Pop law abounds in The Lawbringer, your weekly dose of WoW, the law, video games and the MMO genre. Running parallel to the games we love and enjoy is a world full of rules, regulations, pitfalls and traps. How about you hang out with us as we discuss some of the more esoteric aspects of the games we love to play?
I can't stop talking about virtual currency! As virtual worlds and economies penetrate every aspect of our lives, we are faced with the new and daunting challenge of identifying the seedy criminal element present in every human venture. There will always be someone breaking the rules, skimming off the top, or finding a way to steal their way up the ladder. Generally, as a society, we accept this as part of the process and make our rules accordingly to punish and dissuade against future criminals and all that jazz.
This week, we read about a very interesting virtual theft over Zynga poker chips, in which a 29-year-old British IT businessman named Ashley Mitchell pleaded (or pled, depending on your colloquial acceptance) guilty to stealing $12 million worth of the virtual currency. You know what Zynga is -- it is responsible for FarmVille, Mafia Wars, Zynga Texas HoldEm Poker, and about 8,000 other social networking entities. The company is ubiquitous. It also sells an ungodly amount of virtual currency online and offline for its games. Zynga poker chips, however, cannot be bought offline.
Billions of dollars
When Ashley Mitchell hacked into the Zynga servers and pulled out $12 million worth of chips, he turned around to sell them on the black virtual currency market. That $12 million in chips equated to about 400 billion poker chips in the online game. The prosecutor, Gareth Evans, disclosed the value -- about $695 per billion chips.
Virtual currency valuation is hard
The first thing I did when I read this story was run to see exactly how easy it was to purchase chips in Zynga's Texas HoldEm Poker game on Facebook. I promptly lost about an hour playing poker -- and I'm not even a poker player. Suffice to say, it is very easy to purchase official Zynga virtual currency for yourself or others through a comprehensive gifting system.
Back on topic, the article goes on to discuss how virtual currency is a pain to value because, technically, the company was not deprived of actual, tangible goods. At this point, you'd look to the potential effects that flooding the market with cheap virtual currency would do to Zynga, as opposed to the actual value of the chips stolen. This is in the U.K., so I'm not totally sure how damages would be calculated, but I'm sure Zynga will be seeing as much cash as it can out of this guy.
Crime worth the time?
More importantly, however, Ashley Mitchell will most likely be serving some jail time. With a previous 2008 hacking conviction on top of his most recent Zynga virtual currency bust, it looks like he is headed for the slammer. What is interesting to me, however, is that the charges against him did in fact include converting criminal property in addition to the hacking. This means that there was an element of property that was stolen; the court sees the Zynga poker chips as property that was stolen and then attempted to sell off for profit.
Zynga, however, does its absolute best to tell the consumer that the poker chips have no real world value. On Zynga's getzyngapokerchips.com website, there is a very clear message stating: "... further, your Zynga chips cannot be refunded, replaced or transferred, as they hold no monetary value." The valuation problem exists because Zynga is telling the user what they are buying is essentially worthless, but there can be a real-world value to virtual currency when sold at markets where such a value is ascribed. There definitely is a subjective theory of value working here, somewhere, since some kind of value is being ascribed to someone. But, again, value is meaningless when there isn't some kind of cap on the amount of currency Zynga can create -- it's virtual and limitless, doled out when credit cards are charged.
Zynga is Step 2 in virtual goods complacency
There are a few tidbits of information that we gain by just reading the facts of this story. First, there is a thriving virtual currency black market -- which we shouldn't be surprised about, considering that we are MMO gamers and gold farming and selling is its virtual national pasttime. Second, there is a large demand for casual gaming virtual goods -- but again, we aren't shocked by this because we, as gamers in 2011, are accustomed to virtual goods as holding value just like physical goods. Finally, Zynga is supposedly worth a cool $4 billion right now, which is pretty great for a game company and also means plenty of people are playing and buying Zynga stuff.
Zynga is going to be one of the deciding factors in acclimating the general public to virtual goods and currencies -- maybe not Zynga itself, but what Zynga represents and, as the biggest name, will definitely shape our future economies, both actual and virtual. Facebook credits are already sold at stores just like any other gift card. Three years ago it was an absurd notion that you would pay a dollar to send someone a picture on Facebook as a gift, but now that concept has all but evaporated.
Let's talk WoW for a second. Blizzard has been going about the virtual goods business in a very smart way. Instead of selling one-off items per character like the WoW Trading Card Game or currency that is essentially meaningless in game because the best things are usually bought with non-gold currencies, Blizzard instead sells virtual assets to your account, increasing the total value of your whole Blizzard presence, not just your character. Not only does this keep you attached to your account, but it actively encourages the care of that account.
One day, in the smartest move they could ever make, you might be able to purchase one item from the Blizzard store that would affect each and every Blizzard game on your account in some way, adding value to a game you might not even have yet. Want a new Lil' Alexstrasza pet for WoW that also comes with a new outfit for your Diablo III monk and some cool new decals for your Starcraft II units? Conveniently, you'll have a nice "Purchase Digitally Now!" button smack dab next to those unclaimed rewards, waiting for a simple click, a simple moment of product lust to sweep over your trembling fingers. If Blizzard hasn't thought of this yet, shame on you, good sirs. This one is a freebie! Hit me up at email@example.com for more marketing bombshells. WoW's virtual goods have value, but not its currency.
What was Step 1 in virtual goods complacency, you ask? Probably downloadable content (DLC) in video games -- virtual horses and all that. It was shaky in the beginning for virtual goods and content, but it's getting better.
The main problem surrounding virtual currency is still valuation and accepting the notion that something intangible can and cannot have an ascribed value at the same time. Ashley Mitchell's case shows this -- we have someone on trial and pleading guilty to hacking and making unauthorized use of property that was not his to begin with. At the same time, we have a court struggling to figure out what it was exactly that he stole and what it was worth. And during all of this, we have a company selling virtual currency it says has no real-world value -- except for the fact that you paid real-world money for it.
Things get even dicier when you start throwing in Zynga's reported new "RewardVille" program, in which you earn its virtual currency just by playing games. Muddying the waters of valuation with so many ways of obtaining the currency is going to play in Zynga's and WoW's favor down the road. Unlike Linden Dollars, which were only available through a Linden currency exchange, WoW gold and Zynga coins come from various places.
My point in talking about all of this is that at this very moment in time, valuation of virtual currency is a dangerous and volatile topic. Sure, a company like Zynga wants to recover on its lost property, but at the same time, fighting too hard for a valuation on that currency opens up tax liabilities, income issues, and a host of other problems with fungible cash and goods. When you can print this stuff for free by clicking a couple of keys and you operate all over the world, you've got more legal issues floating to the top of your glass every single day.
This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at firstname.lastname@example.org.