Judge Ung-gi Yoon on RMT as goodwill trading

I recently had the good fortune to review a paper by Judge Ung-gi Yoon on RMT.

You can find the paper at SSRN: Real Money Trading in MMORPG items from a Legal and Policy Perspective.

I really enjoyed this paper, and recommend that you take a look if you’re interested in the topic. The analogy to goodwill is really interesting, and there are some great critical insights about the choices that game developers make, which inevitably encourage RMT, and the benefits they receive from RMT. These recognitions set the stage for an interesting debate about the extent to which developers and publishers can then purport to rely on contractual terms which prohibit RMT.

In this article, Judge Ung-gi Yoon considers the legal status of Real Money Trading (RMT) in Massively Multiplayer Online Role-Playing Games (MMORPGs). Judge Yoon notes that in-game items are virtually treated as personal property, but are only legally recognised as information goods. The right of ownership of these goods belongs to the developers, and players have a right to use, as conferred by the terms of service. In contrast, players own the rights in content they create themselves within the game. Transfers of in-game items, as a manifestation of real human will, can accordingly be seen to be transfers intended to have real legal effect in the form of a transfer of a portion of the right to use over the game service held by a user in the real world.

Judge Yoon argues that declarations of intent by players within a game environment cannot be unilaterally ignored by the legal system, and must instead be individually judged to determine whether they were intended to be legally binding. In this conception, internal rules which are consistent with game play should be given precedence over external real-world rules. However, real-world rules should be applied in cases where the intent is unrelated to the game’s proper context, for example in cases of in-game defamation.

Through this framework, Judge Yoon considers RMT, noting that most discussions of RMT in South Korea and elsewhere characterise the objects of real-world transactions as the in-game items. This characterisation, however, is flawed because in-game items are not capable of being treated as personal property. An alternate suggestion is that the transaction is characterised as a sale of a right to use, but this characterisation fails to adequately explain the disparity in values of right to use versus the fees charged by the MMORPG operators, and presents a large liability problem for the operators with regards to the valuable rights to use of their users.

Judge Yoon argues that neither of these models are satisfactory – the object of RMT is neither the item itself nor the right to use the item, but rather something entirely distinct. Instead, the objects of RMT are better recognised as ‘play values’, and the monetary compensation is a ‘gwonri-geum’ (lease goodwill) payment. This analysis makes an analogy between the transfer of goodwill and RMT, where the transfer is not a purchase of an item or the right to use, but rather a payment for the effort the other party has invested in obtaining the item. On this analysis, RMT does not concern the operator any more than sales of goodwill concern the lessor of a business property.

It follows that if RMT is not the transfer of an item or the right to use an item, but rather a transfer of goodwill, then it must fall within the domain of private autonomy of players, and developers and publishers have no legal standing to interfere with the transfer. However, because the value in RMT transactions is the goodwill associated with the item and not the item itself, RMT does not impose liability on the publishers for protection of the items. A publisher’s liability will be limited to the original value of the item (related to the subscription fee), and not for the amounts in which associated goodwill is traded.

Judge Yoon argues that developers and publishers need to face the reality that market pressures have transformed play into real economic activity, a transformation which resulted from the game design choices made by the developers.

The fact that goodwill transfers are outside the scope of regulation by the publisher does not mean that the publisher has no right to regulate related activities. For example, prohibiting in-game advertising of RMT may be prohibited because it interferes with gameplay. Judge Yoon suggests that publishers ought to disclaim any involvement and liability with regard to monetary transactions between players, but reserve the right to regulate the in-game behaviour of players. Judge Yoon argues further that there is no real legal basis for justifying the imposition of restrictions on RMT transactions, and such bans are unfair insofar as they heavily infringe upon players’ rights to the intangible value they have created.

Judge Yoon points out that many publishers and operators do not care to correct structural issues in their games which lead to RMT, as RMT indirectly increases their revenue. However, by including an unenforceable ban on RMT in their terms of service which is of questionable validity, publishers are hypocritically covering themselves in cases where the negative social effects of RMT, particularly on the welfare of youth, are brought into question. Judge Yoon concludes that doing away with bans on RMT can alleviate some of the problems which have been recognised in South Korea, by respecting the personal autonomy of players, allowing trade to occur in a more stable environment and making it easier to deal with fraudulent traders.

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