Virtual currency and virtual property revisited

Still waiting for an orc raid on Stormwind’s Bank

It feels like 2007 all over again. There seems to be a resurgence in articles and blog posts seriously discussing the subject of virtual property and the virtual economy, something that was very familiar in the tech press around the time of Second Life’s nadir. By the way, whatever happened to Second Life?

A recent and well-circulated article in Forbes discussed the subject of the ownership of virtual property. In the article, the author uses the construction boom in some virtual games such as Minecraft to ask questions about intellectual property. Minecraft is a surprisingly successful low-fi online multiplayer game where players are engaged in the construction of structures in a 3D environment by digging. This has IP implications because:

“[In] multiplayer Minecraft there are multiple levels at which intellectual property is being created and used: Mojang, the company that sells Minecraft, provides IP in the form of the underlying game itself. A Minecraft server owner adds IP by designing a specific type of virtual world, and the players within that virtual world then create their own IP as they develop its infrastructure and economy through their own in-game interactions. And in yet another layer of IP complexity, server owners often incorporate software provided by third-party developers, and in some cases also hire people to write code to add customized features to the server.

The level of engagement of Minecraft users is incredible, and the creativity unleashed can be breathtaking. Because the game can be installed in separate servers, it is possible for players to run their own instances of the game, creating their very own environments, which I believe goes a long way in explaining why it is so popular with some demographics (my nephews love it, and so do most of their classmates apparently). Just gape in amazement at this project in which a group of Minecraft users has been building the world of Westeros from the series Game of Thrones (based itself on George R R Martin’s A Song of Ice and Fire).  I want to walk on the virtual Wall and follow in Tyrion Lannister’s tiny footsteps, but I digress…

One feels a sense of vindication when the mainstream finally catches up with what many of us have been talking about for years. This time some of the hype might be justified. Like the video of King’s Landing clearly indicates, there are some interesting IP-related questions to be asked about what is taking place online. The building of virtual versions of worlds depicted in book and screen is a phenomenon more akin to fan fiction than anything else, and the legalities of that realm are still being discussed. In the strictest sense of the word, most fan fiction is in a way a form of copyright infringement, but that does not stop a vibrant community from producing user-generated versions of their beloved characters. And before anyone dismisses fan fiction, just remember that 50 Shades of Grey started life as Twilight fanfic.

It is unlikely that HBO or GRR Martin will ever sue the creators of the Minecraft version of their world, in general it is a very bad idea to litigate against your customers (a lesson that the RIAA was too stupid to learn until it was too late). As long as fan projects remain outside of the commercial realm, most authors will leave them alone. But what about the original content created in virtual worlds? This is a trickier question as most developers claim ownership of everything hosted in their servers. This may include items with real-world value, such as virtual currency converted into real cash by the means of some exchange. This happens all the time when players of online games purchase gold and in-game currencies from Chines gold farmers. The existence of these exchanges is one of the premises of Neal Stephenson’s Reamde, and he might once more have looked at the future. I am still waiting for a game that will take these exchanges into account. This could be sped up by a suit in which a player wants to move out some of their in-game resources into the real world.

This brings me nicely to another development that has been raising lots of eyebrows (virtual and real): Amazon has announced that it will be launching its own virtual currency for their Kindle app store, Amazon Coins. This move has baffled tech analysts everywhere. Why would Amazon try something that has been attempted and failed everywhere? From Facebook Credits to Bitcoin, virtual currencies have had a bit of a bumpy ride. Most of those analysts seem to be missing the point. Virtual currencies are wildly successful in their respective in-game economies, they are used by millions to buy goods and services in limited virtual environments, and it has been proven that people will pay real cash to boost their online content. Take the successful FIFA series, where there is a thriving economy of card trading, where players purchase virtual cards of their favourite players. This can be done through virtual in-game currency which is earned by playing and winning games. But players can also use real money to obtain coins to boost their teams.

This is where Amazon Coins come in they will almost certainly be used exclusively within the Kindle environment to buy content for the Kindle, such as books, music, movies and TV shows. If Amazon can even mildly replicate the most successful in-game currencies, then look for other companies to start adopting the model.

The future is virtual.