Licensing of Virtual Goods: Misconceptions of Ownership

Posted in 2012 Journal


This paper explores several cases related to the purchase or ownership of virtual property: the terms of use for the popular game mass multiplayer online game, World of Warcraft, the “cash shop” or “item shop” business model and issues of “real money transfer”, and finally the specific rights granted to creators of objects in Second Life. It becomes clear that the dominant paradigm regarding ownership is that corporate entities retain ultimate control through the use of software license agreements, which are often poorly understood by end-users. With only a few exceptions, players have no legitimate ownership rights to artifacts that they perceive as their property in virtual worlds and, more importantly, often unwittingly waive copyright to works they might create in the course of their interactions in the world. The licensing terms of Second Life are shown to operate differently than most with the effect of increasing creativity and innovation within that virtual world. This analysis concludes that while the licenses that players are forced to accept by video game manufacturers are binding, the status quo is certainly not ideal and runs contrary to the underlying philosophy for granting intellectual property rights.


Virtual worlds have become an extremely popular space for online interaction over the course of the past decade. With the inception of World of Warcraft, the world’s largest MMORPG or Mass Multiplayer Online Role-Playing Game, an estimated 300 million people or more engage with these online games on a regular basis, creating a multi-billion dollar industry (Castronova, 2005). For most of these online communities, players have little or no rights to any related intellectual property, including their own names, speech, and creations within its bounds. The game provider theoretically owns player-created content that resides outside of the game; even on sites like YouTube. While there are some exceptions, such as the player-generated world of Second Life, even communities known for allowing players to profit from their own creations have strict policies regarding who actually maintains the rights to these virtual entities and provide for compulsory licensing to ensure that world operators will not run afoul of creators’ rights. Rising from the legal and technical level exposes the fact that users of these services are often ill informed about the issues of ownership.

While issues of patent and trademarks are present within the broad scope of this analysis, examples of intellectual property disputes involving these systems are rare within the literature on virtual worlds. Thus, the primary focus of this paper will be copyright law: the branch of intellectual property dealing with the creators of intellectual property and the rights granted to them by virtue of their creation (WIPO Handbook, n.d.). The privileges of copyright are granted to works that are fixed in a “tangible medium of expression . . . from which [a work] may be perceived, reproduced, or otherwise communicated, directly or with the aid of a . . . device” (U.S. Code Title 17, Chapter 1, Section 102). Works related to online games are created both by the creators of the games and by the players, themselves, who often produce art and other innovative works based on the games as well as, in some cases, their creations within these virtual worlds. There have been many copyright-related lawsuits emerging from virtual worlds and there will almost certainly be many more as people around the globe increasingly turn to the interactive medium that is provided by these complex digital spaces, a trend evidenced by the increasing number of communities, subscribers, and overall industry revenue, estimated at 25.1 billion dollars in 2011(ESA, 2011).

This analysis seeks to explore several distinct issues surrounding the intersection of virtual worlds and intellectual property law. Specifically, it shall investigate such examples as the terms of use for the popular game World of Warcraft, the “cash shop” or “item shop” business model, issues of “real money transfer”, and, finally, the particular rights granted to creators of artifacts in Second Life. These issues will then be evaluated in order to demonstrate that the problem of intellectual property within virtual worlds is a complex and dynamic state of affairs. It shall become clear that the dominant paradigm regarding perceptions of ownership is that corporate entities retain absolute sovereignty by utilizing stringent software license agreements. Players possess few proprietary rights to virtual artifacts within these communities and, more importantly, often unwittingly waive copyright to works they might create over the course of their interactions in said communities. The licensing terms of Second Life operate differently than most, and result in increased creativity and innovation within the online community.

