“If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thing power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulge, it forces itself into the possession of everyone, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He, who receives an idea from me, receives instruction himself without lessening mine; as he who lights his tape at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density at any point, and like the air in which we breathe, move and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.”
Thomas Jefferson, 1813
Digital technology is detaching information from the physical plane, where property law of all sorts has always found definition. Throughout the history of intellectual property law, the proprietary assertions of thinkers and inventors have been focused not on their ideas, but on the expression of those ideas. The ideas themselves, as well as facts about the phenomena of the world, were considered to be the collective property of humanity. One could claim franchise, in the case of copyright, on the precise turn of phrase used to convey a particular idea or the order in which facts were presented. Law protected expression. To express was to make physical. One did not get paid for the idea but for the ability to deliver it into reality. The value was in the conveyance and not the thought conveyed. In other words, the bottle was protected, not the wine. (Barlow, 2004)
In the realm of virtual reality, a similar situation is occurring. Many “objects” are being created in worlds that are owned and operated by large corporations who own the underlying code which enables “objects” to be created. In other words, the code is the bottle and the “objects” are the wine. A virtual object is given its meaning at the level of code, even if that meaning is only fully realized in the context of the environment. Divorcing anything from its necessary context (i.e., music without anything to play it) creates an illusion of non-existence. It is the context of virtual worlds that give virtual property its existence, and successful legal protection of virtual property depends on careful consideration of this context. The virtual world interface and the virtual property rely on each other, but their co-dependence does not make them less “real” unless one or the other ceases to exist at the code level. So long as there is careful delineation as to how far virtual property rights extend, many of the problems raised by virtual property’s uniquely digital nature may be avoided. Hence, both the bottle and the wine may be protected.
- The Acquisition of Virtual Property
A quick review of how one acquires virtual property might be useful, because everything your avatar will need costs money. (Salem & Zimmerman, 2004; Bartle, 2004) Not only will you have to furnish your avatar’s tables, chairs, grape arbour and a toilet, but all of the objects and chattels in your place are subject to wear and tear. If you want to keep attracting guests, you will have to refresh the buffet, unblock the toilet, and fix the broken pool table. All of these services have a price. Property in today’s virtual worlds is not confined to virtual realty. Houses are merely one aspect along with weapons, suits of armour, pig iron, lumber, tables, chairs, plants, magic scrolls; or any other virtual item a virtual character of Britannia might want or need which can be bought at auction. A pair of sandals starts at $5; an exceptionally badass battle-axe goes for $150; and a well-located fortress would be priced at about $1,200. (Dibbell, 2003) A simple calculation puts the total of these transactions at approximately $3 million per year. (Castronova, 2002)
Still you want to acquire a home to your avatar. There are a few ways to go about this. The first way involves spending about 40,000 gold coins and receiving a small house property deed, which is essentially a building permit. (Dibbell, 2003) Building a truly appealing home or tavern requires one to purchase walls, windows, and perhaps a pool table, all of which cost quite a lot of simoleons. One must spend time and effort to build up enough online wealth to afford the materials. To do this, one could try killing monsters with your weapons, a risky and uncertain prospect. Or one could become a skilled labourer, like a blacksmith. This means sitting in front of the computer clicking on iron ore deposits, carting them back to a forge, and knocking out breastplate after breastplate. If you do this for days on end, you will eventually accumulate enough of the local currency to afford to build your first hut. In addition to this ‘click-slavery’ of toiling over a virtual red-hot forge, you will need to pay real money – between ten and thirteen U.S. dollars – month after month for a subscription charge to the virtual world of your choice. (Dibbell, 2003) This is known as ‘click slavery’ because you are slaving over your mouse for hours and hours in a mind numbing fashion.
This method assumes that the best way of obtaining something is going to the place where it is made and then building it yourself. By analogy, consider the choice faced by a Briton in search of a Javanese totem or Incan blanket. She could travel to those places, study the art of making totems and blankets, and after years of toil produce her heart’s desire with her own hands. Most people would regard this as insanity. (Lastowka & Hunter, 2004) Alternatively, one can buy a completed tavern, built by property speculators who, like their real-world counterparts who buy prime land early, throw up an anodyne house that appeal to a broad range of would-be owners, and sell it off. (Planet Modz Gaming Network)
Another way to acquire these assets is to log on to eBay and buy your self a rather nice house in Britannia, just like Joe Dugger, mentioned earlier. There is nothing unusual about his transaction. At any given time, many Britannian houses are listed for sale online for various prices. To make this trade requires that both players be able to connect both in the virtual world and in the real world. Within the virtual world, the seller’s avatar hands over the item being traded to the buyer’s avatar. Back in the real world, the buyer/player transfers real money to the seller/player. They may use cash, if they actually meet in real life. However, more often they will use one of the usual forms of payment systems the modern financial world has devised: a credit card, a money order, a check, or credits with a respected third party. (Stephens, 2002) James Grimmelmann (2005) also posed the question, “What distinguishes the world of exchanged promises to pay and complex intermediated financial instruments from a virtual world?”
As mentioned above, this is only a small percentage of the total wealth created annually by the residents of Britannia. For each item or character sold on eBay and other web sites, numerous other items and characters are traded within the game itself. Some bartered, but most bought with Britannian gold pieces, a currency that in 2002 was readily convertible into US legal tender at about 40,000 to the dollar, a rate that puts it on par with the Romanian lei. (Castronova, 2002) The goods exchanged number in the millions, nearly every one of them brought into existence by the sweat of some player’s virtual brow. Magic weapons won in gruelling quests, custom-crafted furniture built with tediously acquired carpentry skills, characters made powerful through years of obsessive play – taken as a whole, they are the gross national product (GNP) of Britannia. (Id.)
