eBay bans auctions of virtual goods

Sales of items from Warcraft and Everquest are now a no-no, but eBay gives the OK for items from Second Life.

Daniel Terdiman Former Senior Writer / News
Daniel Terdiman is a senior writer at CNET News covering Twitter, Net culture, and everything in between.
Daniel Terdiman
5 min read
By proactively delisting auctions for property from virtual worlds and online games, eBay may be effectively forcing players who participate in such trades into the hands of giant third-party operations that buy and sell virtual goods.

Given that a significant slice of the multi-hundred-million-dollar business took place on eBay until now, the move portends a significant shift in who controls the market for virtual goods.

eBay on Monday confirmed its decision to ban auctions for the characters, currency, weapons, attire and accounts of online games such as World of Warcraft, City of Heroes and others. The move was first reported on Slashdot.

The ban does not affect the virtual world Second Life.

In most cases, publishers of online games include in their terms of service a prohibition on so-called real-money trades (RMTs), in which people buy and sell online games' virtual assets for real money. Players who violate such rules can be banned.

But because eBay has dominated the auction market for RMTs, there's little question that the short-term winner in this latest circumstance will be sites like the Internet Gaming Entertainment of the world, which control the third-party market.

While there is no universally agreed-upon value for the RMT market, it is assumed to be worth somewhere between $250 million and $880 million a year, according to experts.

eBay's move is "a boon for sites like IGE," said ="6027212">Julian Dibbell, author of Play Money: Or How I Quit My Day Job and Struck it Rich in Virtual Loot Farming. "They're going to have the field pretty much to themselves." But, Dibbell said, such a circumstance is "sad" because it restricts individuals from being direct participants in the markets themselves.

IGE did not respond to requests for comment.

For its part, eBay said its decision--which is essentially a move to begin enforcing rules against virtual-item trades already under way--stems from a desire to protect users.

"Any policy decision we make...has to do with...basically a good buyer experience and good seller experience on the site," said eBay spokesman Hani Durzy. "We want people to continue to come back, and we want people to have good user experiences on the site."

To Greg Short, director of Web development for EverQuest II publisher Sony Online Entertainment, eBay's move is likely a result of its wanting to avoid the time-consuming annoyance of dealing with customers who are defrauded over virtual-item sales.

"The only thing I can think of from eBay's standpoint is...that there's a huge risk of fraud to the consumer, even more so than with physical goods, because at least with physical goods you can track your shipments."

"We want people to continue to come back, and we want people to have good user experiences on the site."
--Hani Durzy, eBay spokesman

With virtual goods, Short said, there's no physical item to track and there are more opportunities for shady buyers or sellers to defraud their auction counterpart.

But Edward Castronova, a professor of telecommunications at Indiana University and the author of Synthetic Worlds: The Business and Culture of Online Games, says the motivation behind eBay's move is not that simple.

Castronova thinks that by banning items from virtual-worlds and online-game auctions, eBay is signaling its desire to stay out of the way of what it might see as an ugly future fight with game publishers and government regulators.

"eBay is a big, well-funded company," Castronova said. "If they turn their back on this market, they sense it's not worth fighting (the people who run the games) to keep this going. The other potential fight would be with the government. The Korean government is passing laws that regulate RMT. It seems like maybe eBay is just saying that this is just not an extremely lucrative line of business."

Castronova said another sign the RMT market has been deemed too risky is that IGE, which does millions and millions of dollars in annual business brokering virtual goods sales, has not been purchased.

"In the long run, blue-chip companies are always going to see this as a rogue market with no future," he said.

But eBay said it has a different opinion about goods from the virtual world Second Life.

Durzy told CNET News.com that the auction giant has decided to specifically exempt Linden Lab's Second Life from the list of virtual worlds and online games whose auctions it will ban.

"If someone participates in Second Life and wants to sell something they own, we are not at this point proactively pulling those listings off the site," Durzy said. "We think there is an open question about whether Second Life should be regarded as a game."

Second Life publisher Linden Lab has long tried to distinguish its virtual world from online games, in part because activity there revolves around a functioning economy in which players own anything they create or possess. By extension, Linden Lab specifically sanctions players buying and selling Second Life goods, even on eBay.

To Dmitri Williams, an assistant professor in speech communications at the University of Illinois at Urbana-Champaign, eBay's stance on Second Life makes sense, especially in comparison with standard online games.

"It's consistent with Second Life that the economy outside the world is part of the world, whereas these other games are really trying to enforce the magic circle, that the rules inside the game are different from the rules outside the game (in order) to protect the sanctity of the game," Williams said.

Sony Online Entertainment has ventured into a hybrid direction related to permitting RMT trades by launching Station Exchange, a company-run market for EverQuest II goods, that governs some of its servers while others prohibit such behavior. To Short, the example set by Station Exchange is something other online game publishers should follow.

"From our standpoint, (eBay's decision) vindicates the idea of Station Exchange," Short said. "If companies take responsibility for the idea that things like this are going on and give their players a service that's a lot less risky, the players that want to buy can get their goods?without the worry that comes with third-party services."

Dibbell agreed, particularly because the publisher of the game whose goods he trafficked in when writing his book, Ultima Online, has been willing to let players do what they want when it comes to RMT.

"At the end of the day, the blame comes back to the companies that are banning this kind of trade," Dibbell said. "It's sort of disappointing that eBay is going to decide that though some of these trades are legitimate, they're going to ban them all."