Metanomics transcript april 14 2010

METANOMICS:
NEW SECOND LIFE TOS AND METANOMICS 100TH EPISODE:
APRIL 14, 2010

ANNOUNCER: Metanomics is owned and operated by Remedy and Dusan Writer's Metaverse.

ROBERT BLOOMFIELD: Hi. I'm Robert Bloomfield, professor at Cornell University's Johnson
Graduate School of Management. Today we continue exploring Virtual Worlds in the larger
sphere of social media, culture, enterprise and policy. Naturally, our discussion about Virtual
Worlds takes place in a Virtual World. So join us. This is Metanomics.

ANNOUNCER: Metanomics is filmed today in front of a live audience at our studios in Second
Life. We are pleased to broadcast weekly to our event partners and to welcome discussion. We
use ChatBridge technology to allow viewers to comment during the show. Metanomics is
sponsored by the Johnson Graduate School of Management at Cornell University. Welcome.
This is Metanomics.

ROBERT BLOOMFIELD: Welcome to the one-hundredth episode of Metanomics. Since we
started up in September of 2007, we've had the chance to talk with an incredible variety of
people from Second Life artists and musicians to academics from around the world, policy
wonks, just about all the top executives from Linden Lab, as well as presidents and CEOs from
a number of other Virtual Worlds, including Keneva, There.com and Forterra, among others.
You can still see shots from our previous shows on an incredible cake made by Tasia Tonic, of
the Tastery. It's right up here onstage behind me. Hopefully, our friends at Treet can get a nice
close-up. You can see the still shots from the shows. So I'd like to start out by saying, Tasia,
thank you for such an incredible piece of work.

Let me be the first to say that I never expected Metanomics to turn into anything like this. It's
been a wild ride, and, as the cake says, a hundred and still rolling. But I'm glad that I've been
able to play my part. The community is larger and more active than it's ever been. And what I'd
really like to do is thank all of you for what you've done to make Metanomics what it is. So in
that spirit, I'd like to invite all of you to a thank-you party that'll start about half an hour after this
show ends. You can join us in the Muse Isle Arena, where we'll have live music, dancing, and,
of course, more cake.

The party also doubles as a celebration of Muse Isle itself, which has its fourth birthday
tomorrow, April 15th so that makes it the Metaverse's first live music performance venue. So it's
an honor to be able to play a concert there, and that's right, the live music is my band, Beyers
and the ReZtones. We'll be doing some jazz standards, some of my own songs, and a big
musical thank you to everyone who has helped out with Metanomics more than I could possibly
name during this show. And we'll do it an entertaining way. So please do join us, about half an
hour after this show ends, at Muse Isle.

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One more announcement before we turn to today's guest. Dusan Writer has just put a post on
dusanwriter.com, where he announces a new contest. He writes, "As we look forward to a
hundred more episodes of Metanomics, I'm (and that's Dusan is) inviting you picture what the
future of broadcasting looks like. I’m of the firm belief that Metanomics represents a milestone of
sorts, a truly interactive destination broadcasting. So the question is: What is the future of the
broadcast? How will we consume media? How will it be produced? Don't just think about
Metanomics, but think about media production and consumption in general. What does the
living room of the future look like? What kinds of devices will we use to access content? What's
the future of media production? What does the studio of the future look like, the broadcasting
console of tomorrow? You have a thousand prims and up to 20 by 20 meters to create a display
in Second Life, that represents the future of media production and consumption. Why spent all
that time? Well, there are 250,000 Lindens in prize dollars."

So take a look at dusanwriter.com, and you can see more details on that.

So without further ado, let's turn to our guest. Today we are delighted to have Washington and
Lee School of Law professor Joshua Fairfield, who's one of the leading experts in virtual law.
We'll be talking about Linden Lab's new Terms of Service for Second Life, and we'll also look
ahead to the future of law governing not just Virtual Worlds, but mixed reality and augmented
reality, what happens when Virtual and Real Worlds start to butt heads. And, keeping with the
commemorative nature of today's show we’ll also take a look backwards. Josh was on the third
episode of Metanomics, talking about a then recent paper of his, Antisocial Contract. He joined
us again a year later to talk about a conference he hosted at Washington and Lee, called
Protecting Virtual Playgrounds. So we've got a lot of ground to cover: present, future and past.
So, Josh, welcome back to Metanomics.

JOSHUA FAIRFIELD: Thanks so much for having me, Rob. I really appreciate it.

ROBERT BLOOMFIELD: I'd like to start actually just really quickly with your title. You're an
associate professor of law and director of the Francis Lewis Law Center. Does that mean you
can actually establish a career in academia, studying virtual law?

JOSHUA FAIRFIELD: It's amazing, but you really can. I think one of the things that caught
everybody by surprise is how big this has grown and how quickly it's grown. Back in 2005, I'd
say there were maybe five or six articles that sort of mentioned Virtual Worlds, legal academic
articles. By now there are, I think, well north of 200. So this has really taken off as a field. There
are two books; one book's already out. Benjamin Duranske, your co-author on at least one
article, his book on virtual law. I know Greg Lastowka, a friend of ours, is working on another
one. Who'd have known that all those years ago it would come to this?

ROBERT BLOOMFIELD: So it was actually good preparation to get that--what do you have, a
level 67 Night Elf in World of Warcraft.
JOSHUA FAIRFIELD: Well, higher than that now, I'm afraid.

