Notes

Why is EBay Banning the Sale of Online-game Virtual Assets?

Massive multiplayer online games (MMOGs) such as World of Warcraft and EverQuest have millions of players across the world. These players pay to play and spend their time accumulating valuable points and artifacts. They also permit players to trade or sell their items on the online-game marketplace for any other goods or services they need or want. They also increase the player's character's worth.



MMOGs have been around for a long time, and players spend hours online accumulating their characters' net worth. The value is typically kept within the game world, however recently, a new technology has allowed this virtual value to be transferred to the real world. In the last five years or more, "virtual property" has been appearing on online marketplaces like eBay, where it is traded for real money. IGE (Internet Gaming Entertainment) is a specialist in the sale of virtual properties and trade, is where the majority of these transactions occur. The phenomenon has grown to epic proportions, with the annual market for these virtual assets being valued between $250 million to $900 million. This phenomenon now has an official name: real-money-transfer also known as RMT. Governments have started to be aware of these sales (see Do the IRS tax virtual money? Third-party RMT was prohibited in Korea in 2006 and Korea has adopted a similar policy. The game makers who, in the majority of cases, claim the legal right to all virtual assets that are integrated into their games, are beginning to think about how to handle this infringement of their terms of service. Technically speaking, it is the game makers who technically own most of these assets.



With the ongoing controversy and the possibility of a regulation of the RMT field it's not really shocking that eBay has opted to ban the sale of these digital assets in its marketplace. These types of transactions are prohibited by eBay's long-standing rules. They stipulate that the person selling digitally delivered goods] must be the owner of or authorized to distribute the intellectual property. So if Sony has, within its terms of use, already established itself as the intellectual property owner of all assets acquired through EverQuest II, then it was simply a matter of eBay making the decision to classify online-gaming assets as intellectual property.



Is that why the ban? eBay claims that it is protecting its customers and maintaining the integrity of the marketplace. The sale of virtual assets could result in higher fraud rates than the sale of tangible assets. There's also the issue of what seems like the inevitable government regulation of RMT, which would make eBay's life even more complicated than it already is. tsaclub.com To manage the taxes and the record-keeping that a government agency may require for sales made through virtual assets and other transactions, any regulation by a government agency will require eBay to implement new tracking and accounting systems. However, an interesting decision on eBay's part may offer a clue to the overriding reason behind the ban: Second Life property is exempt. What's unique about Second Life? EBay says it's exempt from the ban since there is significant doubt regarding whether Second Life is a "game," falling back on the creator Linden Labs' insistence that Second Life is a "virtual world," certainly not -- an actual "game." However, the distinction between an online world and a game is a rather difficult one to measure. The quantifiable difference, it appears to be, between Second Life and, say, World of Warcraft, is that RMT is legal in Second Life. It's encouraged. It's part of the game. There's no way that Linden Labs is going to be able to sue eBay as a profit-making platform for the selling of virtual assets that are acquired in its, um, world.



If eBay's ban is in fact an attempt at avoiding the flurry of lawsuits involving rights to virtual properties that are likely to occur in the next few years and beyond, then RMT seems to be at a crossroads. Websites like IGE are still up and operating and are facilitating the selling of virtual assets at a rapid speed. However, these third-party platforms are now subject to regulation by the government and could face legal actions. Sony, for example, introduced Station Exchange to allow legal trade and sales of EverQuest II goods. They're smart enough to know that other game developers will follow their footsteps and not invest millions fighting the inevitable.



For more details on virtual property, RMT and related topics, check out the following websites:



How eBay How It Works



How Neopets.com Functions



Can I earn a living in Second Life?



Does the IRS really need your World of Warcraft gold?



CNET News.com: eBay bans virtual auctions for goods - January. 29, 2007.



Slashdot: http://games.slashdot.org/article.pl?sid=07/01/26/2026257 - Jan. 26, 2007



Virtual Economy Research Network



Terdiman, Daniel. "eBay prohibits auctions of virtual goods." CNET News.com. Jan. 29, 2007. http://news.com.com/eBay+bans+auctions+of+virtual+goods /2100-1043_3-6154372.html



Yam, Marcus. "eBay To Delist Virtual Goods from MMORPGS." DailyTech. Jan. 30, 2007. http://www.dailytech.com/article.aspx?newsid=5906



Zonk. Zonk. Slashdot. Jan. 26, 2007. http://games.slashdot.org/article.pl?


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