Edward Castronova had hit bottom. Three years ago, the thirty-eight-year-old
economist was, by his own account, an academic failure. He had chosen an
unpopular field — welfare research — and published only a handful of papers
that, as far as he could tell, "had never influenced anybody." He'd scraped
together a professorship at the Fullerton campus of California State University,
a school that did not even grant Ph.D.s. He lived in a lunar, vacant suburb.
He'd once dreamed of being a major economics thinker, but now faced the grim
sense that he might already have hit his plateau. "I'm a schmo at a state
school," he thought. And since his wife worked in another city, he was, on
top of it all, lonely.
To fill his evenings, Castronova did what he'd always done: he played
video games. In April, 2001, he paid a $10 monthly fee to a multiplayer on-line
game called EverQuest. More than 450,000 players worldwide log into EverQuest's
"virtual world." They each pick a medieval character to play, such as a warrior
or a blacksmith or a "healer," then band together in errant quests to slay
magical beasts; their avatars appear as tiny, inch-tall characters striding
across a Tolkienesque land. Soon, Castronova was playing EverQuest several
hours a night.
Then he noticed something curious: EverQuest had its own economy,
a bustling trade in virtual goods. Players generate goods as they play, often
by killing creatures for their treasure and trading it. The longer they play,
the more powerful they get — but everyone starts the game at Level 1, barely
strong enough to kill rats or bunnies and harvest their fur. Castronova would
sell his fur to other characters who'd pay him with "platinum pieces," the
artificial currency inside the game. It was a tough slog, so he was always
stunned by the opulence of the richest players. EverQuest had been launched
in 1999, and some veteran players now owned entire castles filled with treasures
from their quests.
Things got even more interesting when Castronova learned about the
"player auctions." EverQuest players would sometimes tire of the game, and
decide to sell off their characters orvirtual possessions at an on-line auction
site such as eBay. When Castronova checked the auction sites, he saw that
a Belt of the Great Turtle or a Robe of Primordial Waters might fetch forty
dollars; powerful characters would go for several hundred or more. And sometimes
people would sell off 500,000-fold bags of platinum pieces for as much as
As Castronova stared at the auction listings, he recognized with
a shock what he was looking at. It was a form of currency trading. Each item
had a value in virtual "platinum pieces"; when it was sold on eBay, someone
was paying cold hard American cash for it. That meant the platinum piece
was worth something in real currency. EverQuest's economy actually had real-world
He began calculating frantically. He gathered data on 616 auctions,
observing how much each item sold for in U.S. dollars. When he averaged the
results, he was stunned to discover that the EverQuest platinum piece was
worth about one cent U.S. — higher than the Japanese yen or the Italian lira.
With that information, he could figure out how fast the EverQuest economy
was growing. Since players were killing monsters or skinning bunnies every
day, they were, in effect, creating wealth. Crunching more numbers, Castronova
found that the average player was generating 319 platinum pieces each hour
he or she was in the game — the equivalent of $3.42 (U.S.) per hour. "That's
higher than the minimum wage in most countries," he marvelled.
Then he performed one final analysis: The Gross National Product
of EverQuest, measured by how much wealth all the players together created
in a single year inside the game. It turned out to be $2,266 U.S. per capita.
By World Bank rankings, that made EverQuest richer than India, Bulgaria,
or China, and nearly as wealthy as Russia.
It was the seventy-seventh richest country in the world. And it didn't even exist.
Castronova sat back in his chair in his cramped home office, and the
weird enormity of his findings dawned on him. Many economists define their
careers by studying a country. He had discovered one.
I first met Castronova at a piano lounge last summer at the Caesar's
Palace casino in Las Vegas, where he was attending a high-tech conference.
We talked over a few drinks, though our conversation was soon drowned out
by the bar's syrupy Frank Sinatra impersonator, belting out a version of
"New York, New York." Castronova winced. "Where better in the world to talk
about virtual worlds than Las Vegas?" he said. "This place invented the idea
of virtual life."
Castronova is a natural role-player. He's a short, nebbishy guy with
a neat goatee and horn-rimmed glasses. When he lectures he radiates charisma;
he is the cool professor you wish you'd had when you were trying to grasp
the dry mechanics of price theory. Until recently, he acted in a Shakespearean
troupe, and in his spare time he explores the world of "multiple-user domains"
— Internet chat environments where people assume different personae as they
hang out together.