ROBERT BLOOMFIELD: Yeah, I guess that was a couple years ago. Okay. Let's move on and
talk about what is the hot topic of the week or two, and that is Linden Lab's new Terms of
Service for Second Life. They announced those on the day that we had Tom Hale, chief product
officer of Linden Lab, on Metanomics. But naturally the lawyers told him he couldn't say
anything about the Terms of Service.

JOSHUA FAIRFIELD: Of course.

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ROBERT BLOOMFIELD: It's great to have someone who's totally outside and independent.
Before we get into the details, what do you see as the bigger picture? Is this new set of terms
just a natural evolution as Linden Lab becomes more professional and ready for prime time?

JOSHUA FAIRFIELD: Well, it's interesting. It's a natural evolution, but in two completely
different directions. Right? There's the evolution in the direction of saying, "Gee, a Virtual World
isn't really a place after all. Gee, we've been kidding all these years. Actually all it is, is sort of
copyrighted material that's going to be licensed in various ways. And that's an evolution in the
direction of kind of corporate production of information. That's what you would see in the World
of Warcraft's Terms End User License Agreement, and in a lot of other sort of industry-standard
agreements.

What's interesting is that other parts of the change, especially those that talk about Machinima
and snapshots, those are actually a lot more like what we experience in everyday life. You can't
take a video camera and stick it up to somebody's window. Well, why not? Because you're on
their land, right? You're in a real place where you're not supposed to be. And so in that way I
find the new changes are almost schizophrenic.

In the one direction, they want to say, "Okay, all of this is just intellectual property." In the other
sense, they want to say, "Well, actually we're taking this very real. We're taking people's privacy
considerations very seriously. We're taking their land ownership very seriously."

And so I think they need to make a decision about which way they want to go. Is this just a
special show in a box, or this a real place where people really care about stuff?

ROBERT BLOOMFIELD: Okay, great. Before I jump in with my questions, I just want to
encourage our audience, both here at the Metanomics Sim and at the event partners and on the
web, please do use ChatBridge to pose your own questions because there's so much in these
Terms of Service, you really don't want to count on me to hit all the things that you are
concerned about. So keep those questions coming, and we'll feed them on to Josh.

Is there something you’d pick out as being clearly the biggest innovation, where you'd like to
start?

JOSHUA FAIRFIELD: Well, I mean the big deal, legally speaking, is the change to the series of
being very careful to call everything licenses. I was there five years ago in 2005, at the State of
Play Conference, when Linden Lab announced that they were going to let people keep what
they really owned in Second Life. And people thought at that time, "Okay. Second Life is
evolving in the direction of being a true place, a true internet area where people can buy and
own land, objects, houses, that sort of thing." But the change to saying, "No, these aren't really
objects, they're licenses," or, "Oh, this is really money, it's a license," or, "Oh, this isn't really
land, it's a license." That's clearly a move in the direction of the industry standard where the
norm is. We license everything out. We basically control our own--almost everything. If you look
in World of Warcraft, the players don't own anything at all. And that gives a certain degree of
legal protection, I think, to companies, especially in front of judges who don't understand how
very much attached Virtual World users become to their land, their objects, their homes, their
houses. So I think that move is a bid deal. It's one that's standard in the rest of the industry. It's
not a surprising deal though.

ROBERT BLOOMFIELD: I've had a talking point when I try to explain to people what Second

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Life is all about. I actually draw a big distinction between World of Warcraft and Second Life,
and the story I tell is, World of Warcraft is sort of like Disneyland. Disney created all the
attractions so, of course, you pay Disney for everything. Whereas, Second Life is like a
competitor that says, "Hey, we're not going to build the attractions, but here's a pile of tools and
some scripting tools as well, and you can create an attraction on our land, rent the land from us,
and then when people come in they'll pay you for the attraction, and you pay us for the rights to
build here." What I'm wondering is, first of all, does my analogy just not hold any legal weight
whatsoever? Am I actually misunderstanding what's going on legally? Or, alternatively, is what's
happening that Linden Lab is watering down the distinction between what they have done and
World of Warcraft?

JOSHUA FAIRFIELD: Yeah. Legally the big distinction is between property and contract,
between just a license. So if I really buy something, I own it. And the person who originally
manufactured it can't really come and tell me what to do with it after I buy it. So if I buy a book,
even though that book's got copyrighted material inside it, I own that copy of the book. I bought
it, it's my property. And I can burn it if I want to. But not true. Courts have been very confused
about this distinction online, and so if I'm just licensing something, then the person who
originally created that, the person who owns the license, they get to control what I do with it after
I buy it.

We've been talking about World of Warcraft. Blizzard controls what people can do after they buy
their software. And the distinction I think you make is a good one. We often use property law to
say, "Okay, you own something. You can do what you want with it." We often use licenses or
contract law to say, "Well, actually we just have a deal, and, if you break the terms of that deal,
we take it all back." I think that's why so many companies have preferred to structure things in
terms of a license.

Now if you think about the fact of who created it, who creates content, in that way Second Life's
a lot closer to Facebook. Facebook keeps trying to take the personal information of the people
that use Facebook. They keep trying to assert an ownership, a license interest in that
information. And they can do that because their license says, "Although you created it, we get to
exercise legal rights over it." And that's more or less what Linden's saying. They're saying,
"Although you created this content, we get to exercise certain legal rights over it."

In the employment context, this happens all the time. You're a professor at Cornell so you know
that, if professors invent things sometimes, for example, the university gets to exert legal rights
over that professor's invention so something that we've been used to in other contexts. But the
idea that whatever consumers create using a tool, like Microsoft saying, "If you write the great
American novel using Microsoft Word, we own it," that's something that we've been seeing
that's new in the past five to ten years, and it's a little bit startling that courts are enforcing it.

