Secondlife.com - Government Regulation

For now, the rules of "Second Life" are laid out by Linden Lab and, in particular, its creator, Philip Rosedale. Punishments for everything from violence and lewd behavior to hacking and fraud include suspension, banishment, and "the cornfield," in which players must pilot a virtual tractor and watch an educational video. Like automobile drivers, players earn points for bad behavior, and the more points the more severe the punishment. But Linden Lab is a company, not a government. While it is in the interest of Linden Lab to grow the game's economy, ultimately the company is beholden to its real-world investors, many of whom have little experience or interest in the game's daily goings-on. How long will players--especially players with an economic stake in the game--allow Linden Lab to dictate what constitutes punishable activity, and what constitutes an appropriate punishment?

For now, of course, thinking about the real-world implications of "Second Life" and other games is mostly a futurists' exercise. And there's no guarantee that such games will, in fact, become the next iteration of the Web. But relative popularity doesn't moot questions of where to draw the line between game and reality. What constitutes property rights? In a game like "World of Warcraft," where the economy is closed, the answer is simple: there are no property rights. But what if someone pays real money for land, and plans to turn a real profit? Can Linden Lab summarily shut down their development? That question may soon be answered in a Pennsylvania court, where a player, Marc Bragg, is suing Linden Lab for seizing land on which he was building a virtual nightclub, putting him out $2000. Linden claims that Bragg cheated to get the land on the cheap, while Bragg claims that the punishment was overly severe and violated his property rights. If the court rules in his favor, it could set a powerful precedent for future claims against the company--and a powerful justification for an expansion of the legal system over its operations.

Whether such an extension could actually work is a different question. Graf lives in Germany, owns "property" housed on servers in California, and works with clients from around the world. Who has jurisdiction over her business? Some observers speculate that a legal doctrine that treats virtual space as real space, analogous to the way corporations are considered "persons," will eventually emerge. Such a doctrine would mean giving games like "Second Life" quasi-sovereign status, perhaps as a national or international protectorate.