Law and Order on the Virtual Frontier

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SEMINAR/ PRESENTATION PROPOSAL FOR XBIZ LA 2010 From: Charles Carreon chas@charlescarreon.com Online Media Law, PLLC To: XBiz

Business and Legal Issues on The Virtual Frontier Proposal: A Panel Discussion on how the emergence of Virtual Reality as a profitable business will create opportunities and challenges for the adult industry. Context Virtual Reality is reality. Games are for real. Avatars are real people. Virtual sex is real enough for people to pay for with virtual money. And virtual money is real cash. Sound simple? Its not. If the WorldWideWeb was Internet 1.0, and Social Media was Internet 2.0, VR will create Internet 3.0. And the challenges to the legal system that are going to arise from Internet 3.0 will dwarf the problems created by the first two iterations. Creative Destruction The economic changes that sprang from the Internet have killed off a large number of businesses already. Think news reporters, classified ad salespeople, travel agents, and stock brokers. Nothing slows this process down. The last couple of years have demolished the notion that the adult industry is immune to larger economic conditions. Could it possibly be the case that VR is about to alter the fundamentals of an industry that is all about depicting the nitty-gritty physical reality of human bodies? If I were a betting man, I would want to hedge my bets. VR Opportunities and Challenges for Creatives VR has tremendous potential to expand the earning ability of creative workers and to increase the revenues of web-entrepreneurs. Creative workers, lets just called them Creatives, are vastly needed to build out VR, because without them, theres nothing there! Creatives make every texture, shape, form, shadow, and movement in VR. And since they make it out of digital code, it needs to be protected from piracy. Otherwise, theyll have no incentive to create anything new, and VR will become very boring, with everything made out of cheap, stolen simulations. So property rights and copyright law are going to be the virtual cement that holds VR together. Virtual Economies VR is creating new economies. If you spend any time on Facebook, and/or read the business pages, its obvious that free games selling virtual goods are raking in vast amounts of money. Wikipedia defines a Virtual Economy as an emergent economy existing in a virtual persistent world, usually exchanging virtual goods in the context of an Internet game.

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Virtual Currencies VR spawns virtual currencies. World of Warcraft was the first Virtual Economy to gain substantial notice, and their currency is called WoW Gold. Second Life has currency, and its called Linden Dollars. Red Light Center, the biggest adult VR uses Rays. As the Wikipedia entry on Virtual Economy notes, the existence of virtual currency raises a host of issues such as the ability of the VR operator to manipulate the value of the currencies, the arising of markets for trading virtual currencies, the potential for crime and theft, and many other risks. Virtual Conflict VR breeds interactions, business relationships, and personal conflicts. What law is to be applied in VR? Should VR realms adopt codes of conduct, create Virtual Courts, and conduct Virtual Trials? The Legal Response The law has moved with glacial slowness and ponderous inflexibility as one challenge after another raised its ugly head. But for the power of DVD encryption and the legal muscle Congress gave the entertainment industry through the DMCA, the movie industry would be as decimated as the music industry. The time to build virtual dikes and dams is before the flood of simulated reality hits.

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