LawMeme LawMeme Yale Law School  
LawMeme
Search LawMeme [ Advanced Search ]
 
 
 
 
The State of Play: On the Second Life Tax Revolt
Posted by James Grimmelmann on Sunday, September 21 @ 19:11:48 EDT Gaming
This November 13-15, Yale Law School and New York Law School will jointly present The State of Play, a conference on the intersection of gaming and law. The conference program has been announced, and it should be a thrilling program. The keynote address by Raph Koster, lead designer of Star Wars Galaxies, will kick off two days of panels with a star-studded lineup of gamemakers and academics. LawMeme, of course, will be there in force, with plenty of on-the-spot coverage.

In anticipation of the conference, I'll be writing a weekly series here on interesting legal and social issues coming out of gaming. Today's topic is the Second Life tax revolt.

The Background

Second Life is one of the most recent generation of massively multiplayer online games; it features a strong focus on creative social interaction. Its setting is modern, with twists of surreal whimsy; its design is among the most open-ended of such games. Players aren't restricted to acquiring objects defined for them by the game. Instead, they can build their own objects -- from teakettles to nine-bloit-high statutes of Dimwit Flathead -- and then use a custom scripting language to bring these objects to life. So Second Life, in part, solves one of the major problems facing online games -- how to keep the game interesting for players with new features -- by letting players themselves contribute the new features.

The other feature of Second Life that's relevant for our purposes is its response to another "classic" problem of online games: runaway inflation. Edward Castronova documented a steady and striking decline in the value of goods and money in EverQuest (relative to dollars). The economics are interesting and complex, and perhaps inevitable (and I'll return to them later in this series). What matters for now is that game worlds and inventories have a tendency to become "littered" with increasingly worthless junk. Gems that were rare in a game's first month become useless rocks in its second year; once a sufficiently large number of players are experienced enough to mine them, whatever market in them there once was becomes hopelessly glutted. Even worse, for a social, environmentally-rich game like Second Life, the landscape becomes littered with them.

Second Life chose to deal with this problem proactively by imposing a tax on all objects, payable in in-game currency. The "Linden tax," named after the game's developer, gives players an incentive to get rid of things they don't really want any more.

The itself tax is somewhat complicated, measuring both an item's "cost" in terms of processing time, and also something of its "value" to players. Big things, prominent things, things with scripts -- they cost your more in tax to hold onto.

The Revolt

Second Life, in its way, is more remote than Iraq. I can't just point you to newspapers with daily coverage of events. I can't send you to the web site of the Second Life Public Library. These things don't exist in a form that can easily cross the border back to reality. Instead, I can only point you at two dispatches sent back by Wagner James Au, Second Life's official "embedded journalist." He wrote one piece back in August on a tax protest movement that had recently broken out and another in September on the resolution.

In essence, some "Lifers" decided that the tax system unfairly burdened major projects. People who put up skyscrapers or designed especially complex toys were being charged more -- even though these audacious constructions were greatly responsible for making the game fun for others. Sure, anyone could build a house, but not so many people benefit from a house, goes the argument. But if I build a baseball stadium, lots of people can enjoy it. Why should I be paying more in taxes than the homeowner? I've given so much more to the community already.

Having thus decided that the tax system was unjust, they launched a series of highly symbolic protests. Clothing themselves in American icons, they replaced a model Washington Monument with tea crates, donned shirts saying "Born Free: Taxed to Death" and put up "Don't Tread on Me Billboards." They even slipped Au a copy of their manifesto, which borrowed phrases from the Declaration of Independence in railing against "Mad King George Linden." Au closed his first report by noting that a loyalist movement had emerged and that "the die is cast."

The next few months saw a whole welter of role-played rebellion, from mock-authentic broadsheets to disputes carried out in colonial garb. And the result? Hard to say. The revolt itself " evolved from protest to party;" Linden announced some tweaks to the game's economic system and praised the creativity of its player-protesters.