Castronova suspects his eclectic background is why he never made
the powerful connections necessary to secure a good academic job. "I've always
been an outsider. I've just been floating around outside communities, sort
of flitting from topic to topic," he said.
With virtual worlds, he had finally hit upon a subject that was exploding
into the mainstream. Experimental online worlds had been kicking around for
years, but they took a leap forward in 1997, when Ultima Online — a medieval
fantasy world similar to EverQuest — launched, and quickly amassed a hundred
thousand users. The idea of having a second life on-line suddenly didn't
seem so geeky, or, at the very least, it seemed a profitable niche; companies
like Sony and Microsoft swarmed on-line. Today there are more than fifty
active games worldwide, and anywhere from two to three million people playing
regularly in the U.S. The games range from Star Wars Galaxies (where you
can wander around as a Wookie and fight the Dark Side) to There.com (where
you can wander around Disneyfied islands as an attractive Gap-style model
and admire your hot new body). In Korea, a single game called Lineage claims
more than four million players.
To figure out precisely who was playing EverQuest, Castronova persuaded
thirty-five hundred users to fill out a survey. As one might expect, the
average age turned out to be twenty-four, and the players were overwhelmingly
male. The amount of time spent "in game" was staggering: over twenty hours
a week, with the most devoted players logging six hours daily. Twenty percent
of players agreed with the cheeky (if alarming) statement "I live in Norrath
but I travel outside of it regularly"; on average, each of these "residents"
possessed virtual goods worth about $3,000 U.S. "When you consider that the
average real-life income in America is only, like, thirty-seven thousand,"
Castronova tells me, "you realize these people have a non-trivial amount
of wealth locked up inside the games."
When he finished his research, Castronova assembled it in a paper
called "Virtual Worlds: A First-Hand Account of Market and Society on the
Cyberian Frontier." He submitted it to an academic Web site, the Social Science
Research Network, that distributes working papers, free for anyone to read.
The site has 43,982 papers, by more than 37,000 authors. He didn't expect
too much. "I thought maybe seventy-five people would read it," he recalls,
"and that'd be great."
He was wrong. The paper sent a shock wave through the on-line world.
EverQuest players pounced on it and wrote up excited descriptions on game-discussion
boards. That led to a flurry of posts on popular blog sites. Soon, academics
and pundits in Washington were rushing to read it. Barely a few months later,
Castronova's paper became the most downloaded paper in the entire database
— beating out works by dozens of Nobel laureates. Today, it's still in the
Why the rush of interest? What can a game filled with elves and warrior dwarves tell us about the real world?
Quite a lot, if you believe the economist Edward Chamberlin. In 1948,
Chamberlin admitted that all economists face a critical problem: they have
no clean "laboratory" in which to study behaviour. "The social scientist
. . . cannot observe the actual operation of a real model under controlled
circumstances," he wrote. "Economics is limited by the fact that resort cannot
be had to the laboratory techniques of the natural sciences." Instead, classical
economics tries to predict economic behaviour by theorizing about a completely
fair marketplace in which people are rational actors and all things are equal.
The problem with this — as plenty of left-wing critics have pointed
out — is that all things aren't equal. Some people are born into rich families,
and blessed with great opportunities. Others are born into dirt-poor neighbourhoods
where even the most brilliant mind coupled with hard work may not forge success.
As a result, economists have warred for centuries over two diverging visions.
Adam Smith argued that people inherently prefer a free market and the ability
to rise above others; Karl Marx countered that capital was inherently unfair
and those with power would abuse it. But no pristine world exists in which
to test these theories — there is no country with a truly level playing field.
Except, possibly, for EverQuest, the world's first truly egalitarian
polity. Everyone begins the same way: with nothing. You enter with pathetic
skills, no money, and only the clothes on your back. Wealth comes from working
hard, honing your skills, and clever trading. It is a genuine meritocracy,
which is precisely why players love the game, Castronova argues. "It undoes
all the inequities in society. They're wiped away. Sir Thomas More would
have dreamt about that possibility, that kind of utopia," he says.
Virtual worlds have produced some surreal rags-to-riches stories.