Foreign exchanges in currency and direct investment operate constantly between the virtual worlds of Britannia, Rubi-Ka, Blazing Falls, and Norrath, on the one hand, and real-world bank accounts in the United States, Canada, Australia, and Korea, on the other. (Terdiman, 2004) The mechanics of it are simple. Possessing some valuable asset in the virtual world (say, a million simoleons or a level fifty avatar), I list it for sale in the section of eBay devoted to such auctions. The auction winner uses eBay payment mechanisms (Visa, Mastercard, PayPal) to transfer the agreed price in the real world. I then agree with the auction winner on a meeting place in the virtual world, and when we meet there I hand over the in-world property. (Stephens, 2002) This practice is so common that one can now establish reliable U.S. dollar prices for various virtual-world properties. The amount of trade is so vast that it is possible to analyze the economies of virtual worlds in the same way that real-world national economies are analyzed. (Castronova, 2002; Simpson, 1999; Barzel, 1997; Lehdonvirta, 2008)
Others look at the business potential of avatar shopping from another angle. Mindark, a private Swedish company, aspires one day to use avatar-based shopping to build a global network monopoly in internet interface. Project Entropia is a virtual world in which every object that an avatar may own will be available for sale direct from the company for the player to own also. (Damgaard, 2002) This move envisions making corporate peace with the auction markets by making them completely unnecessary. Their scheme is to create a virtual world of colossal scale, so that millions can use it at any time. The virtual world would be without charge, but people would be allowed to use their credit cards to make transactions within the virtual world. The world designers would then wait for the society and markets to develop, and invite Earth retailers to open three dimensional stores in the virtual space. This is still being developed. It took a leap forward with the sale of a space resort. At that point, your Lara Croft doppelganger avatar will be able to follow up her tough day of adventuring with a run into the nearby virtual Land’s End — to buy Lara’s owner a new dress, for real money. Land’s End offers customer’s the ability to create a virtual model of themselves which can try on virtual clothes which can, in turn, be purchased in reality. (see, My Virtual Model at www.landsend.com and follow the links.)
The commercial potential of virtual worlds is striking, and well worth noting. The exchange rate between Norrath’s currency and the United States dollar is determined in a highly liquid currency market, and its value in 2002 exceeded that of the Japanese Yen and the Italian Lira. The creation of dollar-valued items in Norrath occurs at a rate such that Norrath’s GNP per capita in 2002 easily exceeded that of dozens of countries, including India and China. (Castronova, 2002) Mindark wants to tap into that kind of market. In the past, the discovery of new worlds has often been the event of the century for both the new world and the old. The new world typically has a precursor, an unlucky explorer who has become lost and has wandered aimlessly about in strange territory, but who has had the wit and good fortune to document what he has seen, his impressions of the people, and the exciting dangers he has faced, for an audience far away. (Id.)
As such, the industries that produce these shared virtual reality environments have continuously and rapidly evolved. Advances in connectivity (bandwidth) and interfaces (haptic devices, heads-up displays) have been driven by technology. The amount of available content (narratives, folklores, back stories) has unfolded as huge corporations have begun to transform deeply enmeshed cultural icons into virtual reality spaces. The video game industry has begun to surpass the motion picture industry in gross revenues. According to the Los Angeles Times, game industry revenues were $9.35 billion in 2001, of which $3 billion was for hardware. Total Hollywood box office revenues in 2001 were $8.4 billion. The video game industry had $8 billion dollars in sales in 2004 which translates into an $18 billion impact on the U.S. economy. Estimates call for video game sales to grow to $15 billion by 2010. (Reuters May 10, 2006: Study: Video Games Worth $18 Billion to U.S.)
Sony preserves the world of Star Wars Jedi Knights. Sony, Microsoft, Electronic Arts, and others compete in the realm of Tolkienesque worlds of elves and hobbits. Electronic Arts maintains a vastly popular virtual world of Sims whose beings/characters would be unremarkable and frankly dull except for the fact that they exist only in a cyberspace reality. As the phenomenon continues to develop, the cumulative amount of time devoted to shared virtual reality spaces is likely to rise from today’s tens of thousands of person-years into the hundreds of thousands or perhaps millions. (Sellers, 2006; Terdiman, 2006)
- Crafting v Creating
The craving to create and customize is a significant force. In Britannia, the popular fantasy world operated by Ultima Online, players who would like to embellish their homes must come up with convoluted yet sophisticated strategies for amalgamating in-world objects in order to produce images that look like real world items. For example, there are several different techniques for assembling pianos that involve dozens of different objects, ranging from wooden crates and chessboards to fish steaks and fancy shirts. (Ultima Online Renaissance Playguide, 2000) Other forms of user created content are Mods. Mods are a user modification of the source art, 3D characters, environments, or game engine of a commercially produced video game. David Kushner (2003) describes the process of game “modding”, or directly modifying the fame’s code to allow new forms of gameplay or other significant changes. For a general background on Modding, see Wikipedia, Mod (Computer Gaming), http://en.wikipedia.org/wiki/Mod_(computer_gaming). Note that wikipedia.org is a collaborative information website which can be edited by its visitors, and so its content may be updated frequently. In practice, much Mod-related information is exclusively available on such websites and electronic forums. Modding is generally a decentralized endeavour that relies heavily on collaboration via the internet. Those working on the same project may often never meet in person, or even reside in the same country. The digital dissemination of Mod-related information and discussion reflects this trend.
Mods fall back on the fact that many first person shooter games, and some other adventure games, allow players to modify the content via some combination of artwork and game play. The more adaptable the engine or platform is, the more variety in the mods. So an original first person shooter game can be morphed into anything from a driving game to architectural walkthroughs. There are websites that provide an audience and reviews for these mods. This web-community operates as a training ground or boot camp for artists and developers who want to work on games. An example of this would be PlanetQuake Featured Mods at http://www.planetquake.com/features/motw.
John Diamond is a professional game designer who went by the call sign “Irritant”. A common ritual in the gaming culture is to use a professional nickname reminiscent of fighter pilot’s call-signs. Ten years ago, this moniker turned out to be prophetic. In 1997, Irritant and other programmers were working on an amateur project involving Mods called “Alien Quake”. It was a planned Mod of the Id Software game “Quake” where the original game’s environments and the monsters that had populated them would be entirely replaced by the characters, environments and sounds depicted in the Alien movie franchise. (Mogul Interview, 2004) In the vernacular of modders, this extensive level of alteration was referred to as a “Total Conversion”. However, Twentieth Century Fox, owner of the rights to the Alien films, was not happy. It demanded complete destruction of all the work of Irritant and his team. The previous homepage of the “Alien Quake” project now displays (and has done so for nearly ten years) simply the following message:
“The Alien Quake project has been discontinued by 20th Century Fox. I received an email on April 11th, 1997, form a 20th Century Fox representative that ordered us to cease all activity. The Alien Quake project was using copyrighted material without permission and this make Alien Quake an unauthorized and illegal production. Therefore, you are herby ordered to remove all you Alien Quake files from your computer storage. You must also remove all references to Alien Quake from any www pages or internet sites you keep or maintain. All distribution of Alien Quake is illegal and you should know that the Alien Quake team is under an obligation to report the name and URL of any distributor to 20th Century Fox. Please let us know if you know the URL of a distributor or potential distributor. Thank you for your cooperation.” (Former Alien Quake Homepage, http://student.nada.kth.se/~nv91-gta/quake/.)