The overall analysis concludes that the license agreements that players are forced to accept from game manufacturers are binding, the current state of affairs is certainly not ideal and runs contrary to the underlying philosophy for granting intellectual property rights. By rejecting a player’s proprietary rights to works conceived and fixed within the confines of virtual worlds, players are stripped of any incentive for innovation and creativity. Indeed, in the minds of some, companies that stand to profit from the creative works of players are unknowingly taking advantage of them. Perhaps the most generous license agreements, those illustrated by Second Life, should be deployed as a prototype for which to expand the rights granted to players. Unfortunately, there is little reason for companies to adopt these less restrictive models. This is because the current industry archetype is binding, and alternate modalities do not intrinsically yield increased revenues. Because players tend to be unaware of the rights they surrender when accepting these licenses, a grassroots resistance to these practices has recurrently failed to organize.

Finally, the primary dilemma associated with these virtual items’ is their ephemeral nature as representations of code. This oppositional perspective enhances the need to license content rather than adhere to a more traditional form of property ownership; one predicated on the notion of tangibility. Yet, extensive markets have emerged as a result of perceived value in these items and have consequently transformed once imaginary artifacts into legitimate assets; entities that possess liquidity and may be transferable in exchange for capital. As more virtual inhabitants decide to invest in the creation, purchase, and sale of these virtual products, it is likely that they will begin to demand protection for the value of their licensed content. This in turn creates the need for external 3rd party organizations to maneuver toward establishing rights for players as well as generating increased awareness pertaining to the nature of software licenses.

The genre of games now known collectively as “virtual worlds”, alternately known as “online games” or “synthetic worlds”, can trace its lineage to 1970s, when amateur programmers at institutions such as MIT and Essex University began creating text-based adventure games like the eponymous ADVENTURE and the classic dungeon game Zork (Bartle, 2003). These worlds were composed entirely of text and were, in effect, large interactive stories that the player moved through by entering simple text commands. The game would then interpret those commands and translate them into character actions. Between 1978 and 1980, Roy Trubshaw and, later, Richard Bartle, would create a game known simply as ‘MUD’ or ‘Multi-User Dungeon’ that would eventually be acknowledged as the first interactive online game space. These initial spaces were primitive by modern standards in that they emerged prior to the widespread use of graphical user interfaces (GUIs) in computational models.

Over the next decade, this genre expanded beyond mere dungeons containing predetermined objects and narratives, which lead to what are known as MOOs, or “MUDs, Object-Oriented”. These object-oriented online ecosystems allowed players to create new artifacts and spaces within the shared virtual world through the use of descriptive text and simple scripting languages. Equipped with these capabilities, players in worlds such as LambdaMOO quickly populated their worlds with innovative design spaces and artifacts. For instance, a player could “construct” an object that other players would have described to them, on their computer screen, as being a small television set. Through the use of scripting, players could also imbue these objects with some amount of autonomy. In the case of the television, the creator would program the object to describe its state in the chat window at regular intervals so that other players might see messages like, “The television in the corner crackles as it mysteriously changes channels.” This resulted in a player’s ability to bestow a sense of place and life into what would have otherwise been a simple chat room.

While concerns within the MUD and MOO community regarding intellectual property rights were virtually nonexistent at that time, the ability of players to affect an online environment by creating virtual objects would set the stage for the emergence of similarly constructed worlds in the future, examples being Second Life and Perhaps one of the reasons why intellectual property did not emerge earlier was the lack of commercial engagement with undeveloped online communities. Because these cyber ecosystems were created by students and distributed for free, there was no commerce involved. These communities were generally managed by their designers or other trusted volunteers. It was not until the late 80s that the first commercial online games would begin to debut.

Beginning with a beta release in 1986, a game released by LucasArts would eventually be recognized as the first graphical online game. However, the first widely released online game considered to be a ‘commercial success’ with more than 100,000 subscribers was Origin’s title, Ultima Online, a community that is still in existence 14-years later. Ultima Online’s success has been attributed to many factors, among them is the game’s setting in the realm of Brittannia, a common location shared by at least 10 other games in the Ultima series. Today, many of the largest online communities are extensions of pre-existing worlds and content, such as World of Warcraft and Star Wars Galaxies, bringing with them complex licensing agreements between rights-holders and game operators.

