Anshe Chung: First Virtual Millionaire
Anshe Chung, a real-estate tycoon in the digitally simulated world known as Second Life, has apparently become the first virtual millionaire--i.e., someone whose holdings in a make-believe world are legally convertible into genuine U.S. currency worth more than $1 million.
Chung is the nom de keyboard of Ailin Graef, a former schoolteacher who says she was born and raised in Hubei, China, and is now a citizen of Germany. She will give a press conference about her achievement tomorrow (November 28) at 9:00 a.m. PST, although it will occur in-world, i.e., to attend you will need to have downloaded Second Life's software from the company that created and maintains it, Linden Lab. Here is Chung's announcement, which has additional details. (A spokesperson for Linden Lab told me she could not immediately verify Chung's claim, because Chung's property is held in many different names, but hopes to have the information by later today.)
I wrote about Chung a little bit in a Fortune feature story in November 2005, called "From Megs to Riches," which focused on the broader phenomenon of people earning real money from activities they engage in while playing online games. That story is available here. (In all candor, at this point, every major news organization has written at least one such story, and a fair number of those were published before mine.)
Second Life's creators and denizens do not like it to be called a game--you don't shoot at monsters while you're there, for instance--but it might be categorized nonetheless as a special variety of so-called massively multiplayer online role-playing game (or MMORPG for relatively short), albeit one that is more akin to SimCity than to World of Warcraft. In Second Life, subscribers get a tool kit that enables them to build and create an avatar (a character in the world). They also get a small quantity of Linden dollars to start out with, enabling the participant to buy additional tools and objects within the world itself. Linden Lab converts currency at a floating rate that, at the moment, is about 257 Linden dollars per U.S. dollar.
Though you can buy additional Linden dollars from Linden Lab by paying U.S. currency, Chung says she has made all her additional Linden dollars via in-world buying, building, trading, and selling. The lion's share of it, she says, has been made by buying, developing, and then renting or reselling "land"--i.e., control over the virtual real estate simulated by Linden's servers. Each of Linden Lab's servers simulates about 16 acres of in-world property. At the time I wrote my article in November 2005, Chung was developing private islands and setting up communities restricted to, for instance, East Asian, Victorian, or Gothic architecture, or to French-speakers, or to gays and lesbians, or to fuzzy avatars known as "furries." Because Linden Lab has added simulation servers more slowly than it has accumulated subscribers, virtual property values have soared.
Why, you may wonder, do I consider Chung's achievement to be a suitable topic for a legal affairs blog? Well, it's a bit of a stretch. But, as I explained in my earlier feature story, the whole topic of buying and selling "virtual" property does raise legal issues. Some online game companies have attempted to prohibit, through click-through agreements, the real-world buying and selling of online property created by players, which the companies maintain remains the company's intellectual property--indeed, just graphical manifestations of data entered into company-owned spreadsheets on company-owned servers. Second Life, on the other hand, openly authorizes and facilitates exchanges between its currency and real-world currencies, so that particular legal issue does not arise. Still, you might ask whether Linden Lab is courting legal liability if its servers should suddenly go down one day, destroyed, say, in some real-world earthquake, leaving Second Life denizens devoid of "property" or at least expectations in which they've invested so much real time and money. What do people think?
it is a bit of a stretch .. you (or CNN) must have some vested finanical interest in this company with the dirth of articles that you print about them.
It adds new meaning to the term network security. Unfortunately is will probably end up being just another reason that people hurt one each other.
I think that Second Life is destined to become part of the Google Empire...
I think anyone who spends that much time and energy to accumulate virtual wealth deserves to be left out in the cold in the case of a real world earthquake. Do something for humanity, not virtual humanity, there is a difference.
I think participants in Second Life who invest real money are ina similar position to someone who invests in a business (either brick & mortar, or on line). If that business fails (or in the case of Second Life, the servers crash), well, it's a shame, but you've lost your investment. There are risks inherent in any kind of investing, real world, or virtual.
Second life is just a fad. I doubt it has the propensity to continue on as a viable source for income. Though I do believe virtual world economics could be a viable business.
I think this is great! Capitalism at its best! Since Second Life is artificially keeping virtual real estate prices up by adding more players then servers, what would happen if there were a sudden influx of server capacity? Would this woman then be ruined? Could you borrow real money from real banks against the virtual land that has real value? Great debates are yet to come!
Just FYI, the title of your blog or whatever "Anshe Chung: First Virtual Millionaire" is misleading. She isnt the FIRST per se. Companies like IGE and its founder would be the "first virtual millionaire". For anyone who pays attention to the MMO/entertainment industry, the buying and selling of in game currencies is years and years old, and I know some people who have posted SIX figure annual incomes off of games such as Ultima Online, Asheron's Call, Everquest, Star Wars: Galaxies, Eve Online, World of Warcraft to name just a few. The key is the dont publicize their earnings. Companies like IGE were founded off of individual efforts of off the above games, but grew in such a manner, that help was hired which changed them to big businesses operations as they are now. To sum up this comment, "welcome to last week"
I'm sorry, what????
I read this article twice and still have no idea what any of it means.
I think that denizens of that universe should look at it like they do real property or personal property...GET INSURANCE!! It seems to me that persons occupying that world, if they have convertible Linden dollars should ask their insurance companies about coverage, given that the Linden dollars have translatable value. Also, I would think that Linden Labs does A LOT of backing up of their universe to avoid just that sort of problem. Finally, a disclaimer certainly must be in the terms and conditions to which the "players" agree when they decide to enter their virtual world. It does pose some interesting legal issues, however!
While I do not personally play these online games I do see the appeal of them. This "Second Life" however confuses me greatly. Fighting monsters is one thing but just going online to experience life seems alittle...stupid.
This Anshe Chung however seems like a brilliant person. She has literally has made a "Second Life" for herself that will make her real life better than her virtual life. I commend her and envy her foresight.
People need to wake up!!! What kind of sick, sad people would pay real money to get something that is not real? If these people have so much extra cash that they can throw it away on buying virtual real-estate, perhaps they should start using that money to do something good, like feed a homeless person, or donate that money to AIDS research. It might come in handy should they contract virtual AIDS from having Virtual Sex in a virtual world with a virtual infected lover....
The world (real and virtual) is insane.....
The blend of real world time and resources invested into virtual activities is quite fascinating. As you say- what would happen if the servers or programs were corrupted or destroyed somehow?
I would say that people should be allowed to convert their virtual treasure into real world hard cash, as what they're selling is entertainment essentially. We pay $20 for a DVD, when the value is not in the 10-cent disc, but in the content on the disc, and the same with music, so is this much different? I don't see why.
Legally, I can imagine a field to facilitate transactions, as well as to moderate companies, so that they don't suddenly flood their market with new land/goods and ruin the assets of their existing users.
I think that just like real-world real estate, the savvy buyer will know how to risk-adjust his investment. If you are spending thousands on virtual property, I would hope you have at least spoken with the Second Life company in person, and verified independently the security features on their server systems, the threat of natural disasters where the company resides, competing programs, etc. It is probably very analagous to investing in a highly speculative foreign country's stock.
Second Life = Second Hype. It's a fun place to float around and meet people, but the incredible irony is that people are spending so much RL ("Real Life") time in virtual environments - they could be just as productive, if not more so, and make far more money doing it.
I personally challenged myself to recover my $100 RL investment for a year's members in in SL. After almost two straight weeks of night and day plotting, building, trading and exploring, I was up to about a thousand US SL dollars - or about 30 bucks. The fact is, most items for sale range from 50 virtual dollars to a few hundred.
Real estate rental is a very high risk business venture, even in Second Life. An "Island" now costs well over $1,000 RL dollars - not including any development. Anshe Chung has invested LITERALLY hundreds of thousands of dollars to realize a million in actual currency. Anyone with half a brain an a little patience could put the same into a much safer mutual fund, twiddle their thumbs and be worth 10 million in a few years - without a single hour spent on virtual buying, developing and trading.
In summary, Anshe Chung was ALREADY a real world millionaire with time and money to blow. She was in early and has made a decent return on her high risk investment, but make no mistake. This story is Second Life spin at it's finest.
It won't take a virtual disaster, If you'd bothered to read the term of Service agreement, rgar tou must accept to play the game, er, "access their service" ; they claim no respobsibilities, confer no rights, and can eliminate entire accounts "for any or no reason."
Caveat extremis emptor.
Wheres the check system to determine if anyone is cheating? btw back-up servers is what you use when main servers are destroyed.
The mantra about real-estate used to be "they are not making any more land" - but that's not the case here, where add a few hundred more servers, and we all can have palatial estates.
You haven't even scratched the surface of the legal issues I believe SecondLife has been scurting. For instance, many users participate in online gambling using Linden dollars that are readily convertable to and from your local currancy using PayPal. A Linden official responded to questions regarding the Internet Gambling Enforcement Act of 2006. They attempt to avoid liability since the gambling systems are setup by the virtual owners of the gambling devices.
This article provides the details on their response. I'd be interested in some non-Linden legal opinions.
Given that a single person could accumulate such wealth, I wonder how well a team of real estate developers would perform in Second Life. What if large corporations begin playing the game for profit? Should this happen, I think the corporations would want a legal assurance that they will not lose profit because a real server crashed. Could this lead to the corporate world attempting to shape the future of such online virtual realities? If so, which sectors of the corporate world would take the lead?
