Everybody knows the old Philosophy 101 question: How do we know the “real world” isn’t just a very convincing simulation? Now, thanks to the expanding role of online games in our daily lives, there’s a corollary: Where do you draw the line between a “virtual world” and the “real world”?

Consider this: I sit down at my computer and spend half an hour browsing for clothing, finally deciding on a single shirt. I make sure I have enough funds in my account before clicking the “buy” button. Did I just describe shopping for myself or for my avatar?

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My shirt will be arriving next week. My avatar can put hers on immediately. That’s the only difference I can see – and I’m not the only one.

Virtual worlds are moving into the mainstream, and technology is blurring the boundaries between our activities in online and real-world spaces. When you can spend real dollars to buy virtual goods, it’s hard to say it’s only a game. Especially when people quit their “real” jobs to become successful land barons in Second Life, or threaten to include virtual property in a divorce settlement.

With the operators of virtual worlds increasingly transitioning to a microtransaction-based business model, users with virtual-world problems are turning to more conventional legal solutions. Consider this headline from late 2007: “Dutch Police Arrest Seventeen-Year-Old for $5800 Virtual Furniture Theft at Habbo Hotel.” More recently, big law firms are creating entire divisions to focus on virtual property disputes.

There are few laws on the books mentioning virtual worlds specifically, so attorneys must apply real-world laws to virtual spaces. Typically, these cases involve copyright and intellectual property law. But that’s the shallow end of the pool.

As an example, consider how landlord laws might apply to virtual worlds. If it’s assumed the “residents” are renting their virtual space from the people who make and maintain the game, does banning a player equate to evicting them from an apartment? Now consider the fact that landlord laws vary from city to city, not just internationally, and you have an idea of how complex a simple account ban can become with a little creative litigation.

On the other hand, if MMOG developers are building repositories of assets with monetary value, how is that different from banking? Could functioning MMOGs be regulated as financial institutions? It’s possible the law could support that interpretation, but legal documents involving bank regulations make game design docs look anemic.

There are a host of nightmare scenarios when real-world laws and virtual worlds collide – and one man stands right on that collision point. Ren Reynolds saw the potential for disaster as lawmaking bodies in the real world started looking closely at virtual worlds and trying to figure out how they intersect with reality. (No one talks about “if” they intersect anymore.)

Earlier this year, Reynolds founded the Virtual Policy Network, a global think tank that helps governments, universities and businesses mediate their interests in online worlds. He explains his inspiration for the organization: “I saw so much misinformation in the popular media and so little of the learning from academia finding its way either into the government discourse or the way virtual world companies saw things. I thought there needed to be something to bring these groups together in a dialogue.”

Getting a think tank off the ground is not a trivial project, but Reynolds saw an urgent need for something to fill the widening gaps between stakeholders in the virtual world/public policy space. “More than one person has said it’s the right idea at the right time,” he said. “Virtual worlds are starting to get onto the policy agenda, however there isn’t a virtual world industry association, so at the moment it’s very difficult for parties to engage in dialogue – other than on a one-to-one basis. To some degree tVPN is filling that gap.”

Based in the U.K., the organization’s advisory board reads like a who’s who in virtual worlds and academia: Richard Bartle, Mia Consalvo, Randy Farmer, Thomas Malaby, Jessica Mulligan, David Pullinger. Bartle invented the first massively multiplayer game 30 years ago and has been studying them ever since; he should know a thing or two about them. And the others have resumes that are just as impressive. Getting them together in one think tank should be potent.

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The primary purpose of tVPN is to explore the public policy implications of virtual worlds, bringing together policymakers, industry and academia. Reynolds also reminds me there is a fourth group with just as much of a stake in the debate that is harder to engage: the users themselves.

Many virtual worlds employ their own unique methods of user representation, from the basic, chaotic developers’ message board to EVE Online‘s formal Council of Stellar Management. But these fractured groups are hard to bring together to talk about policy, and this puts them at a disadvantage. Reynolds elaborates: “Where we might start to see issues relating directly to users is when virtual world makers see these things as ‘just games.’ But we might see that users should have rights of free speech within the space because it is starting to grow into what we might argue is an extension of the public sphere.

“This is the type of issue where there should be representation of the rights of the player but no obvious champion. … It’s very difficult to discern how to engage users into the discourse, whereas industry, academics and governments are relatively easy to get into the same room at the same time – as we demonstrated at the recent conference in London called Virtual Policy ’08.”

This event, put together by tVPN, included representatives from most of the U.K. Departments of State, along with many of the major regulatory and international bodies such as the OECD (Organization for Economic Co-operation and Development). The U.S. embassy sent a representative, as did the EU commission. There were speakers from several different countries and companies like IBM, Cisco and Nortel, as well as five major U.K. universities and the Oxford Internet Institute.

The Virtual Policy ’08 conference has already influenced the policy formation effort in preparation for the OECD Technology Foresight Conference next year, and the U.N.’s Internet Governance Forum meeting in December. In fact, Reynolds will be speaking at this U.N. conference in Hyderabad, India, as well as several conferences in the U.K. before the end of the year. In the meantime, tVPN is seeking funding for conducting research and developing reports on topics such as a global policy review, the legal framework for virtual property and the relationship between child development stages and virtual worlds.

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When I asked why real world governments care so much about what goes on in virtual worlds, Reynolds pointed out to me that, cumulatively, “people spend millions of hours in virtual worlds every day, so many governments feel they have at least a minimal duty to know what is going on in virtual worlds. For some governments the negative issues are to do with child safety or fraud or terrorism. On the positive side, virtual worlds are also associated with the green agenda and innovation.”

Regardless of their logic, there’s no keeping governments from legislating virtual worlds. Reynolds would rather be realistic; he said tVPN is in favor of regulation when it’s appropriate and proportionate. He believes some regulation can protect virtual worlds and help them reach their full potential – the challenge is figuring out what those good regulations might look like and how different governments around the world could work together on the process. By empowering the stakeholders to share information and work together for the common good, he thinks the worst outcomes can be averted.

“This is both a matter of explaining the drastic impacts governments might have on the development of virtual worlds if they are hasty to put them in a pre-existing policy box, and of course to explain simple facts about virtual worlds and their uses. I think virtual worlds are highly vulnerable to being politicized, which could result in legislation and regulation from around the world that has a range of unexpected consequences.” But, he says, “my vision is to maximize the social good that we as a global society can gain from virtual worlds.”

Wendy Despain writes for and about videogames and plays around in virtual worlds, but ducks behind bushes when the fights break out.

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