Subscriptions and Terms of Service

Today, players within the majority of virtual worlds, known often as ‘subscribers’ for the monthly fee they are charged by popular game manufacturers, have few or no intellectual property rights to virtual entities in their communities. For example, the World of Warcraft Terms of Use Agreement, which all players are forced to accept prior to entering the game world, has the following to say on the subject of ‘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,” transcripts of the chat rooms, character profile information, recordings of games) 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” (World of Warcraft EULA, 2011).

The extensive list of rights retrained by Blizzard, the game’s creator, includes not only the provider’s own content, but also exerts ownership over the speech of individuals, recordings of the game, and even the player’s own character. While there are no available examples, it is possible for a game provider to exert control over and profit from fan-created works such as fan fiction or machinima (Reuveni, 2007). In practice, these rights are rarely enforced, as demonstrated by the use of game transcripts in research and on fan websites, as well as the extensive use of game recordings for the creation of machinima. How is it that these companies can exert ownership over every aspect of the game, including the actions and creations of each player?

In this regard, World of Warcraft is hardly unique. Almost every online community has such an agreement, and each contains similar assertions of ownership. Players accept these legislative directives without question. In a similar vein, the user accepts the majority of software license agreements without even a cursory reading due to the fact that the end-user has no ability to negotiate the terms of the license. One must accept these terms of use or simply not engage with the product (or alternately, install and use the software). If the underlying code of the game is considered to be lawful, then the license agreement serves as a sort of asymmetrical social contract, governing actions that cannot be directly controlled through inherent coding (Reuveni, 2007).

Where, then, does this leave the player? Players are arguably the most important component to any online community; without them, there is no community. Without players, the game would fail to meet the standard of its own genre, mass multiplayer. Yet, players rarely unite in order to demand rights within a game. In the few instances of large player protests, the underlying factor that glues them together seems to be perceived unfairness in altered game mechanics or community policies (Bainbridge, 2010). Faced with such protests, companies often decide to block the offending parties, again, citing the rights granted to them by their own license agreements; the ones the protestors conceded to. In the end, these types of protests do not represent a viable mechanism for enacting change, especially given the difficulties in organizing a critical mass of players and the absolute authority exerted by the powers-that-be.

In games such as World of Warcraft, players have limited ability to create novel or creative works. Even in the best of scenarios, players would perhaps only be able to own the rights to their own personas and speech. However, it is conceivable that players could also be granted limited licenses to legally use sound and video recordings for strictly defined purposes, such as the non-commercial publication of machinima, podcasts, etc.

One possibility is that these works are, in fact, legitimate derivatives. Commentators have noted that derivative works created from authentic material, without express permission, do not grant the creator copyright protection; however, those created with expressed consent from the original owner do retain copyright protection (Reuveni, 2007). While Blizzard Inc.’s World of Warcraft terms expressly maintain exclusive rights to the content, the allowance for players to hold copyright to original portions of derivative works is a feasible method by which players could be afforded some rights to their creations.

In the end, the cost of creating a system of rights and licensing for game content, as well as policing user adherence it would come at great cost and little benefit to the game’s manufacturers. Indeed, some game providers would not be able to implement such a system due to the fact that they, themselves, are licensing all of their content from a third-party. One such example would be the recently closed Star Wars Galaxies by Sony Online Entertainment, the content of which was the product of a licensing agreement with Lucas Films, a company notorious for staunchly defending the intellectual property rights associated with the ever-popular Star Wars series. However, in the case of Linden Lab’s Second Life, such a system exists, allowing content creators to retain the rights to that which they generate, but with the condition that they grant (automatically) a non-exclusive license to both Linden and to other players in the game, with a specific clause for the use of snapshots and video capture in machinima, demonstrating that in some circumstances, such a system is feasible.

