
Whoa — Aeris DIES?
*cough*…
The only issue that really matters is taxation. If you can assign a dollar amount to virtual goods, then you can be taxed when you sell it to someone else, and you have an increasingly valuable asset which may also be taxed — AND if a company knowingly deflates (nerfs) your investment, then they have caused you material harm. Even selling your time as a service can be taxed. If I spend 200 hours leveling a character as a service to someone else, then I am acting as an independent contractor, and should get a 1099 for the work.
You’re right, though. The very first time the law agrees that virtual items and services have a monetary value, the whole MMO industry will shake. That’s why companies are so careful to frame these issues in non-monetary terms, such as copyright infringement or EULA-terms breaking.
March 31st, 2008 at 11:43 am
It’s a house of cards though, and it can’t last forever. The issue won’t go away because we word things carefully and ignore it.
March 31st, 2008 at 11:59 am
Again, this is an issue because of player misunderstanding. Game companies aren’t avoiding “virtual value.” Game companies believe that you have any virtual value in the account you own. By current law, game companies are right.
What you actually want to hear is that you DO have virtual value and that you DO have rights to your stuff. And since game companies won’t say that, you want somebody outside of game companies to tell you that. But they can’t. You can’t frame a question where that answer even makes sense. That’s what my post was about. From a game company point of view, you are saying, “we need the courts to decide if there’s really a Santa Claus. SOE says there isn’t, but I think there is. But we won’t REALLY know until a judge decides.” Judges aren’t going to rule on Santa Claus. At least, I hope they don’t!
If you could come up with a compelling reason why you would own the virtual goods on someone else’s server, you’d change THE INTERNET. Forum moderators wouldn’t be able to delete other people’s posts, Google couldn’t delete your gmail account, your MySpace page couldn’t be deleted without paying you damages.
Just because you couch the internet services from games as “virtual goods”, and have found a way to illegally sell them on the internet, doesn’t change the fact that they are owned properties of an internet service provider (the company). It’s really an open and shut case.
To reiterate, game companies never use “virtual property” terminology because it is not a meaningful legal term.
March 31st, 2008 at 12:12 pm
Tipa - you’re right, taxation is where the government likely would make a ruling, and that is a terrifying concept we should all fear. Unless you like the notion of paying annual tax on the value of your other virtual holdings, like your Blogger account.
The difference between video game service-providers and other service-providers that create valuable content is nil. It’s just couched in friendly and inviting concepts like “virtual property” which make us think of it differently.
March 31st, 2008 at 12:16 pm
It’s clearly not an open and shut case or it would have been open and shut already. If it was so clear-cut, than Blizzard and Linden and everyone else wouldn’t be avoiding the legal battle– they would embrace it to strengthen their position.
For the record, I don’t want to hear anything of the sort. I think that assigning straight value to this concept of virtual property in a traditional sense and assigning ownership of property rights to players without recognizing the unique nature of the online game service is a definite path to folly. On the other hand, I don’t see anything particularly wrong with being able to freely exchange time and money in these games (or being able to transfer your account or gold to someone else in games which allow it). Neither of these opinions I have change the fact that we need a definite legal answer one way or the other.
“Game companies believe that you have any virtual value in the account you own.” I assume you mean “don’t believe,” right? The key word there is believe. Also, it’s important to note that there’s not a united stand on that front. That’s one stance that many companies take… but what about Linden or SOE? They clearly have different interpretations of this stuff, even if they don’t explicitly assign you ownership of something.
You can’t dispute that there’s something of value being traded, and I think it’s unfair to compare the issue to believing in Santa Claus. I understand exactly what you’re saying with that, but that’s because you’re approaching it from the perspective of a developer. Someone who has a business in buying and selling these services would have a very different perspective.
I’m not suggesting that we need to declare that “virtual goods” are something valuable and give players full property rights on them. What I’d like to see is a definite legal precedent to what exactly it is that players have rights to, which is why I thought your save game analogy was interesting.
It’s an issue waiting to be solved, and the sooner it is, the sooner companies can start dealing with it effectively.
