Tobold's Blog
Monday, August 09, 2010
Rekindling the virtual property debate

The Ancient Gaming Noob Wilhelm2451 has the best summary of the latest EVE story: In EVE game time cards exist as in-game item, called PLEX. They used to be safe, but recently they were changed to be transportable, and thus destroyable. And now somebody had his ship shot down with $1,300 worth of game time cards destroyed and lost.

While you might laugh or cringe at that story, I think it is important to look at the wider implications of this. The current legal situation in the USA and Europe, although never confirmed in a court of law, is that virtual property does not exist. Your space ship in EVE, your epic armor and gold in WoW, your EQ platinum pieces are all just parts of the code, of the intellectual property of the game companies, to which you have limited usage rights as defined in the End User License Agreements and Terms of Service. They don't have value, because they are considered to be something like a highscore in Tetris, which while being dear to your heart has no commercial value. While you *can* buy virtual currency, the game companies argue that they forbid that in their EULA, and thus the virtual currency has no real value. With virtual items and virtual currency *not* belonging to the players, the game companies can't be held responsible for any losses. And the players aren't liable for taxes on their virtual earnings.

For a PLEX, paid for in cash by the player to the game company, that legal argument might not hold up. If the player in question goes to a court of law and says "I paid for 74 months of game time in EVE and through an in-game event lost $1,300 and did not receive what I paid for", that court of law is probably going to consider that those PLEX *did* have value. And that opens a can of worms, because suddenly the game developer needs to argue how players can lose large amounts of money in their game. A court might think of an online game in which you can lose $1,300 as "online gambling", which is illegal in the USA and several European countries. Or they might consider the destruction of that value to be something the game company is liable for. And once we decide that a PLEX has value, then what about the players who "work" in-game to make ISK to buy that PLEX, do they have to declare an income to the tax authorities?

In China, where buying virtual stuff is more wide-spread, courts already consider game companies to be liable for some losses. If that becomes the law over here as well, that could have significant consequences for game development. Game companies would either need to deal with the liabilities of players owning virtual property, or they would need to design their games in different ways to make exchange of virtual goods for real money impossible, and thus get back to the "players are just renting pixels" legal situation.
Why oh why would you transport $1300 worth of PLEX in your ship in a PVP game?

Proof the the Darwin awards can apply to virtual people too!
Income tax and gambling are moot points if there's no way to extract that value from the game. I doubt that the IRS would be amused if you tried to pay your taxes in epics or PLEXes. So far, governments have been more interested in virtual worlds like Second Life, where you can exchange virtual currency into real currency. For example, the EU's Value Added Tax applies to transaction fees in the official Lindex currency exchange.

On the other hand, liability can be quite interesting. Should the game company protect players from themselves? Is it the casino's fault if the father sinks his childrens' scholarship fund into slot machines?
The story unfolding is that the PLEX were purchased with corp ISK, so the people who had paid the USD had already received the ISK they were entitled to for the PLEX.

I don't imagine the decision to allow PLEX transport will be reversed. I fully expect that the ramifications of exactly this event were carefully (and legally) considered before enabling the option of transporting them. C'mon, everyone know SOMEONE was going to do it!
This is horrible news, right? I'm kind of hoping this does go to court, so we can either advance the laws to cover a future of virtual goods, and other aspects of our "online" culture.

Will such laws result in an affect of DRM at all? The value of purchased games online?

@Hirvox: I'm dealing with consolidating payments right now, and since I'm paying less than 60% of the amount owed, that unpaid money is being considered "income".

I have no doubts the US govt. would tax a reduction in a fee, such as buying a Plex card for ISK. (I hope I used the right terms, I don't play EVE).

@wee warlock of the web: Maybe he didn't read the patch notes?
I should ask my employer to pay me in PLEX. Would reduce my taxes to NIL und is quite liquid :)

mmh ... ;)
Not only were they stupid enough to carry all those PLEX in one ship said ship was a tiny little frigate that would take almost no firepower to blow out of the sky.

They were asking for it. I mean even a newbie with a missile ship could have take them out before any police could react to the attack.
I have no doubts the US govt. would tax a reduction in a fee, such as buying a Plex card for ISK. (I hope I used the right terms, I don't play EVE).
Players buy time cards, which in turn are either used directly or turned into PLEX for further trading. As long as you pay the fair market price for the PLEX it's simple trade, not a gift like debt relief is. And any value-added tax is applied to the initial purchase from CCP or it's affiliates.

@wee warlock of the web: Maybe he didn't read the patch notes?
He did, otherwise he would have never gotten the idea of trying it. Before the patch, PLEX were 100% safe from destruction because you couldn't move them away from the station.
Losing game time due to an in-game event is pretty widespread in real life games.

You pay the registration fee to a tennis championship and lose your matches in the first tier. You'll get a "participated in the 2010 monkey-island tennis championship" medal and you have to leave.
Thing is Tobold, he Sid get what he paid for - he it the PLEX item. At any point until the moment he got blown up he could have used them to gain subscription time. He bought the PLEX from CCP, and CCP gave them to him. He got what he paid for. What he chose to do with them after that is really none of CCPs business.
Currently we are governed and legislated largely by politicians and lawyers who have not grown up in a digital world. Consequently, their understanding of matters like "virtual ownership" does not come from direct experience. This will change.