ROBERT BLOOMFIELD: Boy! A bunch of questions have come in already so let me start with
this one. Let's see, this is Michael Renfew, "Is there anything grandfathered in terms of
ownership prior to the new Terms?" Can you actually retain rights from having created
something before they announced this new licensing perspective?

JOSHUA FAIRFIELD: Well, you'd like to think so. Most courts, however, do say that this move
where you have to agree to the new terms, in order to re-log into the service, that that move is
enforceable. Without getting into technical legal doctrine, companies have gotten into trouble
before. In fact, Linden got into trouble before, in the Mark Bragg case, by saying essentially,
"Look, you have to agree to our Terms of Service, or we're going to kick you out." But broadly

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speaking, cases where that happens are very, very rare, and courts have enforced these
changes to the Terms of Use or Terms of Service, if you re-log in and agree to the new Terms
of Service.

ROBERT BLOOMFIELD: We also have a question here from Ann Otoole, which says,
"Machinima is a series of snapshots. Which element of Terms of Service applies?"

This is something I've been seeing a number of people talk about. I guess maybe I didn't spend
as much time as I could have on the Terms of Service, but I didn't see any strong distinctions
between the way they treat Machinima and snapshots in-world. Did I miss something?

JOSHUA FAIRFIELD: Well, there are two big differences. The first big difference is in the
default. You can take a snapshot on somebody's land, unless the covenant governing that lands
tells you, you can't. So the default is, you can. And defaults are a big deal. It means that
somebody has to go to the effort of saying, "No snapshots." Not true for Machinima. There the
default rule, if the covenant doesn't discuss Machinima, then you are prohibited from recording
Machinima until you get the permission of the landowner.

It may not seem like a big deal, but default rules actually end up being most of what a rule really
is because most people don't actually go directly and address the issue. So you think about it
this way: very few people are going to write into their covenants, "Oh, hey, go ahead and tote a
camera all around my property." They're just not going to do that. Because they're not going to
do that, the default is that you can't.

The other big distinction, I think, is that, whereas snapshots don't require--if I recall
correctly--snapshots don't require individual avatar consent. Machinima does to the extent that
the avatar is recognizable or has distinctive features that other people would sort of immediately
recognize from looking at them. So for example, I've met you a couple times. You're a very
well-known personality. If somebody were to capture Machinima of you, they would need your
permission because Beyers Sellers is well-known in Second Life.

ROBERT BLOOMFIELD: Well, I'll take your word for it. To what extent do these distinctions
reflect what we see in the Real World? Pretty much the same?

JOSHUA FAIRFIELD: Well, that's the interesting part. Where the license change really moved
in the direction of saying this is nothing like the Real World, nobody really owns anything, this is
all just licensed, the Machinima and snapshot changes, yeah, they do kind of reflect what we
see in the Real World. Generally speaking, you can't go on somebody else's property, with a
camera, and start taking pictures or start walking around with a camera and sticking it in the
their window. You can, if it's on a public street. As you've mentioned in prior conversations,
Google, of course, is taking street-view pictures of everybody, but, of course, it's street view.
They have to stay on the public street.

So the distinctions that we see in the Real World of you can't stick a camera in somebody's
window but you can take pictures from the street, that's based on Real World property law. And
it's just so strange that, in the other part of the license, Linden's saying, "That's exactly the law
that we're not apply here. Sorry. We're going to apply the law of copyright licenses, not the law
of property." So they're trying to mimic the law of property, but they're trying to do it using this
copyright license scheme. That's what I find interesting.

ROBERT BLOOMFIELD: I don't know if this is relevant or maybe it's just niggling, but people

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continue to point out that you could create Machinima by taking a bunch of snapshots and
stringing them together. Would you expect courts and Linden Lab to see [AUDIO GLITCH] that?

JOSHUA FAIRFIELD: That's actually what courts do best. Right? A lot of people see law as
kind of cold, hard words on the page, that can be twisted in different and interesting directions.
That's not actually the life of the law. The life of the law is judges making common-sense
decisions or lawyers making arguments. I won't say they're always common sense. But judges
making common-sense decisions about exactly this kind of thing. So we all know what a
snapshot is. We all know what Machinima is. And the fact that the one could become the other
is not a line that a court would have a hard time drawing, even though it's a line that, technically
speaking, that technologically speaking might be quite difficult to draw.

There's a snapshot function in the game. There are Fraps programs that capture Machinima,
and the court is going to generally be able to tell 95 percent of cases fairly easily, and so the
middle cases I don't think people are really worried about.

ROBERT BLOOMFIELD: Actually Slim Warrior points out, "What about previous Machinima
and photos taken up to now? Would you see old content as being retroactively subject to these
limitations?"

JOSHUA FAIRFIELD: Well, there's a couple of things there. First of all, most courts are not
going to apply changes like this retroactively. Second of all, most companies, if they're smart,
won't try to apply them retroactively. It’s a good way to get a court to say, "This is really an
unfair deal for consumers. They had one deal, you changed the deal, and retroactively it has
this impact." Now the problem is that doesn't help you very much because, going forward, the
rules very much prospectively--the rules very much will apply.
And there is a whole line of case law saying, "Look. If you break the rules in the future, then you
are then, from that point on, in violation of copyright. That is, every time you look into the World,
because you violated your license, you don't have a license to look in the World. You don't have
a license to copy anything. You don't have a license to make copies of what you've been looking
at. And that will be a copyright violation." But generally speaking, retroactivity should not be a
problem.

