October 31st, 2007 by Jay Moffitt
Guest Commentary – Part Two of VB’s Three-Part “Click to Agree” Series on Terms of Service and End User License Agreements in Major Games and Virtual Worlds
Even in the largest online game experience, the player can always leave. This is the primary difference between a real world economy and a “virtual economy.” Much academic and game-design attention is focused on controlling cash flow in games and virtual worlds. I’ll cover some of the roots of virtual currency, and illustrate why in-game currency can only go so far in approximating a real life economy. Along the way, we’ll take a close look at the terms of service (TOS) of a number of well known games and virtual worlds and examine how they handle virtual currency.
Online games and virtual worlds generally use some form of in-world currency for buying and selling virtual goods. There are several sites that track the exchange rates and valuation of these currencies, one of the best known is GameUSD. You can use that site for up-to-date exchange rates for Second Life, World of Warcraft, and other virtual worlds and games (the site is mainly a portal, but it does provide some real-time data; some the data is out-of-date).
Real money trading, (“RMT”) is available for most world and games, even those that do not acknowledge or condone it. This raises several questions, including what happens as the world shrinks after the expansion – where does that money go? Is there a responsibility to the user to continue, even if the game fails? Who decides when and if the plug if pulled on a currency market? Do users have a true property interest; what happens if they are terminated – fairly or unfairly?
In most games, currency serves as a “points” system. Why is currency used in online games? The obvious answer is that it is lifelike — sexier than points. “Points” seems like a ballgame or a pinball machine, but in an alternate universe, “money” validates the time put in. But what value is money in a virtual world or game? How is it like money in real life? How is it different?
Consider the base duties of a developer in an online world. The main goal for developers is an “even playing field.” Known bugs and cheats must be sought out through the testing period and then ongoing monitoring. The terms of service (TOS) for many games make explicit that a player can be banned from the game for “cheating others” or making use of exploits outside of the contemplated game or virtual world experience. In The Sims Online’s TOS (from Electronic Arts) states, “[t]hough the Game is a role-playing game, the claim of ‘role-play’ is not an excuse to commit any of the disruptive behavior mentioned above. For example, you may not defraud another player because you are ‘role-playing a con man.’” Even in the many games that don’t explicitly state this, the TOS always grant a right to ban within the sole decision of the administrative staff.
An online multiplayer game arguably has no greater duty to its users than this: outsmart cheaters, beaters, and whiners. However, many games have seen ad hoc vigilante justice committees form to punish those who break rules or act against their spirit. These groups, which have been around since the early days of online MMO gaming, typically operate within the confines of the world, but not always. In the case of Second Life, there are several pending user-driven lawsuits that arose because users found that they could not successfully curtail activity that fell outside of the terms of service (and allegedly the law) using in-world tools.
If virtual worlds have real world value, then “video game cheating” becomes “real world theft.” On the other hand, if you are a gold farmer using a game or virtual world to make your real world living, and you are taking advantage of your extensive knowledge of the world to make money as fast as possible, you may argue that actions in the gray area of not-prohibited-but-not-authorized are just part of your legitimate business plan, particularly if there aren’t obvious victims. See this Findlaw article for a more detailed analysis of the ethics and practicality of this argument/philosophy.
Notably, no TOS listed below tells its user it has a duty to “prop up” the currency in its game, although Entropia Universe claims it does back the currency (albeit not in the Terms of Service). Below is a summary of the major MMO games and virtual worlds, and what their TOS say about the rights of users as to currency and other virtual property, and whether there is a right to convert currency by trades or real-world money conversion.