Protests, Parties, and Politics

Dan Hunter, over at TerraNova, has exactly the right instincts about such protests:

Oh, yeah, Second Life is "just a game." I wonder how long this line will continue to work, and how long the revolutions will continue to be peaceful and creatively anachronistic.
On one level, these sorts of protests are parties, and we miss the point of them if we think of them only in rational, structural terms. There is an affinity between the Second Life tax revolt and the spirit of creativity that leads Second Lifers to create fantastickal items subject to tax in the first place. Playing at being revolutionaries and redcoats is a form of acting, of socializing, a form with a wonderful whiff of intoxicating fourth-wall breaching. Pulling the basic features of the game itself into the protest has a bit of absurdist joy to it: no matter how hard the players shout, the game's code will continue to deduct the tax from their accounts. So, yes, perhaps it is inevitable that the protest became a party.

But all protests are parties, in a sense, and it is a logical fallacy to think that the people in the streets outside the WTO aren't making a serious point just because they have samba drummers and big-head paper-mache puppets. The drummers and the puppets are there, not to supplant the politics, but to put the politics into practice. Protests in real life are expressive events: the point is to bring the protesters together in a spirit of solidarity and to impress upon observers images that will linger with them. If that solidarity comes from samba and paper-mache makes for good pictures in the paper, so be it. Once you have their attention, perhaps they'll listen.

Turning back to games, there's been a remarkable consistency to in-game expressions of political protest. When things get tough, the tough get silly. Ultima Online had a nude sit-in to complain about runaway inflation in the aftermath of a counterfeiting bug. There, the money supply had been completely swamped, and the game administrators stepped in to drain off most of the "surplus" gold pieces by introducing new, pricey, and otherwise completely useless consumer goods. The oversupply of gold was ruining the game for many players, and they vented their anger within the mechanisms available to them.

Lacking any kind of democratic control over a game's rulers, protesters need to work with a different vocabulary. Indeed, because the game's itself so strongly constrains them, many forms of what we recognize as civil disobedience in the real world are utterly ineffective. Just as you can't vote the Second Life programmers out of office and you can't overthrow them with in-game muskets, you can't stop paying your taxes or withdraw from game society. It just doesn't work that way.

Other than quitting the game entirely (the threat which lurks behind all such protests), a street party is just about the only action you can take that will even come to the attention of the authorities. Making it fun enough to drag in fence-sitting players is a necessary tactic. If your protest doesn't give them a compelling narrative in which to participate, they'll go fly a hyper-kite or find some other way to entertain themselves. A core of people are genuinely concerned about the tax structure may well attract to itself a penumbra of people there for kicks. Even the "loyalists," in a sense, are part of the protest game. They certainly legitimate the revolt by their presence; they are implicitly buying in to this idea that Second Life has a public sphere. They're framing their own arguments in the very terms that Second Life's public sphere permits.

And, make no mistake, the underlying dispute here is very real. In Au's words, "much of the original anger over the high tax rates was genuine." Yes, these taxes are payable only in in-game money, but that shouldn't fool us for a moment. In the first place, converting virtual assets into hard currency -- cash money American -- is not a complicated proposition, as more or less every game designer has discovered. So these taxes affect the value of things to which we can almost certainly assign a very real price tag.

Moreover, these taxes, just like taxes in the real world, have very complicated and politically explosive distributional consequences. The choice to tax some objects more heavily than others makes the owners of the first kind of objects poorer and the second kind richer. If it costs more to maintain big houses than small, the tax exerts an inevitable leveling effect on the fortunes of players. "Rich" avatars who sit on their hands will be gradually impoverished; the "richer" they get, the more effort they need to put into paying off the tax man just to maintain their status. So although the tax revolt was phrased as a complaint about arbitrary government, the demands of the protesters amounted to an insistence that the government do more to promote the particular economic interests of one segment of society.