The reaction spawned a term among later Modders for such heavy-handed legal tactics: Irritant was the first person to get “Foxed”. (Smith, 2001; Binary Bonsai, 2004)
The distinction between the Quake mods and the Britannia piano is a particularly significant point. The Quake mods allowed the players to change the behaviour of the game; whereas, the Britannian piano cannot be played. It looks like a piano, but it is only a stack of crates, a chessboard, and fish sticks. This is an obvious yet very useful example of the difference between craft and creation. Ironically, in a medium where these user content contributions are more significant than in other previous mediums, the law has generally been reluctant to grant formal protection (such as ownership) to these contributions. This reluctance is in part due to the legal analysis that has focused principally on the computer code underlying the game, rather than on the player’s experience of the game. This distinction is particularly interesting when compared to the existence of doctrines (involving artistic appropriation and fair use) that have developed in other media to balance the rights of the original creators of intellectual property with subsequent creators’ rights to expressive re-imaginings of that original material. A comparable case can be found in Mattel v MCA Records, 296 F.3d 894 (9th Cir. 2002). The Danish band, Aqua, released a song entitled “Barbie Girl” with lyrics that included “I’m a blonde bimbo girl/dress me up/make it tight/I’m your dolly.” Mattel sued MCA records for trademark infringement. The United States Court of Appeals for the Ninth Circuit held that “Barbie Girl” was not purely commercial speech and therefore fully protected under the First Amendment. (Meikle, 2002) It demonstrates what would need to change as to which bits would need protection is which context.
The malleable nature of these games and the connectivity of the internet have encouraged a phenomenon no other medium of mass entertainment has embraced so completely: a symbiosis of content creation. There are fan-created stories involving popular fictional characters, such as those archived at FanFiction.Net, http://www.fanfiction.net which has an extensive history as well. However, evidence of any re-incorporation of such fiction into new content produced by the character’s original creators is extremely rare, in comparison to the commonplace incorporation of Modded content (or hiring of Mod programmers) by a game’s original developers. (Kushner, 2003) While commercial entertainment software companies design and publishers release the initial game product, the players of the games are themselves responsible for creation of additional content, which then contributes to, expands, and sometimes eclipses the original game and its player experience. (Hyman) Many players were purchasing the game “Half-Life” simply to be able to play the user-created Mod “Counter Strike”. Because technology requirements, Mods are generally only created for games played on PCs. Microsoft has recently announced the “XNA Creators Club”, which allows individuals to create and release games for use on its Xbox 360 game console for others to download and play – but only by other subscribers to the Club (at $100 per year). (Duffy & Carless, 2007) Some hold that crafting is not creating in the realm of MMORPGs. Crafting is merely the process of ‘levelling’ or advancing your character or avatar through repetitive generation of game objects. Levelling relies on a complicated system of skills and progressions that permits the player to acquire new abilities, travel to new portions of the world, and generally become more powerful. (Crafting Level 1 at http://starwarsgalaxies.station.sony.com/content) The objects generated through crafting are selected from the repository provided by the game developers. These object may be used by the crafting player, sold to other human players within the game or sold to non-player characters (‘NPCs’) added to the game by world developers solely to act as buyers. These automated buyers are essential because player levelling causes large quantities of items that are not useful or desired to be generated, so the NPCs are needed to drain the unwanted items from the system. (Ondrejka, 2005; Castronova, 2006)
In the real world, objects or goods are created out of component parts of lesser value. A piano, for example, may be built from timber, wire, and ivory (or plastic nowadays). Even though raw materials may have negligible value, the end product piano may be exceedingly valuable due to time and effort added in order to create not only a functional piano, but a beautiful and perfectly pitched piano. This vital type of added value is intrinsic in the real world but is conspicuously absent from virtual worlds. Again, the Britannia piano cannot be played.
For the reason that most crafting systems involve the gathering of ‘raw materials,’ and newer MMORPGs are adding more complicated schemes, the crafting being accomplished gives the appearance that value is being added in the same way as real-world creation. This may not be accurate. Game developers use crafting based on ‘raw materials’ to slow the rate of production, to limit the crafting of the best items, and to extend the life of content by obscuring which items are the best. (Id.) Production is slowed because players must take the time to acquire the correct combination of raw materials. Crafting of the best items is limited through artificial scarcity of raw materials. (Id.) The players must search through a larger design space which, in turn, takes more time to discover the items. This adds to the slower spread of items through the community.