When the on-line world Second Life launched, the players were impressed to
see a female avatar industriously building a sprawling monster home. An in-game
neighbour stopped by to say hello only to discover she was a homeless person
in British Columbia, logging on using her single remaining possession, a
laptop. Penniless in the real world, she belonged to a social elite in the
Not all social inequities are absent, of course. For instance, Castronova
discovered that women in the game are worth less than men, in a very measurable
way: when he compared the sale of male and female avatars, he found than
female characters sold for 10 percent less than male ones at precisely the
same power level. Players with female avatars also say it's harder to advance
in the game, at least initially — even though the female characters are often
being played, in real life, by men. (A study by the game academic Nick Yee
found that male players "cross-dress" as female characters at least one-third
of the time.) Men play as women characters partly for the kinky thrill, but
also because female characters are given random presents of free stuff by
other players, a chivalric custom known as "gifting." "Personally, you receive
a lot more stuff when you start out as a female," as one male cross-dresser
wrote to Yee.
Ultimately, Castronova says, EverQuest supports one of Adam Smith's
main points, which is that people actually prefer unequal outcomes. In fact,
EverQuest eerily mirrors the state of modern free-market societies: only
a small minority of players attain Level 65 power and own castles; most remain
quite poor. When game companies offer socialist alternatives, players reject
them. "They've tried to make games where you can't amass more property than
someone else," says Castronova, "but everybody hated it. It seems that we
definitely do not want everybody to have the same stuff all the time; people
find it boring." It is a result that would warm the heart of a conservative.
Yet progressives, too, have been drawn to Castronova's research.
Robert Shapiro, formerly an undersecretary of commerce for Bill Clinton,
views the economist's findings as nothing less than a liberal call-to-arms.
EverQuest players tolerate the massive split between the virtual rich and
the poor, Shapiro tells me, only because they know that this is a level playing
field. If you work hard enough, you'll eventually grow wealthy. In Shapiro's
view, Castronova's research proves that the only way to create a truly free
market is to support programs that give everyone a fair chance at success,
such as good education and health care. "This may provide the most important
lesson of all from the EverQuest experiment," he wrote in an essay. "Real
equality can obviate much of a democratic government's intervention in a
modern economy. . . . If EverQuest is any guide, the liberal dream of genuine
equality would usher in the conservative vision of truly limited government."
In other words, maybe the best way to save the real world is to make it more
A few months ago, a powerful warrior showed up on EverQuest. He was
at Level 50, an indication that he was an experienced player. But when he
tried to join a group of other similarly powerful players on a quest to kill
a dragon, they quickly realized he had no idea what the hell he was doing.
He didn't understand teamwork or even the basic language of the game. Then
they discovered his secret: he was a thirteen-year-old kid whose parents
had gone to PlayerAuctions.com and bought him the character for $500.
"He kept getting killed over and over and over again. People were
like, Who is this idiot?" says Sean Stalzer, a thirty-three-year-old who
is a five-year veteran of EverQuest. Stalzer runs The Syndicate, one of the
game's most respected "guilds." Guilds are groups of powerful characters
who co-operate to defeat the deadliest monsters (which provide the richest
loot). The most elite guilds generally have a no-buying ethic. They accept
only players who have "levelled up" their characters the old-fashioned way.
"They put hours and hours into it," Stalzer says. "So when someone comes
along to make a profit or buy a character, it makes a mockery of what they
do. Why should you be better than me because you have more money?" His disdain
is like that of a hardscrabble kid from the projects who works for years
to get into Yale — only to watch George W. Bush sail in because his daddy
is a rich donor.
This culture war underscores the big irony of EverQuest politics.
Sure, most players love a level playing field — but they love a leg up even
more. Adam Smith might smile at EverQuest's booming marketplace, but beneath
the surface, Marx's bleaker vision of capital might be winning the day.
Of course, many people buy "pre-levelled" characters not to cheat
at the game, but to save time. They're usually busy professionals who can't
waste six numbing hours a day killing bunnies to make their warrior elf more
powerful. Game companies frown on the selling of characters because they
feel it destroys the meritocratic feel of their worlds. But because so many
millions of players clearly want to buy their way to power, the companies
have mostly turned a blind eye to the on-line auctions. Last year, Ultima
Online caved in and began to sell "pre-levelled" characters to new players;
demand was so high on the first day that their phone banks crashed.
Even the most stoic guild members are tempted by the booming market.
Stalzer's guild was once offered $50,000 for all of its characters and loot.