I think the whole thing is ridiculous. I could probably make $1M too if I could "earn" and turn in enough Monopoly money down at the recycle shop. To me this kind of thing encourages a resource drain of people and materials into a virtual world that profits us nothing. Sure, someone may be able to turn a buck, but the resources wasted by those who didn't makes it easy to see why we have global warming. Are we supposed to clog the courts with cases because someone tripped over a power cord and your virtual world and everything in it went "zap"? I hope not.
Better to live and create in the real world.
It would seem that on-line poker players who parlay an on-line tournament win into a seat at a real tournament, then proceed to win a million or more at the real tournament would also be virtual millionaires. After all, their stake was virtual money.
The other MMORPG's have attempted to stop the sale of virtual items for cash however they forget one simple thing and that is the fact that I am allowed to sell my time and effort.
This is why sites like www.playersauctons.com have not been shut down legally by the makers of these games.
If I choose to sell 5 hours of my time and "give" you whatever I happen to obtain during those 5 hours. They aren't going to have a legal ground to stand on.
Sure they can ban accounts but that isn't helping anyone. The only reason they try to "stop" it is is because they need to "appear" to keep their intellectual property rights if something ever does arise that requires legal action.
These companies should be ecstatic that so many people want to play that their members are deciding it's worth it to spend that much time in their game to actually sell things and make cash.
I think you writing about the article is fine...I just can't believe that this "game" is becoming popular enough to write about. I find it ironic that as real estate in the world as I know it is becoming next to impossible to purchase in so many "real" cities, is apparently is the same problem in virtual cities. I find it even more disturbing that people waste their time with this virtual nonsense considering all the real world problems that could be addressed with that many man hours wasted in gaming.
We obviously know about the IT industry's excitement over the prospects of Second Life, and we are beginning to hear about the retail industry's initial forays as well. But to your point, I think the next big industry to awake to this phenomenon will be the legal world. We are no doubt on the verge of disputes over Second Life property and avitar identity theft.
Let's hope there are no precedent-setting legal blows to the possibilities this environment has to offer.
May I suggest someone developing a judicial process within the Second Life world where participants agree all such disputes involving the simulation are brought and resolved?
Some of the people here responding have alot of nerve.
Do they not have any hobbies?
Why are their hobbies more "important" than someone who enjoys playing a MMORPG?
People who parachute, why should the courts and insurance companies be hindered with the cases of people jumping out of perfectly good airplanes?
If you put $$ into "virtual property" which just like real property can be lost, too bad. It's still "speculation" so be warned.
Maybe some people don't WANT to add to the real world.. With all the sprawl, I prefer to make fake skyscrapers than contribute to urban sprawl and disposable electronics that polute our enviroment. Not everything is about real world productivity. I'm content with just living my life while independently supporting myself.
You express concern over investors losing everything if the servers are destroyed. Unlike the real world, virtual worlds have backup copies. Therefore, I would expect that only "in-world" disasters would present a threat to these investors. Which raises a question: do in-world investors insure their virtual property with real dollars?
Engaging in creative ventures inside of Second Life comes along with certain practical risks (like a real earthquake) that individuals should take into account before they decide to engage in a venture. Additionally, Second Life can take steps (international back-up servers) that can reduce some of those risks. Responsibility for this risk could be taken up by the corporate side of Second Life, but I don't reccomend it.
I had an employee who rooted himself to his seat playing MMORPG's during worktime. He accumulated quite a reputation, and a small fortune in his online world, but in the process lost his realtime job. I've met few, if any people who were able to function well in both worlds.
Given disaster recovery standards and requirements for IT shops these days, full recovery of Second Life 'assets' should be an expectation for users. But questions could also arise over the time it takes for full recovery and whether Linden Labs is responsible for lost revenue to Second Life 'businesses'.
Can the real people behind the characters really cash-in at any moment? If so, why doesn't this guy get some of his equity out now? You got to diversify that retirement fund Mr. Graef! Virtual real estate is the classiest oxy-moron I've ever heard.
I always find it interesting when people complain of virtual worlds and the amount of time, money, and energy other people invest in them.
I know people that buy season tickets to sporting events, parking, beer, food, etc, in order to watch other people run around and to socialize with like-minded individuals. Many of those people have cleverly found ways to turn their love for sports into profitable ventures.
In my opinion, that form of entertainment and subsequent profiteering is in no way different than the topic presented here.
While Second Life is a very clever way to create an opportunity for those unable to accomplish the same things in the real world, I believe it is only a matter of time before the "Real World" rules and regulations apply. I am sure the SEC and other governmental agencies around the world have had this on their radar for some time now. The question is, how will they go about getting their fair share?
She bought and sold these virtual plots of land, and likely they were bought and sold a few times again after her. If a plot of virtual land is suddenly not there anymore, do you go back to the last seller and demand your money back? If so, couldn't that seller just demand their money back from the person that sold it to them and so on? There is no end to this and no one is going to give money back, so caveat emptor.
you guys are all crazy
Wouldn't a simple disclaimer or an agreement to the terms of playing the game take care of that? Just goes to show how much money is in this country, as I return from a 2 month stay in Eastern Europe. Many people there have no food and we spend hundreds on pixel property. Rather sickening.
It's all very interesting. If you think about it, it's not much different than the stock market where, and correct me if I'm wrong), much of a stock's value is based on perception. Your comment about loosing a server and all it's "properties" is very interesting. Are there insurance agents and policies in Secone Life. I don't see why not.
Sounds like they need Virtual Property & Casualty Insurance!
I assume they could add some servers and her cool mil could be a not so cool 50k in as long as it took them to plug them in.
I think the pseudo-random aspects of most games mean that Linden Labs is in violation of UIGEA.
What's the difference between playing a game that is a mixture of skill and chance (like poker on PokerStars) and playing a different game that is a mixture of skill and chance (like Second Life)? Both are played with virtual money that is explicitly convertible to real money.
I wouldn't say that I agree with a person committing their life efforts to "artificial" results, but I cannot say I disapprove of it. Many are critiquing the differences of those living in the "real" and those living in "fake" worlds and jumping quickly to the conclusion that something like "Second Life" is as disconnected as you can get from "real life."
I think people who collect stamps are dislocated from real life. And people who watch reality TV. And Republicans. And people who wait in 10 hour lines for a video game system. Is it really irresponsible to run from the first life into a second? Video game designers are people. They are part of companies that deal in the entertainment industry. Sure, some people sit down and play these games for hours at a time, but how often do you sit down to watch somebody else's life on TV as you waste away on the couch?
WorldofWarcraft.com is running a story about a couple that met and got married as a result of their game. How many people can say the same from watching "Dancing with the Stars" or "Grey's Anatomy?"
The line of reality and unreality is drawn between those who are involved in one world and not another, and critique the differences. The stamp collectors and Republicans are so far removed from what I believe to be reality still have an economic impact in some way or another. So regardless whether I agree, the implications and trickle down effects of other peoples' hobbies will eventually reach me. I cannot disapprove. Especially if real life hunters move into a "Second Life."
Players of "Second Life" are the bread and butter of hard-working game designers, just as viewers provide the bread and butter to producers and directors in the movie industry.
The legal implications (to get back on topic) are as clear as the TOS would be. And as far as clogging the courts, I'd rather see how the courts handle artificial realty than, as per today's headline, a murder trial over a guy who shot his friend over a $20 college football bet.
I agree with S Gabo. People on Second Life are interacting with other people - just through their computer. So what if they spend money to join clubs, or buy "permanent residence" on an island for people having similar ideas, or whatever. And, so what if someone else makes money selling these "places" to meet? How is this so different than any number of web site creators who made money having people come to their site to share things - such as MySpace, IVillage, WebMD, etc etc.
And, as to them "wasting" their time - who cares? What about people who play fantasy sports? Should they abandon that hobby so they can better contribute to real society? Heck, that's so popular 'stats are published during the games!
I don't do any of the above things, but, live and let live. It's an interesting phenomenon. Fun to read about.
Here's a thought.... does the fellow who parlayed a paper clip (albiet a red one) into a house on ebay play Second Life? I'll bet he does and is right behind Anshe.
I am amused at the negative comments above - "ridiculous", "waste of time", etc. Clearly these folks don't have a clue about SecondLife.
Personally, I find it fascinating that someone had the vision to create such a place and attract over 1 million subscribers.
Who knows what new technologies and opportunities will be spawned from such creative thinking.
The whole concept of her earnings is as frail as any capitalist venture. She may be a millionaire in virtual holdings, but her ability to liquidate those virtual assets is suspect at best. Her holdings are only worth as much as the market will bear, so her worth, if liquidated, would probably be significantly lessened. And, as another reader pointed out, if more virtual property were added, her holdings would decrease in value.
I don't understand why people would spend real world money in a virtual environment. One buys a game or joins Second Life, and plays or interacts in that world. The only real transaction should be buying the real product or buying expansions of the real product. If a user can find a way to manipulate that product into a real world application, there's some worth, but again the worth is totally dependent on the demand for the product.