March 31st, 2008 at 12:18 pm
Believe me, I don’t want to be taxes on my epic drops any more than you do.
I honestly think we’re going to need a whole new set of laws to define this area– it’s not like anything we’ve ever dealt with before.
March 31st, 2008 at 1:38 pm
I apologize for coming off as snide. The Santa Claus analogy wasn’t particularly useful.
But I want to reiterate the point that the player-made notion of “virtual property” would not be constrained to in-game goods. A very good example is domain names. The “virtual value” of one of my domains is estimated at $80k. I sure as heck don’t want to pay taxes on that just because I could theoretically sell it to some sucker for $80k. If we want to talk about virtual goods, it’s crucial to take it out of the context of games. Talking, and even THINKING, about it as virtual swords owned by virtual people just masks the underlying topics.
Also, from a legal perspective, the WoW vs. Glider case has absolutely 0% to do with “virtual property” as defined by the law. That’s because there is no such thing, legally speaking, as virtual property, so there’s no way to phrase things in that way. It’s extremely misleading to suggest that WoW is pussyfooting around the issue because they are afraid of a ruling! The simple fact is that there is no ruling to make on the topic. There are no laws about it. It’s a concept players invented, and that players now want laws to exist for. My stance is and continues to be that this is not a good idea at this time.
We can’t even define what makes a virtual good different from other online services! Why would you think somebody else could do that for you?
March 31st, 2008 at 2:18 pm
It’s all good. This a discussion-friendly region. I welcome a good disagreement (even if it gets a little heated sometimes).
I think WoW *is* pussyfooting around a ruling, though. Everyone is! They don’t want the possibility of a rule which would create the concept of a virtual good any more than any other game developer. I think that we’re all in agreement that that would be more than a little silly, but it’s something that could potentially happen if someone who didn’t properly understand the issues made a ruling.
And it’s not that I think someone should do it for us. It’s that I think that the industry is going to have to get together and make a decision about how to handle this or the government will do it for them, regardless of what they want (and it’s going to suck a lot more than if they were proactive about it and had an early voice). If the decision that the industry makes is that no, there is no value here and players have no right to trade whatever value they perceive, then they’re going to have to alter their game design principles (possibly even in existing games) to reflect that policy.
In other words, if you want to tell players they can’t sell gold for real money (because there is no gold to trade), you need to change your game design so that they actually can’t do that. I certainly don’t believe that a company has the right to tell me who I can and can’t give real money to. If an in-game gold trade to a friend looks largely the same to a gold sale, than they shouldn’t differentiate. It goes back to that chart I drew a while back– eliminate grey-market RMT and lock your game down, or open it up and embrace grey-market RMT.
“Itâs a concept players invented, and that players now want laws to exist for. My stance is and continues to be that this is not a good idea at this time.”
No, it’s a concept that evolved due to game design. Players are required to pour real-world resources into these games to be effective (time). As a result they get “something” that has tangible value to someone (or they wouldn’t bother). It’s clearly not just “fun,” which exists for a moment and then is gone forever.
What that something is, who owns it, and whether the player has the right to sell that something to another player is what we’re really arguing about. There are ten different ways you can look at it and phrase it, but I think that those questions are what it comes down to. It’s simply not an easy question to answer.
I don’t think I’m disagreeing with you, fundamentally. I just really do believe that there is more than one side to this issue, and it’s not nearly as cut and dry as many people wish it was.
Every time we have a lawsuit over this, we get close to a legal precedent. The lawsuits aren’t going to stop, and it’s only going to get worse. The industry may have to accept laws that are less than palatable, and which may drive some people away from online game development. It sucks, but there it is.
March 31st, 2008 at 2:23 pm
That was a little more rambly than I’d like.
I need to make a distinction between RMT and virtual goods, as they are not one and the same. RMT is something that does currently exist and is defined, while virtual goods aren’t and don’t.
Blaargh. I have too much work today to say what I mean very eloquently or concisely. Let me think about this discussion and do a follow up post in a few days where I’ll try to streamline my thoughts.
