eBay Cracks Down on Virtual Asset Sales

Online auction giant eBay (Nasdaq: EBAY) is reportedly cracking down on the sale of "virtual assets" won in online games like "World of Warcraft," a move that comes as good news to other companies making money by hosting virtual asset sales and bartering.

Millions of people worldwide are avid players of the online games. Over time, as they gain expertise, players acquire weapons, money and other goods coveted by less-adept or experienced enthusiasts.

Spending real money, on eBay and other sites, was an easy way for some players to acquire the game assets needed to jump levels or otherwise advance. It also was a lucrative business for those selling the goods. So-called "game farms" exist where people play the games only to build up assets that can be sold.

However, the practice violates user agreements in most of the games. Those caught buying or selling virtual assets risked being banned from the online worlds.

A Difference of Legal Opinion

That isn't deterring companies such as IGE, however. IGE describes itself as "the world's largest secure network of buying and selling sites for massively multiplayer online game (MMOG) virtual currency and assets on the Internet."

eBay's departure from the field should be good for IGE while only incidental for eBay, IGE Senior Vice President John Maffei told the E-Commerce Times.

"There seems to be wild speculation that eBay is pulling out of facilitating the trade of virtual assets via a secondary market," he said. "eBay is a huge, huge business. They have so many different things they are into. I cannot imagine, if you look at all the revenues generated by eBay, that this is more than a blip. But for us, it's our core competency and obviously, for us, this is a boon."

IGE is working to convince game producers, such as "World of Warcraft" maker Blizzard Entertainment, that they should embrace the real-world sale of virtual assets instead of fight it, Maffei noted.

"There is some question about who owns these virtual assets," he added. "We strongly believe that if you go and play the game and collect those virtual assets, they belong to you. If you use Microsoft (Nasdaq: MSFT) Word to write a document, does the document belong to you or to Microsoft?"

People pay monthly fees to play the games and they should be allowed to benefit from the time and expense, Maffei explained. "We tend to take a stance where we will support the consumers' rights to buy and sell these assets and we want to work with the publishers. We're trying to figure out a way to best partner with them because we think the secondary market is here to stay."

The Bigger Picture

eBay obviously doesn't need the money from the virtual assets market and it also doesn't want to be involved in something with questionable legality, Edward Castronova, an associate professor of telecommunications at Indiana University told the E-Commerce Times.

Castronova found most interesting reports that eBay will not ban people from buying and selling assets acquired in Second Life, an online virtual world that actually encourages players to mix and mingle real world commerce with in-game life.

"Second Life isn't a fantasy game," insisted Castronova. "I'm really proud of eBay that they're making that distinction. There will be 3D, interactive environments that are extensions of the real world and they are designed to be that. Second Lifers conceive of it as an extension of the real economy and there's no point in saying people can't buy and sell virtual items from that."

eBay's ability to see the difference between Second Life and fantasy games is almost revolutionary, according to Castronova. "When a big company like eBay realizes they have to draw some lines, it's a big moment," he added. "The long-term impact of this awareness is very significant. It's a blue chip company recognizing ... and not saying these things are all stupid video games."