I love these pathetic chumps who are complaining that Second Life users aren't "buying anything real" and are "wasting your time."
When you paid money to see James Bond this weekend, did you believe you were actually watching a real superspy defeat real terrorists and evildoers? What? You knew it wasn't real? And you paid money anyway? My God, you movie watchers need to GET A LIFE. It's not real, after all.
I think the legal issues that arise are numerous.
Such as oversight on Linden dollars. Who controls the exchange rate and infuses capital into the "virtual world" that could directly impact your financial stake in the "real world".
Same with property values, due to supply and demand; and the owner of the company is in full control of supply and demand. (They could singlehandedly wipe out the economy of the virtual world, or artificially inflate the values of properties or the monetary exchange rate.)
I think a lot of the answers would reside in the TOS the users have agreed to.
Why are so many comparing investments in Second Life to real world real estate? Isn't it much more logical (and less pessimistic) to compare it to investments in domain names and web sites? Second Life, as I have experienced it, is not a game nor a "waste of man-hours". It is a way to communicate and interact with other real people, much like the World Wide Web. Only more immersive and easier to break into with a small investment.
To Anonymous (the first post). I think you mean "dearth" instead of "dirth." Since "dearth" typically denotes a scarcity of something, I also think that your word choice in this instance belies your vocabulary ignorance.
As for the article, I think the issue surrounding rights in virtual property raised by the article are interesting, indeed. As millions begin to have a stake in environments such as SecondLife--even relatively small interests--an event that destroys data could erase real money from people's assets. I think it will be interesting to see if some form of insurance will become available to "residents."
Second Life is rife with casinos where one may bet, win or lose, Linden Dollars. Since these are, as mentioned in this article, convertable to US Dollars, does Second World not run afoul of the new US prohibition against online gambling?
I would just like to say thanks for all of your hilarious comments. I needed a a good laugh
Buying and selling of stocks is just as virtual as these online games. The only value they have is that which the collective give them. So to all the people that are saying that online games are ridiculous are just that...ridiculous!
By the way, I have never taken part in these online games...
SL is basically a simulation game, whether you use it just to meet people or try building a business. Many colleges and businesses use simulations to train people in situations. If people lose or make money from it, then great, but if it disappears overnight from some disaster that is the risk you take.
I find it ironic that so many mark SL as a waste of time or unproductive to society. At least this is an "active" pastime where you participate, as opposed to watching TV, which is a "passive" activity. Learning to build a business, even if virtually in SL, could be argued to be a better learning tool than reading a book on the subject, but nobody is going to say reading a book is a waste of time.....
I just have one thing to say to this article and the comments posted...Life, liberty and the pursuit of happiness.
Do you need an real or virtual attorney to verify the property rights of the virtual properties you are buying and selling? Do they need pass a virtual or real bar exam? Can you buy and sell based on virtual inside information in this virtual world? If so, would the SEC or NASD have regulatory jurisdiction? Sounds like Second Life is violating anti-trust laws if they have "virtual" control over availability of all virtual assets. Who would be responsible for breaking them up? My guess is the Eliot Spitzer is virtually all over already.
This is the future of the Internet and world wide economy. Everyone wondered why you would by virtual real estate during the birth of the internet. Now the domain name market has made many millionaires. All businesses who rely on web pages have the same risk if ever the servers were to shut down. There will be many more millionaires made in Second Life and other virtual worlds. Virtual World Real People.
Thanks, Amy from Philly. Thats refreshing! To everyone whining about this being a waste of time: What exactly do you think you're wasting to come up with the judgement of OTHER PEOPLES TIME?
If it make them happy, does it really matter if you approve?
Sounds like its time for virtual property insurance companies to spring up.
My biggest fear is that people are giving up their real lives to persue a life online. They are losing the opportunity to better their own lives in the process. However, to each his own.
I think, "Tough beans". If some virtual world wheeler-dealer thinks their virtual real-estate is more terra-firma than New Orleans they ARE living in a fantasy world. Hurricanes or computer crashes. Earthquakes or viruses. Attack by theives or by crackers. The world, real and virtual is a dangerous, risky and unfair place.
I think a lot of people here are really missing the point of Second Life. It's not a 'game' where you walk in, pay for land, and instantly the money comes rolling in. You still have to work for the money. The islands that make up Anshe Chung's dreamland cost a pretty penny, yes, that's why she has a million dollars worth of virtual land. But she can rent this land to people and make several hundred dollars per month per island.
For other people, it's not about buying and selling land. It's a social tool, it's really an advanced graphical chat. Everything in the SL world is made by residents (Aka "users") in world.
For me, I'm an artist, and SL is just another way for me to express my art, and make a little extra money on the side. For others, such as musicians, they can provide performances and reach out to audiences they never had access to before.
I think SL is a wonderful social experiment, and the only people here naysaying it are those that don't truly understand the nature of it. If you're just looking at the money side of things, you're being ignorant towards the rest of what SL has to offer.
How ridiculous. I pity those who live a "virtual life"...imagine what their "real" lives must be like.
Do you have to mow your lawn in the virtual world? Or replace shingles or major appliances for that matter? How about taxes??? I've just gone through property reevaluation on my real house and if this virtual world is all it's cut out to be I might be able to my wife and kids that this is a pretty cool place. If everyone starts with 100 Linden dollars, what prevents you from creating multiple users? Buy and trade with yourself and make yourself a millionaire...hummm? Sounds like the internet version of Star Trek's Borg. Well, at least if you lose your virtual millions when the virtual real estate market goes bust and can take a jump off your virtual skyscraper that's now worth virturally nothing and still live to tell the tale. Or talk it over with your real world psychologist...
I just wonder how much of this "Second Life" money is going to Neal Stephenson, since it sounds exactly like the concept detailed in his book Snow Crash - over 10 years ago!
although I haven't read your prior articles, I have been trying to keep aware of the buzz and discussion of the virtual to reality property/money exchange issues of online gaming over the past year. As a techie, a gamer and a member of the legal industry I'll throw in my 5 cents on the question. Most companies do have offsite and redundant backup and mirror sites to allow partial if not complete recovery of data to a certain point. That is, if a major catastrophy did occur they would be able to rebuild the system as it had existed 24 to 36 hours prior. All transactions, building, destroying, etc. that occured after that period of backup would probably be lost or damaged. But, obviously, that depends on the server and critical risk management protocols/processes setup and inacted. But yes, let's play devil's advocate and say that such a total devistation did still occur and that there was no way to recover the data. Then it would, indeed, be, in terms of time, energy and emotion collateral, a loss. The question is whether or not an actual, real world value can be placed on it.
This is sounding very much like we're heading towards the question of "Can I have a Real World Insurance policy placed against my Virtual World property and holdings?"
That, however, is another can of worms that we may be forced to deal with.
Without experiencing first hand, "Second Life", there is no way to have a valid take on it. Some of the skeptical comments may turn out to be correct, but at this point, it is real money that is being invested and made. The stock market in real life had its second worst day of the year today...Second Life grew by over 10,000 "residents" and some made thousands of dollars. Strange it may be....nonsense it is not. Good article to keep us informed about a "new world".
I just have one thing to say to this article and the comments posted...Life, liberty and the pursuit of happiness.
I believe Locke's unadulterated, "Life, Liberty, and Property" fits better in this context
As an avid gamer, I am amazed at the prevailing ignorance of what games truly amount to. They are as much a medium of learning as of entertainment, often combining both in ways that prevent even the player from detecting the learning aspect until they realize, down the line, that they did obtain invaluable experience through fictional circumstances. To point the most drastic example - one of my friends, who had for several years played on-line first person shooters, became squad leader in basic training within several days due to the leadership skills he developed cooperating with other players on daily basis. He is currently serving in Iraq, using experience gained from games to keep his subordinates alive.
It is certainly welcome news to see the legal world waking up to what the digital revolution brought to us in terms of enriching our lives in yet another way. I do wonder - would recognition of digital property rights also pave way toward recognition of violations of personal rights by other users?
Imagining serving a warrant to a notorious "flamer" or one of the many "l33t d00dz" is quite an amusing, and very highly appealing, thought.
I am a strong supporter of doing what you feel, as long as others are not hurt in any way, shape or form. With that being said, if Linden Lab were have a disclamer, not holding them (Linden Lab) liable for disasters such as you name, then I have no objections to it whatsoever. I also believe that Linden Labs should have to report any and all "escrow" they earn throughout a given year for tax purposes. After all, someone is making money; a lot of it.
I'm sorry......Get a real job and make a real $1,000,000,000.00 and then I'll tell you congratulations on a job well done!!!
Are there virtual terrorists in the virtual world? What steps has virtual Homeland Security taken to prevent virtual terrorist attacks? Can you create virtual war? ...can you tell me how one might get back his virtual change from the virtual vending machine that stole his virtual bag of chips? So, how was everyone's virtual Thanksgiving? Do you have virtual holidays???
What is interesting to me is whether the IRS should step up and start requiring one to report earning made from such enterprise.
"How ridiculous. I pity those who live a "virtual life"...imagine what their "real" lives must be like."
Hmm...sounds like fear of the unknown.
One of my instructors in college once said "Something is worth what you can get people to pay for it." As an IT guy I always preach in favor of backups. In this case off site backups would be preferred.