ROBERT BLOOMFIELD: Okay. Let's see. Here's a general question from Tasia Tonic, "Isn't it
really a fact that Linden Lab puts items in their Terms of Service hoping that people will just take
that as law, but, in reality, it could be defeated at most turns?"

JOSHUA FAIRFIELD: That's a very interesting question. So certainly Linden lost--I mean the
case settled, but everybody sees it as a loss--the one time that people really went to court on
these issues. And California law, I'll be the first to say is very pro consumer and so a lot of these
rules, for example, the rule we can change the Terms of Service at any time, that will lead a
court not to enforce that contract under a legal doctrine called Unconscionability. Or, if they say,
"We can change it at any time for any reason," that will lead a California court to not enforce the
contract under a legal doctrine called Illusoriness. Basically it means that the contract isn't a real
contract because they can change it at any time, and so they didn't really promise anything. If
they didn't really promise anything, then it's not a contract.

So yeah, I think that these kinds of contracts do have serious enforceability problems. I would
not go out and tell someone to go ahead and violate these contracts with impunity because they
are backed up by intellectual property law. And intellectual property law has real teeth and is on
the rise. The use of IP law to control property, to control consumers' use of their property, is

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very much on the rise. Look at the restrictions that Apple puts on its iPad. That's all apparently
legally enforceable. At least nobody's challenged it yet.

ROBERT BLOOMFIELD: Follow-up from Dusan Writer, "Are there particular parts of the Terms
of Service you see as especially vulnerable to challenge?"

JOSHUA FAIRFIELD: Oh, absolutely. Any provision saying, "We can change the rules at any
time," that's very much subject to attack. As we saw in Linden's case versus Bragg, any
provision saying that, "We can kick you out for any reason and take your stuff," that definitely
would be subject to attack. Anything that we look at that would be a class action waiver, for
example, or forced arbitration that would require a consumer to not join together with other
consumers to sue, California courts will say right away that's not enforceable. So I think there
are certainly some elements of any of these.

And I'll say this, and by way of ending, as a matter of California law, these contracts that you
have to sign into, that you're forced to sign into, you say, "Well, I agree," or, "I disagree," these
click-through agreement online, they're already halfway to unenforceable under a doctrine
called Procedural Unconscionability. That method of entering into a contract is already unfair
say California courts, and so really then all that's left is for the court to say, "Oh, yeah, and
substantively that is what's actually in the contract is unfair." I mean if a court says, "Well, the
way we made the contract was unfair, and what's in the contract was unfair," then the court can,
at its discretion say, "I'm not going to enforce the contract."

ROBERT BLOOMFIELD: I have a legal question that is topical for people who are here in the
Metanomics studio. I see it as not affecting filming, but someone has created some local
particles. Maybe you can see these, Joshua. We've got a bunch of little Super Mario guys flying
around and, you know, minor griefing. I have a couple questions. My first is: What do you see in
the Terms of Service that would affect the legal ramifications of griefing? And, in this case, not
only is someone trying to interfere with an event, without permission, but they're doing it with
something that's copyrighted.

JOSHUA FAIRFIELD: Right. There's lots of stuff. There's copyright infringement with respect to
Mario coming down here. That one's easy, but that would have to be enforced by the holder of
that copyright. What's more interesting and goes to the heart of the Terms of Service is, if
somebody did something like that in real life, they would be trespassing on your land. That's the
law of property. Of course, what we would have to say here, after the Terms of Service change,
maybe not that they were trespassing on your land, but that they were violating, can you
believe, your copyright. It might almost be better if you were filming this, and the Mario showed
up, because then you could say they were creating an unauthorized derivative work, kind of like
an unauthorized sequel to your filming.

But I think that question really highlights the fact that Linden, as well as most of the users of
Second Life, really do treat this like a place. The person showed up. They were trespassing.
They got booted out. That's a conversation we have in law about people's property. Somebody
shows up in a place they're not supposed to be, and they get escorted to the exit. You try. You
get drunk and rowdy in a theater and watch what happens. It's not a contract or a copyright
situation. It's just simply trespass.

ROBERT BLOOMFIELD: This actually goes to a topic that you discussed on Metanomics back
in September of '07, where you talked about the antisocial contracts. If I'm understanding you
correctly, you're saying, in the Real World, a lot of the relationships between people are

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governed not by contracts between those people, but by the covenants that adhere to their
property. Like you said, if someone owns a movie theater, everyone knows they can kick you
out if you misbehave, and it's not necessarily because of a contract.

JOSHUA FAIRFIELD: Right.

ROBERT BLOOMFIELD: So you’re seeing that one of the problems online is that everyone
signs a contract with Linden Lab, no one signs a contract with one another, and so neither one
nor the other world seems to be very effective. Am I getting you right on that?

JOSHUA FAIRFIELD: Absolutely. I mean, if you think about it in terms of the person who was
just here griefing, in the Real World what contract would a trespasser have signed. You can't
kick them out saying, "Okay, you violated some contract," because we don't sign contract with
everyone we meet on the street. It would too costly and too prohibitive to do so. If you think
about the law of theft, when I own something, when it's my property, the whole world is
immediately bound by that rule. It doesn't matter that they've never met me before in my life;
they can't come and steal something.