In this, of course, virtual protests are hardly different from real-life ones. The Boston Tea Party was the expression of mercantile anger at taxes: the protesters wanted was a revision of British tax policies to favor colonial merchants at the expense of merchants in England. Economically speaking, the entire American Revolution was a scheme to improve the fortunes of colonial elites. But to convince their future countrymen to go along with their tax revolt, they developed one of the most inspiring ideologies of liberty and justice the world has ever seen. "No taxation without representation" is a slogan that transforms "mere" economics into egalitarianism. There are plenty of thinkers who will tell you societies as a whole can often reap enormous benefits by letting one particular group get rich; these benefits are hardly confined to material wealth.

And this argument, note, is exactly the one the tax revolters in Second Life were making. Yes, their buildings were larger, their gizmos more gizmoriffic. But these edifices were benefits to Second Life society. Encouraging the grand builders to go off and be grandioser and grandioser makes everyone happier, because it drives a process of creative competition in which they develop ever more wondrous monuments and toys. And all they ask is a favorable tax policy.

True? False? Would easing Second Life's tax rates make it into a stronger loving world? Or would it cause them to overburden its servers with complex scripts and private robot armies? As in real life, these are empirical questions, ones that can only be answered by close analysis of the particular conditions of Second Life and its workings. This is exactly the sort of analysis Second Life's designers are carrying out; or at least it's the sort of analysis they've been telling Wagner James Au they're carrying out.

One last way, then, of looking at the Second Life tax revolt is that Second Life's citizens took some time out from their second lives to say that close analysis alone is insufficient. They wanted their subjective feelings about Second Life's tax structure taken into account, no matter whether the designers in their expert wisdom thought things were whirring along just fine. I am a player, and I am unhappy with how things are, they said. Listen to me.

Where online democracy does not yet exist, it will be necessary to invent it.

 
Related Links
· More about Gaming
· News by James Grimmelmann


Most read story about Gaming:
On the Second Life Tax Revolt

Options

 Printer Friendly Page  Printer Friendly Page

 Send to a Friend  Send to a Friend

Threshold
  
The comments are owned by the poster. We aren't responsible for their content.

Re: On the Second Life Tax Revolt (Score: 1)
by Ernest_Miller on Sunday, September 21 @ 20:32:12 EDT
(User Info | Send a Message) http://importance.typepad.com/
Readers might also be interested in this Slashdot [slashdot.org] post on some of the strange goings on in Second Life: ( Second Life Welcomes Alien Abductors [games.slashdot.org])


[ Reply to This ]


Re: On the Second Life Tax Revolt (Score: 0)
by Anonymous on Monday, September 22 @ 11:49:44 EDT
The idea that the idology of liberty was concocted to justify a tax revolt, shows a gigantic ignorance of the nature of said ideology. The idea that removing an unfair burden from oneself is done at the expense of those not so burdened, confirms the intellectual corruption giving rise to said ignorance.


[ Reply to This ]


Re: On the Second Life Tax Revolt (Score: 2, Insighful)
by Comolan on Monday, September 22 @ 13:19:03 EDT
(User Info | Send a Message)
These worlds provide a direct test of the feasibility of for-profit government, the Promised Land of many people in my profession. Up to now they have degenerated into a customer service state, where the level of service depends on the willingness of the marginal citizen to decamp for another world. Since all life in these places tends to revolve around games of capital accumulation, naturally, the marginal citizen is deeply locked in by the value of the assets she has. With high switching costs, the profit-maximizing level of customer service is low. Really low.

These worlds are not legitimate on any process grounds - no voting except in ATITD - but they may seem legitimate because they are able to hold on to their populations. In Hirschman's terms, the power of exit may suffice when voice is disabled. *May.* It depends on how locked-in the citizens are.