Nevertheless, the players are still merely picking from the set of objects that the world developers constructed for the game. Competitive pressures merged with communication between players will force rapid convergence onto the best items. The value of some of these items will be increased due to scarcity, but this is fundamentally different from the value added in real world creation. Players cannot truly innovate because they are still just choosing from the items supplied by the developers. (Ondrejka, 2005)
Developers believe that they are creating new worlds in which communities can be formed and stories can be told. Players see this in a slightly different light. They use the game platform to create identities, have adventures, and tell their own stories. This altering process could be compared to starting with the pieces of a chessboard, incorporating a pair of dice, and creating a game like “Risk”. (Baldrica, 2007) The technologies for producing animated motion pictures and building virtual worlds have been converging. The design of movies and virtual worlds are similar; however, virtual worlds require interactivity. Interactivity makes virtual worlds a better medium for the communication and exchange of ideas than motion pictures. Not only can the game designer exercise his imagination in the creation of new worlds, but so do the players. Motion pictures allow images to be viewed by a mass audience; but multiplayer online games convert that mass audience into active participants and storytellers. (Metz, 1982)
Virtual worlds permit contingent events, path dependencies, and cumulative effects. In short, they permit the development of histories. They allow the players to formulate new meanings, to engage in new adventures, to take on new personas, to form new communities, and to express themselves and interact with and communicate with others in ever new ways. (Balkin, 2004) “A virtual world is a computer-simulated environment intended for its users to inhabit and interact via avatars. This habitation usually is represented in the form of two or three-dimensional graphical representations of humanoids (or other graphical or text-based avatars). Some, but not all, virtual worlds allow for multiple users. The world being simulated typically appears similar to the real world, with real world rules such as gravity, topography, locomotion, real-time actions, and communication. Communication has been in the form of text in current examples of an online world. One perception of virtual worlds requires an online persistent world, active and available 24 hours a day and seven days a week, to qualify as a true virtual world. Although this is possible with smaller virtual worlds, especially those that are not actually online, no massively multiplayer game runs all day, every day. All online games include downtime for maintenance that is not included as time passing in the virtual world. While the interaction with other participants is done in real-time, time consistency is not always maintained in online virtual worlds. For example, EverQuest time passes faster than real-time despite using the same calendar and time units to present game time.” (http://en.wikipedia.org/wiki/Virtual_world)
Many (not all) virtual worlds allow avatars to be modified over time. Many (not all) of those modification allow the avatar to achieve more, or to achieve it more easily, to wield greater power within the virtual world, or just to see cool things in the game. (Salem & Zimmerman, 2004; Bartle, 2004; Grimmelman, 2004) Sometimes, it is the virtual objects that come into the avatar’s possession that provide the benefit. These objects could be virtual currency, virtual weapons, virtual gadgets, and so on. It matters not whether these increased possibilities are treated as attributes of the avatar or as a distinct virtual item. They are always desirable. They could be confirmation of success, the keys to unlocking Jedi mastery, or markers of social status. As such, for most all the reasons that people lust after possessions in the real world, they lust after possessions in virtual worlds. (Id.; Bartle, 1996; Yee, 1999-2004) A thriving trade follows. (Dibbell, 1995; Simpson, 1999) As history has demonstrated, where there is capital, there is law to protect it. In the case of Morissette v United States, 342 U.S. 246 (1952), the Supreme Court remarked that, “Stealing, larceny, and its variants and equivalents, were among the earliest offences known to the law that existed before legislation.”
Thus players accumulate not just experiences but property. “Property [being] nothing but the basis of expectation,” according to Bentham, “consist[ing] in an established expectation, in the persuasion of being able to draw such and such advantage from the thing possessed.” (Munzer, 1990, citing Bentham) Curiously, although Bentham argued strongly for the constructed nature of property, he considered the absence of property — poverty — to be natural: “Poverty is not the work of the laws; it is the primitive condition of the human race. . . .” Munzer (1990) characterizes the idea of property-as-‘thing’ as the popular conception and property-as-relations as “the sophisticated version of property.” He also notes that “property, conceived as a legal structure of Hohfeldian normative modalities, makes possible legal expectations with respect to things.” (Id.) The relationship between expectations and property remains highly significant, as the law “has recognized and protected even the expectation of rights as actual legal property.” (Powell, 1990) Munzer (1990) argues that property cannot be equated with expectations, but that expectations are part of the psychological dimension of property. This theory does not suggest that all expectations give rise to property, but those expectations in tangible or intangible things that are valued and protected by the law are property. The bits of code which players collect in the perceived shape of goods are expectations that those goods are really owned by them. “A commodity is a commodity. If it is worth something, people are going to work hard to make the money. In China, there is a matter of fact attitude about it.” (Robbie Cooper quoted by Twist, 2005)
In fact, the difficulty lies not in identifying expectations as a part of property, but in distinguishing which expectations are reasonable and therefore merit the protection of the law as property. (Harris, 1993) Joseph Sax asserts: “The essence of property law is respect for reasonable expectations. The idea of justice at the root of private property protection calls for identification of those expectations which the legal system ought to recognize.” (Sax, 1980) Virtual property may not be protectable from a loss of context. For example, would it be reasonable to enjoin a game company from terminating games simply because there are participants that own virtual property in them. This could be seen as being unconscionable for the courts to force game companies to continue operating a game so that participants could keep using their virtual property. It is conceivable that a game’s virtual property will someday be of greater value than the ownership of the game itself.
For example, in Project Entropia there have been sales of $26,000 and $100,000 for virtual property. Consider a case where a game company is losing $1 million per year running a game, the game itself is worth $2 million, and the virtual property in the game is worth $100 million. Such a case provides a quandary insomuch as there is more value in continuing the game than in allowing it to cease operations. However, it would be unconscionable to force the game company, for whom the game is losing money, to continue funding its operation. Would it be better to allow the game company to tax the virtual property, thereby making up the yearly loss? How much tax would be justifiable or quantifiable? Should the courts force an auction of the game, thereby providing a market mechanism for game continuation to the virtual property owners? Should the government take over operation of the game? A scenario like this is unlikely to happen in the commercial game development context, where the game provider has the opportunity to increase subscription fees (similar to a tax) and sell virtual property itself to create additional revenue streams. There is, perhaps, no good solution in the context of freely available games. Mind Ark uses this approach with Project Entropia, which gives free accounts to anyone and charges in-game currency for items. In some other game companies, the game provider itself sells in-game currency and virtual property for real money. (Entropia Universe, http://www.entropiauniverse.com)
There is another difficulty when determining the line between change of context and loss of bits. If a game provider replaces one virtual sword with another, is it a prohibited deletion? If a game provider replaces a virtual sword with a virtual gun, is it a deletion? If a game provider replaces a virtual sword with virtual armour, is it a deletion? If a game provider replaces a virtual sword with gold, is it a deletion? Deleting an item completely from a character account should be prohibited. However, what about deleting one characteristic of a virtual sword, such as the ability to automatically slay a certain type of monster? Is that a deletion of virtual property or just changing context?
Bits should be protected from effectively complete devaluation. Game companies should not be allowed to continue to provide a game (continuation of the context) but prohibit the use of, or completely devalue, the existing virtual property. This will be an area of great debate. Suppose that a game company introduces a type of virtual armour in a game. Users determine a way to use the armour to make their in-game characters effectively invincible, thereby making the armour very valuable. This is a problem for the game company, which strives to keep a game ‘balanced.’ “Balancing” a game refers to ensuring that no particular type of virtual property is significantly more powerful than other alternatives. However, there is value to the virtual property, and if the game company deletes the armour, then the users will lose this value, which would be similar to the situation in which the virtual property is lost or stolen. The game company should, however, be allowed to modify the context of the bits by changing the unbalanced aspects of the armour. However, this raises the question: what is the line between total devaluation and partial devaluation? Is it the case that when the context of the invincible armour is changed, so that it is only as good as other armour, its value is so much lower that it is effectively valueless? Perhaps. These are the borderline questions that should go to fact finders to make the decision.