The members declined. But, sometimes, when individual guild members run into
financial difficulties in the real world, they quietly pawn off virtual goods
on the side. "One guy had an 'Enchanter' and he sold it for two thousand
dollars," Stalzer tells me. "That happens a lot. You get a guy who says,
'Dude, I just graduated and I can't find a job, so I gotta sell this thing.'
But I don't mind it when it's real financial need."
Guild members hesitate to sell their goods in part because they do
not feel they are the sole owners. When a guild vanquishes a monster, it
divides the loot among the members. Each player's booty winds up feeling
more like a piece of communal property. At the Las Vegas computer conference,
Castronova and I ran into a blue-haired nineteen-year-old who plays EverQuest
as a Level 55 "cleric" in a powerful guild. "I've got dozens of reagents,
these magical potions," she said. "And some of them are probably worth, like,
a hundred bucks apiece. I could totally sell them. But I always think, damn,
I only have this stuff because of how other people helped me get it. So they
sort of own it, too. It's not my right to sell it." In EverQuest, even socialism
finds a home.
Within months of Ultima Online's launch, in 1997, the game spiralled
into a currency crisis. The developers woke up one morning to discover that
the value of their gold currency was plummeting. Why? A handful of sneaky
players had discovered a bug in the code that allowed them to artificially
duplicate gold pieces (called "duping"). The economy had been hit by a counterfeiting
ring. Inflation soared, and for weeks, players would log in each day to find
their assets worth less and less.
Ultima programmers soon fixed the bug. But then they had a new problem:
How do you drain all the excess gold out of the economy and bring prices
back to normal? They hit upon the idea of creating a rare type of red hair
dye and offering it for sale in small quantities. It had no real use, but,
because it was rare, it became instantly popular and commanded an enormous
price — which leached so much gold out of the system that inflation subsided.
But the programmers had to meditate for hours on what possible side effects
their "fix" might have.
Game designers are, in a sense, the government of their worlds, continually
tweaking the system to try and keep it from ruining the lives of their "citizens."
In essence, they face the political question that bedevils real-life politicians
everywhere: How much should a government meddle in the marketplace?
In Ultima Online, players pick jobs and produce goods: blacksmiths
make iron tools; tailors make shirts. In the early days, the players were
forced to find other players to buy the stuff. They had to act like entrepreneurs
and, as it turned out, few people really wanted to do that; they just wanted
to do their jobs and get paid. So the game designers created "shopkeepers,"
robot characters that would automatically buy whatever goods the players
made. This forced the designers to behave like Soviet central planners, micromanaging
every aspect of the marketplace with arcane algorithms of supply and demand.
How much would a chair be worth, compared to a rabbit skin? If horseshoes
were suddenly in low supply, how would that affect the price of magical healing
potions? How much inflation is too little, or too much?
Citizens, too, began to complain that the economic system was bafflingly
arbitrary. One irate player pointed out that a spool of thread could be bought
for two gold pieces, then instantly transformed by a tailor into a shirt
worth twenty gold pieces — a profit margin that massively overshot any other
activity, for no apparent reason. Eventually the game designers mostly gave
up, and built a system in which players could trade more easily among themselves.The
Berlin Wall fell, and capitalism rushed in.
The free market made things more fluid, but also more unfair. Soon,
rich players drove the price of basic goods so high that poor players became
much poorer. Once again, the designers had to step in. They would "drop"
objects in places where new players could easily scavenge them, giving them
a chance to amass a bit of wealth. The designers also set up programs to
buy the otherwise useless items generated by poor players (such as animal
skins) to give them a chance to make money. In essence, they created handouts
for the disadvantaged. Ultima Online had morphed into a modern welfare state,
where a free market coexists uneasily with an activist government. "As a
developer, I would love to leave it all as a free market," says Anthony Castoro,
one of Ultima Online's first designers. "But people who are new to the game
would have nothing, and the big players would have everything."
A year after Castronova began his writings on the field, on-line
games were sufficiently mainstream that he was a media celebrity, with CNN,
National Public Radio, and endless newspapers calling him for comment. But
economists at universities still weren't impressed. Castronova submitted
his original EverQuest paper to a few economics journals. They rejected it
instantly. One reviewer wrote a snippy note saying he preferred "to stick
with things that are real rather than virtual."