I do think you make some very good points, and I think that we’re in the same ballpark with our opinions, if not necessarily on the same team.
March 31st, 2008 at 3:29 pm
Well, intellectual property is a form of virtual property. A song I write is independent of the tools I used to write it — a piano, some score paper and a pencil — right? Without MMO players, MMOs would have no virtual assets. By playing the game, making decisions, making the game have life, players give the game value. If the players all leave, the value of those virtual goods become zero, instantly.
Clearly the company does not own something that the players can take away with them and which can not be taken from them — their time and creativity.
March 31st, 2008 at 3:30 pm
I think you’ve hit the nail on the head. Something is being traded. What that something is exactly is being hotly debated; but, whatever it is, it’s being traded for real money and that means it’s only a matter of time before the government demands its share (taxes, as Tipa said).
Let’s not forget that the reason for death taxes and such is that organized crime syndicates were hiding incomes through “inheritance” and the like. While the government is not regulating virtual sales, those crime syndicates can use it in the same way, so that’s another reason the government might eventually take interest.
The second thing I think we can count on is that the ruling, whenever it comes, will not make good sense to gamers and game designers; because the ruling won’t be written by gamers, and the judges will doubtfully see eye-to-eye with developers. The ruling will be made by people with little or no experience with such things, and their logic will probably be based on scenarios that are hardly analogous. We’re going to have to live with some pisspoor rulings before the laws are amended to make good sense.
I bet the first ruling comes from a nation other than the U.S. Perhaps South Korea or Australia?
March 31st, 2008 at 3:41 pm
My opinion is that the game companies are avoiding direct battle with the gray RMT market because they are afraid of loosing, which would mean that RMT is legal whether you want it or not. Not to mention that good part of that market can be based literally from any part of the world, namely china, which makes any legal battles very difficult if not impossible.
If something, game developers should try to establish tax for anyone else except legal RMT traders which pay it anyway. That could bring some light to this jungle.
I’ll try to post more on this subject later when i can think about it for a bit longer.
April 1st, 2008 at 4:30 am
Have you looked at the work Runescape has done in the last 2 years to make RMT simply not worth it?
It’s working.
April 1st, 2008 at 7:31 am
Game developers aren’t going to establish tax. Game developers are going to stop making games with characters and property if you start seeing the courts rule on their ability to create.
Make no mistake on that - this is a discussion about the creative freedom of game designers, too.
If it’s decided that players, not the game companies, own the characters and items they “earn” in games, then any patch that reduces that value can and will result in claims and lawsuits against studios. Anyone know a lot of studios that want that legal hassle? Would you?
For those studios who remain, you’d see mark4ed changes in game design. Companies would be forced to maintain higher technical standards, sure. However, they’d also be less inclined to make any game balance changes that might reduce the value of items or characters (and potentially open them up to litigation). Every game mechanics change would have to be checked and approved by studio legal teams before it could go live.
You’d see flat out legitimized dollar=gamegold sales, and why not? If the courts step in and say “virtual property produced by developers is actually owned by players”, what’s to stop developers - ALL developers, mind you - from trying to reap the rewards to offset the risks?
After all, at the end of the day, the developers still control the code. If they have to be on the lookout for possible lawsuits, it stands to reason they’d also be there to take advantage of the laws to allow direct sales of items, platinum/gold/gil, and even character templates.
Why let the second hand market collect all the fees for that?
We can’t look at arguments like this in a vaccuum. The world doesn’t stand still, and if a single change is made to legitimize your gold purchase today, I think it’s important to try to understand the larger implications of that action.
April 1st, 2008 at 8:31 am
@Ophelea: Yes!
That’s a great example of partially solving this issue through design (although limiting trading sucks, but the more you limit RMT the more freedom you have to take away). What I’d love to see is a creative way to make the issue go away through game design. What is it? Who knows?
@Ken: Agreed. It’s going to shake the industry to the core if we get some sort of straight property laws like that. Honestly, a lot of them would probably just walk away in the face of draconian laws for the purposes of tax collection.
