An even more intriguing financial institution opened for business a few months ago: the Gaming Open Market. Based in Toronto, it is an online service that exists solely for trading the currencies of virtual games—Gold/Silver from Horizons, Linden Dollars from Second Life, Therebucks from There.com. If you’re a player who wants some quick virtual currency for your favourite game, you can buy it there using real-world US cash. Sometimes people who play several different virtual games use the market to transfer money from one world to another, like travellers at an airport exchanging currencies.
As on Wall Street, the value of each game currency fluctuates wildly depending on how badly it’s needed. “It’s just supply and demand. If somebody really wants a currency, it can drive the price sky-high,” says Jamie Hale, the thirty-year-old founder of the Gaming Open Market. The day I spoke to him, a single player had bought every Linden Dollar on the market, about $500 worth. It cleaned out the Market’s entire stock and produced a sudden spike in the Linden Dollar’s value. Sometimes Hale himself will jump in to do some quick currency trading if he spots a profitable spread. He admits he has no official training in finance; in fact, he’s a programmer by trade, and his co-founder—who helped write the Market’s software—is an astrophysicist. “We keep a bunch of economics texts on my shelf to appear smart,” he jokes.
Hale’s operation is still small, with only 900 users. But, as it grows, it could conceivably produce a virtual George Soros—someone who amasses so many billions of units of a currency that he could provoke a crisis in that game’s economy for the purposes of profiting off it, much as Soros destroyed the British pound in September 1992. “The value of the currency would drop through the floor,” Hale notes. “But that’s the game company’s problem.”
As virtual worlds increasingly mirror the real one, game companies are already dealing with another problem: crime. Indeed, there’s even organized crime in The Sims Online, the cyberspace version of the top-selling computer hit. In the game, players assume control of tiny suburbanites, build houses, and work at jobs to earn “Simoleans,” the in-game currency. The Sim Mafia was founded by Jeremy Chase, a twenty-six-year-old in Sacramento. Players who want to destroy another character’s reputation turn to the mob. The game has a system of black marks for punishing bad behaviour. If Chase is paid to “tag” someone, he gets his crime family—a loose collection of a hundred players—to place dozens and dozens of red tags on the victim. When they’re done, other players will assume the character must have done something awful and refuse to speak or trade with him.
Peter Ludlow, a professor of philosophy at the University of Michigan, became fascinated by The Sims Online last year and founded a blog—“The Alphaville Herald”—that reports on interesting social situations inside the world. Last November, he discovered something truly strange: The game had a chain of cyber-brothels, run by a family of avatars, all played by a character named “Evangeline.” Evangeline had organized a handful of Sim women to perform hot-sex chat inside the game for customers, who paid in Simoleans. “Girls set their own prices,” she told Ludlow. “Bj’s” were 20,000 Simoleans, the equivalent of roughly $4.50 (US); Evangeline reserved the richest customers for herself, making up to $40 or $50 (US) a trick. Ludlow later discovered that some of Evangeline’s “girls” were underage girls in real life and that Evangeline herself was a seventeen-year-old boy living in Florida. When he blogged about his findings, reporters nationwide snapped to attention, and soon The Sims Online was on the front page of The New York Times.
Maxis—the company that runs the game—struck back. They cancelled Ludlow’s account, claiming he had broken the game’s rules by advertising his blog inside the world. (Maxis prohibits anyone from advertising real-world services or goods inside the game.) Ludlow insists he never made a dime off “The Alphaville Herald” and that he was booted out solely because his research had embarrassed the game company.
Either way, Ludlow lost most of his goods. When game owners cancel your account, it’s like having your house instantly destroyed in a fire: your property winks out of existence. Ludlow figures he had about $200 worth of virtual goods deleted, including a pet cheetah (“which is like a fifteen-dollar animal”) that he’d bought from a vendor online). Yet Maxis could not entirely delete his virtual wealth. A week before his account was deleted, Ludlow had deposited 800,000 Simoleans into an account at the Gaming Open Market. And Maxis has no power over the Market; it cannot forcibly demand that Hale, the owner of the exchange, delete that money. In effect, Ludlow had parked his money in the virtual-world equivalent of an overseas bank, where no game government could touch it.
Ludlow’s case points to the ultimate question, with enormous legal implications for the real world: What, precisely, is the legal status of virtual property? Does anyone actually “own” it?
Last November, I accompanied Castronova to a legal conference in New York devoted to this subject. There game-company executives argued that when a player joins a world such as Ultima Online, he or she agrees to a user licence that explicitly says the game company owns everything that happens on the servers. “It’s a game, and what we’re doing is inviting you in to play with the toys. But you don’t own the toys. We do,” said Richard Bartle, who pioneered the first virtual world back in the 1980s.
The problem is that people who play the games act as if their virtual castles were their own private property. And, when it comes to property issues, courts in the US, at least, have traditionally tended to take the view that if it quacks like a duck, it is a duck. If enough people treat their Robe of Primordial Waters as though it’s genuine personal property, the law might respect that—no matter what the game companies say.
This debate may appear rather abstract right now. But, sooner or later one of these game companies will start losing money and decide it can’t afford to keep its virtual world. (Many observers expect at least one major world to go bankrupt this year.) If a game shut down, it would instantly destroy hundreds of thousands—perhaps even millions—of dollars. The homeless woman with the virtual mansion, for instance, could probably sell her goods for several hundred dollars; she would lose her single most valuable possession.
For now, there is no clear precedent on how to deal with virtual property. Owning a virtual castle is not like owning other virtual things, such as stock in a company, because the value is not in an external, tangible object such as a corporation, but in the work and money invested in acquiring it.
With stakes like that, said Jack Balkin, a Yale law professor and a host of the legal conference, players will probably fight back with lawsuits, or by going right to politicians, demanding legislation to prevent worlds from closing down. Julian Dibbell, a journalist who began trading virtual goods himself last summer—he aims to report “revenue from the sale of virtual goods” as the single biggest line-item on his 2004 tax return—later suggested an even stranger scenario. He said that players could well band together and try to buy back the world at the company’s bankruptcy hearing—and then run it themselves as a breakaway republic. “Some renegade players have done things like that before, actually,” he noted. “They’ve gotten access to the code of the game and then illicitly created their own duplicate world.”
In a few years, these questions will creep into the mainstream, because online environments such as EverQuest are likely to become a significant way that people interact with the Internet. Only a small chunk of the population will ever go into a brooding medieval-fantasy such as EverQuest, but virtual worlds have emerged that are much friendlier, and do not use dungeons-and-dragons themes at all. Indeed, they’re not even games: they have no goals, no “levels” to achieve, no points to score.
There.com, for example, is a 3-D world devoted to nothing but chatting and socializing, using avatars that look like seductive, attractive models. You’d probably prefer it to real life because everything is just so much prettier in There. As in the real world, one of the main activities in There is shopping. The company created a currency, Therebucks, and tied it directly to the value of the American dollar to prevent inflation. Players spend a lot of time customizing their appearance (often for the purposes of flirting), so Nike and Levis have virtual clothes that they sell solely inside the game. Individual players, too, have become designers, creating outfits they sell to other There citizens. “One of the leading clothes designers is making $3,000 to $4,000 a month, which is a full-time job,” says There’s founder, Will Harvey.
