eBay and ‘virtual artefacts’

The widely read blog Slashdot reported on 26 January that eBay had decided to discontinue the all auctions for virtual property on its site. According to Slashdot, the eBay spokesman said that the difficulties of establishing clearly the ownership of the property and led to so much litigation that this business became uneconomical.

This looked like important news and was picked by other blogs and and b y Google News alert. For many commentators, this looked like another confirmation that IP is notoriously difficult to trade online (this was why Oecan Como auctions patents in a physical setting, and with mixed results, it would seem  – see our 9 April 2006 article). Others took it as an example of the change of in eBay strategy: it is now looking to focus on higher-value, more profitable listings. They also noted that the virtual property trade on the internet was increasing rapidly, particularly in the form of RMT (real money transfer).

Before adding my two-cents worth of opinion, I took a closer look at the announcement. And there is both more and less to it than meets the eye. The eBay decision concerns only a specific segment of virtual property: items related to MMORPG (massively multiplayer online role-playing game). These include game characters, and resources that allow players to gain upper hand.

What is interesting is how large this segment is. According to Wikipedia, in China, there are some 100 000 people employed in “gold farming”, or in collecting MMORPG resources. The gold farming turnover is estimated at over US$1.2 billion. This is an estimate as gold farming is largely illegal and game designers specifically forbid it. The legal problems explain both eBay’s decision and its strategy of reducing its exposure to China.

That said, there is little doubt that eBay is generally wary of the digital goods trade. Its published digital goods policy clearly states that the policy is restrictive and starts by listing items that cannot be sold. Unequivocal ownership is the key requirement. And, to the extent that digital delivery is not considered as shipping, digital items are not covered by the PayPal Seller Protection Policy. This is somewhat paradoxical, given that Paypal itself is a virtual artefact.

All in all, one does not get the impression that eBay encourages the use of its infrastructure for trading in digital goods.