If you can make one million dollars playing a fantasy game, without investing real money in it, that can't be a bad thing, and I'd say you're pretty clever.
People saying how 'pitiful' Ms. Chung is, how 'stupid' Second Life is, etc., should look at themselves and see if they've got $1,000,000 too...
This is nothing more than a pyramid scheme. For a few to get rich, many more will have to give up their real money. No real wealth can be created in a virtual world. When you open a real factory you can create real things that help produce real value for you and for the person buying what you create. When you create a virtual factory you only pretend to help people in exchange for money. In a virtual world there is no way for everyone to gain; for one to gain it is because others lost money when they paid for nothing. A hype will develop as people jump on board to get rich and the majority of them will end up very poor as a result.
My first impression of this article is it is a "calling all ambulance chasers" siren. Are there any contracts/agreements one makes when buying virtual real estate? If so, I hope they say you must sue in Virtual Court, which would be another application I wrote ... and sold ... for them to do anything! ;-p
There is little difference between this and the situations which preceded the massive devaluations of tech stocks in 2000. There was as much real value then as there is with Second Life and its ilk now. Further, savvy investors will be just as underwhelmed at this dubious accomplishment. One is reminded of a Simpsons episode where they lampoon an internet company that has their stock certificates rolled up to be used as toilet paper. Ms. Chung's virtual holdings have as much value.
This is the dumbest thing I have ever heard of. Get a life!!! Internet real estate. Come on ppl are u for real? Go outside and do something with yourself.
After reading many blog comments, it is clear that since so many dont even have a clue about what is going really in virtual environments, what are the various applications etc..., and not realizing that activities in virtual environments are real and productive... it is evident that this is earth shattering..well not for me of course, but to the clueless laggers out there.
This arguement that no real wealth can be created virtually is hogwash. If I compose an electronic song, distribute it on the net, and make a profit, then I just made wealth with virtual goods.
There's no guitar you can hold on to, no drumset to touch, no vinyl to put on your recordplayer.
What makes Second Life any different then a website? Websites make money, so why is 'Virtual Reality' supposedly just a "fad"
Wake up and smell the bytes, we're headed towards a civil war between the online and the offline societies.
In order to get around the potential liability, they should offer virtual insurance. This would allow you to be reimbursed in real dollars if your virtual assets are destroyed. However, to have this you would have to pay in real dollars. If you don't buy the insurance, too bad, you lose, no liability for the company - just like in real life.
I'm still shocked that people would page any "real world dollars" for a virtual reality let alone "property".
I'm a HUGE fan of Simutation type programs. I have SimCity, The Sims, The Sims2 and even Flight Simuatior X. I have all expansions of each programs and enjoy them very much. The moment I see someone trying to sell me thier creation, will be a breaking point for me.
Maybe I'm not hooked on MMORPG types of GAMES, but I'm not about to waste money for this chance to have a 2nd life. I've already "wasted" time with these games I'm hooked on now.
That's my 2 cents on this blog
My estranged spouse spent many long days in Second Life. No, he did not have a "real" job but managed to become somewhat successful in Second Life. He was in this virtual world 10-14 hours a day. He did not spend time with his daughter or his wife. He developed relationships with women who also didn't have "real" jobs or were housewives. And he angrily quit the world when it became more important to get a "virtual" lap dance than celebrate our anniversary. He and I are split now and I'd love to say that it was Second Life that caused it. But in fact, it was his antics in the Virtual World that were more than I could handle.
Second Life, itself, offers an environment where there are practically no boundaries...except one's lack of imagination. The majority of residents are some of the most creative people I have ever met. Congrats to Anshe. She figured out how to make it work for her.
Very good read! Thank you. And yes, the trend is just starting!!
Couldn't Second Life be used as a way to transfer large sums of cash from one player to another without having to worry about taxes? What about laundering?
I took a final on this very subject in my Cyberlaw (Internet Law) Class in law school 2 semesters ago. Indeed, I actually do think the time is coming when "virtual" property is given a legal value and therefore, a true physical presence. Remember, our technological laws are based mostly on telephone and telegraphs, radios and TV's. The time is now to re-write the law of the virtual world as it becomes more a part of our daily world, as the virtual world is rather new (only about 15 years old as we currently know it). If someone steals someone else's "SWORD" in World of Warcraft, or finds a glitch to steal someone's property in Second Life, should they have a way to be made whole in our legal system? I argue that they should, no matter what people think personally about online worlds, etc. What matters is that someone has invested time and resources into creating something that exists. Whether it's a sewn sweater existing in the physical world, or a real-estate empire in Second-life, if the real world assigns monetary value to both, then we should protect someone's right to own both in a legal sense. Now, the real question is: What if the contract you sign when you join second life specifically says "WE OWN THE GAME AND CAN DO WHAT WE WANT," leading to a day where $3 million of property in the game could be cancelled if the game shuts down. What happens then? All very interesting questions.
I have been in SL for a little over a year, and I am not surprised to hear Anshe has hit a million. Her presence in the world is very pervasive.
I do own land in SL, although I realize that owning is really renting from Linden Labs, and if they go under or I am banned for some reason I am out of luck.
There have been some comments here disparaging the time/efforts of people in a virtual world. One thing to consider -- I have known several disabled people who spent most of their time in Second Life, and I think it does add considerably to their overall quality of life. It also gives them a chance to earn some extra income, if they have skills that can generate in-world pay.
I know people who build houses and design clothing, and some of them are very talented. Those people do not necessarily have the resources to pursue those dreams in the "real" world.
I think it's each to his/her own. If participating in a virtual world doesn't interest you, then by all means don't. But that's not a reason to denigrate those who do enjoy it.
The big issues facing Linden Labs right now are not legal, they are technical. There have been huge growing pains in SL recently, including attacks, bugs, network problems, and database slowdowns, which have resulted in either downtime or degraded performance on a very frequent basis. The Lindens started giving away free accounts a few months ago to people without even asking for any kind of vertification of age, in what I believe was a push to boots their user numbers for PR purposes (one of their spokepeople made the ridiculous claim that they will have more users than WoW eventually). Unfortunately,
this has also had a big, very negative impact on those of us who pay to use the service.
From what I have seen, Linden Labs is still caught up in the mentality of a startup company, and needs to make the leap to being a "real" company that provides a stable platform for the buisiness they have courted to SL.
Geez, what a bunch of sour grapes whiners here. What a bunch of hypocrites, as if any one of you critics would be so critical if you came up with an unconventional way of making $1M. I think it's cool. Not my thing, but cool none the less. She made $1M, good for her! I'm sure she'll manage to handle the 'get-a-life' criticism here if she can in fact deposit $1M in a real bank.
Looks like an opportunity for insurance
The legal question of virtual property also brings to mind the American's With Disabilities Act. If I'm not mistaken, the software for the game is not compatable with speech reading software, limiting access of the blind to "property" that conducts commerce, therefore establishing the requisite requirements for the act to apply. Should we hold this virtual marketplace accountable for this? Southwest, Amazon and others have. The nexus between the web and the real world has been held pretty tight in district courts regarding the ADA and a "physical" place, this isn't much of a stretch to hold that the nexus includes "virtual property" where commerce is conducted.
Just like the dot.com bust - real things are real, and when the electricity goes down for whatever reason, the unreal things vanish and are worth nothing. These people who escape reality through drugs and VR escapades, etc. are missing out on the greatest show on Earth - that is a fulfilling, interactive life with all the consequences that go with it. What a collosal waste of talent!
I think that the $1M figure probably is more complicated than it sounds, and I think Second Life's economy probably could crash also. But what about the economic crashes that have happened repeatedly in the real world? What about 1929, and 1987, and 2000? People will hopefully continue to learn from these mistakes. That is why we have the SEC right?
Anyway, I have never used Second Life, but what I see from what i have read here and elsewhere is something like the movie industry in 1915, or the written novel industry in the early 1700s, or the pop music industry of the late 19th century/early 20th century, or even the internet in 1992. All of this stuff is something less than tangible, but people pay tons of money for CDs and DVDs. When you buy a DVD of your favorite movie what the heck are you buying? It is a recorded artistic performance. Second Life is an ongoing unrepeatable mulitidimentional artistic expression and or performance.
And I think virtual lawyers and virtual insurance agents with virtual cases and contracts are at least just around the corner, if not already in operation.
Understand that Second Life is a virtual community, and that it was established as a kind of reflection of reality. Second Life is in my mind the leading edge of a change in our view of social interactions, in that the folks we talk with online may be separated by thousands of miles. Science fiction has written about the upcoming virutalization of life some time now, and SL is simply a manifestation of that existence. It's apparently important enough now that Reuters has opened up a news bureau IN Second Life, and that the governments of Australia, Britain and the US are viewing the earnings made in Second Life as real, taxable income. Is SL a game any more? Or a virtual economy that may drive the real economy soon?
I think that people in the US are more likely to be lonely than in many other countries... Because of that, some enjoy "playing" that they have a life... At some point, the game stops being a hobby and turns into addiction. But I am not here to judge. I may prefer to interact with other people; love, touch and feel real lovers and hold and help real people. For some, these routine activities can be very painful. They are somewhat safer in the virtual reality, and turn it into their life.