One can appreciate the economists' confusion. Even the most highly
valued virtual goods do not seem, in some essential way, real. An Axe of
the Heavens may be great for killing virtual orcs, but it cannot be enjoyed
in the physical world. You can't eat virtual food to stay alive. But that
distinction shouldn't matter — at least not in economics, which is, as Castronova
never tires of pointing out, the study of the entirely arbitrary values that
people ascribe to things. "Most of a diamond's value is virtual, too," he
The ultimate proof of this idea is in the game world's emerging merchant
class — people who make their real-world income purely by "flipping" virtual
goods. Much of their everyday jobs is conducted within the game.
One of these merchants is Robert Kiblinger, a thirty-three-year-old
West Virginian. A commercial chemist by training, he worked for Febreze,
the company that invented the popular cleaning agent, for which he still
holds a couple of patents. ("I was basically selling perfumed water," he
jokes.) But then he started playing Ultima Online, where he ran into a player
who was tired of the game and wanted to sell his entire account. The player
owned two houses and towers and oodles of rare items, and only wanted $500,
which Kiblinger figured was a steal. He drove to Cincinnati to close the
deal. "I met him in a Taco Bell parking lot and I gave him a cheque," he
recalls. The next day, they met inside the game, and the seller handed over
the virtual goods. Kiblinger turned around and resold the whole shebang a
few days later to another player on eBay for $8,000, producing a tidy profit.
He was hooked. He began buying up items from anyone who was willing
to sell, and set up a Web site — UOTreasures — to advertise his inventory.
Today the site gets thirty-five thousand visitors a week. Kiblinger employs
five hundred people inside the game, paying them a small stipend (in Ultima
Gold and cash) to act as virtual couriers, scurrying around inside the game
to deliver the goods to the players who've paid for them. A few elite customers
have bought more than $20,000 of stuff from him. A couple of years ago, business
was so good that Kiblinger quit his job as a research associate at Procter
& Gamble to work full-time as a virtual vendor, though he won't tell
me his exact income. "It's in the six figures," he says. "It's a decent living."
Kiblinger introduced me to one of his clients, Becky Ruttenbur, a
thirty-seven-year-old woman in Montana. Outside the game she's a single mother;
inside she is "married" to another virtual character, played by a soldier
who is currently stationed in Iraq. Ruttenbur and the soldier have a joint
house and property in the game, even though the soldier is married in real
life. Such in-game polygamy is common; Ruttenbur has even met her cyberhusband's
real-life wife, and says, "She thinks we're nuttier than you could imagine."
After playing Ultima Online for five years, Ruttenbur has a huge estate of
in-game property, including a set of potted plants that goes for an average
of $75 in real U.S. dollars on an auction board. Her stash of on-line goods
would fetch $15,000 if she sold it.
Now there's a company rich enough to buy the entire lot. Three years
ago, a company called IGE, whose sole function is to buy and sell virtual
goods, launched. I met one of the company's founders, Brock Pierce, at a
gaming conference in New York. A fresh-faced, blond twenty-three-year-old
who is based in Boca Raton, Florida, he said IGE has "thousands of suppliers"
who scout the games all day long to find cut-rate goods. He has a hundred
full-time staff members at an office in Hong Kong to handle customer service.
On any given day, he says, they handle "several million dollars'" worth of
Several million? "We're ten times the size of anyone else," Pierce
bragged. Many players call IGE the Wal-Mart of virtual games. But it is more
like a Morgan Stanley or a Long Term Capital Management, a company whose
holdings are significant enough to singlehandedly affect the cash flow of
Of course, every booming economy has not only its white-shoe financiers
but also its lowly offshore workers. A few years ago, a company called Black
Snow Interactive opened up a "levelling" service for the game Dark Age of
Camelot. It had a digital sweatshop in Mexico; there, ultra-low-wage workers
would click away at computers, playing the characters twenty-four hours a
day to level them up. Mythic, the company that runs Dark Age of Camelot,
got wind of the scheme and closed down Black Snow's accounts and auctions.
The operators vanished, and have not been heard of since.
An even more intriguing financial institution opened for business
a few months ago: the Gaming Open Market. Based in Toronto, it is an on-line
service that exists solely for trading the currencies of virtual games —
Gold/Silver from Horizons, Linden Dollars from Second Life, Therebucks from
There.com. If you're a player who wants some quick virtual currency for your
favourite game, you can buy it there using real-world U.S. cash. Sometimes
people who play several different virtual games use the market to transfer
money from one world to another, like travellers at an airport exchanging
As on Wall Street, the value of each game currency fluctuates wildly
depending on how badly it's needed. "It's just supply and demand. If somebody
really wants a currency, it can drive the price sky-high," says Jamie Hale,
the thirty-year-old founder of the Gaming Open Market. The day I spoke to
him, a single player had bought every Linden Dollar on the market, about
$500 (U.S.) worth. It cleaned out the Market's entire stock and produced
a sudden spike in the Linden Dollar's value. Sometimes Hale himself will
jump in to do some quick currency trading if he spots a profitable spread.