In the U.K. a staple of satirical comedy in the 1960s and 1970s was the High Court judge who had to stop proceedings and ask learned counsel "Who are "The Beatles"? That stereoptype has all but disappeared even from comedy.

Now we have senior politicians, like Alan Johnson the shadow Home Secretary, making radio programs about their pop star fantasies

Money IS being made in online games, both legally and illegally. It will take a little longer for the administrators and legislators to catch up, but they will. If there isn't primary legislation, there will be case law and as younger lawyers, judges and even jurors who have more personal experience of the virtual world come up through the system the rulings and verdicts will change accordingly.

Enjoy the anarchy while it lasts...
didn't see anyone else post this (but maybe i just missed it). here's the kill board showing that they were destroyed and not looted ^_^
The repercussion of this is definitely going to be interesting. No doubt CCP will refund the guy's cash if he complains hard enough. That said, he did know exactly what he was doing. I suppose it's no different from withdrawing $1,300 from an ATM in real life and then getting mugged or lose your wallet.
Who said they guy bought the PLEX from CCP? Its far more likely the case that the player either had the money to buy the PLEX which would of being around 24 Billion or the player was using his Corp/Alliance funds to actually buy the PLEX from other players on the market since it can be bought that way in game. Because I find it very and highly unlikely that one player would spend around $1300 buying that many PLEX on his/her credit card at one time which wouldn't make all that much sense and then attempting to move them in a tinfoil hull of a ship. Which is a boneheaded move at best.
Who said they guy bought the PLEX from CCP?
While you're probably right in this case, having someone spend a veritable fortune on Eve is not unheard of.
Why would the company be liable for his loss? There has to be some breach of contract or negligence for that to happen. An entirely normal game event happened; this guy happened to have all his eggs in one basket and got screwed. That's tough, but that's the game.

Also, while I wouldn't put misunderstanding beyond legislators, it simply isn't gambling because there is no possibility of gain. At best, you keep your plex; at worst you lose them.
The really stupid part here is that there is absolutely no reason to ever transport PLEX in game even though you can do it now. Regular items have to be transported to use them, say to attach them to a ship or to build an outpost. But PLEX can be used remotely. Buy the PLEX from across the galaxy and then simply right click it in your assets window to use it remotely. You don't even ever have to go to the place you bought it from. Stupid, stupid, stupid.

And people were warned up front that if PLEX is blown up it is gone and they were reminded that you don't need to ever undock with it. So I don't know how far a legal challenge is going to get here.

Finally, any game can convert real world cash into a virtual currency amount in the sense that a person can spend their 30 days making X amount of money. Some people are better at it and some worse, but time in game gets you a certain distance, so to speak. In EVE, you simply have the ability for the market to decide what 30 days of game time is worth in ISK. You don't pay $15 to get 300mill isk, you pay $15 to get 30 days of game time and then you can see what people will give you in the game for that. So they end up using the 30 days instead of you. But in the end, someone got 30 days of time.

Perhaps that is the whole deal right there. Until now, someone got the game time. Now, game time can be destroyed. I bet what comes of this, is that everyone gets there PLEXs refunded to them and the PLEXs are made so they cannot be destroyed but can be stolen. That way someone gets the game time. Unless of course the gambling angle sticks, then I bet they make them untransportable again.
Here is another way to look at converting game time bought with cash into in game currency issue. If I had a friend, and I made a deal with him to pay for his $15 sub to WoW in exchange for 1000 gold each month, (assuming of course that he had a lvl 80 character) would that now make a 1000g worth $15?

That is essentially what PLEX is. How much am I willing to pay, in terms of my time converted into in game earnings, to not have to pay for my sub with cash. Instead. I give a portion, (300mill) of my monthly earnings to some other guy willing to pay my sub fee who only started playing recently and who can't earn money as easily as I can.
kind of off subject but online gambling like poker is NOT ILLEGAL to play... the sites themselves are not allowed to receive wire transfers from banks but the illegality of you or I playing poker except in a couple of states that passed specific laws is more of an urban myth than reality.
After thinking about it, I agree, I don't think the gambling angle sticks because there is no way to get your money back out of the system. $15 goes to CCP and you get an item that may or may not ever be used to get 30 days but CCP never pays back out.

The only question I have now is how much hell they will take from the idea of being able to pocket $15 without anyone getting 30 days of service. Even in the case of someone with a PLEX sitting in a hanger or a lot of cash, CCP has allowed people to petition for a free day or two so they could log in and use a PLEX or buy a PLEX to reactivate the account. In that way there was never a really a circumstance in which a PLEX could become unusable. Forgotten but not unusable.

But now we have the case of 74 PLEX that can never be redeemed into game time. So CCP gets the money but doesn't have to provide the service. Even if it is the fault of the user I can still see that being a PR sour point if not a legal annoyance. I suspect they will either make PLEX indestructible and always dropped from a ship kill or they will go with an ideal like this guy:

I really like the idea of them giving a donation for all destroyed PLEX. The game is doesn't get burdened with special case rules for items and CCP doesn't look like they are scamming folks.
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What is money? Governments around the world have a hard time defining it.

What's property? A theoretical construct with a *purpose*: it's supposed to motivate everybody to work.
And as soon as the general public perceives ingame value as something that should be protected because it motivates people to work, it will obtain legal protection.

That'll take a while...
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