I'm a real architect and very intrigued by all this virtual real estate. What would keep me from creating my own SL "avitect" and selling virtual design services (heck, virtual design and construction services!) to other SLers? If I set my virtual fees correctly, then I earn virtual dollars, convertable into real US dollars. I utilize my real education and experience in a the virtual world. And I probably don't need to carry virtual professional liability insurance, either! Hmm....
If she was real smart, she'd put up virtual billboards on her virtual real estate and sell virtual advertising space to real world businesses? If this game has that many players than maybe she could turn a buck or two doing that.
The more interesting issue is whether income taxes are being collected and paid on the income earned.
Should Second Life not serve the purpose to explore, innovate, refine and intrigue while gathering information about everything that is out 'there'? Should Life itself not serve the same purpose. I imagine, that if we all were not intrigued in some way, we would not be commenting. Maybe we should all give Life a second chance.
All value is virtual. A piece of land, a book, a car, a stock, a painting, any good or service you can name� it doesn�t matter whether it actually exists or not. What does matter is if people want it, and what they will pay for it. Where there is any demand and finite supply, there is value. Spending ones assets on a real house is just as ridiculous or wasteful as spending ones assets on a virtual one. Both have value and risks, both had to be constructed over time, both provide something desirable, both will be bought and sold. There mere physical tangibility has no bearing on this.
There being no meaningful distinction between assets in a virtual or real world, I�m in favor of applying the full plethora of social and legal constructions to this new frontier of value. Insurance, liability, property rights, theft, and taxation will all be expanded into the virtual realm over time.
Jason said, "What is interesting to me is whether the IRS should step up and start requiring one to report earning made from such enterprise."
Actually, the US Congress is in the preliminary stages of probing virtual economies. That should be considered a good indicator of how lucrative this virtual "waste of time" (as some have deemed it) can be.
As someone who develops elearning for government agencies and commercial companies, I started to explore Second Life and have found that it can be a very effective training environment if utilized properly. Unfortunately, digital as a second language types (those raised prior to the introduction of home computers and cellphones) just can't seem to move beyond their ignorance to see some of its potential uses.
Real world musicians play concerts introducing new people to their music. Groups do fundraisers for a variety of real world causes exchanging Lindens for real world donations. Courses on using the in-game modeling tools and scripting language are offered. Companies introduce products -- a hotel chain is building virtual versions of future hotels to get feedback.
Unless you have done the research and/or have participated in this or other massively-multiplayer environment, you really don't know what you are talking about.
Amazing! The hostility shown here toward virtual environments and gamers. I bet many of those folks that find it so hard to understand people may pay $15 a month for to play a game will not hesitate to pay $50 or $100 to watch OTHER people run around a football field or basketball court. Now who's the fool?
For anyone trying to understand what this is all about or why anyone would spend time on Second Life, etc, keep in mind that players are usually substituting for other entertainment and social activities.
The best games can combine the social element of chatting on the phone with friends (including live voice), the long-unfolding story lines of a TV series, the great visuals of an action movie, the self-controlled pace of reading a book, and the interactivity of browsing the Internet.
The social nature of these "games" is what is most often overlooked. They are not like normal video gamespeople play to "win". They are more like going down to the pub to shoot pool with friends. They lack in physical presence, but allow people who are scattered far apart to spend time together.
People who make real US dollars in these games are just entertainers and those who facilitate the entertainment. And it is no more or less obscene to spend enormous time and money on movies and sports and music than on this entertainment.
This is big business (World of Warcraft gets something like $15 per month for each of 5 million subscribers), and as more kids grow up with broadband and PS3's, and the IRS looks towards the enormous income on gray markets, this may be the biggest growth area for new law.
I agree with comments above regarding value. The only value in this "real estate" is created artificially by limiting space. Also, why would someone want to invest in real estate in a "world" in which a single company has control of literally every aspect of the "world".
Wow, These people need to get a "REAL" life!
Douglas said, "I'm a real architect and very intrigued by all this virtual real estate. What would keep me from creating my own SL "avitect" and selling virtual design services (heck, virtual design and construction services!) to other SLers?"
Lots of people in SecondLife do that very thing right now. You could even demo real-world ideas and floorplans by building them in SL and showing them to customers, either in world or at your office.
Though, in order to do this, you'll most likely have to buy your own land (which is one of the primary reasons people want land in SL) in order to show off your work.
This reminds me of the value placed on Beany Babies, Pet Rocks and other assorted junk. The only reason "virtual" has any value is because millions of people are in agreement that it has value. "Virtual" is very different from real, you can't pull the plug on real. You folks have have way too much time on your hands and have watched Kenau Reeves movies way too often. This "virtual" reality isn't. People who really need help would not be amused with the amount of money spent on "virtual reality" while they watch their children starve.
How about "virtual pathetic"? Go marry a virtual person, eat a virtual meal and live in a virtual house. If the amount of time and money spent on "virtual" were actually put to a good use, maybe this "real" world would actually be a better place to live.
I've been a resident of Second Life for about two years and must repeat what someone said up thread about it being an entertainment replacement. As TV has gotten duller, SL has gotten more interesting. I have a small business there making houses, my virtual business nets me about $200 USD each month, enough to pay the monthly charges (tier) for the land that I own. The topic of RL taxes comes up on a regular basis on the forums and thus far we are expecting at some point that the way things will fall out is that anyone who "cashes out" more than $600 a year will likely see a 1099 in the coming years. Most of us, however, funnel our business profits back into SL - which Anshe has done by buying more islands. Of course it's a risk. We know that. We also know that, for the most part, we are playing with money that would go towards other entertainment concerns. How much a month do we all pay for cable/satellite? It is the same exact thing.
Capitalism is only one of the myriad ways in which to use Second Life and anyone who expects to walk in the door and start earning cash is greatly mistaken.
Buying and selling virtual real estate? Insuring the same? Converting non-real currency to dollars?
As Slavoj Zizek would say, it doesn't get any more post-industrial. This is merely the fulfillment of the move towards quaternary occupations, a service based economy where no raw materials are produced or crafted into consumer goods. The middle-man is everything and the potential for economic growth i virtually unlimited as more players will introduce more money into the system. My final question: how long before the poor of Second Life begin solidarity movements and demand distribution of wealth?
Land is wealth everywhere.
Fake money, real money, what is the difference? Is not all money fake, is not life game? By server or God via crash or cataclysm we are at the mercy of the World and not it's master. Games of wealth are such--virtual or real.
Can someone explain to me why this is legal, yet I as an American can no longer play the game of poker online for money?
I think it's funny how the majority of comments here can look down on the people that choose to play this game with their free time. If the worst thing someone does with their life is toss away some money in a virtual world, so be it. It's a heck of a lot healthier than many of the other hobbies we as Americans (and people in general) like to have.
I think that I am going to invest in real estate in earthquake proof data storage centers.
Perhaps they should start teaching virtual law in schools now to deal with the inevitable tide of virtual slum lords--maybe start with virtual tenant rights and rent control, good grief.
I can't wait to securitize the mortgages into bonds on these babies! All we have to do is get our lawyers to put together a nice prospectus (and believe me, they will make it happen) and project the future cashflow and prepayment speed and we are set (Ok, maybe we need to take care some of those virtual dollar related risks too, but there's nothing a few SWAP or derivitives can't handle). You think nobody will buy these bonds? Show them the cashflow and they will buy ANYTHING. Think about it, this is diversification into ANOTHER WORLD.
If you think this is real world vs virtual world, then you are certainly missing the whole picture and what is coming at ya.
I ran a similar business in a competing online world. The biggest issue I have is it seems I was the only one reporting earnings to the IRS.
These people who keep cashing out and laundering the money to avoid taxes will soon wake up to the harsh reality of life or behind bars.
One thing I can tell you with 100% confidence, there are a lot of lonely, introverted, desperately seeking acceptance losers in these worlds and they spend an ungodly amount of real life money there. It is the ultimate in sad.
I've been a resident for years in SL. I can see by the postings of many here that they don't have the slightest idea what Second Life is and how it's a platform & not game. Aside from the casual socializing & "playing in SL", SL is used in several ways...Education: several universites teach courses in SL, ranging from basic 3D modeling to other fields like sociology, anthropology, architecture & design; Medical studies: SL provides a safe & creative environment for adults who suffer from conditions/disorders like autism, cerebral palsy or who're paraplegic, giving them the ability to communicate, socialize & intermingle in ways they never could in real life.
When disasters like the '04 San Bernidino fires & Hurricane Katrina occurred, residents sold merchandise, held fundraisers and other events to raise money, donating 100% of the proceeds to organizations like Red Cross, Toys-For-Tots during X-Mas & Kava.org. In fact, the first major donation from community fundraising was given to the Red Cross and they refused the donation because they had no idea who or what Second Life was. The donation amounted to several thousand U.S. dollars, which was then donated to several other charities...but what a loss for the Red Cross because they lacked the ability to do research and find out what Second Life was all about. I think many people want to "poo poo" the very idea of SL because they're ignorant to what SL is and has no become.