He admits he has no official training in finance; in fact, he's a programmer
by trade, and his co-founder — who helped write the Market's software — is
an astrophysicist. "We keep a bunch of economics texts on my shelf to appear
smart," he jokes.
Hale's operation is still small, with only nine hundred users. But,
as it grows, it could conceivably produce a virtual George Soros — someone
who amasses so many billions of units of a currency that he could provoke
a crisis in that game's economy for the purposes of profiting off it, much
as Soros destroyed the British pound in September, 1992. "The value of the
currency would drop through the floor," Hale notes. "But that's the game
As virtual worlds increasingly mirror the real one, game companies
are already dealing with another problem: crime. Indeed, there's even organized
crime in The Sims Online, the cyberspace version of the top-selling computer
hit. In the game, players assume control of tiny suburbanites, build houses,
and work at jobs to earn "Simoleans," the in-game currency. The Sim Mafia
was founded by Jeremy Chase, a twenty-six-year-old in Sacramento. Players
who want to destroy another character's reputation turn to the mob. The game
has a system of black marks for punishing bad behaviour. If Chase is paid
to "tag" someone, he gets his crime family — a loose collection of a hundred
players — to place dozens and dozens of red tags on the victim. When they're
done, other players will assume the character must have done something awful,
and refuse to speak or trade with him.
Peter Ludlow, a professor of philosophy at the University of Michigan,
became fascinated by The Sims Online last year and founded a blog — "The
Alphaville Herald" — that reports on interesting social situations inside
the world. Last November, he discovered something truly strange: The game
had a chain of cyber-brothels, run by a family of avatars, all played by
a character named "Evangeline." Evangeline had organized a handful of Sim
women to perform hot-sex chat inside the game for customers, who paid in
Simoleans. "Girls set their own prices," she told Ludlow. "Bj's" were 20,000
Simoleans, the equivalent of roughly $4.50 (U.S.); Evangeline reserved the
richest customers for herself, making up to $40 or $50 (U.S.) a trick. Ludlow
later discovered that some of Evangeline's "girls" were underage girls in
real life, and that Evangeline herself was a seventeen-year-old boy living
in Florida. When he blogged about his findings, reporters nationwide snapped
to attention, and soon The Sims Online was on the front page of The New York Times.
Maxis — the company that runs the game — struck back. They cancelled
Ludlow's account, claiming he had broken the game's rules by advertising
his blog inside the world. (Maxis prohibits anyone from advertising real-world
services or goods inside the game.) Ludlow insists he never made a dime off
"The Alphaville Herald," and that he was booted out solely because his research
had embarrassed the game company.
Either way, Ludlow lost most of his goods. When game owners cancel
your account, it's like having your house instantly destroyed in a fire:
your property winks out of existence. Ludlow figures he had about two hundred
dollars' worth of virtual goods deleted, including a pet cheetah ("which
is like a fifteen-dollar animal") that he'd bought from a vendor on-line.
Yet Maxis could not entirely delete his virtual wealth. A week before his
account was deleted, Ludlow had deposited eight hundred thousand Simoleans
into an account at the Gaming Open Market. And Maxis has no power over the
Market; it cannot forcibly demand that Hale, the owner of the exchange, delete
that money. In effect, Ludlow had parked his money in the virtual-world equivalent
of an overseas bank, where no game government could touch it.
Ludlow's case points to the ultimate question, with enormous legal
implications for the real world: What, precisely, is the legal status of
virtual property? Does anyone actually "own" it?
Last November, I accompanied Castronova to a legal conference in
New York devoted to this subject. There game-company executives argued that
when a player joins a world such as Ultima Online, he or she agrees to a
user licence that explicitly says the game company owns everything that happens
on the servers. "It's a game, and what we're doing is inviting you in to
play with the toys. But you don't own the toys. We do," said Richard Bartle,
who pioneered the first virtual world back in the 1980s.
