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eBay bans sale of virtual goods

I’m trying to get back into the habit of blogging, so bear with me if there are a few days of boring posts while I get up to speed.

This semester I’m taking a class called “Key Readings in Information Law and Policy” at NYU Law school. As part of the class, we’re asked to keep up with the latest on IP, cybercrime, court decisions, free culture, etc. A great resource for doing this is BNA’s Internet Law Newsletter, which comes out every weekday and provides a succinct daily summary (if you don’t mind sitting through five paragraphs of promotional sludge at the beginning. Sign up at ecommercecenter.bna.com.

I want to talk about eBay’s decision to enforce the ban on virtual goods.

First reported by the always-reliable Slashdot:
http://games.slashdot.org/article.pl?sid=07/01/26/2026257

“Mr. Hani Durzy, speaking for eBay, explained that the decision to pull these items was due to the ‘legal complexities’ surrounding virtual property. “For the overall health of the marketplace” the company felt that the proper course of action, after considerable contemplation, was to ban the sale of these items outright… Mr. Durzy pointed out that in reality, the company is just now following through with a pre-existing policy, as opposed to creating a new one. The policy on digitally delivered goods states: “The seller must be the owner of the underlying intellectual property, or authorized to distribute it by the intellectual property owner.” Given the nebulous nature of ownership in online games, eBay has decided the prudent decision is to remove the possibility for players to sell what might be the IP of other parties via their service.”

So it’s a preventative measure: what MIGHT be the IP of another party. There are “legit” marketplaces in some games for selling virtual goods, but this would seem to point to an increase in the (already substantial) grey market sites that don’t have the seller/buyer protections and infrastructure that eBay provides. I’m also interested to see if this impacts on other types of goods, for example, unlicensed Marilyn Monroe switchplates, import CDs, DVDs of out of print movies and other goods that are in wide availability on eBay.

Lately I’ve had to sit through a large number of presentations on how virtual worlds are SO revolutionary and are going to have SUCH a huge impact on the world that we will all be going to our virtual Eames-lite offices and hanging out with Hiro Protagonist at the Black Sun. I’m really tired of this rhetoric, because a) I think it’s garbage and b) It is used as one of those universal solutions. For example:

Person A: Global warming is going to have catastrophic effects on the planet.
Person B: Don’t worry! Nanotechnology will solve all these problems.

Or:

Person A: Gerrymandering and the for-profit nature of news is having a negative effect on American democracy.
Person B: Don’t worry! The political blogosphere will solve all these problems.

Or:

Person A: Extension of IP, DRM and Trustworthy Computing could make it really difficult for people to use their computers to watch pirated content.
Person B: Don’t worry! YouTube will democratize celebrity and solve all these problems!

You get the point. Second Life is an edge case product that is currently being spooged all over by marketeers because it provides HUGE ROI in terms of publicity. If I have a book signing at the Framingham Borders and 50 people come, nobody cares. I won’t even get a line in the local paper. BUT, if I have a book signing at a VIRTUAL Borders in Second Life and 50 people come, it will be in the Wall Street Journal and BusinessWeek and on all the blogs and I will be heralded as a member of the 3l33t digerati!!!11 But the significance is roughly the same.

This new ban by eBay could be totally inconsequential, as everyone could move to grey market sites designed specifically to buy or sell virtual property, or game owners could set up “officially” sanctioned auctions. Who knows. But it does speak to the many, many legal and infrastructural barriers to a massive extension of virtual world usage. Yes, there is a corpus of legal theory about this, and my infolaw reading group discussed it last year. Suffice to say that nobody really knows how to deal with virtual ownership and it’s far from clear that it will shake down on the “free culture” side of the debate.

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1 Comment

  1. Tim

    Glad that you haven’t drank the Second Life kool-aid, Alice. Also, I’m really glad that you’re blogging again.

    Ebay’s decision to leave money on the table is an interesting one, but the legal issues aren’t all that complex. These goods can only exist in-world, so the content owner’s never in any serious danger of losing control of their IP.

    I bet the real issue was fraud. The exchange of virtual goods purchased on ebay is pretty much unregulable, since the whole reason they’re exchanging on ebay in the first place is they can’t do it in-world, and you can’t run to the police or the world owner when the owner doesn’t deliver.

    I wonder if this applies to exchange of character accounts, etc.

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