Economy of Virtual Worlds by Edward Castronova

Edward Castronova (PhD, Economics, Wisconsin, 1991) is an Associate Professor in the Department of Telecommunications at Indiana University, Bloomington. He is the father of economic analysis of virtual worlds and has numerous publications on that topic, including Synthetic Worlds and Exodus to the Virtual World. He delivered the keynote address for the Washington and Lee School of Law symposium Protecting Virtual Playgrounds: Children, Law and Play Online.

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Gold Farming illegal in China?

According to the official news release of Ministry of Commerce the People's Republic of China:

China has unveiled the first official rule on the use of virtual currency in the trade of real goods and services to limit its possible impact on the real financial system.

The government also spelled out the definition of "virtual currency" for the first time, which includes prepaid cards of cyber-games, according to a joint circular from the Ministry of Culture and the Ministry of Commerce Friday.

"The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services." it said.

More references and comments:

InformationWeek

CNET

Virtual goods news

Law of the game

Terranova

CNN

Play no evil


and CNBC video:

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Real banking coming to virtual worlds

The Swedish Financial Supervisory Authority (Finansinspektionen) has granted a license to conduct banking activities to Entropia Universe developer MindArk PE AB's wholly owned subsidiary Mind Bank AB.

According to the company's official statement:

Mind Bank AB will be the first bank that fully incorporates real money transactions with activities in a virtual world. Milions of transactions can be processed by the bank for further transer to MindArk and the virtual universe. Mind Bank will also offer selected bank services to customers on the conventional market

More info: link here

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Virtual Property - Business Models And Pitfalls

Another outstanding issue associated with virtual property is ownership. Who actually owns these objects, characters, and land after they are "purchased" from the company? Most EULAs state the game company owns the intellectual property in the objects and the players are merely purchasing a limited license. Still, this is changing with some companies, such as Linden Lab, experimenting with EULA provisions that grant limited ownership rights in user-created virtual property. In fact, the Bragg case was only possible because that particular world, Second Life, acknowledged some limited player rights in virtual land. There are also companies like Metaplace that are developing technology that allow users to build their own virtual worlds, literally creating the world with their own IP.

from The Metropolitan Corporate Counsel

see also Dan Miler's post

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China has announced a 20 per cent tax on income from trading virtual goods

Beijing tax officials declined to explain how they would implement the vaguely worded ruling, with local media saying detailed regulations could be announced in the coming days. However, Chinese analysts and games players suggested that the authorities’ attempt to tax the virtual currency trade would fare no better than the previous effort to ban it.

from Financial Times

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Transactions of Virtual Items in Virtual Worlds

An interesting article by Michael Passman.

More on Virtually Blind.

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One hour audio from Virtual Law Conference

Steve Mortinger, IBM's lawyer gave interesting lecture titled: "The Top Ten Things a Brand Should Know about Virtual Worlds"



Here you can download the record from the Conference.

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Economy in the Metaverse

John Zdanowski, also known as Zee Linden is CFO of Linden Lab.

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Congressional Hearing on Virtual Worlds

HEARING
Online Virtual Worlds: Applications and Avatars in a User-Generated Medium

Subcommittee on Telecommunications and the Internet
Tuesday, April 1, 2008, 9:30 a.m.
2123 Rayburn House Office Building

Some resources:

The House of Committee on Energy and Commerce webside

witness list

audio

video: webcast or download

the most comprehensive summary

the best commentary

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Regulatory issues around virtual worlds by Cory Ondrejka

From his blog:

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Ziggy Quirk's thoughts on content theft in SL

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Second Life Designers strip for IP Awareness Campaign

Chez Nabob initiated SL content creator protest.

The hope is that enough awareness and education can take place as a result of the ads that a dialogue can be opened with LL and third-party ventures that will lead to a stronger, more robust system for dealing with the problem of theft.

For more information check commentary by Kit Merederith, who in RL is an attorney specializing in intellectual property.






"All ads reprinted by permission of Chez Nabob".

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Why not qualify the taking away of virtual objects as theft?

Interesting discussion on Terra Nova started by Arno R. Lodder


From the post:

I see no reason for distinguishing between virtual and physical theft. The original owners of the stolen Habbo furniture obtained the items after they bought credits with real money, and do attach value to those items. As long as the original owner looses something of value (such as virtual items) due to the act of another individual who gains possession over the item, it should in my opinion be qualified as theft, no matter whether the locus delicti is in the physical or the virtual world.

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The Second Life Story by Cory Ondrejka

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and...
a very old (from 2004!) interview with Cory... not Linden any more on IP issues of Second Life

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Interview with Desmond Shang

The laws that govern residents re: gambling and other such things are largely in place via our societies, not cooked up by our virtual world service provider. Our social interactions on the grid are already largely formed by us, and these are the basis for our rulesets. We can generally tell what is intended to be someone’s virtual bedroom as opposed to the street. We can generally ascertain meaning from how people chat, interact, move, and conduct business. From these social cues, we form distinct online cultures with their own values. Should governments of nations take action? For money laundering, identity theft or other major crimes, yes. But if someone leaves a virtual flaming bag of poo on your virtual porch, no, the government should not be involved.

An interview with Desmond Shang, the owner of The Independent State of Caledon. It is very interesting article about legal issues of Second Life from practical point of view. You can find it on The Seventh Sun's webside.

Two other interesting articles:

A virtual property dispute

Court rules against Linden

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When Pretend Money Has Real Value

The Illinois Business Law Journal is a production of the University of Illinois College of Law's Business Law Society. This project is inspired by an innovative trend in legal publication, in which weblog technology is utilized to allow students, faculty, and professionals to interact online through legal writing and scholarship; providing a unique complement to traditional law reviews. The purpose of this Journal is to provide our readers with information on recent developments affecting business law. Articles are written by law students, but we invite professors, students, and practitioners to submit articles or user comments for publication on the website. Please visit the website on a regular basis, as new articles are published frequently.

and what can we find there...

A Study of Virtual Property in Online Gaming

just one more link about Property in Second Life

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Real life, real lawsuit

fascinating stuff :)

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