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Anshe Chung: First Virtual Millionaire

Anshe Chung: First Virtual Millionaire

Monday, November 27, 2006

Anshe Chung, a real-estate tycoon in the digitally simulated world known as Second Life, has apparently become the first virtual millionaire--i.e., someone whose holdings in a make-believe world are legally convertible into genuine U.S. currency worth more than $1 million.

Chung is the nom de keyboard of Ailin Graef, a former schoolteacher who says she was born and raised in Hubei, China, and is now a citizen of Germany. She will give a press conference about her achievement tomorrow (November 28) at 9:00 a.m. PST, although it will occur in-world, i.e., to attend you will need to have downloaded Second Life's software from the company that created and maintains it, Linden Lab. Here is Chung's announcement, which has additional details. (A spokesperson for Linden Lab told me she could not immediately verify Chung's claim, because Chung's property is held in many different names, but hopes to have the information by later today.)

I wrote about Chung a little bit in a Fortune feature story in November 2005, called "From Megs to Riches," which focused on the broader phenomenon of people earning real money from activities they engage in while playing online games. That story is available here. (In all candor, at this point, every major news organization has written at least one such story, and a fair number of those were published before mine.)

Second Life's creators and denizens do not like it to be called a game--you don't shoot at monsters while you're there, for instance--but it might be categorized nonetheless as a special variety of so-called massively multiplayer online role-playing game (or MMORPG for relatively short), albeit one that is more akin to SimCity than to World of Warcraft. In Second Life, subscribers get a tool kit that enables them to build and create an avatar (a character in the world). They also get a small quantity of Linden dollars to start out with, enabling the participant to buy additional tools and objects within the world itself. Linden Lab converts currency at a floating rate that, at the moment, is about 257 Linden dollars per U.S. dollar.

Though you can buy additional Linden dollars from Linden Lab by paying U.S. currency, Chung says she has made all her additional Linden dollars via in-world buying, building, trading, and selling. The lion's share of it, she says, has been made by buying, developing, and then renting or reselling "land"--i.e., control over the virtual real estate simulated by Linden's servers. Each of Linden Lab's servers simulates about 16 acres of in-world property. At the time I wrote my article in November 2005, Chung was developing private islands and setting up communities restricted to, for instance, East Asian, Victorian, or Gothic architecture, or to French-speakers, or to gays and lesbians, or to fuzzy avatars known as "furries." Because Linden Lab has added simulation servers more slowly than it has accumulated subscribers, virtual property values have soared.

Why, you may wonder, do I consider Chung's achievement to be a suitable topic for a legal affairs blog? Well, it's a bit of a stretch. But, as I explained in my earlier feature story, the whole topic of buying and selling "virtual" property does raise legal issues. Some online game companies have attempted to prohibit, through click-through agreements, the real-world buying and selling of online property created by players, which the companies maintain remains the company's intellectual property--indeed, just graphical manifestations of data entered into company-owned spreadsheets on company-owned servers. Second Life, on the other hand, openly authorizes and facilitates exchanges between its currency and real-world currencies, so that particular legal issue does not arise. Still, you might ask whether Linden Lab is courting legal liability if its servers should suddenly go down one day, destroyed, say, in some real-world earthquake, leaving Second Life denizens devoid of "property" or at least expectations in which they've invested so much real time and money. What do peopl