A New Frontier in Digital Content Policy: Case Studies in the Regulation of Virtual Goods and Artificial Scarcity

Abstract

Millions of people around the world are spending billions of euros per year on virtual items, characters and currencies in online games, social networking sites, and other digital hangouts. In this paper, we examine this shift in consumer behavior and business models from a public policy perspective. We present three case studies to examine the key policy issues that virtual goods are giving rise to, and analyze some of the regulatory responses that have been effected so far: judicial protection of the possession of virtual goods in Finland and the Netherlands, statutory regulation of virtual goods trade in Korea, and application of consumer protection law to virtual goods sales in Finland. As with the debate over copyright, the first big content policy debate of the digital era, this new digital policy debate tends to pit individual consumers and entrepreneurs against the interests of publishers and established public policy. However, the roles are curiously reversed: it is not the publishers but the consumers who demand that pieces of digital content be respected as property, and turn to courts to enforce their view. While copyright and virtual goods both aim to impose artificial scarcity on non-rivalrous matter, copyright is designed to provide economic incentives to producers, while in virtual goods scarcity provides benefits to consumers directly.