A Legal Question for Ginsu Linden

Ginsu, would you like to offer any legal comments about this post of mine which initially started on the Residents questions and answers forum regarding music downloads?

If you are Lindens lawyer it is correct and fair that I should tell you I am not asking for personal legal advice, and in addition you may treat me as a market counterparty as my day job is in the financial services business.

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Some of the music download issues mentioned on this thread are beyond me but there is one theme I could pick up on and that is money.

Personally I would not want to fall into the trap of saying Linden Dollars have no value regardless of the Linden TOS.

Or perhaps to put it another way if it looks like a duck, quacks like a duck, and flys like a duck, there is a high possibility it could get treated like one.

For example, if in world or by arrangement on the Lindex I offered anyone of you on this thread the opportunity to buy 500 linden dollars for $1 (real one) you might snatch my virtual arm off. Another example could be I can sell sufficient Linden dollars via Lindex and leave the real US dollars on my account to pay tier, or perhaps buy a private Island from Linden.

I suspect that some of the very large Second Life businesses have elected to pay income/capital gains tax on profits on the basis of legality. I know I would follow that route.

In essence the Linden dollar has a "fungible" monetary value.

Although Desmond Shang has commented much of the technology here is cutting edge and there may not be legal precedents, on the money issue I believe there is ample legislation in place. So in my own opinion that may influence what could be deemed to be legal in terms of paying for music copy write

Just a personal view

Regards John

Hi John! In the future could you please also provide a link to the original thread? I found it here:

/327/b6/139028/1.html

and I'll forward this to Ginsu.

There does not appear to a direct question posed in this post. Possibly the central question you pose is: Are Linden Dollars the same as real money? I can answer this quite clearly:

Linden Dollars are not real money. As noted in Section 1.4 of the terms of service, Linden Dollars represent your limited license right to use an aspect of Second Life, i.e. the aspect that simulates a real-world economy. Linden Lab does not provide any right of redemption for Linden Dollars - you cannot demand that Linden Lab provide you any sum of money in exchange for your Linden Dollars. Linden Dollars are a software license right, not money.

I should note here that there appears to be some confusion about Linden Lab's position as to whether Linden Dollars have value. It is undeniable that people are willing to pay money for Linden Dollars. People buy Linden Dollars from us, they buy Linden Dollars from each other - obviously, value can be attributed to Linden Dollars. In this sense, Linden Dollars obviously have value.

But this is a completely separate issue from whether or not Linden Lab will ever provide a right of redemption for Linden Dollars. We do not provide any right of redemption of Linden Dollars for monetary value. Along with Section 1.4, Sections 5.2 and 5.3 of the terms of service make clear that Linden Lab will not provide or guarantee any value for any data (including Linden Dollars) residing on our servers; and the service of Second Life is provided on an "as is" basis.

As you must know, the value of the transactions taking place in Second Life greatly exceeds the revenue provided to Linden Lab - that is the whole point of Second Life: to provide a platform on which users can create content and benefit from the content they create. There is no financially rational way that we could provide a guarantee of value for all of the content in Second Life. I would encourage you to review the terms of any hosted software service available to a general consumer base over the Internet - you will find nearly the same terms regarding the value of data and the "as is" nature of the service.

Now, none of this provides definitive answers to questions about whether you must provide royalties on your activities in SL, or whether you need to pay income taxes. These questions would arise whether "Linden Dollars" were called "Acorns" or "Gold Pieces" or "VirtuaBucks" or what have you. They would be the same questions raised if you conducted all of your business activities using Pez dispensers as your unit of trade. All of those things have market value and can be traded for money at market value. None of those things are money. But that does not mean that the IRS or any other party would not examine whether you have made money, or some other measure of value, in a manner for which they have some jurisdictional purview or IP or contractual right. Here, as you note, you are well-advised to consult your own competent legal or tax professional if you desire advice.