'Cause We Are Living in an Immaterial World...

A friend's plight, and the fallout from Zynga's abolishment of Street Racer, set me on the path to thinking about how we deal with digital assets in a world that hasn't yet realised that they are the digital representation of a physical asset and so is valuable.

Let's look at how this is effecting Joe Blogs on the street first.  Mr Blogs has been having some financial trouble as of late and is unable to pay back his debts - as a result he has to declare bankruptcy.  Normally when you declare bankruptcy, your non-essential assets are sold off in order to pay back your creditors, however in my example Joe Blogs has very few physical assets to be sold off.  He has his laptop, which he uses for work and so has to keep, but he spent most of his previous leisure time playing MMORPGs, listening to music, reading ebooks and social networking.  As a result of this, Joe has very few physical assets but has thousands of pounds worth of digital assets.

Currently, these digital assets are ignored - they are not seen as being worth anything.  The reality, however, couldn't be further from the truth.  Joe has a World of Warcraft account, with four characters that would be worth circa £700 each on ebay; he has around £5,000 worth of music, ebooks and movies on his laptop; his Steam account has £500 worth of games downloaded to it, and he owns seven valuable domain names that are worth about £100 each.  The collective value of his digital assets is around £9000, which far outstrips the value of the rest of his physical property combined.  At time of writing, there is no way for the accountants, or Joe, to access these funds.  Joe can't sell on his mp3s or ebooks as they only work with his iTunes account; he can't sell his World of Warcraft account as selling it is against Blizzard's EULA and though he personally can sell on his domain names, the accountant cannot do this for him.

Joe does not own his own property beyond using it for its single intended usage.  This seems simply nonsensical in a world that is increasingly digital.  Why is it that if I buy a CD in a shop I reserve the right to sell this on once I am done with it to whoever I wish, but I cannot do the same with the eight mp3s that make up my "Fame Monster" album?  Why are the terms of use so restricted just because we remove the physical element?  Why is it suddenly apparently worthless to anyone but me?  The fact of the matter is that it isn't.  My CD is still worth what someone will pay for it, but it's made impossible for me to sell it on.  Joe's £9000 worth of digital assets?  Effectively worthless.

Now let's look at how this effects businesses.  Zynga, creator of social games on sites like Facebook, has come under fire after announcing they were abolishing one of their games, Street Racing.  The reason this has caused so much consternation is that Street Racing, like many of Zynga's games, employs the use of microtransactions to allow players to customize and upgrade their vehicles.  For those who don't know, a microtransaction, in this situation, means the player pays a small amount of real money for access to digital content within the game.  Zynga have faced a lot of criticism for people who have sunk a lot of their hard earned cash into the game - abolishing the game effectively means Zynga is taking their money and running without consequence.  It's tantamount to you buying a diary in real life, using it for a little while, then having WHSmith come into your house and take it away without explanation, your notes and dates still in it.  Of course, in the real world, businesses would never get away with taking away something that a consumer had already paid for and taken into their possession, but for some reason when we move these transactions into the digital realm it becomes common practice and seen as bizarrely ethical.

There was another example of this back in 2009, when the initial Kindle ebook reader launched.  Amazon released a number of George Orwell's books that later had to be withdrawn for legal reasons.  However, the books were not just withdrawn from the store, as you would imagine, but removed from the libraries of consumers who had already bought and paid for it.  The owners of these books were not made aware this was happening and were understandably upset that Amazon felt it had the right to delete things from their Kindle libraries, that they had previously perceived to a personal and private piece of property.  They were sure, as had come before, that once you buy a copy of a book, the store no longer own the rights to that copy.  Not so, said Amazon.

The world is clearly in transition, between being focused on what's real and can be held in one's hand and the increasingly immaterial world we inhabit in our daily lives.  I personally spend probably as much time on social networks as I do actually speaking to people face to face - does that mean those interactions are worthless because they were not physical?  No, and my property isn't worthless just because it's not physical.  We are locked in a power struggle over our own personal assets.  Companies want to retain the rights to their intellectual property to prevent people stealing it, and consumers want to retain the rights to their digital property to prevent companies stealing it back.

At the moment I cannot see any simple solution.  In times to come will we be able to sell these digital assets back to companies at a reduced rate in the way that one can trade in a game for cash at a store?  Will we be able to auction them off them on eBay?  Will we see digital repo men invading our networks and stripping our hard drives of all that is valuable?  Will they come for our MMO characters if we fall behind on our subscription?

It seems impossible to predict how the power balance is going to shift, but with the rise in social networking many of these apparent injustices in DRM are not going unnoticed and are hurting their brand as much as the company feels they may be protecting it.  Perhaps that is where the battle will be fought, and the war ultimately won - power to the people.