Why Virtual Property Doesn't Make Sense

from the bingo dept

I’ve long had trouble with the idea that “property rights” make sense in virtual worlds. After all, the entire purpose of property rights is to efficiently allocate resources in the presence of scarcity. If there’s no scarcity, there’s no question of efficient allocation (everyone can get as many copies as they want). However, for whatever reason, there’s been a big push to create “property rights” within virtual worlds. Slashdot points us to an excellent paper that goes through the arguments for assigning property rights in virtual worlds, and even models out some scenarios based on them. In the end, it finds no compelling reason for assigning property rights in virtual worlds. Here’s just a snippet, from a look at whether or not property rights make markets more efficient in a virtual world:

Extending property rights to virtual resources does not make more efficient markets for those resources. The qualified approach to virtual resource property rights provides no reductions in the search costs of a buyer since the legal rights and attributes of those resources mirror those granted by the virtual world’s code-based regulations. Worse, a carte-blanche approach will increase search costs by requiring a buyer to determine where the code-based rights and attributes of a resource deviate from its legal rights and attributes.

Therefore, the efficient market justifications for virtual resource property rights can not be satisfied under either the carte-blanche or qualified approach to virtual resource property rights. The only way this justification may be satisfied is if legislatures and courts reach into the virtual worlds and mandate what specific rights and attributes virtual resources can take.

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Comments on “Why Virtual Property Doesn't Make Sense”

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Chris-Mouse (profile) says:

who would want to run a virtual world?

If virtual property ever gets any sort of rights, I can’t see why anyone would want to run a virtual world to put the property in. The reason is simple, if you ever shut down that virtual world, the value of all the virtual property in it vanishes with the world. The operator of the virtual world would then be faced with either buying all that virtual property, or else risking lawsuits over the vanished value of that property. Either way, it’s potentially very expensive.

Frosty840 says:

Re: who would want to run a virtual world?

Actually, as the second commenter points out, because the company running the game has control over its items, they can effectively drive the value of all items in the game to zero by removing all artificial scarcity from those items.

I’d guess that giving all players maximum stats and making all in-game items available in in-game stores for free, even a couple of hours before the “death” of the game, would cover you legally.

Killer_Tofu (profile) says:

Should never happen

They can keep their real life laws out of the not so real life games I play. The game imposes its own laws. Through a few button clicks if they wanted to they (they being game owners / creators / operators) could spawn a million copies of a weapon. If you take the real life property laws and apply them to the game you would be saying that those game runners just increased the GDP of the US by [ a million times whatever value you assigned the weapon ].
It just would never make sense. They would need a million little exceptions and stipulations on the laws dictating this junk, and then I still guarantee you people would have ways around it.

They (being government and lawyers) need to just stay out of it.

LostSailor (profile) says:

Definition fail

After all, the entire purpose of property rights is to efficiently allocate resources in the presence of scarcity.

Uh…not so much. The efficient allocation of resources in the presence of scarcity would be the purpose of markets. The concept of property and the purpose of property rights is, in part, the necessary backbone that allow markets to exist. Efficient allocation of resources is certainly not the “entire purpose” of property rights.

PRMan (profile) says:

Re: Definition fail

“Efficient allocation of resources is certainly not the “entire purpose” of property rights.”

Of course it is. Otherwise, we’d all still be living off the land like primitive cultures. Nobody would care because everyone could make houses in a matter of weeks with some help from their friends and could easily feed their family all the time. Since you wouldn’t need anything else, you wouldn’t care.

LostSailor (profile) says:

Re: Re: Definition fail

Property isn’t about allocation, it’s about control. The purpose of property rights is to codify who controls (owns) and has use of a resource. While property rights are fundamental to the existence of markets, it is purpose of markets to allocate resources (whether efficiently or not depends on the market).

Ergo, my friend, property rights may be involved in allocation of resources, it is not their “entire” purpose.

Mike should know this.