It is perhaps worth noting here that in at least one instance, courts examined a game’s license agreement, viewing it as a contract of adhesion, and portions of it were rendered unenforceable, in this case, a mandatory arbitration clause (Bragg v. Linden Research Inc.). The possibility, then, that a court could find a license agreement to be unconscionable due to “absence of meaningful choice on the part of one party due to one-sided contract provisions, together with terms which are so oppressive that no reasonable person would make them and no fair and honest person would accept them (FindACase, n.d.)” leaves open the possibility for future cases against overly restrictive or unfair license agreements, especially when the issue of capital becomes assigned to entities within the jurisdiction of such licenses. Sweeping changes are more likely to stem from this sort of legal dispute than attempts of collective player action. The oppressive nature of these licenses will be explored in greater detail later in this analysis.

Cash Shops and Real-Money Transfer

This analysis has now sufficiently examined the dominant “subscription” model for online game revenue. Other popular games, often marketed to youth audiences who may not possess the resources required for a monthly fee, are made available under the “free-to-play/cash shop” model. This model, pioneered by the South Korean company, Nexon, with their popular title, Maple Story, allows players to enter into the world and engage for an unlimited amount of time. It also allows players to exchange capital for alternate currency that may be used in an online auction house in order to purchase items that either grants the player an in-game advantage or to customize one’s in-game persona, or avatar.

In this case, rather than paying for access to an existing world, players are exchanging real capital for virtual artifacts. Shifting to the terms of service governing these purchases, one is immediately drawn to the following sentence, highlighted by the use of all capital letters: “REGARDLESS OF THE CONSIDERATION OFFERED OR PAID IN EXCHANGE FOR CASH ITEMS, YOU DO NOT HAVE ANY OWNERSHIP RIGHTS IN THE CASH ITEMS” (Nexon, n.d.). Exactly what, then, is the customer purchasing? The terms also restrict the user’s ability to share or transfer these items, both in and outside of the community (i.e. on Ebay or other auction site) as well as stating that the company may relieve these virtual artifacts from a player at any point without being obligated to provide a refund. However, this is perhaps not an issue of copyright, per se, in that if players never own the copyright of items that their characters possess, but rather, are being granted a “non-exclusive, limited, fully revocable license to use the [game client and intellectual property therein]”, transference of these items between players is not a violation of copyright, but a breach of the contractual parameters set forth in the license agreement (Dannenberg, 2011). In general, though, players gain a sense of ownership over the virtual artifact within the context of the game, and are unable to conceptualize the intricacies of the license that underlies those perceptions (Bartle, 2004).

While Nexon and other providers of virtual goods purchased with real capital include such statements in the agreements that players must accept, they are often blindsided by decisions to close down systems into which they have invested significant amounts of resources. For instance, when Google announced it would be shutting down SuperPokePals, players flooded the game’s forums with angry words and demands to be compensated for the money they had invested in the game (, n.d.). While at present, the nature of these license agreements establishes that players have no legitimate ownership stake in their virtual property, the uproar caused by such destruction of virtual goods deemed valuable by players demonstrates that perceptions of ownership persist, and at some point, players may begin to demand some form of true ownership or, at least, the right to compensation when items purchased are no longer able to be accessed.

At the heart of this issue resides the notion that players are not, in fact, “purchasing” anything, but are licensing it from the company, as has become typical with many digital goods such as computer software and mobile applications. In 2010, the US Court of Appeals for the Ninth Circuit reversed a prior decision that had held that consumers were allowed to re-sell previously purchased software. In the decision of this case, Vernor v. AutoDesk, the 9th Circuit ruled that the language used in software licenses prevented the “sale” of the product and, therefore, could be enforced to restrict consumers from re-selling the software, even if they did not have it installed on their computers. Vernor, who had purchased several legitimate copies of the AutoDesk software from his office and a garage sale, believed that he was not bound by the license, as he had never installed the software or agreed to it. However, upon posting these items for sale on the auction site Ebay, AutoDesk repeatedly filed DMCA complaints, leading to the removal of the auctions. While lower courts had ruled that Vernor was within his rights to auction the software under the first sale doctrine that allows legitimate owners of copyrighted material the right to re-sell them, the Ninth Circuit reversed this decision saying that since the original transaction had 1) been termed a license, 2) significantly restricted the user’s right to transfer ownership, and 3) imposed notable use restrictions, the transaction was a license rather than a sale and, therefore, Vernor could not assert first sale as a defense for his sale of the software.

