The Dark Side of Second Life

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The firm's roughly 30 developers are also working to better identify the original creators of designs and make this information easily accessible to the public. The hope is that, once people know someone has an illegally copied item, he will be shunned by the community or sued by the original designer, be it in a real-world or Second Life court system, for violating copyright protection laws.

Rosedale says it is not appropriate for Linden Labs to sue copiers itself or get involved in dispute resolution, though many residents would like the company to devote resources to policing the community. Still, Rosedale admits that real-world suits by virtual members might not be enough. "Longer term, Second Life is going to have to develop its own law or its own standards of behavior," Rosedale said during the town meeting. He added that he hopes the community develops "local authorities" to deal with property ownership and copyright issues.

Vigilante Justice

Already, Rosedale says, groups have started up Better Business Bureau-style associations to weed out bad players. Linden Labs may also encourage the publication of blacklists of known copiers.

Yet the notion of grassroots justice in a virtual world raises a host of serious questions: On what authority would they act? What punishments can they mete out? And to whom would they be accountable? For example, if a shopkeeper is erroneously blacklisted, can he or she hold anyone responsible for lost sales? If so, who?

Linden Labs cannot simply block people from using copy programs since it must show the computer the code for images in order for users to see those images in the game and interact with them. Personal information about the players, however, is not shown and is protected by code on Linden's own servers.

Smaller Vendors Fearful

Sibley Verbeck is the CEO of the Electric Sheep Co., a firm that designs experiences in Second Life and other virtual worlds for major companies such as Reuters (RTRSY), Sony (SNE), and Starwood Hotels (HOT) (see BusinessWeek.com, 8/23/06, "Starwood Hotels Explore Second Life First"). Verbeck says issues of property and copyright control are being increasingly discussed as more Second Lifers have begun creating and selling their own content. "It is a rapidly evolving technological platform. There are going to be bumps in the road, and there are segments of the user base that are prone to panic," says Verbeck. "If you watch Second Life for awhile you are going to see a crisis just this big every month."

Corporations are less worried about intellectual property issues in Second Life than some smaller vendors, says Verbeck, because they are fashioning their creations more to promote a brand than to make money off actual sales. Still, they are concerned that the copying software could be used to replicate a logo or item and then alter it in a disparaging way. It could also have an effect if people begin leaving Second Life for fear that their creations will become valueless.

Still, Verbeck says he has faith that the Second Life community will figure out how to handle law enforcement in the virtual land. "A lot of people are becoming aware of the potential for damage, it has gotten a dialogue going, and it's gotten a lot of people interested," he says.

Holahan is a writer for BusinessWeek.com in New York
With Rob Hof in Silicon Valley