So, yes, you can play a "game" in SL, as well promote any artistic project you can dream up, socialize with others around the world, use SL to create 3D models of your home/room to help you remodel or redecorate, or one can merely fly around & explore the world that makes up SL. Some have described SL as a 3D chatroom, others have called it a virtual world of Lego where one can create anything they'd like. The great thing is that Linden Lab gives one IP rights and one can sell their creations, as well as cash out one's Linden earnings to US$ if one cared to. In fact, it was IGE & Gaming Open Market that first traded in Lindens, not Linden Lab itself. Linden Lab didn't start cashing out their currency until late last year.
What folks need to understand is that from the residents perspective, it's hardly a waste of time and there's more to it than just making a buck. It's a virtual world where everything inworld is created by it's residents, including it's culture...the nice thing is that you can make a real life living in SL, IF that's what you want to do.
What I find surprising is how resistent some folks are to the very idea that such an environment can ever exist, and successfully. I've seen some of the criticism thrown about SL, yet it's obvious they've never tried it. Some folks may make as little as US$5 a month, others make hundreds of thousands. It all depends what you want to do in SL.
And about Anshe Chung, she may have been an early adopter, but it's never too late for another person to do what's she's doing. It all comes down to how much you want to risk of your own investments. When land was first being auctioned, residents were merely bidding for land parcels for their own personal use. Instead, Anshe saw the opportunity to buy as much land as possible and resell it at a premium. Many residents cried foul, but she wasn't violating the terms of service...she was merely doing what others were too scared of doing themselves or never dreamed of doing. She may be the first most successful land baron of SL, but not the first to attempt to be one. Btw, before she became the famous land baroness she is today, she worked in SL as an escort for a famous club in SL. Anshe is most likely the most famous rags-to-riches story to ever come out of SL, though she's been known to deny her "humble" beginnings in SL.
Barring any legal issues associated with the exchange of virtual property while all servers are up and running, liability due to "loss" associated with a server going down is negligible, assuming regular back-ups are made of the servers. In the event a server should crash, or an earthquake should wipe out a server farm, the virtual property can simply be restored.
Now if the virtual property can be restored, could it be "hacked", such that duplicates of the virtual property could be established at counterfeit, copy-cat, competition? Wonder what the liability would be at that time, especially if the servers were established in a country that did little to discourage cyber-crimes.
Although I do agree that, ostensibly, this is a waste of time, it is, however, no more of a waste of 'time' than sitting in a cubicle punching in numbers into a computer all day for what a lot of us call a 'real job in the real world'. She was essentially doing the same thing, and, well, making money doing it. A lot of money. Enough money to get her on CNN. If I could sit in my cubicle with my 'real job' and make millions, I would. But I can't, so kudos to her for finding a way.
It is so interesting that so many people felt that this is not the real world and it does not matter. Buying a XBox is real and if you hit someone hard enough with it they will bleed. But once you use it for its intended use you are in a virtual world and you are paying real dollars to be in it. No difference if you want to have a better experience by paying real dollars. XBox is hardware and software, Second Life is purely software and the distinction is not all that great.
One persons foolishness is another persons money making opportunity. In the real world years ago we had beanie babies with people buying and selling them for thousands of dollars. I'm sure there is someone who could claim they were the first beanie baby millionaire. So who cares if Anshe Chung is an online real-estate tycoon who claims to have made $1 Million. Where will she be in 5,10,15 years?
The day she or any other online gamer makes the "real" worlds richest list via their virtual holdings is the day I start paying attention to virtual worlds as money making opportunities. Otherwise it's just a nice nitch market for a few individuals willing to spend their time and resources on what some would consider foolish.
So let them sue over virtual deals gone virtually bad. We have plenty of dumb real life lawsuits in the court system already, what's a few more going to do?
A few months ago, I was curious and logged in to SL after paying a 1-month subscription. I wanted to see what the hype was about. Well, let me tell you it was boring as crap.
Nothing beats real sex, real food, real drinks, and having face to face conversations in the real world.
However, having said all that, all the fat losers of America can play in that world all they want. I don't really care. If they make a million bucks so be it.
Sooner or later a person has to look himself in the mirror after 60-70 years of living and hopefully he or she will feel proud of what they have accomplished.
In the case of 2nd life, perhaps a virtual funeral could be attended by virtual children.
I'm not interested in going back to SL. Anybody want a free subscription?
Personally i feel stories like this are full of BS. Anyone who has ever tried to sell something at a tag sale will understand why. Value is subjective. This would only be news if someone actually converted it to 'real' money and 'real' assets. 'Real' money too has only subjective value, but at least more people believe in it and it is not only on a server some where on the West Coast (I assume). If you believe that Second Life and its ilk represent some new representation of the world that supercedes the real one....Well then I have a file on my laptop that I say is worth $1M, anyone want to buy it. Hey , why not write a story about it?
"Scurting" and "dirth"? The only thing more surprising than the lack of ability to spell (or use a spell checker) is the venom for which some of those here apparently hold SL in disdain.
Like it or not, and though early in development, this is the future. It won't be too many years before we all (in the industrialized world) "live" through an avatar in a virtual world to shop for RL houses, check our RL bank accounts, buy RL clothes, enjoy RL entertainments and meet RL mates.
Personally, I found Second Life a bit boring. I set up an account, dressed my character, flew around the new member island and never went back. Though a friend has a photography studio in SL and is very big on it.
However, despite my personal experience, I can't see how there aren't going to be imitators, mergers, Google buyouts (as mentioned below), MySpace tie-ins, more and more promotion, more and more customers and more and more and incentives to birth a virtual alter-ego.
Welcome to the future (if you want to see it more clearly, read Neal Stephensen and Tad Williams).
For those of you who have read *The Tipping Point*, I believe Second Life has recently tipped.
I'll be interested to see how long the popularity lasts, as well as what imitators SL spurs.
What was this all about? Several geeks playing an online game? Give me some real news over this garbage. If there are nerds out there that want to play computer games all day and night and live in their own little virtual world, go for it. But don't waste my time reporting on them. They just need to go get a cat orsomething.
You're incorrect. The first documented millionaire from Virtual holdings was John Yantis. In 2002 he sold his virtual property to IGE for an undisclosed figure rumored to be just shy of 8 figures.
Please correct your article.
The Linden Dollar will crash as soon as the buzz wears off.... The L$ is worth 2 nickels...
Good for her...SL is amazing.
Second Life players are earning Linden Dollars and/or realizing a monetary appreciation on their virtual property. Even if players' earnings and gains are in a "foreign currency," that currency is directly convertible into USD (and vica-versa).
This is starting to sound like real-world income... And if so, are there (should there be) real-world tax implications?
You could argue that players are each running their own home business, in a 1099 sense. Each player buys/trades/sells property (even if the property is virtual in nature) in order to grow his or her investment. This is directly analogous to the work of a daytrader, who certainly pays taxes on capital gains.
If we didn't want to scrutinize each transaction made in the virtual world -- as a daytrader would be responsible for reporting on his/her tax return -- we could at least consider the game as a single investment. We could think of the US dollars pulled out of the game minus the US dollars invested into the game as one big capital gain -- and tax it accordingly.
On a lighter note, if the IRS were to tax gamers for capital gains made in this virtual world and in this fictitious currency, should the income be considered foreign or domestic?
I find it interesting that so many said something along the lines of "get a real life" regarding those who play SL. I think there are certainly those who will take something like SL too far and probably DO need to get a real life. However, the vast majority of players are there during whatever free time they have, which others might use to play golf or go to a football game, or more likely, watch TV.
I play SL in my spare time and also build houses (to populate the virtual landscape) and for me it is a creative outlet. In my RL job, I work for a large bank. I love my RL job and the people that I work with, but I don't have a lot of opportunity there to create something of beauty. In SL, I can do that using tools that I am comfortable with after having worked with them in my play time for a few months and combining them with some of my RL talents (Photoshop, etc.).
I do also do some RL photography and of course enjoy visiting interesting architecture and going to museums to see beautiful art of all kinds.
And as for the people who variously said things about touching/loving real people, spending time with real friends, etc. etc. Not everyone in SL is there to have virtual sex, though the more normal social interactions (conversation, discussion, negotiation, etc.) are certainly an important part of the community. Truly, the interesting thing about SL is that it really can be whatever you want to make of it. If you are a shut in and have 20 hours a day that you want to spend on it and that is your life... it can happen. If you want to spend a few hours a week or month and listen to some live music with some friends (or make some and gain an audience) this too can be done. And pretty much anything in between.
So you see... not EVERYONE in SL is actually missing out on anything RL. Some are just augmenting parts of their RL or engaging in activities that they are not able to in real life for whatever reason (I'm certainly not going to design and build a 'real' house in my spare time).
how dare you CNN,writing articals like this GLORIZING someone without facts about LL currency system- it means nothing, the value of a dollar is little compared to things now aday and yet you write articals about this and name someone this.... i am suddenly reminded of another prospect for this: the sudden boom of websites a few years ago... this will fall and when it does i pray for anche....and for your reputation
Why don't people use this anger and questioning of why people people spend money on this Second Life or should I say Get A Life and instead question people who spend money on useless crap such as fancy cars or high tech electronics when they can barley feed there children or pay their rent. Or what about the war or should I say struggle in Iraq. If we stopped the war for two days we could send that $350 million dollars that would have been spent those two says and do something about poverty, aids, massacres, and global warning that go on around the world. Its not just these Second Life people that are "wasting" money. It is everyone. Even you...