Recently the World of Warcraft was hit by a mysterious rampant plague. It began as a new especially challenging dungeon was opened which featured a dungeon boss, called Hakkar the Soulflayer, who cast a spell called Corrupted Blood (a reference to King Lear). Such powerful spell attacks are not unusual in this game world. But what happened next was just plain weird. When infected adventurers returned to town at the end of their quest, they inadvertently passed along the Corrupted Blood infection to those nearby. “The most interesting thing about this ‘outbreak’ is perhaps the reaction of the World of Warcraft players. Instead of being angry about the deleterious effects of a bug, many are treating this as an exciting and unprecedented event in the World of Warcraft universe. It would be even more interesting if epidemiologists in the real world found that this event was worthy of studying as a kind of controlled experiment in disease propagation.” Jeremy Reimer on Ars Technica (2005) was quoted as saying.
Although the existence of certain property rights may seem self-evident and the protection of certain expectations may seem essential for social stability, property is a legal construct by which selected private interests are protected and upheld. In creating property ‘rights,’ the law draws boundaries and enforces or reorders existing regimes of power. Singer (1992) argues that, in deciding what contract and what property rights to enforce, the state endorses the power of one party over the other or prevents one party from exercising power to the detriment of the other. Thus, the state makes allocative decisions in all transactions, public or private. The inequalities that are produced and reproduced are not givens or inevitabilities, but rather are conscious selections regarding the structuring of social relations. In this sense, it is contended that property rights and interests are not ‘natural,’ but are ‘creation[s] of law.’ Justice Holmes’s dissent in International News Service v Associated Press stated that “[p]roperty, a creation of law, does not arise from value. . . .” 248 U.S. 215, 246 (1918).
- The Allocation of Rights
Professor Joshua Fairfield (2005) in an article entitled Virtual Property has taken up the utilitarian justification of property rights in virtual world objects and expanded upon it with a law and economics justification. First, he posits that property rights are generally granted in newly emerging resources in order to provide incentive for their proper development and use. (Id. at 1065) Next, he reasons that due to the interdependent nature of virtual environments, improper allocation of property rights in virtual environments can lead to an undesirable anti-commons. (Id. at 1076) The overlapping property rights in an anti-commons prevents anyone from making beneficial use of the property thus reducing overall value. Therefore, property rights ought to be allocated in a manner that cuts across potential conflicts and allows the use of the object to which the property rights attach. Because virtual world objects define such a useable object, they are the proper unit in virtual environments to which property rights should be attached. (Id. at 1077)
From the virtual world creators’ point of view, the company produces the game and provides access to the servers on which it operates, “runs” the world and therefore owns everything. For example, in the Everquest User Agreement and Software License, Sony claims to own the entirety of a player’s character: “We and our suppliers shall retain all rights, title and interest, including, without limitation, ownership of all intellectual property rights relating to or residing in the CD-ROM, the Software and the Game, all copies thereof, and all game character data in connection therewith. You acknowledge and agree that you have not and will not acquire or obtain any intellectual property or other rights, including any right of exploitation, of any kind in or to the CD-ROM, the Software or the Game, including, without limitation, in any character(s), item(s), coin(s) or other material or property, and that all such property, material and items are exclusively owned by us.”
When a player makes a character in EverQuest or some other MMORPG and grows it into a powerful entity, the company typically claims to own the character and its possessions as its intellectual property to the same degree it claims to own the copyrighted computer code used to generate the image of the character on the player’s screen. So, one of the conditions of use for the game is that Sony requires all players to agree that they do not own the character via a lengthy End-User License Agreement (“EULA”) that pops up every time they start the game which a player must click through in order to enter Norrath. The Everquest license reads, in part: “You acknowledge and agree that you have not and will not acquire or obtain any intellectual property or other rights, including any right of exploitation, of any kind … in any character(s), item(s), coin(s) or other material or property, and that all such property, material and items are exclusively owned by us.” (Id.)
Although Sony encourages most economic activity when goods and services are exchanged for plat (in game currency), the EULA forbids the same sales for U.S. dollars. “You may not buy, sell or auction (or host or facilitate the ability to allow others to buy, sell or auction) any Game characters, items, coin or copyrighted material.” (Id.) In fact, Sony asserts that efforts to sell the character, the character’s equipment, the character’s plat, or even to offer to power-level (or accept an offer to be power-levelled) for real-world profit gives it the right to terminate a player’s access by giving the character itself the (in-game) death penalty for the commercial activities of the player in the real world. The EverQuest EULA states:
“We may terminate this Agreement (including your Software license and your Account) and/or suspend your Account immediately and without notice if you breach this Agreement or repeatedly infringe any third party intellectual property rights, or if we are unable to verify or authenticate any information you provide to us, or upon gameplay, chat or any player activity whatsoever which we, in our sole discretion, determine is inappropriate and/or in violation of the spirit of the Game as set forth in the Game player rules of conduct, which are posted at a hotlink at http://www.everquestlive.com. If we terminate this Agreement or suspend your Account under these circumstances, you will lose access to your Account for the duration of the suspension and/or the balance of any prepaid period without any refund.” (Id.)
Furthermore, Sony claims that it has actively sought out and banned players who farm plat for the purpose of selling it for U.S. dollars. (Posting of Smed (John Smedley President, Sony Online Entertainment) to Everquest II Official Forums) From Sony’s perspective, such a ban is likely deemed necessary to prevent a breakdown of the virtual world itself. This is not entirely accurate. The use of U.S. dollars to purchase virtual-world goods does not cause the virtual world economy to break down. It merely changes the game’s atmosphere. Real-world wealth can replace in-game effort. This can taint the successes of those who “work” for their items within the game’s environment. Thus, according to Sony, such a ban on a secondary market is necessary because it preserves the quality of the primary market. Under the rule of reason, an otherwise anticompetitive restraint may be deemed pro-competitive if the product would cease to exist without such a ban. The U.S. Supreme Court held in Nat’l Collegiate Athletic Ass’n v. Board of Regents, 468 U.S. 85 (1984) that such a claim is a fairly standard defence in many antitrust cases, such as in a horizontal joint venture.