The ruling has had substantial implications for digital media, in general, in a world where products that were once purchased as physical objects are now bought in digital forms. There is fear that other industries such as book publishers and music companies will adopt similar licensing practices and effectively destroy the re-sale systems that have previously existed (Anderson, 2010). Indeed, users of services such as the Amazon MP3 market will find that the terms they agree to contain similar language, altering their purchases to be licenses rather than actual sales and that restrict the consumers ability to re-sell these items legitimately (Amazon, n.d.). Owners of such digital content maintain that this model is a necessity in a system that allows for non-rivalrous consumption, for, if consumers could re-sell these digital goods, it would be to convenient to either sell illegitimate copies or retain such copies for themselves, even after re-selling the original product. Indeed, distribution of copyrighted digital materials is rampant through the use of peer-to-peer file transfer systems, yet this contention is beyond the scope of the primary analysis.

Certainly, this ruling has a direct effect on the sale of digital items in virtual worlds as well. At the very least, it grants legitimacy to the terms set forth by these companies to govern the sale of virtual goods. Though, regardless of these terms, there is a growing market for commodified virtual goods. In this sense, commodified is used to refer to the attribution of real-world value to digital goods, most typically through their sale on 3rd-party websites or private agreements. While these “real-money transactions” are generally conceived as detrimental to game because it bestows an unfair advantage to players willing to invest capital over those who are not.

Economists have, at different points in time, used benchmarks set by the illicit sale of these items to calculate certain “real world” economic markers for virtual worlds. The value of the currency in the world of Norrath, the setting of Sony Online Entertainment’s Everquest games, has been studied and found to be both highly liquid and worth more unit-for-unit than the Yen or Lire (, 2010). Edward Castronova has also asserted that, were it a real country, the GDP of World of Warcraft would exceed that of Bulgaria (Castronova, 2005). Unlike the idyllic days of MUD and LambdaMOO, there is a massive commercial market for these virtual goods, and this value has a strong relationship with the methods typically employed to protect intellectual property by owners of virtual worlds. Namely, game companies declare ownership over these digital entities and, where possible, act to restrict consumers from profiting from them. In practice, full enforcement is impossible, evidenced by the continued markets and revenues generated by domestic players as well as the recent phenomena of “gold farming,” or “gaming sweatshops,” where players in developing countries are paid to accrue marketable virtual goods for a wage, often one far below the value of the goods they are obtaining in the virtual worlds (Ge, 2010).

Fortunately, there is evidence that this modus operandi may be in the infant stages of transforming. Along with the cash shop model that illustrated the first case of virtual world items carrying a real-world value, albeit with the intermediary of a cash shop currency, some large game manufacturers are preparing to further legitimize the sale of items in virtual worlds. World of Warcraft, the world-record holder for the greatest number of subscribers (, 2011), is owned and operated by Blizzard Entertainment Inc., which is set to release the third installment in the popular Diablo series in 2012. Blizzard has already announced that Diablo III will feature an in-game market or auction house to facilitate the sale of in-game items for both in-game and real-world currency (Blizzard, 2011).

While Diablo III is still undergoing beta testing, this feature has already generated a large amount of press coverage and speculation by players. It is believed that, pending the successful implementation of this system by one of the largest industry players, other major organizations will follow suit, if not because it represents a novel revenue-generating model. Nevertheless, there are several problems that may arise from this new architecture. Even while the EULA maintains that players have no legitimate ownership of their artifacts, they will now be allowed to sell them and generate income from them. Legal issues could potentially emerge, such as in the case of a player whose account is blocked while carrying a significant account balance of capital or valuable items. It is conceivable that such a player could assert that they have rights to the continued use or the value of capital and items covered by the license. Such a claim would be difficult to substantiate due to the nature of the license agreements, and the measures that Blizzard will take to prevent such litigation will be of great interest to intellectual property scholars.