Okay, wow. This woman bought zero additional Linden Dollars? So, say she started with 257 LD - ~1 dollar US. And she ended up increasing her wealth to over a million times what she started with? Wow. I wonder how long it took her and how many hours per day she averaged to get this sort of return. Very interesting.
I think this is the future of entertainment.Finally some sort of answer for artists in the computer world.
On December 2 the New York School of Law is having a panel on the tax implications of such "gaming" (IIRC it is part of a larger conference). Some nations are already considering taxing convertible money earned in such games, and there are questions about related issues, such as money laundering. Even at a 300 to 1 rate, this lady is sitting on over $30,000 of value. It's not just nickels and dimes anymore.
You bring up a very interesting point or a start down a slippery slope. Besides the fact that people may lose all there Linden dollars to some catastrophe affecting servers in the real world, what about losing Linden dollars in-world. What if someone becomes an in-world real estate agent and recommends a property buy? Are they then liable if property values decline? Eventually, you will see all the same methods of making money in the real world being copied in-world and all the scams and get-rich-quick schemes. And that includes of course lawyers.
To all those who deride ms. Chung and anyone else who spends any time in Second Life....
Until such time as you stop going to sporting events and concerts, buying or renting movies, going to the movie theater, watching anything on TV other than the news, or reading any books that are works of fiction, your opinions on virtual reality are not worth hearing. And to those of you who believe we should be spending that money helping others through charitable contributions, until you stop eating out and start fixing your own food at home instead, same for you. The $20 you spend on a meal in a sit-down restaurant rathe than cooking the same meal at home for maybe $5 is just as much keeping food out of the mouths of hungry children in another country, which you think my money should be used for helping with, as the same $20 spent on Second Life.
I suppose if there were an earthquake, Virtual FEMA would show up 5 days late with virtual trailors and $2000 virtual debit cards, and half the population will have relocated to SimCity.
What a complete waste of time and human experience. If this person has become (truly) rich (that's what I gather from the article, unless I misread it), then it comes at the expense of others who are participating in this undertaking. All power to her for extracting this cash from them voluntarily. To the others, get a life.....
There are other virtual experiences. Second Life while well publicised is the new kid on the block. Franky, making money in the VR world is not why I go there because I have to do that in real life. I prefer a fixed fee unlimited building environment such as Activeworlds.com . Their latest version rivals Second Life graphics and is only 70 dollars a year. In the log run the average user gets more bang for the buck and not everyone (as in the real world) manages to become a millionare.
It sounds like their may be a virtual world opportunity for someone to offer property insurance to protect against the loss of virtual property to a real world catastrophe.
I've written about *how* Anshe made her million here:http://secondthoughts.typepad.com/second_thoughts/2006/11/the_anshe_chung.html
I wonder if Lloyd's of London would insure my virtual estate empire in Second Life? Probably not, because the Lindens drop down a TOS -- which has become more and more refined as time wears on -- saying that basically, our holdings have no intrinsic value, the currency is merely a license to use the scrip inworld for microtransactions, and we can be expelled "for any reason or no reason" and all our property and belongings deleted without compensation.
Still, most people suspend disbelief in the fragility of the world and spend and make money with relative ease. You are not paid anything near RL wages but with perseverence you can make a profit.
Anshe didn't start as a RL wealthy person, she was merely a part-time school-teacher and homemaker, like many of the women making money in SL - it is a miracle for female entrepreneurs.
Everyone would be interested to see a legal precedent set that would value the land and goods in some RL way, but so far, only nuisance lawsuits have been launched on LL by people who actually exploited and stole their virtual goods.
Congratulations to Anshe Chung. It sounds like most of the folks who left comments here aren't "getting it". How is this different than your so called money existing in the virtual bank server as data? It's not, I just wouldn't trust my assets to game programmers though ;-)
Some interesting comments indeed.
There are lots of typical knee-jerk technophobic reactions from people who are threatened that the world is progressing without them, and some of these comments are intriguingly hostile.
Much of the discussion has abandoned the topic of virtual property and defaulted to the "sin" of online human interaction (we're doing that with this discussion aren't we?). Such people should educate themselves on modern avenues of entertainment and interaction or be left in the past.
I think what many people seem to be missing in their responses is that like it or not, virtual communities have been around in one form or another for over 20 years and will continue to grow and expand for that segment of the population that finds escapism in it and to be and do things that are impossible for them in the real world. People are making real money and supplementing their real incomes with virtual businesses. One of the responders here said he was an architect and he could design virtual buildings in Second Life. Why? Why not use Second Life to create a simulation of a building you are designing for someone and walk them through it completely top to bottom before doing a single thing in the real world? There are immense marketing and business possibilities merging the real and virtual worlds and that is why there is so much press about Second Life lately and there will be more about newer possibilities of the Metaverse. (The term was first coined by Neal Stephenson in a 1992 book entitled Snow Crash which was the foundation for Second Life and a few other virtual communities like The Palace)
It amuses me to hear so many people's comments draw firm distinctions between "real world" and "virtual worlds" -- many with sarchasm and contempt.
Physics and many religions teach that what we perceive as the "real world" is an illusion. Matter doesn't exist -- it tends to exist. There are no solid objects in our shared reality -- it's all energy -- the air, earth, and water are all highly organized forms of energy.
What are virtual worlds composed of? You got it -- energy.
And although virtual worlds are less sophisticated than our own they continue to evolve, grow and become more complex. Someday virtual worlds will become indistinguishable from our own. Think of the potential benefits to the physically disabled. Or to astronauts on epic, multi-year journeys to Mars and beyond.
Heck, at the rate we're going virtual worlds may be the only hope that our grandchildren will ever see and experience trees, blue skies, wolves, bears, birds, fish...
The Chung story really goes to support my thesis that virtual-world property is headed toward this critical mass where it will become impossible to argue that there is no legally protectable property at stake.
One can catch my article on the subject, Owned: Finding a Place for Virtual-World Property, in the Michigan State Law Review as soon as it hits shelves sometime in the next couple of months.
Like allot of the above comments...
Much more fun to communicate with virtual friends then it is to go outside and play in a park or go for a walk etc.
Mankind is truly a perverted creature. Dont you ever get the feeling that you were born on the wrong planet?
There is a risk of loss with everything in life virtual or real. A person should do what makes them happy. Maybe a person can get virtual insurance. I am sure that is as good as real insurance these days. LOL. At least when you virtual house comes crubling down you only get virtual wounds.
SL is a joke, it is just an online porno chat with graphics. Fad indeed.
Reminds me of the VMRL days of 1996.
Because it's fun! All this "get a real life", stuff is just crap. Do you watch TV? I don't even own one. Do you go to sports games? I actually participate in them (what a thought). Do I play Second Life? Yup. In addition to building a house, playing with my son and wife, running an actual business and a VIRTUAL one. Why? Because life is fun. My first life and second one. Now get off your butt and do something. I'll be online later tonight to play.
On-line creation/exchange of digital goods is the wave of the future and there is nothing legally wrong about it.
"Still, you might ask whether Linden Lab is courting legal liability if its servers should suddenly go down one day, destroyed, say, in some real-world earthquake, leaving Second Life denizens devoid of "property" or at least expectations in which they've invested so much real time and money. What do people think?"
Have you heard of server mirrors and backups?
Regardless of whether you think this is an entertaining activity or a waste of time, this is a very interesting and useful tool for Economic simulation and research. Since there is no "work" or added value created in SL, there is a wonderful opportunity to study supply and demand at work, with some monetary policy insights. This is a great opportunity to study speculative asset bubbles as well.
The demand for Virtual Land is largely linked to the number of subscribers, with their $100 Linden Dollars, as well as whatever people have brought into the system using real dollars. The supply is (by design of Second Life) fixed. SL has essentially adopted an inflationary monetary policy by steadily increasing the supply of currency by new subscribers. In a simple economy like the one in SL the relative value of items in SL can be easily derived by dividing the total amount of currency in circulation divided by the amount of commodity present. In the case of SL, land is rare, and everything else is fairly plentiful. I'd be interested to see economic data for SL. I bet it's a roughly Total Land Value = Total Amount of Currency available.
In a normal economy, this would devalue a currency relative to other currencies. By fixing the exchange rate, Linden is setting itself up for an inevitable "run" on its virtual currency at some point in the future.
I am an avid Second Lifer (as Zelator Baphomet) and although I love SL, I would never personally invest any money in Second Life. The rate of population increase is far outstripping the ability of Linden Labs to support users, and the quality and performance of the world will continue to degrade. Linden Labs committed a huge error in allowing free accounts, and we are all going to pay the price for the Linden's marketing practices.
As an avid user of Second Life, I can tell you that Anshe Chung is indeed the most notable real estate tycoon, far outweighing any others. I don't play this game with the idea of making money. I do it because I am forging relationships with friends that have a visual component that typical chat room does not. I have spent a fair amount of my own money to enhance this experience, but anyone can use all the tools available in Second Life for free. This is an amazing virtual world. As an IT professional in the real world, Second Life gives me a chance to utilize both my technical and creative sides at the same time. In addition to building things (everything in the Second Life world is user-created), I can write scripts to bring action to these items.