So in that way, of course, what's so fascinating about Linden's approach is that at the same time
that they're very much trying to say, "This is all about your intellectual property. This is all about
your contract licenses," they're also introducing things like these new strengthened covenants,
which look very much like a property rule saying you can't come onto this land and do that sort
of thing, even though that person never signed any agreement with you at all. Linden's trying to
make a contract system that acts like our Real World law of trespass, and that, I think, is a very
interesting development that--you can almost see the Terms of Service tearing apart right
between these two views of the world, of how the world works.

ROBERT BLOOMFIELD: Another question about ownership. This is going a fair bit back in
chat, but LOM Runner asks about death and content, and I do know that this has been an issue
in general online, and people who are Second Life regulars know that there have been a
number of high-profile content creators who have died. Do you see anything in the Terms of
Service that alter the status of what happens if you have an account and die?

JOSHUA FAIRFIELD: Absolutely. Again, I know I'm sounding like a broken record here, but it
comes down to this distinction between property and contract. If your Virtual World assets,
home, land, objects are your property, then they automatically pass to your heirs or designs
under your Will or automatically by descent and distribution by the state. Right? You go into
probate, and the court's going to say what goes to who. However, if it's just a contract, then
there's going to be a serious problem because then there's just simply a requirement from
Linden saying, "We'll let you come into the World and access your material." And that's just a
contractual promise, and a contract is just a deal between Linden and the user. Again, it's not a
deal between the user and anyone else, such as their heir. So yeah, it really does boil down to
this question of, "Is this stuff our property, or do we just have a series of contracts in place that
let us access it?"

And I'll give you some examples. These are old examples. You can read about them in my 2005
article on virtual property. This has been a big deal with the Iraq war because a lot of soldiers
are gamers. A lot of soldiers love to use social networking technology, and sometimes when
those soldiers pass away, their online life is all their family has. There have been disputes
where the family has actually had to sue, for example, the internet service provider that
controlled the email account of the soldier because the internet service provider said, "Hey, this

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email account was just a contract between us and the soldier, and we don't owe you, the
soldier's family, anything. In fact, we have an affirmative duty to keep this email account
private." And so the families have had to go to court and get court decision saying, "No, this is
actually property, in a sense, and so it can come down, it can go through probate and come to
the family."

ROBERT BLOOMFIELD: That's going to draw us into a lot of the connections between the
Real and the Virtual World, and I want to get there. But before we do, I've got a question that I
know a lot of people have been asking about on the third-party viewer. And this is from
Latha Serevi, "Are you familiar with the new policy on third-party viewers that's attached to the
Terms of Service? Linden Lab tries to impose some liability and responsibility on developers of
code that connects to Second Life via a click-through agreement made by users of that code.
It's a bit of a mess and has authors of the code up in arms. We'd love a comment from a
lawyer."

JOSHUA FAIRFIELD: Great. Well, I mean one thing is be worried about it. I'll give you a
parallel. As you all know, World of Warcraft permits people to write code for its add-on system.
And one guy wrote an add-on that let people do certain things; it's called Wild Glider. It let
people do certain things, including automate their characters within World of Warcraft. Blizzard
Entertainment decided they didn't like that, and so they said to the users, "You may not use
programs like Glider in order to animate your avatar." And Glider, of course, said, "Well, gee,
that's nice that your users signed that contract, but I haven't signed any contract with you, so I'm
going to go ahead and continue to create this program." MDY, which is the company that made
Wild Glider, they got sued. They lost, and I think it was like six and a half million dollars, by
Blizzard.

So the parallel I think here is pretty direct. If you access Second Life in a way that is in violation
of a condition of the Terms of Service, then you're committing copyright infringement, says the
law. I despise this area of law. I should make it absolutely clear that this is not something I'm
happy about. This is something that I'm simply describing as accurately as I can. So if you
access the World in contravention of your license, then you are committing copyright
infringement when your computer loads the program into RAM. At that point, anyone who helps
you commit copyright infringement by loading the program into RAM, without your license, is
committing secondary copyright infringement or contributory copyright infringement. If I were an
author of that code, I would cease development or else seek reassurances and a safe harbor
from Linden before proceeding.

ROBERT BLOOMFIELD: I know that one of the issues that came up at office hours with, I
think, Joe Linden yesterday is that a lot of this is Open Source code so you may be using a
whole bunch of code from Linden Lab and from other third-party Open Source developers. You
put all of that into yours, and then you have made a product that includes parts of the code that
violate the terms that you didn't write, but you're still liable. That rings true to you?
JOSHUA FAIRFIELD: Yeah, absolutely.

ROBERT BLOOMFIELD: Okay. Let's move ahead and talk about what you see as being the
legal future of what you called mixed reality, which is I guess various versions of augmented
reality. In an abstract, that you sent me, to a paper that I guess you're just in the process of
writing, you referred to a gap in the literature. Can you describe what that gap is?

JOSHUA FAIRFIELD: Sure. It's interesting for us as Virtual World users, denizens, players,
sometimes we really think this is where the world is going to be, where we think we're sort of

9

five years ahead of the curve. But I just saw in the backchat somebody saying, "Actually most
computing is going to be over mobile devices in five years." And I love the quote there in the
backchat, "Bye bye, for now, desktops." So that's the gap is that most of the legal literature
about Virtual Worlds has been talking about Virtual Worlds as if they're going to be in the future,
the kind of thing that we're doing right now.

I presume most of us are sitting down. Almost all of us are sitting in front of something that looks
more or less like a typewriter. Nobody's moving around in real life much. I think that difference is
going to be everything, the whole "bye bye, for now, desktops." Or, as a good friend of mine
once said, "We've got to stop using the internet like a typewriter." So that, I think is the gap. That
I think is what's going to change. And it doesn't mean that Virtual Worlds are going to go away.
It does mean that Virtual Worlds are going to go with us when we start to move around.