Virtual property rights in all of the virtual worlds are demarcated by EULAs. An in depth look at these contracts will be provided in Chapter 7. However, a brief look at the divergent types of virtual worlds is needed here. They can be labelled as property-opposed worlds, the virtual world creators who openly reject virtual property rights, in contrast to property-endorsing worlds, whose creators have granted property rights. Since virtual worlds first began, a huge market for virtual products has emerged. However, most virtual world EULAs prohibit the trade of virtual products outside the virtual environment. They further deny any property claims players may assert against them, even within the virtual environment. Unfortunately, any legal dispute between users and operators over virtual property in such worlds would likely be decided by these agreements.
- Property-Opposed Worlds
The EULAs of property-opposed worlds deny all virtual property rights which may allow for a claim against a virtual world creator. World of Warcraft (WoW), the most popular virtual world in the United States, is a good example. Blizzard Entertainment, which owns and operates World of Warcraft, includes the following in its EULA §8:
“You may not purchase, sell, gift or trade any Account, or offer to purchase, sell, gift or trade any Account, and any such attempt shall be null and void. Blizzard owns, has licensed, or otherwise has rights to all of the content that appears in the Program. You agree that you have no right or title in or to any such content, including the virtual goods or currency appearing or originating in the Game, or any other attributes associated with the Account or stored on the Service. Blizzard does not recognize any virtual property transfers executed outside of the Game or the purported sale, gift or trade in the “real world” of anything related to the Game. Accordingly, you may not sell items for “real” money or otherwise exchange items for value outside of the Game.”
The contract is clearly adamant that the players do not have any right to the accounts for which they pay, let alone to any virtual property within those accounts. As such, players have no right to buy, sell, gift, or trade any such goods. This provision is regularly breached. Elsewhere in the EULA, Blizzard asserts that it owns all objects in the game, and that it may terminate user accounts at any time, for any reason. (§7 WoW EULA)
Another highly popular world is owned by NCsoft, the operator of Lineage. The Lineage User Agreement § 4(d) also strictly limits user rights which includes the following: “[Y]ou agree that you do not own the account you use to access the service, the characters NC Interactive stores on NC Interactive servers, [or] the items stored on these servers ….” Lineage, in contrast to WoW, allows players to upload their own content into the virtual world. Nonetheless, the EULA limits a player’s rights even as to her own content. She must agree to grant the operator a perpetual right to do essentially anything the operator wants with the player-created content. (Id. § 6(c))
These EULAs are representative of property-opposed virtual worlds. Their terms deny users any claims to virtual property. A pragmatic argument in favour of virtual property rights would be to point out that players are trading over $200 million in virtual property, they must be relying on property rights. A related policy argument would be that courts should protect virtual property rights because failing to do so would destroy an otherwise viable market. (Westbrook, 2006) From an outside point of view, players seem to have exclusive possession of their virtual products along with an ability to transfer those products to others. According to this argument then, to deny the existence of property rights under such circumstances would be ignorant or naïve.
The virtual world operates disagree. First, trade among players may suggest the existence of rights; but there is no clear underpinning structure to these rights between players and operators. Second, the very conditions that give rise to putative property rights are controlled by the virtual world operators, themselves. Despite appearances, the virtual world operators know that they possess the virtual products insofar as they possess the entire world. They can prohibit transfer by changing the code. They can destroy any value virtual products might have by providing identical goods to every player. They can even destroy all products by shutting off the world completely. On the other hand, doing any of these things may destroy their business.
- Property-Endorsing Worlds
As stated earlier in this work, Linden Lab’s Second Life purports to be different. Second Life announced that it would protect the virtual and intellectual property rights of its residents. Linden Lab’s CEO, Philip Rosedale, has said, “We like to think of Second Life as ostensibly as real as a developing nation …. If people cannot own property, the wheels of western capitalism can’t turn from the bottom.” (Baage, 2006) To the users of his world, Rosedale says, “You create it, you own it–and it’s yours to do with as you please.” (Id.) Linden Lab even sells virtual land directly to users, who can have their own island for $1,675 plus $295 per month. (Second Life–Land: Islands) Linden Lab appears strongly committed to protecting the virtual property rights of Second Life residents.
The simplest way for residents to create objects is by clicking an option that opens a small winder where the resident can find a set of building tools. The resident then selects from primary building blocks choices called graphic primitives, or “prims”. The resident controls and manipulates the dimensions of the prims, attaches other prims to it, then colours the result object. A separate function allows the application of a variety of textures to various parts of the object as desired. Each object that is created can then be fashioned together similar to Legos in order to create more complex objects. A function also allows the user to create an exact replica of this object. This replicating facility allows for easier building of complex objects. For example, it allows the residents to create lots of bricks in order to build a structure. There a basic templates for the less experienced residents as well. The physics of these prims are also geared to the physics of the virtual world, so that residents can have a reliance on ordinary physical characteristics. For example, permeability and density are embedded into objects so that a wall to a building cannot ordinarily be penetrated.