Edward Castronova


[ Reply to This ]


Re: On the Second Life Tax Revolt (Score: 1, Informative)
by Anonymous on Monday, September 22 @ 15:53:59 EDT
Another interesting player uprising can be seen here: http://www.guildsite.com/hibprotest

Around 400 characters (presumably one player to character, but that is subject to debate) showed up to protest Mythic Entertainment's treatment of the Hibernian realm in their game.

So far as I know the feelings that spurred this protest still run strong in the players of Hibernia. I couldn't say for sure, as I quit the game in protest myself.


[ Reply to This ]


Re: On the Second Life Tax Revolt (Score: 1)
by Aquatopia on Thursday, September 25 @ 12:17:51 EDT
(User Info | Send a Message)
I've never played this game before. Nevertheless, I have an idea for those using the house/stadium argument described above: public sphere permits. Those that feel an object that they have created has a great deal of value to the general public can petition to "sell" their object to the community/government. This will make the object tax-exempt. The object's designer retains sole control concerning changes to the object, but any changes that the public/gov't disapproves of my result in the permit being revoked.


[ Reply to This ]


Re: On the Second Life Tax Revolt (Score: 0)
by Anonymous on Friday, September 26 @ 12:30:00 EDT
As one user posted above, in Mythic's "Dark Age of Camelot," there were a few comparable protests. One that remains fresh in my mind was a protest over one particular Hibernian class, the Bard. There, players were upset over the lack of utility and strength of the class as compared with the equivalent classes in the other two realms (Albion and Midgard). Although hundreds of players protested and some quit their accounts in protest, little was actually done to improve the class. Eventually, Bard abilities were improved but so were the same abilities in the equivalent classes of the other realms. Mythic really just improved that entire set of classes and their respective abilities. Furthermore, Mythic added more and more content (namely Realm Abilities and spell crafting and alchemy) rather than addressing players' specific concerns and gripes about the classes.

My personal opinion is that this example, and Second Life's Tax Revolt, are not so indicative of real-world ideology in a gaming or online context but rather specific cases of game-balancing gone awry. The second hardest job for game developers (second only to retaining players' interest and subscriptions) is balance. Online gamers constantly complain about certain classes being too strong, too weak, too difficult to level, too easy, not in demand enough for groups, etc. The protest is in response to that difficulty and, as with real-world governments, it is often VERY difficult to affect any change whatsoever.

Unfortunately, the best way to strongly voice your opinions and get noticed by the game developer is to vocally cancel your account, comparable perhaps to renouncing your citizenship and leaving your country of residence, thereby removing yourself from taxation and any possible representation (if it exists).

I don't know if there is any apparent solution to this problem. I am also unsure as to whether there needs to be. If you dislike the gaming environment so much because of the perceived injustices, then why remain attached and involved in it? If it so causes you distress, drop the game and move on. Find one better suited for you and your temperament. In this manner, online worlds are very different from the real world since such actions as mentioned above are much more difficult to undertake.

Two last quick notes:

Something minorly innovative, should it be eventually implemented - Star Wars Galaxies (an MMORPG by Sony Online Entertainment) will have player towns/cities that are controlled by a resident-ellected mayor. The mayor will retain significant power in determining how the city grows and evolves, where structures may be placed (i.e. he can create roads and an overall structure of the city) and who may place them (who is actually allowed to live in the city). This is a good example of a real-world process applied to an online environment.

Also, thank you for posting notice of the conference. As a law student with an interest in Intellectual Property who also happens to be a mild-gamer, I definitely plan on attending.


[ Reply to This ]


Leges humanae nascuntur, vivunt, moriuntur
Human laws are born, live, and die

Contributors retain copyright interests in all stories, comments and submissions.
Everything else copyright (c) 2002 by the Information Society Project.

This material may be distributed only subject to the terms and conditions
set forth in the Open Publication License, v1.0 or later.
The latest version is currently available at http://www.opencontent.org/openpub/.

You can syndicate our news with backend.php

Page Generation: 0.348 Seconds