John says:

Re: Re: Re: Definition fail

Actually, the purpose of property rights is the allocation of property. Hardin’s The Tragedy of the Commons and Harold Demsetz’s Toward a Theory of Property rights clearly outline the importance of property in the efficient allocation of property.

Attempting to artificially separate “control” from “allocation” is folly. The two go hand in hand — each necessary for the other. Property allocates resources by granting control, and control is granted by allocating resources.

Property theory deals with this duality as far back as Grotius and Puffendorf. Grotius argued against the allocation of property rights in the high seas because they could not be controlled and were, in his time, infinite in nature.

As for markets, they do nothing for the ‘allocation’ of resources. Markets are merely a representation of resource transfers. Markets themselves do nothing — they only present data.

Rather, the policies (such as laws, regulations) involved in those markets allocate resources. Property law is one of the classic, and potentially the first, policies that affect how markets allocate resources. (Contract is another oldie but goodie.)

Finally, ‘virtual property’ is a problematic term that is inexact and captures other resources already regulated by law. This includes patents and copyrights. The ‘virtual property’ here is the carving out of a virtual world rights in the items represented in that world — the ‘virtual real estate,’ the ‘virtual swords,’ and the ‘virtual characters.’

These ‘properties’ would be independent of the underlying hardware and intellectual property rights of the developer.

Kenneth Younger III (profile) says:

This will be pushed for by Big Content

These virtual property rights will be pushed for by the big content companies. There is zero difference between a piece of content created and used in a virtual world, and a piece of content created in the real world and then subsequently virtualized. This means there could be an eroding of “Intellectual Property” (i.e. virtual property) rights.

It’s ALL virtual. None of it exists in a real sense.

Eliot says:

Depending on the environment, scarcity may not necessarily be artificial. If you are looking at the virual real estate in Second Life, the real estate may be virual, but the tax on the systems (processor power, storage space, etc) is quite real.

This isn’t to say traditional property laws can apply, but that the issue is far from a black-and-white consideration of ‘infitite’ versus ‘finite’ goods.

Anonymous Coward says:

Re: Re:

There is nothing particularly abstract about an item in a virtual world — it is ethereal, existing only in representation not in physical form, but it has very concrete definition and representation. I don’t support property rights for virtual ‘property’, I’m just pointing out that this argument is not one you want to go to court with.

TheStupidOne says:

Game Rules, not Gov't Laws

Some virtual worlds (games) are designed with scarcity as an essential component of the game. For example: You need land to grow your food to fed your army to attack your neighbor to gain more land … So if someone cheats (or exploits a bug) to gain an advantage (more land) then the game rules/admins should address that, not real life police.

To some extent civil lawsuits might make sense in such a game if players see hundreds or thousands of hours of their time wasted by someone cheating at the game. But again a good game system could address that much better than the courts.

Anonymous of Course says:

Virtual lawsuits, virtual courts.

It seems obvious to me that virtual property rights should be enforced by virtual courts that levy virtual fines in the virtual worlds where the property exists- if at all. Otherwise itthey should be laughed out of court. IT’S A GAME… if you choose to waste your time playing a game that’s all find and good. Don’t expect the real life courts to mediate, there are enough non-game real life issues for them to deal with. Lets find some perspective here people, please.

Virtual world 3D says:

Virtual Real Estate and Economy

It isn’t strange to own virtual land inside of the Metaverse, many people own their own piece of virtual real estate. One can compare this best with hosting space that you lease just in another form. As long as you pay a maintenance fee to keep the property online you own your piece of server space. It’s logical when you think about it.

In Dreamworld you can own your own virtual property for a low monthly cost and use it to be creative, check it out at http://www.virtualworld.sl

Anonymous Coward says:


I think the biggest reason I wouldn’t want virtual property to be recognized, is that it could then be considered income and taxed. And no, you couldn’t just give 25% of the virtual property to the IRS – you’d have to pay with real money.

If someone hacks a game and steals your sword, they should be charged under appropriate hacking laws. If they steal your sword within the rules of the game, you’re out of luck.

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