Thinking back to the stir caused by Google’s shuttering of SuperPokePals, and Google’s eventual decision to reimburse its players with equivalent goods in other games, it seems likely that the perceptions of ownership and value held by players will be strengthened by the ability to freely profit from the trade of items in virtual spaces. This trend will almost certainly bring with it some of the first challenges to the licenses claiming lack of legitimate ownership by players. These challenges hinge on the assertion that highly restrictive licenses are unconscionable; based on the logical assumption that no rational person, given the chance, would invest their time and money in a market where their goods can be seized at will by the company that owns the trading space. This, combined with the status of the shrink-wrap license as a contract of adhesion, offered on a “take it or leave it” basis, could serve as a solid basis for legal challenge. Even though companies may not be able to license the copyright of objects to players directly, it may be the case that the value contained in such objects must be somehow protected and insured.

Overall, the commodification of virtual items heightens the significance of the debate over players’ rights to their own creations as well as the objects they obtain within virtual communities. As it becomes increasingly possible to garner a livelihood through the procurement and trade of virtual creations, it is likely that the users of these virtual world services will begin to advance bolstered demands to have some form of rights to their virtual objects. While some of the difficulties in assigning these rights have been discussed, there are worlds that adopt a reverse perspective towards intellectual property, and work to assign as many rights as possible to creators and allow for the protection of the property players obtain in a world.

Second Life, Second Perspective

In the summer of 2003, Linden Labs launched its virtual world known as Second Life (Second Life, Wikipedia, n.d.). Unlike the majority of virtual worlds currently existed, Second Life was not a fully-formed world that players subscribed to, but rather, was an open environment where players could use systems embedded within the game client to generate their own content. While such worlds, often referred to as “metaverses” or “sandbox worlds”, were not unheard of and, in fact, hearkened back to the earlier open and player-created worlds such as LambdaMOO, SecondLife was the first to achieve commercial success.

Another relatively unique feature, which has been touched upon earlier, is that the Second Life terms of service allows its players, often called residents, to retain all of the intellectual property rights to their in-world creations (Second Life ToS, n.d.). Of course, these rights are granted with many conditions, among them, players must be the copyright holders or sole creators of content as well as compelling players to grant several non-exclusive licenses. These compulsory licensing requirements ensure that the presence of works to which Linden Labs does not hold copyright are able to be stored, transmitted, and displayed to other residents within the world, as well as containing specific language allowing for the capture and use of screenshots and video footage by both Linden Labs and other players.

These terms are obviously constructed around a philosophy in opposition of those discussed previously, in that they seek to provide players with the least restrictive terms possible, while maintaining the integrity of the community and its systems, rather than rigidly withholding intellectual property rights for the provider to the greatest extent possible. Ultimately, these policies have had a number of positive and unique effects. The world of Second Life has expanded to become equal in landmass to more than half the size of Rhode Island, and the entire space is the result of player contribution (although there are also corporations and universities that have established spaces for themselves) (Nino, 2010). The other chief benefit of this policy is the ability to profit from their creations. To date, the equivalent of more than 1 billion US dollars has been exchanged between players through the in-game currency of Linden Dollars that can be traded for real currency on the exchange known as the “LindeX.” However, it is important to note that Linden Dollars are, like all virtual items, not actual currency that the player owns, but are rather termed as “digital tokens” licensed to the player and able to be traded for real dollars at the discretion of Linden Labs.

The allowance for players to hold copyright and profit from their creations has clearly worked towards fulfilling the constitutional goal of intellectual property rights by spurring creativity and innovation. According to Linden’s statistics, approximately a quarter of a million objects are created everyday, for a total of more than 270 terabytes of information. Yet, creations within Second Life are still subject to greater restrictions than creations in the real world, primarily a consequence of how these worlds function. For example, creations within the virtual world are generally not able to be manifested in the real world, although some copyrightable creations may be useful outside of Second Life, such as unique textures (2-dimensional patterns that are “wrapped around” 3-D frames) and some portions of code that are attached to particular objects.