The problem is that people who play the games act as if their virtual
castles were their own private property. And, when it comes to property issues,
courts in the U.S., at least, have traditionally tended to take the view
that if it quacks like a duck, it is a duck. If enough people treat their
Robe of Primordial Waters as though it's genuine personal property, the law
might respect that — no matter what the game companies say.
This debate may appear rather abstract right now. But, sooner or
later, one of these game companies will start losing money and decide it
can't afford to keep its virtual world. (Many observers expect at least one
major world to go bankrupt this year.) If a game shut down, it would instantly
destroy hundreds of thousands — perhaps even millions — of dollars. The homeless
woman with the virtual mansion, for instance, could probably sell her goods
for several hundred dollars; she would lose her single most valuable possession.
For now, there is no clear precedent on how to deal with virtual
property. Owning a virtual castle is not like owning other virtual things,
such as stock in a company, because the value is not in an external, tangible
object such as a corporation, but in the work and money invested in acquiring
With stakes like that, said Jack Balkin, a Yale law professor and
a host of the legal conference, players will probably fight back with lawsuits,
or by going right to politicians, demanding legislation to prevent worlds
from closing down. Julian Dibbell, a journalist who began trading virtual
goods himself last summer — he aims to report "revenue from the sale of virtual
goods" as the single biggest line-item on his 2004 tax return — later suggested
an even stranger scenario. He said that players could well band together
and try to buy back the world at the company's bankruptcy hearing — and then
run it themselves as a breakaway republic. "Some renegade players have done
things like that before, actually," he noted. "They've gotten access to the
code of the game and then illicitly created their own duplicate world."
In a few years, these questions will creep into the mainstream, because
online environments such as EverQuest are likely to become a significant
way that people interact with the Internet. Only a small chunk of the population
will ever go into a brooding medieval-fantasy such as EverQuest, but virtual
worlds have emerged that are much friendlier, and do not use dungeons-and-dragons
themes at all. Indeed, they're not even games: they have no goals, no "levels"
to achieve, no points to score.
There.com, for example, is a 3-D world devoted to nothing but chatting
and socializing, using avatars that look like seductive, attractive models.
You'd probably prefer it to real life, because everything is just so much
prettier in There. As in the real world, one of the main activities in There
is shopping. The company created a currency, Therebucks, and tied it directly
to the value of the American dollar to prevent inflation. Players spend a
lot of time customizing their appearance (often for the purposes of flirting),
so Nike and Levis have virtual clothes that they sell solely inside the game.
Individual players, too, have become designers, creating outfits they sell
to other There citizens. "One of the leading clothes designers is making
$3,000 to $4,000 a month, which is a full-time job," says There's founder,
A place like There is not so much a game as a platform for life.
A large chunk of our everyday experiences — meetings, conversation, music,
shopping — could port nicely to a 3-D space. There Inc. is already talking
to companies about licensing "land" inside the game, so far-flung employees
can conduct meetings there instead of on the old-fashioned Internet. It's
not as far-fetched as it sounds. The U.S. military has already licensed a
private chunk of There and created a simulation of the planet on it. The
army is currently using the virtual Baghdad in There as a training space
for American soldiers.
The prospect of life moving into an area such as There both amazes
and terrifies Balkin. "So, what happens when people start doing therapy inside
a virtual world?" he asked. "Or teaching? It's a convenient place to meet,
but literally everything can be recorded. So what do you do when doctors
are meeting to talk with patients in a virtual world?"
Castronova sighs. Though he has made his career out of studying these
economies, he is dismayed by how the real world has bled into the virtual
one. "I liked it better when they were just, you know, games," he says wistfully.
He preferred the meritocratic feel of EverQuest, before all the duping and
the auctions and the bidding wars for powerful avatars. He liked the idea
of on-line worlds as a place you migrated to when, like an immigrant, you
wanted a new lease on life — just as three years ago, when, depressed and
lonely, he first stumbled into EverQuest.
His own voyage had a good ending. A few months ago, the communications
department at Indiana University in Bloomington called. They had read his
work and wanted to talk. Weeks later, they offered him a fully tenured position
in a new department. Castronova had still never published a single one of
his EverQuest papers in print; all his analyses had been distributed on-line.
"It's all PDFs and Web sites," he joked. Like an avatar in the game, he had
Clive Thompson writes about science and technology for The New York
Times Magazine, Wired, and Details, and runs the tech-culture blog collisiondetection.net.