There is also a simple script that allows users to write code which allows their objects to move. So, once a resident has created a car, she can then use this script to allow for motion and steering commands. The resident can also create a balloon to follow them or candles that will burn down and out. There is an area called Svarga where whole ecologies grow up seedlings, to tree, flower, and then die along with the bees that then re-pollinate and start the process of rebirth. When a resident wants to create or continue working on a creation, they can access the platform provided tools through an edit option which re-opens the building tools window. If the resident does not want to leave their creation unattended (and many areas of Second Life do not allow unattended objects to be left), then the resident stores her creation in an inventory folder. If she would like others to be able to interact with her creation, then she must rent or purchase land. On this land, the resident may create her own landscapes and set rules, permitting or banning activities such as building or commerce by non-authorized residents. (Marcus, 2008)
A careful reading of the Terms of Service suggests, however, that Linden Lab’s protection of residents’ property is not as vigorous as it first seems. The Terms of Service state: “[Linden Lab retains] the perpetual and irrevocable right to delete any or all of your Content from Linden Lab’s servers and from the Service, whether intentionally or unintentionally, and for any reason or no reason, without any liability of any kind to you or any other party ….” Linden Lab retains the right to destroy content in a virtual world where everything is content. To the extent that this license term is valid, residents have no claim against Linden Lab even for the loss of all of their property. While Linden Lab is happy to sell you an island for almost $2,000, the Terms of Service emphasize: “Linden Lab does not provide or guarantee, and expressly disclaims … any value, cash or otherwise, attributed to any data residing on Linden Lab’s servers.” In other words, the virtual world operator has no obligation to protect the value of players’ property, and it reserves the right to do anything it wants with that property. This includes the right to copy, use, reproduce, or analyze user content for almost any reason. (Terms of Service)
The seeming disparity between Rosedale’s statement and the Terms of Service may be reconcilable. Rosedale and Linden Lab are committed to virtual property rights insofar as they are committed to protecting and fostering a resident’s stock of in-world goods, and to protecting a resident’s in-world property rights against the infringement of other users. In short, Linden Lab is committed to protecting property in resident-resident conflicts but not in operator-resident conflicts. Linden Lab may be expressing, in part, a commitment to respect residents’ intellectual property rights as well as resident-resident virtual property rights. This commitment would not preclude them from deleting resident-copyrighted designs, for example, and would be consistent with its EULA. The case of Bragg discussed below
demonstrates Linden Lab’s commitment to protecting residents’ rights. The case shields residents from those who wish to obtain property through questionable or fraudulent means. Moreover, Linden Lab’s failure to protect all possible residents’ property claims may just be a necessary precaution. They may not be able to remain in business if faced with the risk of a server failure deleting vast amounts of resident property, and opening them up to millions of dollars in liability.
- Which rights within the ‘bundle’ should be allocated to virtual property?
Returning to Wesley Hohfeld’s (1917) bundle of rights theory, his analysis of property states that “what the owner of property has is a very complex aggregate of rights, privileges, powers and immunities,” not in a thing (in rem) but rather against other people (in personam). Accepting that what one creates in the virtual world is owned by that creator, what would that actually entail? The Terms of Service serves as the framework for the virtual world. It will set out the rights of the player and create the tools to protect them.
- The Right to Exclude
The right to exclude protects property owners from various kinds of trespass, and has been held by the U.S. Supreme Court in Kaiser Aetna v. United States, 444 U.S. 164 (1979)
to be “one of the most essential sticks in the bundle of rights that are commonly characterized as property.” This right becomes interesting in a virtual environment due to the availability of code-based exclusionary measures. With regard to personal property creations in Second Life, once a resident has created her object, she controls the permissions that allow or not other residents from certain types of activities including subsequent transfers, modifications, and identical copying. The permissions are enabled by clicking boxes on the editing menu. If a resident allows others to modify her object, the any resident has access to the object and can edit and modify it using the same tools in the same manner as the original creator. Upon transfer of an object, the new resident-owner may set any of the enabled permissions for subsequent transfers.
With regard to virtual real property, another way to express the right to exclude is the right to visit. The most basic rule for virtual real estate is to allow all residents access to all areas. However, this would render ownership meaningless. So, the virtual world operators must allow owners the ability to choose who is allowed to enter their property. Unfortunately, trespass remains a problem. In Second Life, a French political party’s virtual headquarters was the target of a protest that developed into a riot and minor war. The disruption was so severe that portions of the party’s virtual headquarters were destroyed, and it had to relocate its in-game headquarters. (New World Notes, 2006) Despite the damage to the building and the forced relocation, the party had no recourse for the trespass or the destruction of its virtual property. This sort of situation will become more commonplace in virtual worlds as more real world entities establish a virtual presence. Resolving this problem in a virtual environment requires very little legal intervention with a right to visit permission.
The right to visit is usually perpetual, non-transferable, and subject to revocation by the owner. An example of the types of permissions would be the distinctions between the following: Visitor, Guest, Resident, Tenant, Acquaintance, Associate, Friend, Ally, Partner, and, of course, Owner. Each of these can be further customized with respect to the number of permissions, and to special object with their own special rules. This would include being able to automatically exclude specific avatars. This takes the form of an eject button (the equivalent of throwing a specific person out of a club), or a ban function (the equivalent of an unbreakable “No Trespassing” sign that would apply only to select avatars or to everyone but select avatars).
- The Right to Possess
Possession is a more complicated right to resolve in the context of virtual environments. Due to the unique digital nature of virtual property, it is capable of being possessed in two distinct ways: (1) in the real world, and (2) within the virtual environment. More importantly, it is capable of being possessed in both ways simultaneously, since even as users possess the virtual property within the environment, the developer’s possession of the actual data remains uninterrupted. Keith Hunt (2007) proposed a “co-possession” approach that would allow both the developer and the player to simultaneously possess the virtual property depending on whether the player was actively logged in. Co-possession can be thought of as a type of joint tenancy, except that parties would be granted asymmetric interests based on a bailment standard. Bailment is “the rightful possession of goods by one who is not the owner.” (Black’s Law Dictionary, 1990) As a result of this possession, the bailee (possessor) owes the bailor (owner) a duty of care. Applied to virtual worlds, the developer would be considered a bailee that possesses the virtual property for the entirety of its existence. Players, in contrast, should only be considered to possess virtual property whenever logged in, since that is the only time they are able to transfer, delete or otherwise modify the virtual property. (Balkin, 2004)
Co-possession becomes most important while the player is logged into the virtual world. During this time, both parties can manipulate the virtual property (i.e., delete it, alter it or transfer it). Thus, both should be considered to possess it. During co-possession, the player would be solely liable for anything that happened to the data within the virtual world (i.e., for “handing” it to another character). Developers would be liable for anything that happened to the data outside the context of the virtual world (i.e., a hacker moving virtual property from one player’s data file to another’s). This would, in turn, limit the developers’ liability to risks it can be expected to control. (Hunt, 2007)
- The Right to Transfer
The free alienation of virtual objects occurs even in property-opposed virtual worlds so long as the transfers are based on the local currency, and within the context of the game. Some companies have attempted to ban out-world transfers with limited success. So although the world is Tolkienesque, the Middle Earth trappings are mostly superficial from a cultural perspective. The transfer of virtual chattels remains as familiar as the transfer of real chattels. If your avatar wants to sell her invulnerable chain mail armour, she is free to do so. If she wants to seek multiple in-game buyers, there are well-known markets within each world where she might peddle her goods. These change regularly. Finally, if your avatar dies, others can strip the armour from her lifeless body and make it their own. However, rules vary from world to world.