I know it sounds like I’m saying that we should legitimize gold sales, but I’m just trying to work out what it is that can or should be done about all this. I’ve been thinking about this stuff all night and I am going to do a follow up post later this week to try another stab at the issues from a different angle.
We have to look at arguments like this in a vacuum because that’s where we are (legally). It’s certainly not ideal trying to fumble through a tangled mire of player perception and developer intention with no laws to help shape the argument, which is exactly why I think we need some.
I’m not advocating for any particular set of laws, just pointing out that we need them. Why not try convince the government that there really is no such thing is virtual property, therefore anyone in engaging in gold sales or character sales is committing fraud? Well, that’s got problems too.
Like I said, I have more to say later.
April 1st, 2008 at 9:34 am
1. The game companies are avoiding the ruling, because it’s more or less obvious that what they are doing is resembling ‘gambling’ as we know it, although embedded into a different visual paradigm (âchipsâ, pseudo-random events, although there are elements of the âplay of skillâ too). So, the legislation regulating MMO would be very much similar to ‘gambling’ laws and regulation. If you think about the MMO in terms of a ‘casino’ you will see that right now they are using ALL ‘dirty tricks’ a casino could use against the player - no clearly defined rules, ‘all your chips belong to casino’, game client spyware is pretty much a âcamera camera on the ceilingâ letting casino owners to look into your cards (and even into your âunderwearâ) etc. etc.
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2. The technical aspect. The so called ‘developers’ in fact are using the large chunks of reusable software developed by other companies over the years. Not only they don’t change the code much, they don’t even know that much about it’s internal logic and architecture (believe me!). Introducing the concept of ‘virtual property’ would require a completely different architecture of the service, namely:
a.) Separate RELIABLE depository for assets/virtual items. I’m not even pronouncing the word ‘certified’, see… ? Let’s say, it must be TRANSACTIONAL and with a clear audit trail.
b.) Separate RELIABLE payments platform - same thing. Please realize that even the âcoinsâ are there just because itâs easier to operate EVEN NUMBERS. ?
c.) Simulator(s) itself/themselves. But those MUST be different (persistence, roll-back option, dynamic content downloads etc.etc.)
They just CAN NOT DO IT right now (with the existing ‘engines’, culture of building things ‘on top’ of the existing engine instead of interconnecting separate systems/software, boxed software mentality… etc.etc.), it’s a whole different architecture, mindset AND PEOPLE who could accomplish this type of a work. So, basically, by saying ‘we want virtual property’ to the developers you are telling them: “We want you, guys, to be sacked out of your job ASAP, because you are incompetent in building the service WE WANT TO HAVE.” Who would like that?
3. Iâm not going into the subject of âgame-god mentalityâ, but itâs definitely there. Just re-read the initial post, it has a clear message between the lines: âDude, I CREATED ALL THIS, and you are saying you own it? Naaa
Bottom line - don’t talk to the developers about ‘virtual property’.
April 1st, 2008 at 12:37 pm
I love arguments that base all potential “logic” on whether or not developers are competent or not. That’s not an overgeneralization or anything, right?
April 1st, 2008 at 12:49 pm
Excuse me, but comparing MMOs to gambling?!
Gambling is something that you usually do to get more money even though the odds are against you. MMOs are about having fun, not making money. Maybe someday you will play MMO as a slot machine where epic can get you 60$, but that game doesn’t exist yet and i hope it won’t ever be created.
April 1st, 2008 at 1:09 pm
Traditional MMOs are not like gambling for one simple reason: predictability. MMOs are almost completely predictable. Securing specific loot and skills is just a matter of time and effort. Every casino game includes the factor of chance. In MMOs, nothing is gambled, because the conclusion of the game is guaranteed at the start.
April 1st, 2008 at 1:15 pm
But that’s exactly what assigning property rights (and commiserate real world values) to virtual items does. Killing a boss becomes essentially pulling the handle on the slot machine. The only difference is that given the current payment structure you’re paying a months worth of slot machine time rather than per handle pull.
April 3rd, 2008 at 4:39 pm
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