ROBERT BLOOMFIELD: What do you see as being the big legal implications here?

JOSHUA FAIRFIELD: Well, I think there are two big legal implications. The first one is just
listen to all the passion in the room about the Terms of Service change. People are really
passionate about the virtual objects, lands and experiences that they've created for themselves
here in Second Life, and some people are upset that the Terms of Service changes are going to
really impact things that they view as theirs: their house, their land, their rights as owners, their
rights as citizens of the World. Well, imagine how mad people are going to get. Imagine how
passionate people are going to get when these virtual experiences are part of our everyday
lives.

When we're walking around, when we're driving our cars, when we're at home and looking out
of the window, that virtual objects and experiences are going to be pushed down into real space
and become part of our everyday walking-around lives. And so the impact of these kinds of
license changes are going to more and more impact our real everyday world.

I'll give you an example. I used to crack jokes saying, "Gee, what'll happen when we just license
books rather than actually buy books?" Or, "What happens when we just license a car?"
because our car has computer software in the control chip. "What happens if we just license our
car rather than actually owning our car? Will those copyright licenses really control our everyday
life then?" I used to sort of use that as an abstract example. And then the funny part is that that
actually happened. Everybody here has heard by now old news of amazon.com's move to reach
into the Kindle device and delete the 1984 book by George Orwell, that the users had
purchased, because it was a license.

ROBERT BLOOMFIELD: They were going for the Irony Award.

JOSHUA FAIRFIELD: They were. I mean who's their PR person? Really. But yeah, they
reached in, they deleted that book, and it just demonstrates that, instead of owning a book now,
I just license it. I've seen the new iPad, and the book libraries are gorgeous, but we don't own
any of those books, even if we care passionately about them. In the same way I used to joke
about cars and what's going to happen when copyright licenses and intellectual property
licenses govern cars, but that also started to happen with the last big gas price shock. Insurance
companies started to think about ways to raise your insurance costs if you drove down certain
roads or in certain neighborhoods. States started to try to figure out ways to use GPS to charge
people more, who drove on certain roads. So this is apparently going to be a fundamental shift
in what we own and how we own it.

10

ROBERT BLOOMFIELD: We have a question from Joel Savard, "Can you comment on the
position that some people take, that contracts here are with avatars and accounts rather than
with real people, or as Second Life rezzers want to say 'the typists behind the avatar'?"

JOSHUA FAIRFIELD: Sure. This may not be a popular opinion for Second Life, but, to me,
there is no difference between the Virtual World and the Real World. That's why I'm interested in
mixed reality because I think that what's really going on is real people are sitting at real
computers. They are interacting, using a phenomenal technology that gives them all sorts of
benefits. And so, to me, I have to say, and I believe, to the law, contracts between avatars are
perfectly binding because there are people sitting behind each of the avatars. You might say,
"Well, not always. I can automate my avatar. What happens if I automate my avatar in order to
enter into a contract?" But that doesn't help either.

So you may know that, for example, Walmart's big innovation and how Walmart took over the
country was that they automated a lot of their inventory buying. Computers buy their inventory
and, of course, have no problem saying that those contracts are fully enforceable. Why?
Because if you code a computer program to take a legal action, the courts are perfectly happy
to say you actually took that legal action. So I think there's no legal ground for saying the
contracts are simply between avatars. I think that there is every legal ground for saying that
contracts between human beings are fully enforceable.

The one way I would point out that it would be possible to say kind of that sort of thing would be
if you were in a game world where entering into contracts were part of the game, and everybody
understood, "Hey, you weren't really doing--I'll give you an example here: Monopoly. So if
people are playing Monopoly, even though there's all kinds of wheeling and dealing, those aren't
real deals. Everyone is operating on a consensual understanding that people aren't really
entering into binding contractual relations when I offer to sell you Park Place for $500. So that
would be the one place, as Greg Lastowka would point out, that sometimes you can say actions
in Virtual Worlds aren't what they really seem, and that's where you can argue, "No, it's just part
of the game."

Just like I can smack somebody in the Real World and go to jail, if I'm just hitting them, or I can
punch them in the Real World and not go to jail if we're in a boxing match. It all matters what
game we're playing and what the understanding of the parties was, going into that game.

ROBERT BLOOMFIELD: Your Monopoly example reminds me of an aspect of the Terms of
Service I was interested in, which is they're making very clear that Linden dollars are not
money; they're just tokens that you license. I'm wondering if you could give us a little insight on
why they would emphasize that and whether there's anything that's actually legally important in
the words that they're saying.

JOSHUA FAIRFIELD: Sure. The last time I was on Metanomics, I think, was sort of in the wake
of the Ginko Financial collapse, and there people were talking about that there might be a slight
risk that the government would consider people like Linden to be printing money. And, as you
know, that's counterfeiting, and that's bad. I don't take that very seriously. People issue private
letters of credit all the time. There's a whole private money supply system that's the shadow
economy of this country. In fact, that's a lot of what went wrong during the last financial crisis.
And so I don't think anyone takes it seriously to say that Linden was worried that the
government would say, "Hey, you're trying to act like a bank, and you weren't allowed to do
that."

