Introduction: Welcome to the virtual worlds of role-playing games
Digital Rights Management in the online game market usually applies to copy protection, online distribution models and online access control (Vogeley 2005). Beyond these common roles, DRM can also be used in a broader sense to manage the gameplay of virtual worlds. Especially in massive multiplayer online role-playing games (MMORPGs), the management of user rights is gaining increased relevance.

MMORPGs are persistent virtual worlds, in which thousands of players are interacting simultaneously with each other via the Internet. Each player is symbolized as a graphical representation, a so-called avatar. These virtual worlds are persistent, i.e. they continue whether an individual avatar is logged in or not (Wikipedia 2005). Usually, avatars are interacting with each other and work together in a range of different activities. The developer is in charge of supervising this virtual world to guarantee new activities and challenges for players. Users usually pay a monthly fee between € 10 and € 15 in addition to the initial purchase of the game. The genre reaches from fantasy settings to realistic environments.

The most popular MMORPGs have more than 300.000 subscribed players. Among them are EverQuest by Sony, Ultima Online by Electronic Arts, and World of Warcraft by Blizzard. Since its release in December 2004, World of Warcraft has become one of the most successful games today. They recently announced their 500.000th subscriber in Europe (worldwide 1.5 million) (Blizzard 2005/03/17).

The trade of virtual items for real money as a phenomenon in MMORPGs
A phenomenon in MMORPGs is the trade of virtual items among the players. These items are traded via external online platforms in exchange for real money. Virtual items include coins, weapons, spells or buildings. Usually MMORPG developers did not intend this kind of trade, when they implemented transfer mechanisms for virtual items between avatars.

There is a high demand for specific and scarce virtual items, which give the owner enhanced power to accomplish further challenges. Usually, to receive such items requires much time and effort. Many players do not have the required time to "earn" these items. They simply buy the desired items outside of MMORPGs on platforms such as eBay. After a purchase, buyer and seller meet inside the virtual world to hand over the traded item.

This has led to a prosperous external market with a high monetary value for in-game items and with remarkable transactions. Recently, a player of the MMORPG Project Entropia bought a virtual island for US $ 26,500 (Lettice 2004/12/17). This purchase included mining and hunting rights, ownership of all land on the island and a castle (no furniture included). The current number one seller of World of Warcraft items on eBay has earned more than 44.000 $ each month in early 2005 (Leupold 05/06/05). Altogether, the secondary market for virtual goods is estimated at between US $ 800 and US $ 900 million annually (Terdimau 04/12/20). It is notable that players have created this secondary market by themselves.

This development has led to a big controversy among MMORPG developers about the legitimacy of these markets. Popular MMORPGs such as EverQuest, Ultima Online or World of Warcraft do not welcome external online trade beyond their control. They claim intellectual property rights to every item in their worlds and deny any real-world economic value of virtual items (Terdimau 04/12/20). Users have to comply with these assignments in the corresponding End User License Agreement (EULA).

One reason for this point of view is the increasing number of complaints from angry players, who have been defrauded by sellers. Although the developers are not responsible for these kinds of problems, their customer services are getting increasingly confronted with them. Another aspect deals with the customer life cycle: Revenue models of MMORPGs are usually based on monthly subscription fees. Therefore, developers are designing evolving worlds where users will constantly have to spend significant time to collect powerful items or to achieve higher levels. When the players can easily buy desired items outside the game, they can overcome the time needed to collect all necessary credits. This leads to reduced income for the developers. As a result, most of the largest MMORPGs have taken legal action to fight external trading. For example, the MMORPGs EverQuest and Asheron's Call forced eBay to remove every auction with items from their corresponding world (Rolston 01/01/19; Beckers 04/05/14). Blizzard is continuously cancelling accounts of players who have been identified as traders on online platforms (Klaß, 05/03/14).

DRM to control external trade of MMORPGs
However, these approaches by the developers are not sufficient to stop further trading effectively. On the contrary, the focus on eBay has led to the emergence of other less-tractable online platforms such as IGE or ItemBay.com. IGE organizes trade for more than 15 different MMORPGs and provides an exchange rate between virtual items and real money (www.ige.com).

