Online Game Provides Lessons about Zoning

Published October 10, 2008

Policymakers can learn much from a proposal to increase regulation in the popular Web-based virtual world known as “Second Life,” market analysts say.

The “Mainland,” the portion of the virtual world directly controlled by Second Life’s parent company, Linden Labs, will now be subject to new zoning rules intended to fix problems many gamers have long lamented.

The announcement of the new in-game regulation came in an August 5 blog post from Linden Lab’s Jack Linden.

Change in Policy

Linden Labs will set aside areas of virtual land for specific use, such as commercial or residential, the post announced.

Second Life has been plagued by “ad farms,” large areas of land purchased by businesses for advertising purposes. Historically, Linden Labs has remained on the side of user freedom and allowed the ads. The new policies mark a change from that philosophy.

“It has always been a diverse and exciting place to have your in-world home, but in recent times it has also become a challenging and frustrating one,” Linden wrote in his Web post.

“We have long had a policy of noninterference, instead applying the Terms of Service and Community Standards via abuse reporting,” Linden continued. “Unfortunately with the wonderful freedoms and creativity the Mainland offers have also come substantial problems that are unique to this area of the grid and so the time for change is now.”

Details to Come

Though details on the policy changes are currently vague, Cord Blomquist, a technology advisor and online editor for the Competitive Enterprise Institute, thinks policymakers could learn from Second Life, especially since zoning in reality is much more damaging than what happens in a virtual reality.

“Policymakers should take note of how long Second Life has gone without significant restraints on users’ actions. Such laissez-faire policies should be implemented in our first life,” Blomquist said.

“Zoning in government is a lot different from Second Life,” Blomquist continued. “Local governments often take zoning laws beyond establishing broad uses for property, and instead use them to micromanage how property owners maintain their homes or run their businesses. Zoning is too often abused and used to restrict property owners’ freedom rather than preserving property rights. Hopefully Second Life won’t make the same mistake.”

Real-Life Laws Unavoidable

The Second Life changes are intended to preserve the game and provide an enjoyable experience for gamers—much like the arguments made for zoning regulations in state and municipal government.

Steve Titch, technology advisor for the Reason Foundation in Los Angeles, says such policies may in fact be beneficial in a video game, but the same logic can be a dangerous encroachment on peoples’ liberty.

“At heart, the game is a recreational activity,” Titch noted. “Its creators have the right to set the rules. Since Second Life is a business for Linden Labs, you can say that their institution of ‘zoning laws’ is a response to customers who are tired of ad clutter, and Linden decided the value of keeping players happy was worth more than any value they might lose from advertisers who might opt out.

“Which brings us to the second point: Second Life players who don’t like the zoning idea can opt out, too, unlike citizens and business burdened by real land use laws,” Titch added.

Private Zoning Praised

Edward Stringham, an economics professor at Trinity College in Hartford, Connecticut, agrees videogame zoning is less harmful than in real life. He thinks the use of zoning in Second Life can be instructive about the superiority of private zoning rules and regulations in the real world.

“While most people associate zoning with government, there are actually many examples of what can be considered private zoning. A homeowner’s association, for example, might require that all members paint their fence a certain color or keep it to a particular size, or might prohibit people from using their property in certain ways. The members of the association choose these rules so the value of their property will not be diminished by neighbors who might have different goals.

“Another example of private zoning on a larger scale is the town of Celebration, Florida, which was almost entirely planned by Disney. They have many rules, but the rules enhance the value of the community so property values at Celebration, Florida are higher than in other communities in the area,” Stringham continued. “These rules are beneficial because they are chosen voluntarily by the residual claimants on the land. Any bad zoning rules would negatively affect the people who choose them.”

Government Rules Ineffective

Stringham notes it is difficult to implement government policies that act in the same way. Historically, such policies have failed to promote the same kinds of values and goods that can come about from private zoning regulations.

“Private zoning contrasts with government zoning, where government zoning is not contractually agreed to by all parties involved. Government zoning is often used to force change to how other people use their property, even if that change is not necessarily beneficial.

“Government zoning laws have a sordid history, including explicit racism, to keep out certain types of people using the force of law,” said Stringham. “This was not requested by landlords or tenants, but it was because other residents of the area decided it was better to use government force than to buy up land around them if they did not want certain people as their neighbors.

“The lesson I would draw from it is that we can rely on private regulation or private zoning as an alternative to government zoning or government regulation,” Stringham continued. “Private parties have an incentive to only create rules when those rules are beneficial, in contrast to government parties who lack such incentives and in most cases over-regulate and over-zone.”

Aleks Karnick ([email protected]) writes from Indianapolis, Indiana.