Five years after the revolution, businesses still have to worry in Second Life

Five years after the Tax Revolt in Second Life issues concerning the residents' rights are still being passionately debated. At a moment in which enterprise applications of virtual worlds in general and of Second Life in particular are becoming serious business, these issues have an even broader commercial relevance. One can establish a Virtual Corporation and use Second Life as platform for the virtual headquarters, but what rights does an entrepreneur have in Second Life, how well protected is she against arbitrary interventions by the owner of the world, Linden Lab, and did Linden Lab finally made up its mind about the very nature of their project? It seems those issues are still very much in doubt.

It is five years ago that the famous tax revolt in Second Life broke out, in July 2003, as remembers Wagner James Au on the New World Notes. Residents protested against the tax policy of Linden Lab, which penalized excessive building by deducting L$ from the creator's account The residents were re-enacting the resistance of the Americans against British taxation, with great success, even enticing Linden Lab to join in the events.

Wagner James Au lists five stratagems which were used and which had success:

• Attack the policy, not the people who enforce it.
• Make revolution fun, even for the victims (Linden Lab).
• Mix your revolutionary reality.
• Hold the company (Linden Lab) to its stated ideals.
• Declare victory before it's too late.

Now, what are those ideals of Linden Lab? Wagner James Au:

(...)an improvisational, collaborative, community-minded world. (...)

Five years later there is still a lot of revolutionary potential. It is maybe as yet not a broad based movement in Second Life, but very diverse groups seem to be clamoring for more residents' rights, for more clarity in the stated ideals of Linden Lab etc.
Let me give some examples.

• Some time ago I stumbled on a document from the Second Life Democratic Movement (SLDM), stating in their new document about goals and strategy:
  

  The SL Democratic Movement (SLDM) believes that the governance of SL by Linden Lab (LL) is both in theory and practice completely unbalanced, while we believe that because SL is created by its residents this is unjustified. We believe that the residents of SL (and Metaverse) should be able to govern themselves (and not only at microlevel) which entails establishing rights in the LL (or that of any gridoperator) Terms of Service (ToS) and implement venues and structures that empower and protect the individual (especially against a “benevolent” dictator).

  The SLDM is objecting against some very concrete elements in the Terms of Service (ToS) of Second Life:

  (...)ToS article 2.6, which states that “Linden Lab has the right at any time for any reason or no reason to suspend or terminate your Account, terminate this Agreement, and/or refuse any and all current or future use of the Service without notice or liability to you.”
  LL has to abolish ToS article 3.2.b, which states that they can “delete any or all of your Content from Linden Lab’s servers and from the Service, whether intentionally or unintentionally, and for any reason or no reason, without any liability of any kind to you or any other party”

• On the 4th of July a meeting was planned by the Commonwealth group about "independence".
  

  How do citizens achieve independence or free self/creative expression in societies... and in particular in Second Life? How do we develop and maintain (and get agreed on) a shared 'bill of rights'?

• These groups are very involved in collaborative and progressive projects in Second Life. One could say that these groups are leftists with no respect for company rights, trying to force Linden Lab to give up some fundamental rights concerning their own product, Second Life. But in the business community there are some very eloquent voices demanding a more coherent stance of Linden Lab. This position in the debate is explained very well in the book Virtual Law, Navigating the Legal Landscape of Virtual Worlds by Benjamin Tyson Duranske.
  One of the key concepts in the book is Johan Huizinga's Magic Circle. The Magic Circle is a dividing line between play spaces and reality. It is a potential dividing line between that which should be regulated and governed and that which should not. Duranske shows with a certain elegance how the law is involved or should be involved inside and outside the circle.

  I especially looked for his comments on Linden Lab's Second Life, that world being quite famous because it grants copyright and other intellectual property rights. Duranske looks at this in some detail, and warns that the patent clause in the Terms of Service may cause serious concern to users who want to patent inventions they implement in Second Life and even for companies with preexisting patents contemplating to do business in Second Life.

  Duranske repeatedly points out that Second Life is in a difficult position, trying to be inside and outside the Magic Circle at the same time. In advertisements Linden Lab says that people can make real money in the virtual world. In the Terms of Service however it is made clear that the Linden dollar is more like a product feature, no guarantee for the right to withdraw any "real money" at all from Linden Lab itself. At the same time all residents view the Linden dollar as free interchangeable with real-world currency.

  Duranske summarizes the situation of Linden Lab nicely:

  Linden Lab had ended up in the unenviable position of essentially running what for all intents and purposes appears to be a real cash economy while denying that it is doing so via restrictive provisions in the Terms of Service that define land, currency, and objects as part of a "product" and, thus, entirely the property of Linden Lab.

  It goes without saying (in my opinion, RL) that such ambiguity can be problematic for projects such as ArcelorMittal's plan to sell shares in Second Life. How can you do serious business when the currency you are using is defined as play money by the the owner of the virtual world while at the same time in daily life it is freely exchangeable for US dollars? Here is what the Terms of Service have to say about the Linden dollar:

  You acknowledge that the Service presently includes a component of in-world fictional currency ("Currency" or "Linden Dollars" or "L$"), which constitutes a limited license right to use a feature of our product when, as, and if allowed by Linden Lab.

  This is what Linden Lab says elsewhere on the Second Life website:

  There are as many opportunities for innovation and profit in the Second Life world as in the Real World. Open a nightclub, sell jewelry, become a land speculator; the choice is yours to make. Thousands of residents are making part or all of their real life income from their Second Life Businesses.

What is my own opinion? I still believe in the potential of Second Life to be an interesting environment for a Virtual Corporation. However, there is a very annoying tendency of Linden Lab to suggest at the same time that Second Life is a real cash economy and that the money used is fictional, nothing more than a product feature, and that Linden Lab at any time for any reason or no reason can suspend or terminate your account. This is like renting office space making it clear that the tenants can be chased from the building at any time and for any reason and no reason. Some observers say that the situation is not that bad because Linden Lab has no reason to chase away companies and because the investments in virtual office space are often rather limited.
However, I do not completely agree with this. Some businesses and projects could suffer a lot of damage should they be evicted suddenly from Second Life, because their activities are strongly integrated in this world. It also seems not very business-like to grant intellectual property rights on the one hand, and on the other hand to make it possible to close down accounts for no reason at all, to do a bad job in protecting patents and situate oneself inside and outside the Magic Circle, depending on whether one writes publicity on the site or the Terms of Service on that same site.
I guess the lawyers of Linden Lab have some very good reasons to maintain this situation, but commercially speaking and looking at the company ideals, I think it would be a great idea to reconsider the company position so as to make it more suitable for "real business".