China Bans Use of Virtual Currency for Real Goods

News reports have come out that China has both defined 'virtual currency' and barred the use of that currency for purchase of real world goods. In theory, this is to combat certain underground uses of vitrual money by limiting their use to the purchase of virtual items. In practice, however, it could prevent the spread of virtual worlds like Second Life into China. Based on the Chinese definition of 'virtual currency,' the Linden Dollar used in Second Life is undoubtedly covered, and thus the interplay between the Linden Dollar and real currency would likely be problematic, though the use of Linden Dollars to purchase in-world goods may not be. It will be interesting to see how this continues to play out, especially in view of last year's finding that a virtual seizure had a real world value in China.

Reminder: The Big Debate is This Weekend!

I just wanted to take a moment to remind everyone that the big debate between Jack Thompson and me is this coming Saturday, July 4, 2009, at 4 pm in Dallas, TX, at the ScrewAttack Gaming Convention. The convention is at the Westin Dallas/Ft. Worth Airport, starting this Friday and ending on Sunday.

They've updated the event page to note that it will be on the main stage in Trinity VI. Be sure to get there early, space is limited. I'm looking forward to seeing all the g1s at the event. I'm still waiting to hear from Craig, but I imagine I will be around the convention on Friday and Saturday before the debate.

Class Action Against SquareEnix Targets More Than Fees

It's been on the major news sites that a class action has been levied against SquareEnix for fees associated with Final Fantasy XI, the company's MMORPG. However, there's more to it if you look at the filing posted by GamePolitics.

News sources have been quick to point out that the monthly fee is clearly stated on the Square website, as most MMORPGs with a monthly subscription plan do. Looking at the pleading, though, the main monthly fee isn't the crux of the complaint. I think the stronger complaint lays with the penalties and interest for late payments, and 'charges while the online game account is suspended,' if that means the monthly fee is continuing to toll. This case may not be about the base monthly fee at all, but rather what happens if you don't pay.

More troubling still are facts 11 i and vi, which essentially challenge the software licensing model as a whole. Fact 11i reads 'Licensing of the online games software disguised as a sale;' while count 11vi reads 'Termination of the right to use the online games for late payment of fees.' To me, this reads that they're challenging traditional software retail and MMO sales as a deceptive trade practice because buying the game doesn't actually purchase a copy of the game nor the right to play. The latter is certainly the weaker point, as I'm fairly certain the box references the required monthly subscription. Normally I wouldn't put stock in an attempt to redefine the entire software industry, especially in California where so much software is developed, but the California courts have been known to issue unusual decisions and have long favored consumer protection.

Count vii, which contests the terms of use, seems like a dead end unless the entire software licensing model is shot down by the court. The Terms of Use are an extension of the license, and if the license is upheld, then the terms of use will be. Other cases have failed to strike down either (other than with regard to things like arbitration provisions), so I doubt this will be successful.

It will certainly be interesting to see the claims in the suit fleshed out further. Based on the information available, this looks like a case of 'I bought the game, didn't pay my monthly fees, and are mad that you won't let me play and are charging me interest on the fees I owe you.'

LGJ: If 24 songs = $1.9 million, then 1 game = ?

On this week's LGJ, a discussion of the RIAA's recent victory and what it may mean for statutory damages across the board.

Read on!

LGJ: The Anti-Trust Game

Does the game industry have some reasons to worry about anti-trust? Perhaps. Check out this week's LGJ to learn more.

Read on!

A Video and An Announcement

First, I wanted to let everyone know that video from the Play-Machinima-Law conference at Stanford Law School is now available online. For those looking to view the panel I was on, here is the direct link.

Second, some of you may have noticed a few small changes on Law of the Game, and they hint at the announcement that I'm formally making in this post. The Vernon Law Group has officially joined Munck Carter, LLP. I had been waiting for the press release to appear, but now that our bios have been at least partially moved to the new site, I thought it was appropriate to make an 'official' announcement on Law of the Game. For those who may be concerned about the move's impact on this blog, rest assured Law of the Game and LGJ will continue in essentially the same manner they have in the past.

LGJ: Is the NDA still viable?

In what's becoming a bit of an E3 tradition, the latest LGJ talks a little more about the non-disclosure agreement, and some of its shortcomings.

Read on!

SGC Ticket Presale Ending Soon

For those of you who want to catch "The Debate of the Century" and haven't purchased your SGC tickets yet, I wanted to remind you that you only have until June 19 to purchase pre-sale tickets at $40. After that, tickets at the door will be $50.

The debate is set for July 4, 2009, at 4:00 PM.

Tickets (convention badges) are available at the ScrewAttack Gaming Convention website.

Virtual World Money Laundering

A few months back I posted a link to a gold farming study by Myke Sanders, a fellow Dallas IGDA board member. Well, Myke just forwarded me his new article on the use of virtual worlds for money laundering. A full PDF is available here.

When I had envisioned use of a virtual world for money laundering, I had always anticipated use of a front business in, say, Second Life such that 'dirty' money is used to buy Linden Dollars that are used to buy virtual goods, and then the front business cashes out the Linden Dollars for 'clean' money. Use of things like prepaid debit cards could even facilitate the laundering of dirty cash.

Myke has a background in credit card processing, however, and came up with an entirely different mechanism based on where the transactions couldn't be traced. While it could also use prepaid cards, it could also be used to generate cash from stolen cards.

As an interesting sidenote, Myke and I were discussing this very topic, and he suggested that the same methodology described in this paper could be used to put gold farmers out of business based on the number of chargebacks they would receive. Of course, that would be highly illegal.

In terms of solutions, I'm not sure his suggested idea of tracking transactions in virtual goods is practical, and even if it were, I don't know that it would be applied to item drops later picked up by other players. More importantly, as Myke pointed out to me, what if an organized crime group created their own MMORPG which they used for laundering, and simply didn't track transactions for that reason.

It's certainly an interesting issue to think through, and I'm not sure there's a readily available answer. I've seen other papers propose all sorts of solutions to the more traditional laundering I've mentioned in the past, but this newer methodology Myke describes is much harder to deal with.