Thus, one of the most dramatic protections that this policy extends to players is the prevention of having their creative works claimed by the operating company. Unlike a poem composed within World of Warcraft, a player in Second Life could submit such a work for publication in a real-world anthology without fear of receiving cease and desist letters or being sued for infringement. Additionally, players do not have to fear that their work will be co-opted by the company for their own profit, although the compulsory licenses do provide Linden the ability to use player’s works for the “sole purpose of promoting the Service” (Linden Labs, 2011).

It would be unwise to suggest that there aren’t any fundamental differences between virtual communities like World of Warcraft and Second Life. The former is offered as a mature virtual world constructed from pre-existing intellectual property, derived from a series of popular video games. The latter represents a structure for producing novel content. In fact, outside of text-based creations and manipulations of art contained within the game, World of Warcraft does not contain any systems that allow for player-created content. Even games like Ultima Online that possess relatively robust affordances for highly-customized user houses do not allow players to insert graphics or code into the game engine or servers.

These operational divergences complicate matters because the nature and originality of creations within these respective world types are constrained from binary perspectives. One is built upon a relatively blank slate using tools provided by the operator, where the other is characterized by use of pre-existing intellectual property, often using systems outside that of the actual game software. However, both of these systems exist within the restrictions that govern all virtual spaces. The lack of physical presence in the world and the fact that all of these objects, regardless of creator or rights-holder, are characterized by their status as replicable strings of code that are being transmitted all over the world through the Internet. It may not be possible to truly own such objects, but rather, to have a licensed right to the value attached to them within the market.

Summation And Suggestions

In the end, it becomes evident that complex licenses will continue to be attached to virtual worlds for the foreseeable future. Lacking the ability to give physical ownership of objects and software to consumers, the only remaining option is to license that content. In spaces in which players are creating content, it should certainly be the norm for players to own any and all rights that can possibly be afforded to them in order to continue promoting creativity and innovation. As exemplified by Second Life, this type of creativity can lead to a robust market for player creations, through which the community providers benefit directly from fees on transactions, as well as indirectly through the growth and longer-term stability of a paying customer base.

As demonstrated by the juxtaposition of pre-created worlds like Maple Story and World of Warcraft against player-created “sandbox” worlds like Second Life, there exist two paradigms for the ownership of copyright. In the former case, the company that has created the materials retains full copyright, licensing only the use of their service to consumers. The latter, providing systems for creation and fixation of novel works also imbues the user with the intellectual property protection for their creations. There are spaces in which the former model could possibly draw from the latter with the hope of increasing endogenous productive creativity.

One such area is the provision within the most restrictive licenses that co-opt the copyright to creations that would otherwise belong to the player. The assertion by companies such as Blizzard Inc. and Sony Online Entertainment that they hold the copyright to all works created within the confines of their system, even when not rigidly enforced, makes a mockery of the philosophy underpinning the Copyright Act. In a sense, it is almost as if all of the users of these worlds have entered into a strange contract of employment with these companies, paying for the privileges of access, but effectively being in a situation resembling works-for-hire, where the products of their labor and creativity are automatically wrestled from their grasp.

Another such area is the creation of policies that allow for the least restrictive licensing of material for use in novel forms of derivative works such as machinima. Several companies have released official policies aimed at giving legitimacy to fan-created works such as machinima. Microsoft, with the publication of their “Game Content Usage Rules”, granted its players “a personal, non-exclusive, non-transferable license to use and display Game Content and to create derivative works based upon Game Content, strictly for noncommercial and personal use” (Game Content Usage Rules, 2011). This is a crucial step towards granting players some ability to legally use this sort of content for the creation of novel works. While it may not be possible for content owners to grant full copyright to derivative works, the creation of official policies is an important gesture towards granting these important creative works some form of protection. At the least, it prevents the content owners from profiting from the creativity of this fan-created content.

