Still waiting for an orc raid on Stormwind’s Bank

It feels like 2007 all over again. There seems to be a resurgence in articles and blog posts seriously discussing the subject of virtual property and the virtual economy, something that was very familiar in the tech press around the time of Second Life’s nadir. By the way, whatever happened to Second Life?

A recent and well-circulated article in Forbes discussed the subject of the ownership of virtual property. In the article, the author uses the construction boom in some virtual games such as Minecraft to ask questions about intellectual property. Minecraft is a surprisingly successful low-fi online multiplayer game where players are engaged in the construction of structures in a 3D environment by digging. This has IP implications because:

“[In] multiplayer Minecraft there are multiple levels at which intellectual property is being created and used: Mojang, the company that sells Minecraft, provides IP in the form of the underlying game itself. A Minecraft server owner adds IP by designing a specific type of virtual world, and the players within that virtual world then create their own IP as they develop its infrastructure and economy through their own in-game interactions. And in yet another layer of IP complexity, server owners often incorporate software provided by third-party developers, and in some cases also hire people to write code to add customized features to the server.

The level of engagement of Minecraft users is incredible, and the creativity unleashed can be breathtaking. Because the game can be installed in separate servers, it is possible for players to run their own instances of the game, creating their very own environments, which I believe goes a long way in explaining why it is so popular with some demographics (my nephews love it, and so do most of their classmates apparently). Just gape in amazement at this project in which a group of Minecraft users has been building the world of Westeros from the series Game of Thrones (based itself on George R R Martin’s A Song of Ice and Fire).  I want to walk on the virtual Wall and follow in Tyrion Lannister’s tiny footsteps, but I digress…

One feels a sense of vindication when the mainstream finally catches up with what many of us have been talking about for years. This time some of the hype might be justified. Like the video of King’s Landing clearly indicates, there are some interesting IP-related questions to be asked about what is taking place online. The building of virtual versions of worlds depicted in book and screen is a phenomenon more akin to fan fiction than anything else, and the legalities of that realm are still being discussed. In the strictest sense of the word, most fan fiction is in a way a form of copyright infringement, but that does not stop a vibrant community from producing user-generated versions of their beloved characters. And before anyone dismisses fan fiction, just remember that 50 Shades of Grey started life as Twilight fanfic.

It is unlikely that HBO or GRR Martin will ever sue the creators of the Minecraft version of their world, in general it is a very bad idea to litigate against your customers (a lesson that the RIAA was too stupid to learn until it was too late). As long as fan projects remain outside of the commercial realm, most authors will leave them alone. But what about the original content created in virtual worlds? This is a trickier question as most developers claim ownership of everything hosted in their servers. This may include items with real-world value, such as virtual currency converted into real cash by the means of some exchange. This happens all the time when players of online games purchase gold and in-game currencies from Chines gold farmers. The existence of these exchanges is one of the premises of Neal Stephenson’s Reamde, and he might once more have looked at the future. I am still waiting for a game that will take these exchanges into account. This could be sped up by a suit in which a player wants to move out some of their in-game resources into the real world.

This brings me nicely to another development that has been raising lots of eyebrows (virtual and real): Amazon has announced that it will be launching its own virtual currency for their Kindle app store, Amazon Coins. This move has baffled tech analysts everywhere. Why would Amazon try something that has been attempted and failed everywhere? From Facebook Credits to Bitcoin, virtual currencies have had a bit of a bumpy ride. Most of those analysts seem to be missing the point. Virtual currencies are wildly successful in their respective in-game economies, they are used by millions to buy goods and services in limited virtual environments, and it has been proven that people will pay real cash to boost their online content. Take the successful FIFA series, where there is a thriving economy of card trading, where players purchase virtual cards of their favourite players. This can be done through virtual in-game currency which is earned by playing and winning games. But players can also use real money to obtain coins to boost their teams.

This is where Amazon Coins come in they will almost certainly be used exclusively within the Kindle environment to buy content for the Kindle, such as books, music, movies and TV shows. If Amazon can even mildly replicate the most successful in-game currencies, then look for other companies to start adopting the model.

The future is virtual.


5 Comments

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giles · February 11, 2013 at 3:32 am

Bitcoin and alternative currencies could take a large chunk of the banking industry in the future if the traditional currencies don't adapt to the times. For getting started with Bitcoin – http://thebitcoinmaster.blogspot.com

    Avatar

    Andres · February 11, 2013 at 5:20 am

    I beg to differ, Bitcoin as it exists is deeply flawed, adoption rates haven't gone up, and at the moment it is a small core of enthusiasts driving the price up. It isn't a currency, it is a virtual speculative vehicle.

      Avatar

      The Starkiller · February 19, 2013 at 5:33 am

      How is it deeply flawed? Bitcoin itself has never been compromised – sloppy users and insecure exchange servers have.

      BTC is an actual currency that is being adopted by more and more companies as a form of payment – especially for online services which are jumping on en masse. Why let PayPal take a cut when you can transfer money for free?

      Have a look on Reddit. Users are giving each other bitcointips. Total strangers handing each other money. You can't do that with $!

      Likewise, BTC is an opportunity for immigrants to send money back home to their families, and unlike with traditional remit services, you don't need to pay a cut or sign customs papers. That industry is worth $250bn a year (Wikipedia). With BTC's value currently slightly over $300mn, I see a lot of upside.

      In a time when national currencies are being inflated away by central banks in an export boosting/debt erasing race to the bottom, I'll put my money into something that does NOT lose value over time but at the same times has NONE of the drawbacks of traditional fiat money.

        Avatar

        Andres · February 20, 2013 at 5:49 am

        The actual encryption and some of the technical details are sound, but strong encryption does not a currency make. You hint at the problem with BTC when you acknowledge that people have been the subject of hacker attacks and robbery. This is a big problem, as it creates a "blame the victim" mentality.

        The reality is that the exchanges and wallets are indeed the weakest link in the chain. A currency that requires a high level of security and of user knowledge will never be widespread, as the chance of losing money to attacks is too high. And once the coins are gone, they´re really gone. No recourse to your bank, no legislative protection (UK law for example protects debit and credit card users quite well). The same happens with the much maligned intermediaries such as PayPal. I have had money returned by PayPal after something has gone wrong. If something goes wrong with BTC, tough luck. Your only recourse is to go to the forums to complain.

        BTC has built-in problems from the economic standpoint as well. It encourages hoarding, it benefits disproportionately the early adopters, and it is a deflationary currency. There is a good reason why the gold standard was abandoned, it created more problems than it was worth.

        I strongly believe in virtual currencies, and I hope that in the future we'll have a strong one. But BTC is not it, at the moment it's an article of faith among a small cyber-elite.

Recommended reading, 7-13 February 2013 at Lex Ferenda · February 18, 2013 at 3:59 am

[…] ‘Virtual currency and virtual property revisited‘ (Technollama 11 February 2013). An overview of recent developments on virtual £££ and IP and other things, prompted by a piece in Forbes which mostly about virtual property). See also this nice PBS video on Bitcoin, etc. […]

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