In Second Life the right to transfer virtual goods is highly encouraged. Adding to the total collaborative experience is the point of Second Life. Residents post and provide scripts which are either given away or sold within and outside the platform through a library-themed forum, in-world instructions that residents post at various locations, and simple in-world inter-avatar interaction. In practice, any and all property from Second Life can and is transferred (sold) on sites such as eBay. In direct contrast to property-opposed worlds, Second Life believes that this is good for their business, and they have developed a friendly relationship with eBay. This is of comfort to the businesses who wish to conduct their business within Second Life.
- Current Legal Developments in Virtual Property Rights
It is one thing for property to be recognized within a virtual world; quite another for this fact to have any significance in the real world. Yet, property interests in the virtual worlds bleed over into the real world, and assets accumulated in a virtual world sometimes have value in the real world. (Lastowka & Hunter, 2004; Castronova, 2001) A gamer, David Storey of Australia, spent £13,700 on an island in Project Entropia and has recouped his investment according to the game developers. The character, Deathifier, made his money back in under a year by selling land to build virtual homes as well as taxing other gamers to hunt or mine on his island. (BBC News, 2005/11/09; Market Wire, Nov. 8, 2005) Already, cases have been filed over the ownership of various virtual assets. For example, a California company called BlackSnow Interactive set up a “point-and-click sweatshop” in Tijuana, Mexico. (The Unknown Player, 2003) Their business plan was based upon the disparity between the value of labour in first and developing worlds as well as between real world and virtual world. The possibility of arbitrage existed and created an incentive for this type of indirect employment. If the effective hourly wage is greater in Norrath than in the real world, then it is possible to extract this differential. (Press Release, 2002) So, they hired locals to sit and play Dark Age of Camelot. The ‘employees’ would generate a lot of in-game wealth and assets. This is called “gold farming.” (Barboza, 2005) BlackSnow would in turn sell these items at on-line auctions.
They were caught by the webmasters and their accounts terminated. Mythic Entertainment, the owner of Dark Age of Camelot, attempted to prevent the commoditization of their world by forcing eBay to remove all in-world virtual items from their auction listings based upon a theory of intellectual property infringement. (The Unknown Player, 2003) BlackSnow brought suit against FunCom. (Blacksnow Interactive v Mythic Entertainment, Inc. (U.S. Dist. C.D. Cal.)) Blacksnow’s lawyer threw down the gauntlet: “What it comes down to is, does a … player have rights to his time, or does Mythic own that player’s time? It is unfair of Mythic to stop those who wish to sell their items, currency or even their own accounts, which were created with their own time.” (Dibbell, 2003) Though the plaintiff dropped the case when its other legal problems forced a hasty retreat, the issues it raised remain. Virtual ‘property’ has real-world value.
However, the threat to the dealers from the games companies remains. For example, Sony declared a ban on the EverQuest auction market and got eBay to enforce it. (Smith, 2001) They then created StationExchange, a site which allows players to auction in-game items to each other for real-life money. Sony takes a service charge of $1 per item listed for auction. (see Sony’s description of the process at http://www.stationexchange.station.sony.com) The resulting uproar and push for a class action lawsuit centred on the claim that, although Sony owns the virtual item, the players own their time and labour that procured the items. As such, the virtual items should be freely alienable by the players. Apparently, the class action suit never developed and an opportunity to litigate this issue was lost. (Smith, 2001) But even apparently market-friendly efforts can play havoc with the traders’ livelihoods. Recently Electronic Arts announced that Ultima players could now, for a mere $29.95, order their own custom-built, high-level characters straight from the company. This is frowned on by some such as James Hebert (2005) who reported GuS Tovar, 14. a San Diegan who plays the online game Guild Wars saying “I frown upon it due to the fact that the game should be just as difficult for everyone. People who can afford to buy (millions in) gold can just dominate.”
Bragg v. Linden Research, Inc., Pa. Magis. Dist. Ct., Chester Cty., No. CV-7606, complaint filed 5/2/06, highlights some of these issues, and was thought that it could become the first case in a United States court to test virtual property rights. Marc Bragg, the plaintiff, accumulated Second Life property worth thousands of dollars, some of which he purchased through a loophole in an auction system, and some of which he accumulated through legitimate means. However, when Linden Lab learned of Bragg’s questionable dealings, it seized all of Bragg’s in-game assets, including land, items, and roughly $2,000 in real-world money on account. Because of his exploitation of the auction system, Bragg is not a particularly sympathetic plaintiff, and the case was likely to turn on whether Bragg violated the Terms of Service rather than on the general question of whether users can assert virtual property claims against operators. Still, Linden Lab’s willingness and potential ability to seize and sell off a user’s assets cast doubt on whether it supports strong user rights.
Bragg and the Second Life Terms of Service demonstrate that Linden Lab’s commitment to virtual property rights is not absolute. Linden Lab’s CEO tells users that their virtual goods are theirs to do with as they please. At the same time, Linden Lab reserves the right to delete any content at any time, for any reason, or take and sell the virtual property of those users Linden Lab believes to be in violation of the Terms of Service. If users want to retain robust virtual property rights, Second Life is not a perfect world.
In Asia, the first litigation involving virtual property was successfully completed. (Xinhua Online, Dec. 19, 2003) In 2003, a young man who played in the virtual world of Hongyue (Red Moon) became basically invincible via hard work stockpiling a vast collection of biological weapons and purchasing thousands of hours of game play. One day, while he was not logged in, a hacker broke into his account and stole everything. He went to the game designers and requested the identity of the hacker, but they refused to give it to him. He then went to the police to no avail. So, he filed suit in a Chinese court where he won. The court ruled that he was to have his virtual object returned to him. (China Daily, Nov. 20, 2003)
Implicit in this last case is that the player has a property right in virtual objects that could be recognized in a real-world court. This is one of the most interesting features of the property systems of the virtual worlds. They closely mirror the real world, or at least the subset known as the Western capitalist economy. Private property is the default. Entrepreneurs and tycoons feel right at home. The timeworn metaphor of property as a bundle of rights, chiefly the rights to use, exclude, and transfer, applies to virtual chattels as well. (Lasktowka & Hunter, 2004 citing Honore, 1961)
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