As a result, developers are considering using in-game tools in MMORPGs to manage the trade inside of MMORPGs more effectively (Leupold 05/06/05). Microsoft for example announced (cf. Feldman 05/03/16) that the selling of virtual items via their next-generation game console Xbox will be possible allowing the purchase of new levels, maps, weapons or skins via a one-stop-shop. This leads to a new and interesting potential role of Digital Rights Management – either to control the trade of items or to enable new business models. DRM as a tool to manage further trading of items opens up a variety of possibilities for MMORPG developers (MacInnes et al. 2004, p. 4). For example, developers can determine special rights of valuable items to prevent the handover to other avatars. World of Warcraft uses this concept on specific items: Once the item is picked-up by an avatar, it cannot be transferred to another. It is also possible to determine the maximum number of items, which can be created in a given period. DRM can also be used to demand taxes on every transferred item. On the other side, DRM can be implemented to broadly allow item trading. The MMORPG "Second Life" by Linden Lab gives users the right to sell items they have created by themselves (www.secondlife.com).

DRM in this context is an appropriate term, because MMORPGs are not simply games, where a set of mandatory game rules by the developer applies. Rather, MMORPGs should be regarded as social spaces, where users create characters, dynamic economics, and an evolving culture (Taylor 2005, p. 4). Unlike pure computer games, MMORPGs are leading to a convergence between virtual and real life: Virtual goods do already have an economic value outside of MMORPGs and are also increasingly affecting national laws. For example, a Shanghai MMORPG gamer has killed a man in real life for selling his virtual sword (Slocombe, 05/03/31). Gradually, the boundaries between virtual and real are more and more blurred.

The role of DRM as a tool to manage, i.e. to restrict, trading is currently in its infancy. Among MMORPGs developers there is intense discussion on how to find a balance between restricting real-world exchange without limiting in-game trading too much (Ondrejka 2004, p. 2). In a widely discussed attempt by Randy Farmer to describe a complete eBay-resistant virtual economy, he concluded that it would lead to the removal of too many interesting features (Farmer 2004).

What the players think about the restriction of trade
Regardless whether developers are tolerating, battling or supporting the trade of virtual items, they will hardly be able to achieve consent among the majority of their customers. According to a survey by Sony among its EverQuest customers, the position for, against or neutral towards external trading is evenly split (Leupold 05/06/05). This leads to the interesting situation that one customer group would welcome the deployment of DRM to stop trade, while the other group would not. The main argument of the trade opponents is the unfairness of players paying for desired items rather than achieving them through skills and labour.

But it is likely that more and more players will be engaged in external trade and will constitute the dominant group. According to the survey by Sony, 20 to 25 % are already involved in trading. In South Korea, which has a mature MMORPG market with the largest penetration rate of MMORPG players worldwide, the vast majority is already in favour of trading (MacInnes et al. 2004).

The crucial dispute between players and developers is the question of copyright ownership of created items. Many players regard items, which they have earned or built through countless hours of game-play, as their own intellectual property with a measurable value outside the game. A survey by the Korea Game Development & Promotion Institute (KGDI) among 1.247 players of the worldwide biggest MMORPG Lineage shows that 78 % claim to own the items. Only 3 % accepted ownership of the developers (MacInnes et al. 2004, p. 9). Developers have to acknowledge the massive interest of players in monetizing their items.

Bottom line
The emergence of MMORPGs has led to an unexpected convergence between virtual and real life. MMORPG developers have to acknowledge that there is a dynamic social and economic change in their virtual worlds, which they have only partly under control. DRM mechanisms will play an increasingly important role for MMORPG developers to define and enforce claimed rights to virtual items. But in-game trading is already common practice and broadly perceived by the players as their personal right. Therefore, to balance the interests between developers and players it is crucial to adapt the increasing dynamics of MMORPGs.

Sources

About the author: Danny Vogeley is an intern at Berlecon Research. He has been analysing several digital markets like Internet broadcasting, mobile music and M-Business strategies of media companies. Currently, he works in the field "digital consumer". He is a member of the INDICARE project team. Contact: danny@dvogeley.de

Status: first posted 30/05/05; included in INDICARE Monitor Vol. 2, No. 3, 30 May 2005; licensed under Creative Commons
URL: http://www.indicare.org/tiki-read_article.php?articleId=104