Gone in 60 Seconds Life

So Second Life creator Philip Rosedale says that virtual worlds will be bigger than the Internet in 10 years. Whatever. The fact is that they’re big…and getting bigger. But what will happen as these MUDs continue to mature into something more than late night nerd playgrounds? It’s already happening: Second Life is quickly becoming a remarkable proxy for our first world — home to cultural events, thriving businesses, in game and out of game services, and even its own Reuters Bureau. As more people rely on virtual characters, virtual real estate, virtual products, and virtual services to make real money, serious policy questions will come to bear — and serious policies will need to be formed. And we all know how good policy makers are at keeping up with technology and lifestyle developments…

The issue is too big to work through or even properly introduce in one post, but I’ll go ahead and try to put it in a nutshell. Property rights form the foundation of Anglo-American law. Our rights in property and the settled expectations that come with them form the basis of our lives, our economy, our system of laws, and our interactions and transactions others. The question, then, is what kind of rights do we have in this new property. The answer, it seems, is not much. Treatment of this new property, which is neither physical nor intellectual, has virtually no guidance from statutory or case law, and it seems that fitting analogies to existing property rights regimes may be of little use. For the time being, it appears that all rights in this type of property, to the extent that they exist at all, are derived from the contracts required for account set up (We’ll be looking at these later). This may or may not be a viable solution. Up until now, government has largely avoided dealing with the huge host of issues that activity and commerce in these worlds has brought up. This will no doubt change as the revenuers turn to these worlds for new ways to squeeze people…and the moralizers strike out at these realms of iniquity. Mostly this will change because if Rosedale’s bold vision of the future is to find any degree of fulfillment, there will be a dramatic increase in productive use of these worlds — read: commerce. This means increased exchange between virtual property and real world property, making virtual property portfolios every bit as real as traditional financial portfolios — and in-world reputations every bit as important and valuable as real world goodwill. Even if governmental forces don’t nose in and try to ruin it for everyone (which they will), those users engaged in commerce will demand a greater degree of protection for the reputations, and virtual currency and property that they accumulate in the worlds than can be provided by the arbitrary and ever shifting contracts offered by the purveyors of these services. A recent financial downturn in the world of Second Life shows that these concerns are very real. Virtual worlds are no longer just games–they are communities and markets and economies. I don’t think that there’s any need for a complex, top heavy, expensive scheme of government regulation…just a way to get to a settled understanding or rights to in-world property sufficient to allow these economic engines to develop.

Lots more to come…

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