11

What they may be trying to do is, again, this difference between property and contract. That is,
they may be trying to say, "Well, it's just a copyright license. It's nothing real. And because this
license isn't real, you can't sue us for destroying it, for example, if we do something particularly
boneheaded and take the servers down." But that doesn't work either. If you think about what
your bank account is--I don't think anyone believes that your bank account works like it does in
Harry Potter. Nobody thinks that, when you go to the bank, there's actually a vault back there
with your money in it. The whole purpose of the bank is to take that money and lend it out to
other people. All banks don't have all that money on hand. That's how a bank makes its capital.
That's how a bank makes its money. I shouldn't say makes its capital; that's how a bank makes
its money.

So saying that the copyright license isn't real and therefore there's no actual dollar value that
you could bring a lawsuit over, I think is just incorrect because there's nothing real in your bank
account either. Right? It's just a figure. It's just an entry in a database in a bank, just the way
your Linden dollar account is just an entry in a database. So again, the second reason for doing
it that way, I don't see why they would do that, if they thought it through.

The third thing they might be trying to do would be tax consequences. And the idea here again
would be, "None of this is real, therefore, I don't have to pay taxes on it." And I also think that
that would a bit of a misreading of the Tax Code, although I'm not a tax specialist and so I
should defer. You can look at Leandra Lederman's, for example, phenomenal article called
Stranger than Fiction, in which she lays out the taxation of Virtual World money and assets. I
think she does it far better than I ever could. But her conclusion is, "Look. I don't care what you
call it, Linden dollars, whatever, as long as you can exchange it out for real dollars, there's value
gained, and that, if you do cash out for real dollars, you're going to have to pay an income tax
on it. Nobody's unclear on that topic."

I can see three separate things they might be trying to do. They might be trying to protect
themselves from a threat of a lawsuit from damages. They might be trying to convince a court
that none of the stuff really exists, or they might be trying to avoid tax consequences, and none
of those three reasons really stands up, if you look at the law.

ROBERT BLOOMFIELD: Thanks. We're getting toward the end of our time. I'd also like to ask
you about the outcome of your conference Protecting Virtual Playgrounds. I flew down there
with some of the other people you've named today and heard a bunch of legal papers;
presented one. Actually I was delighted to see that there actually is a college town that is
smaller than Ithaca, New York. It made me feel very cosmopolitan. I know that following that
conference, the FTC issued a report Virtual Worlds and Kids: Mapping the Risks. I'm wondering
if you could just real quickly talk about where you see that aspect of the law on Virtual Worlds
and more generally online content.

JOSHUA FAIRFIELD: Sure. There's sort of three different things here. One is, gee, who should
regulate the 'net? To what extent should government be involved? Two, what did the FTC do?
And then three, what about kids? You were at that conference, and actually, as we've discussed
before, the Federal Trade Commission expressly asked for your paper, as well as a couple of
other papers from the conference, on this issue. So I think the one thing that we can learn is that
the government is taking Virtual Worlds extremely seriously. Now that's a good thing, in the
sense that it's kind of nice to get some respect. It's always a little bit of a scary thing too.
Nobody likes to be the target of a regulatory attempt.

Video games, I think, have always had a bit of a moral panic problem when it comes to

12

legislation. Legislators just love to whip up hysteria about video games, and although we keep
telling them it's not, some people do see Second Life as a video game. So I think there's some
legitimate trepidations and legitimate worry there about what's going to happen when the
regulators really get going on this.

On the kid front, I think that children have always been the reason why Congress has tried to
regulate the internet. You think back to the Communications Decency Act, for example, or the
Children's Online Protection Act, both of which were found unconstitutional because they
restricted what adults were allowed to say to other adults, in the privacy of their own
conversations, in their own homes. And one of the big issues is: Is Congress going to try again?
Is Congress going to try to limit what adults can say to each other in Virtual Worlds because of
the risk that a kid might be hiding behind an adult-looking avatar? I hope that they won't try. I
hope they won't try a third time. I hope that, if they do try a third time, it would be found
unconstitutional a third time.

I think what they can do is respect community standards, and this is something that you brought
up in your paper and that I think is an enormously important point. We've often, in internet law,
had a big fight that wasn't worth having so half the people in internet law say, "The internet's a
separate place. It should set its own rules. Government, stay out." The other half say, "Hey,
Real World governments can make better rules than virtual communities can so Real World
governments get to point guns at servers, and they get to govern." You notice those are two
separate questions. It's clear that Real World governments can regulate Virtual Worlds. The
question is, should they? Are they really going to make better rules?

Communities make rules under our system all the time. Think about your local municipality, your
town. Think about an industry setting its own custom and practices. Think about a games club. I
mean groups of people set their own rules, that are enforceable by law, all the time. You don't
have to say the internet is independent in order to say, "Hey, we should maybe be able to set
our own rules a little bit." And that, I think, is the most important thing. There are some places
where kids should not be, and it's up to the community to keep them out, and I think we can do
a good job of that, and I think we need to do a good job of that, or else we're going to get
regulated.

ROBERT BLOOMFIELD: Okay. Great. Thanks. Let's see. We've had so many questions
coming in. Here's an interesting one; I don't know that this has been altered by the Terms of
Service, but something that I think a lot of educators or people who are just having personal
relationships in Second Life care about: private, instant messages between two avatars. Can
that text between those two be used by Linden Lab or anyone else?

JOSHUA FAIRFIELD: Well, I mean I certainly think that it can, as your co-author,
Ben Duranske, demonstrated in his book. Red(?) Linden was able to pull up conversations
between Bragg and other people something like two and a half years after those conversations
took place, so that's just a data point. They are recorded. They are used. Those recordings,
those are often reported out to law enforcement. I'm not saying Linden does this, but Virtual
World providers have been known to provide access to these chat logs to law enforcement.