|World/Game||TOS on Currency
||TOS on RMT|
|Entropia Universe||“You agree that you will not gain any ownership interest whatsoever in any Virtual Item.”||“The Entropia Universe is fitted with an economy system that enables Participants to carry out secure transactions with other Participants”|
|IMVU||“The Site includes in-world fictional currencies (“Currencies” or “Credits” or “Promo Credits” or “Predits” or “Dev Tokens” or “DT”) (all of the foregoing are “Currencies”), which may be purchased for real world currency and can then be exchanged on this Site for limited license right(s) to use a feature of our product when, as, and if allowed by IMVU and subject to the terms and conditions of these Terms. IMVU may charge fees for the right to use our Currencies, or may distribute our Currencies without charge, in IMVU’s sole discretion. Regardless of terminology used, IMVU Currencies are not redeemable for any sum of real world money or monetary value from IMVU at any time. You agree that IMVU has the absolute right to manage, regulate, control, modify and/or eliminate such Currencies as it sees fit in its sole discretion, in any general or specific case, and that IMVU will have no liability to you based on its exercise of such rights. IMVU Currencies cannot be used for any kind of wagering, betting or gambling either within or outside of our Site.”||“You also agree to use IMVU’s Currencies for all transactions involving IMVU products or services and related use rights and you agree not to create, employ, or utilize any parallel form of virtual currency in connection with any transaction on this Site. IMVU may allow for free exchange of some, all, or none of its Currencies via third parties, but IMVU does not assume any responsibility associated with your transactions with such third parties.”|
|Second Life||“You acknowledge that the Service presently includes a component of in-world fictional currency (“Currency” or “Linden Dollars” or “L$”), which constitutes a limited license right to use a feature of our product when, as, and if allowed by Linden Lab. Linden Lab may charge fees for the right to use Linden Dollars, or may distribute Linden Dollars without charge, in its sole discretion. Regardless of terminology used, Linden Dollars represent a limited license right governed solely under the terms of this Agreement, and are not redeemable for any sum of money or monetary value from Linden Lab at any time. You agree that Linden Lab has the absolute right to manage, regulate, control, modify and/or eliminate such Currency as it sees fit in its sole discretion, in any general or specific case, and that Linden Lab will have no liability to you based on its exercise of such right.”||“Second Life offers an exchange, called LindeX, for the trading of Linden Dollars, which uses the terms “buy” and “sell” to indicate the transfer of license rights to use Linden Dollars. Use and regulation of LindeX is at Linden Lab’s sole discretion.”|
|The Sims Online||“You acknowledge and agree that all characters created, items acquired and developed, and content uploaded to the Game or its website as a result of, or for, game play are part of the Game and are the sole intellectual property of EA.”||“Electronic Arts does not recognize or condone any outside service that may be used for the exchange of points, assets or attributes that you may accumulate as a result of participating in the Service or playing your EA game. This includes the exchange of points or EA Elite cards on services including eBay™ or Yahoo!™ Auctions. We don’t assume any responsibility for, and won’t support, such transactions. ALWAYS USE CAUTION WHEN EXCHANGING ASSETS ON THESE SERVICES!”"While EA provides a system for transferring Account ownership for the Game, EA and its subsidiaries do not assume any responsibility for the integrity, content, community reputation, or any other element of perceived value regarding the Account being transferred.”|
|There.com||“As part of your interactions with the There Environment, you may acquire, create, design or modify There Objects, but you agree that you will not gain any ownership interest whatsoever in any There Objects or There Environment, and you hereby assign to Company all of your rights, title and interest in any such There Objects.”||“Trades are transactions between members involving any items or Therebucks that are purposely given to another member (by mutual agreement between the two involved members). Trades involve items owned by each party. Company does not take responsibility for trade between members. However, when scams or fraudulent behavior occurs, Company may research and take appropriate action. Trade scams are not permitted in The There Environment. Members involved with scamming or fraudulent trades may have their accounts suspended temporarily or permanently.|
|Ultima Online||“You acknowledge and agree that all characters created, and items acquired and developed as a result of game play are part of the Software and Service and are the sole property of EA.com.”||“You may not use, copy, modify, sublicense, rent, sell, assign or transfer the rights or obligations granted to you in this Agreement, except as expressly provided in this Agreement. Any assignment in violation of this Agreement is void, except that you may transfer your Account to another person provided that person accepts the terms of this Service Agreement”|
|World of Warcraft||“All rights and title in and to the Program and 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” incorporated into the Program, transcripts of the chat rooms, character profile information, recordings of games played on the Program, and the Program client and server software) are owned by Blizzard or its licensors.”||“You agree that you have no right or title in or to any such content, including the virtual goods or currency appearing or originating in the Game, or any other attributes associated with the Account or stored on the Service. Blizzard does not recognize any virtual property transfers executed outside of the Game or the purported sale, gift or trade in the “real world” of anything related to the Game. Accordingly, you may not sell items for “real” money or otherwise exchange items for value outside of the Game.”|
The Game is the Government
When examining these terms, keep in mind Edward Castronova’s 2002 paper, On Virtual Economies (.pdf): “[W]hat if the government could simply produce whatever quantities are demanded, at no cost to itself? If those two acts were possible, then a policy of government price control would be feasible. And in cyberspace, the coding authority does indeed have the power to create and destroy any amount of any good, at virtually zero cost. Therefore, as a de facto government, the coding authority can indeed control prices.”
Those who intend to make their living selling virtual property need to remember that caution when setting their career goals. Because, one must bear in mind, the game developers’ job is not providing the fairest or best online game experience, but selling more games, subscriptions, accounts, etc.
Second Life, by many accounts the most “lifelike” of the alternative universes followed, is explicit with the tenor of its money policy. “Linden Lab may charge fees for the right to use Linden Dollars, or may distribute Linden Dollars without charge, in its sole discretion. Regardless of terminology used, Linden Dollars represent a limited license right governed solely under the terms of this Agreement, and are not redeemable for any sum of money or monetary value from Linden Lab at any time. You agree that Linden Lab has the absolute right to manage, regulate, control, modify and/or eliminate such Currency as it sees fit in its sole discretion, in any general or specific case, and that Linden Lab will have no liability to you based on its exercise of such right.”