Unfortunately, because most of these policies exist outside of the official licenses contained within the virtual worlds, their status is questionable. In theory, there is still nothing to restrict these companies from withdrawing these policies and claiming ownership of the copyright on all derivative works. Beyond this, the “take it or leave it” nature of these licenses places all users of virtual worlds at the mercy of these companies. After investing thousands of dollars in subscriptions and licensing fees as well as hundreds or thousands of hours of game play, players are so heavily entrenched in individual worlds that they simply have no choice but to accept unilateral alterations to the terms of service. Changes do occur on a regular basis, and when they do, players are typically presented with the choice to accept the new terms or cease having access to the world in which they are embedded. It seems unlikely that players would ever be able to form a union to fight changes to these licenses, such as boycotting a particular company, especially for worlds that contain many tens of millions of subscribers dotted across many countries (and thus, legal jurisdictions). Generally speaking, it appears that vast amounts of players place enough value on their investment in a virtual world to accept whatever conditional changes are presented to them.

Deeply entwined with notions of intellectual property rights and virtual items is also the conception of value. While the value of holding copyrights on game content has traditionally stemmed from companies’ ability to license that content to create immersive spaces for entertainment, the commodification of virtual goods has become inevitable. Along with the legitimization of players’ conceptions of value will also come challenges from players regarding their rights to the inherent value of their virtual items.

While it remains unclear if these concerns revolving intrinsic value and the potential to make one’s livelihood through the procurement and sale of virtual goods can overcome the strength of the license agreements, there stands a definite possibility that the terms of such restrictive licenses could fail to withstand a serious legal challenge under the right circumstances. Only time will tell if and when these challenges will be presented. As with the majority of large-scale litigation, the cost of opposing a major corporation is prohibitive to the average individual, and it is often not until a group representing consumer rights or interests steps in to assist that the first cases can proceed to court.

Overall, the current situation regarding copyright in virtual worlds varies from community to community, but in most cases it leaves the user in the tenuous position of having few or no rights to that which they produce, and the ability to create derivative works only so long as the parent companies permit it. The position taken by Second Life’s parent company, Linden Labs, is an interesting foil to these policies, but is only possible due to the wholly player-created nature of the Second Life ecosystem. To the extent that companies have worked to make some allowance for fan-created works, there is still a pervasive sense of only allowing users enough leeway so as to not completely stifle the fan community, likely because the product of such communities is a source of advertisement and promotion for the communities, themselves, and thus, indirectly leads to revenue.

Today, it seems as if there is, or will be, a need for exogenous organizations to monitor the polices of gaming companies and to lobby for players’ rights to their creative works, textual or otherwise, as well as to simply increase awareness of related issues. It has been noted that most users do not seem to read the EULA agreements before installing software, perhaps as a result of the perceived inability to resist the terms set forth by companies, or even an unawareness of what they are agreeing to when clicking the “Accept” button (Sauro, 2010). With the organization of such entities, the possibility of legal action on behalf of individual players or groups of players becomes more likely. Any successful suit against a provider’s license agreement would almost certainly have far-reaching ramifications.

In closing, while there is certainly no panacea to eradicate the emergent issues associated with these virtual worlds, there are immediate steps that can be taken that will ensure the continuity of innovative works and serve to grant creators the greatest amount of rights to their products. Licensing of content has become the dominant paradigm of ensuring respect for intellectual property ownership, but only a few communities such as Second Life have taken the approach that maximizes the users’ rights. Some companies have established more open guidelines for players’ use of their intellectual property in derivative works, it is still the case that most creators are not well versed as to what these policies mean, nor that they are subject to unilateral change or revocation at any time. Finally, it is the hope of the author that the continued success of virtual worlds and explosion of value attached to digital goods brings with it a player-driven movement, facilitated by consumer-rights and other watchdog organizations, to provoke companies to grant maximum rights to users wherever possible as well as to work to clarify licensing terms and educate consumers about the nature and terms of the licenses they are forced to agree with.


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