World of Warcraft, I think, just helped somebody catch a drug dealer in Canada. It was all over
the news a couple of weeks ago. So these things are captured. They are written down. The
Terms of Service expressly say, "We get to monitor it. We get to record this stuff." I think you
ought to be very cautious before you consider that what you say is not going to be recorded by
Linden.

13

Now I will say this: There's a fairly good market constraint here. Linden has no interest in
betraying your privacy and then plastering your details all over the web. Why? Because they
know that they have a particularly independent-minded user base, and they know that that
would be the death knell to the company. So I don't think that would be a good idea for them. I
would be more concerned about the fact that, look, pretty much everybody can log whatever
you say to anyone and just in Virtual Worlds as with Tiger Woods, I think you ought to assume
that whoever you're sending text messages to or instant messages to or chats to, you ought to
assume that that person is going to log them all and put them up on a website.
ROBERT BLOOMFIELD: Good advice. I'm afraid we have run out of time. We certainly haven't
run out of questions. I would like to encourage people, if you want to continue asking questions,
we can pull them together and maybe pop them on our website, and Josh, if you have a chance,
we'd love to get any comments you would have to those. So we'll pass any remaining questions
along to you, of which there are more than it looks like.

JOSHUA FAIRFIELD: Sounds great, Rob.

ROBERT BLOOMFIELD: I don't know. Probably one of the longest questions I've seen in a
long time. Thanks so much for joining us, Josh Fairfield, of the Washington and Lee School of
Law.

JOSHUA FAIRFIELD: Thanks so much for having me.

ROBERT BLOOMFIELD: And I hope maybe we'll have you on for episode number 150 or 200
or something.

JOSHUA FAIRFIELD: Here's hoping we make a thousand.

ROBERT BLOOMFIELD: So just in closing to everyone, as you know, I often close with a little
bit of Connecting The Dots. Today, really, it's connecting two dots. One was September 17,
2007, when I gave a lecture, I actually thought the best thing to do for Metanomics was give a
lecture. Go figure. But I gave a lecture called Metanomics 101, and that took us all the way to
show 100 today, with Joshua Fairfield looking at really a pretty new World, and it's worth
thinking about how much things have changed in the last roughly two and a half years.

But before we head to our party at Muse Isle, just a short flight from here to celebrate and to
thank everyone--I emphasize thank everyone who has been involved since September of '07. I'd
like to thank some of the people who have been most crucial to Metanomics' success, and I'm
going to start with sort of a trivia question for those of you who were around way back when:
Who were the first producers of Metanomics? And the answer is, it was actually the company
Metaversed, now is Clever Zebra, or as Nick Wilson likes to call it: Clever Zĕbra.

But first thanks go to Nick Wilson, who was the one who gave me the idea of doing this and
linked me up with Treet.TV, actually then SLCN TV, and Caleb Booker, who helped out with the
production then. So first thanks to Nick and Caleb. Now after Metaversed produced, I actually
took over Metanomics and hired Bjorlyn Loon and Yxes Delacroix, who did tremendous work in
pulling those shows together. So another really big thank you to Bjorlyn and Yxes. We would
never have made it past that first season without the two of you.

And then Remedy came in, and, of course, thanks to Dusan Writer, Joel Savard the first project
manager, Michael Renfew, Rob Mistwood, Jennette Forager, and Devon Alderton, who our

14

many, many, many volunteers know as being the volunteer coordinator. And finally, well,
actually not quite finally, but thanks to Treet.TV, formerly SLCN, and, in particular Starr Sonic,
Texas Timtam and Wiz Nordberg, who have been one of the constants that has made
Metanomics and all of their other shows what they are. I really can't say enough about how
professional and reliable Treet has been. You've done amazing work. My wife and I joke about
people who can whip together dinner from Baco Bits and Jell-O, and you guys do that every
week. So, thanks.

And finally, I'd like to thank two people who have been part of Metanomics, in various
capacities, since the very beginning, that first show in 2007: Bevan Whitfield and JenzZa Misfit.
Bevan, as many of you know, has been a tireless promoter, not just of Metanomics, but of all
things Metaversal, on Twitter, on Plurk, pointing people to the things, you know, anything out
there to read, and so thank you, Bevan. And JenzZa takes on a lot of roles, including right now
avateering me so maybe you can make me clap, JenzZa, now for everyone who has been so
helpful.

One closing word before I head down to the music studio. I'd like to thank Linden Lab for the
platform that we've been using, Second Life, and I know it's always in style to bash the people
who provide us with our basic services, whether it's Microsoft or our cable company or Linden
Lab. But, after a hundred episodes, I would like to remind all of you what it was like to conduct
this show in late 2007: no in-world voice; hours of down time every week, often with no notice;
rolling restarts more than once a week in some cases; no more than 40 avatars to a region. I
could go on and on. Is Second Life still a work in process? Sure, but they're light years ahead of
where they were, and, for that, thank you, Linden Lab.

Okay, and thanks to all of you for listening. Head over to Muse Isle Arena. I'm sure people will
be popping their SLurls into chat, and I'm going to drive down to the studio, to join my band, and
I will see you there. Thanks a lot, and bye bye.

Document: cor1084.doc

Transcribed by: http://www.hiredhand.com
http://www.hiredhandtranscription.org

15

Metanomics transcript april 14 2010

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Metanomics transcript april 14 2010