Is it worth a financial investment? That's for you to decide. I'm no Anshe Chung and will never get rich selling real estate. But I sure do have a good time.
If the servers crash and these people lose their real money, then they deserve it. I cannot comprehend the concept of paying real dollars for make-believe land. Or their preference for virtual life over real life. These people have lost touch with reality. If these are tomorrow's leaders, then I fear for our future.
I personally find this exercise in creating a "virtual" economy to be fascinating study in how people create and perceive value. Of course, someone above said it all with his one-word post: "Tulips." We've seen this all before...from the Dutch Tulip Bubble of the 1630s, through the speculative build-up preceding the 1929 Market Crash, to the Internet Bubble of the late 1990s. This is another bubble in the making, rest assured, and it will likely be one of the most spectacular crashes of "Web 2.0" when it bursts. In the meantime, however, those of us who see through this nonsense "just don't get it," just as we "didn't get" the "New Economy" in 1999.
All the "Real World" bigots should pick up a physics book and read about String Theory. The "Real World" doesn't seem so real after you do, especially the part about they aren't sure strings would exist if they didn't vibrate. In short, if the vibrations stop, the material world goes poof! It's a bit like smoke and mirrors. So what's real and what's virtual is more a matter of perspective. Perhaps "value" is better defined by time and effort.
"I just want to say one word to you - just one word. Are you listening? 'Furries.' There's a great future in furries. Think about it. Will you think about it? Shh! Enough said. That's a deal."
What happened with the copy cat script that was used by hackers, they copied all the virtual stuff, how does this effect the users that made those objects. Now that same script is on the internet for anyone to use. SL tried to downplay the whole thing...
But this caused the linden vs USD to drop, so people rushed to convert linden money to real USD, and this caused a major loss of linden value.
Also, many are scamming the buying system, they wait in virtual clothing stores and try on clothes or wait for others to, and then they just grab the image file from their hard drive, all images on stored in a cache folder.
So now they have the clothes people are selling, but they get them for free.
The SL system is weak and has many exploits, I would wonder how long before more hackers try to make quick money.
Also some users make object that slow down the server on purpose and others have exploited the grey goo, by making object self replicate when anyone touches them in game.
So, when are you going to cover the true Second Life crowd. It's full of freaks.
Property or any other asset in the real world has value only because it inherently has something to offer. Ownership of a stock has value because it might be expected to provide dividends. Buying a bond has value because it is expected to pay interest. Ownership of real estate has value because of a certain desirability to live there or produce goods or services from. There does not seem to be any inherent value in virtual real estate except to those in the queer niche of die hard gamers. If this artificial landscape grew in scope and applicability, then perhaps they could acquire some legitamate value as platforms for advertising or some other creative money making scheme. But unless these virtual properties start to grow fruit that one could buy at walmart, owners should realize that what they own is worth only what the next sucker is willing to pay. If that sucker one day realizes he's buying really much of nothing, then that person is SOL.
I agree with those whom condemn the SL players. I mean, who uses computers or any other form of digital entertainment anyway?
Furthermore, why don't the SL players just blow people up for their resources and wealth...like the RL players.
An important aspect many of you knee-jerk Luddites are missing: SL contains real people that will buy real stuff. Set up shop there and pimp your real world services or products.
Also, SL may well be a precursor to a future internet interface. And if any of you have ever spent any time in message boards or chat rooms, then you really ought to shut up, because, well, SL amounts to a sort of 3D chat room on steroids (and Viagra ;) )... a 3D chat room in which it is actually possible to make some money.
**What!!? What happens if the wheels fall off that there horseless carriage? NO THANK you. I'll keep my horse...horseless carriages are a FAD...a FAD, I tell ya!!... (pfft)**
First of all, Second Life is a game. Period. A person can make money playing it all the time and selling their stuff. But most people can make more money working the same number of hours. The objective for most people in SL is not to amass a fortune, but to have fun. Some people with businesses in SL are happy to make the game pay for itself - more correctly, to get others to buy enough of their creations that the cost to the business owner for the game is zero.
I'm happy that someone saw potential, jumped in on the ground floor and made a million bucks at it. Good for her - I assume she'll list it on her income tax forms, seeing she's a "real" businessperson and all. But most of us are happy to simply have fun and watch you media mouthpieces gush about things you know little about. Moby Dick, for example, is not simply a story about some guy trying to kill a big fish. You can be factually correct but miss the much larger picture.
It doesn't make sense to me that people would have such reactions as "live in the real world!"
The reason is, we live in a world of information. The "real" we experience is just a perspective. The information and emotions one gets from a virtual world or no less real than what one feels in the "real" world. A Harvard lecture could take place here and be just as effective as in "real" life. Perhaps more effective than what online courses are like now.
What I see as an interesting discussion would be the liabilities of "crime" happening in such a virtual place. With real money on the table the potential for real losses exists.
Many people do not like the idea of this, it seems silly. Well I hate to say this but this is not the first site that you don't fight monsters in and spend real life monrey in and buy realastate. From imvu with 3d chatting and developing to a simple charater/fishing blogging site like gaia. These are everywhere! It is a tend that has been going on for years and years now. Wake up and smell the coffee writers and fellow readers. This is not the first.
Listen to these naysayers whine about how another person should spend their disposable income. If you prefer socializing online with people from around the world more than say, drunks in some bar up the street, then so what? Your also apt to meet a more diversified collection of individuals than you would find there. Players of SL encompass all types and classes, from professional types, to the disabled shut in's. And out of all these people some are making money and some are spending it. Sure, your spending real money to purchase a virtual outfit for your virtual charecter, but at least your online persona is dressed well. Anshe Chung is currently making a real life living in an online arena, whether this can be maintained long term is irrelevant, shes making some decent cash right now. All the power to her and the other entrepreneurs of secondlife who can make a simple social venue into a profitable experience as well. But the bottom line here is that SL is here for our entertainment, and many are being entertained. If you dont like it, go play golf or something.
I see the legal question you pose, and think you are rather ingenius for finding this. However, I see the cashing in of the virtual dollars more like a regular refund for the product because if the user cashes in all of his virtual property he will have nothing. The appreciation that will occur is not a real appreciation, but the user refunding the 'virtual property' of other users who have transferred their virtual property to the one who is cashing out.
When the stock market crashes, you lost..You knew it was a gamble when you bought it! no brainer.
"The cinema is little more than a fad. It�s canned drama. What audiences really want to see is flesh and blood on the stage." � Charlie Chaplin
I agree that Second Life presents a plethora of new legal issues. The recent bot that is able to immediately clone anything your avatar wants will certainly test intellectual property rights in ways we've never dreamed.
My biggest question concerns Linden Labs' value in the marketplace vs the rights of the landowners which give it it's value. If Google or a rival pays big dollars to acquire Linden Labs, it seems that the property owners would be entitled to a share of Linden's earnings. What is Linden's position on this particular issue?
Your thought on the legal liability issues of "crashing" property in 2nd life leads to a fairly simple and ultimately profitable solution, Selling property and casualty coverage.
Is the money taxed?
I find it very interesting that so many people here seem to think that it is wrong for people to pay money for virtual product (in the case of SL, this includes real estate, cars, clothing, houses etc). The only difference between 'real' and virtual product is you can touch real product. Virtual product has the same tangible benefits and value. We pay for services now that 20 years ago we would think ridiculous to pay for. Using virtual worlds as education, simulation, creativity etc I think has real value, and therefore should be encouraged. I'm guessing the people who say it's stupid to have real value for 'virtual' product would also be against applying 'real' value to a great bottle of wine (it's for drinking really), or to a fine painting (it's a picture and nothing more), or to fashion clothes (it's only a dress). All of these form part of the fabric of a capitalist society, and support for capitalism implies support for any crazy idea, product or service that people are prepared to pay for.
Those people who suspect SL is simply a fad should take a quick history lesson - look at the 'fads' that are now endemic in our society: the car; mobile phones; computers; skateboards; etc.
I take comfort in the fact that the players of SL will not reproduce and will remove their flawed genes from the race. Now if only we could get religious fanatics to start playing....
This certainly raises the question of a viable and profitable market for cyberspace insurance with real reimbursement!
Need to look up Yantis, one of the first major sellers in the secondary market of MMO's, this person is DEFINLTY not the first millionare in online game profits.
It's a fascinating comment on the direction of our society in general. The concept of virtual realities having real world connections has been made by numerous science fiction writers in the recent past. I think it's the next great generation gap concept that older people (like myself) will have trouble understanding and relating too. Clearly the comments made already show many people do not understand or appreciate the significance of this trend.
my daughter is a resident of second life and just had her home "stolen" in a home invasion situation on Sunday. People showed up - threatened her - then her home was "gone" - some connection with the landlord apparently by the "robbers":, Linden Labs apparently refused to do anything about it and told her to get a lawyer. She is not new to the site - has been there for some time. She was paid the value by a sympathetic member - but not the point. Wants to know what steps she can take. She was completely blown off about this by everyone (except for the other resident). Any input would be appreciated. She would like to regain her property and make sure doesn't happen again - the principle of it.
Thanks so much.
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