Entropia Universe, which proudly proclaims in the introduction that it is “not a game,” actually does back its currency (although that is not discussed in the Terms of Service, it is integrated into most of Entropia Universe’s advertising. MindArk “Evangelist” John Bates confirmed, “MindArk backs the Entropia Universe’s PED (Project Entropia Dollar) with exchange for US Dollars at a 10 to 1 ratio. That means if you wish to cash out, Entropia will perform that 10 to 1 US dollar currency exchange, with some nominal fees/charges added to the transaction.”
This is a unique proposition among the MMOs covered in this article.
Notably, if the Entropia account is terminated “for cause,” however, you will not be granted a refund: “In the event that your Account is locked or terminated, no refund will be granted. Any delinquent or unresolved issues relating to former participation must be resolved before MindArk will permit you to have a new Account.”
Yet Entropia does preserve your rights to your account and even the value of your virtual items in the event of inactivity. “You acknowledge and agree that your Entropia Universe Account will be deemed inactive if it is not used for a period of three hundred and thirty (330) consecutive days. Upon verification of your identity, MindArk may, at MindArk’s sole discretion, reactivate your Account. You further acknowledge and agree that your Entropia Universe Account will be purged if is not used for a period of five hundred and ten (510) consecutive days. Upon purging your Account, all your item(s) will be sold for their Trade Terminal (TT) value and the funds will be transferred to the PED balance of your Account.”
It isn’t directly stated that if your account is terminated you can’t cash out (the language says “you will not be granted a refund”) but it is fairly evident from this language your currency rights are different upon “locked or terminated” than if is “unused.”
There.com is a little stricter in what it will not refund. “In the event that your account is terminated or canceled, no refund, including any membership fees, will be granted, except for refunds expressly provided for in the Discontinuation of Service section below; no online time or other credits (e.g., points in an online game or any There Objects or Therebucks purchased, won, or earned) will be credited to you, nor can they be converted to cash or other form of reimbursement.” In other words, if you get yourself banned from There.com, the Therebucks you purchased from There.com stay with the company.
Ultima Online states succinctly “(c) Rights. You acknowledge and agree that all characters created, and items acquired and developed as a result of game play are part of the Software and Service and are the sole property of EA.com.” It seems that the larger game companies, such as E.A. here, and Sony (Everquest II) use more stock phraseology and uniform claims of rights across all their “universe of games”. This would be in contrast to Entropia Universe, Second Life, etc. which aren’t trying to establish copyright claims and defenses across a portfolio of dozens of online games.
The most widely documented “in-game” service for trade is Sony’s Everquest II “Station Exchange.” Here is an excerpt from their incredibly detailed analysis of their first year of business.
When it comes to selling, younger age groups are far more active; 22-year-olds lead with $45,000 in total sales this year. The 33-to 37-year-olds still dominate as an age group, but mainly because they represent the largest block of sellers. 18-to 22-year-olds, while only 16% of all sellers, are nearly as active as their older counterparts who dominate when it comes to buying. One likely reason for this is that 18-to 22-year-olds have more free time to spend playing the game, and thus gathering virtual goods to resell. Older players, on the other hand, have less time to devote to the game but more disposable income to use for buying the virtual goods they need in order to advance.”
It would seem that the argument is almost a “class war” of types, where some people with “more money than time” feel a right to improve their game standing by buying in-game currency for greater wealth. On the other side are the “purists” who believe that in-game pursuits should only reflect in-game triumphs, not purchased by filthy lucre. Second Life would seem to fall more in the first camp, as well as There.com and Entropia Universe. On the other side, most notably, are Ultima Online and World of Warcraft by Blizzard.
Blizzard in particular has been very aggressive in pursuing remedies against those who try to use RMT to improve game standing. Perhaps the spate of bad publicity, especially centered around World of Warcraft “gold farming,” has helped solidify their attitude. (See Julian Dibbell’s New York Times article, “The Life of a Chinese Gold Farmer” and accompanying video, and also The Real Price Of Virtual Gold (video) from MTV.)
I guess the only firm argument that can be made from all of this discussion is that as in the real world, choose your friends carefully. Before investing your time, effort, heart and soul in an online game or world, read carefully not only the Terms of Service, but find the forum threads about the gameplay, and read, read, read. Make certain that the way you want to play a game is the way that’s encouraged in that games online environment.
After all, if you’re having to go to the last resort to sue a game company to play their game a certain way, by the time the court decides, it may not seem like a fun game to play anyway.
Further Research and Reference Material
PBS: Media Shift “Virtual Worlds”
US Video Game Cheating (Findlaw News)
Sell Virtual Products in Online Games (Entrepreneur Magazine)
The Unreal Real Estate Boom (Wired Magazine)
Does Virtual Crime Need Real Justice? (BBC News)
Jay Moffitt is a Tennessee attorney of two decades experience, obsessively interested in copyright law. (Tennessee is among the top three most litigious states for copyright and trademark law; thank you Elvis Presley Enterprises and country music!) He has worked as a software negotiator for a Fortune 50 company, been certified by Microsoft as an A+ certified computer technician, and built and maintained a classic films website frequented by visitors from over 50 countries.
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