January 2011 Archives

Around the Virtual World


A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Federal Games Warning Label Law Introduced to Congress

On Wednesday, U.S. Representatives Joe Baca (D-CA) and Frank Wolf (R-VA) introduced a bill called the Video Game Health Labeling Act that would federally mandate warning labels on a large subsection of video games.

LinkedIn IPO May Be First in Wave for Social Media

LinkedIn Corp.'s plan to raise as much as $175 million in an initial public offering may be the first in a wave of share sales for U.S. social-networking companies.

Facebook Plans to Extend Credits to Mobile Devices

Mobile devices will get access to Facebook's virtual currency system under plans revealed by the social networking website's head of international business development.

Gamification Coming to the 2011 Game Developers Conference

In a sign that it's becoming more of an issue for mainstream video game developers, the 2011 edition of the Game Developer's Conference is setting aside a day to discuss the topic of gamification.

SEE Acquires MindArk Virtual Planet, Design Studio for $6 Million

SEE Virtual Worlds, a developer of branded online virtual worlds, announced on Thursday that it has acquired Planet Calypso, the first virtual planet in MindArk's "Entropia Universe" massively multiplayer online role-playing game, for $6 million.

Virtual Goods! Virtual Currency! Virtual Output!

The Keiser report talks about what the economy of 2050 will look like.

Jermaine Dupri Creates 'Global 14' Social Network

The site, which is supposedly the "coolest, hippest city on the Internet," originally came to Dupri when he was the president of urban music at Virgin Records and working with longtime collaborator Janet Jackson on marketing her '20 Y.O.' album.

Current Trends in Social Media in the Workplace



According to a recent study by OpenDNS (available here), Facebook is both the most widely blocked site in enterprises today and the second most widely allowed site in enterprises today. The study goes on to report that more than 14 percent of all enterprises that block websites on their networks choose to block Facebook, and MySpace and YouTube round out the top three most commonly blocked websites for business users.

The OpenDNS findings are consistent with those reported in ProofPoint's 7th Annual Survey on Outbound Messaging and Content Security (available here), which broke the blocking statistics down by company size:


And there's a good reason for companies to be blocking that access. According to the ProofPoint report, in 2010:

  • 25% of US companies investigated exposure of confidential/proprietary info via blogs/message boards
    • 24% disciplined employee for violation of blog policy w/in last 12 months
    • 11% terminated employee for violation
  • 20% of US companies investigated exposure of confidential/proprietary info via social networks
    • 20% disciplined employee for violation of social network policy w/in last 12 months
    • 7% terminated employee for violation
  • 18% of US companies investigated exposure of confidential/proprietary info via video/audio sharing services
    • 21% disciplined employee for violation of media sharing/posting policy w/in last 12  months
    • 9% terminated employee for violation
  • 18% of US companies investigated exposure of confidential/proprietary info via SMS/web-based messaging

So what should your company be doing?

First, have a social media policy. Talk to employees and solicit ideas for the corporate social media policy. You want to encourage all personnel to think and act like an official company spokesperson, but make sure they know they are not an official company spokesperson and cannot claim to be. The company should designate social media representatives and give them limitations what they are and aren't supposed to do.

Identify off-limit subjects ahead of time and share that with your company's social media representatives. Employee training and communication are key to compliance.

Second, have a monitoring policy. From a company perspective, the policy should state that all use of company-provided equipment or services can be monitored, but limit searches of communications/devices to where there is suspicion of misconduct, and limit those searches so that they are consistent with the purpose of the investigation.

Third, make disciplinary consequences clear in your policies, and be consistent in application of the policies.
Turning a blind eye to executive violations of the policies, or applying different disciplinary consequences to executives who violate policies can undercut both the company's moral authority in the eyes of the employees who are subject to those policies and the company's legal ability to enforce those policies.

Gibson Claims Patent Infringement


Gibson Guitar Corp. recently filed suit in the U.S. District Court for the Middle District of Tennessee alleging that Seven45 Studios' video game "Power Gig: Rise of the SixString," infringeGibson's concert simulation patentGibson filed its complaint againgibson.jpgst 745 LLC (d/b/a Seven45 Studios) asserting "Power Gig" violates its U.S. Patent Number 5,990,405, titled "System and method for generating and controlling a simulated musical concert experience."  The claims center on "Power Gig" and its related components, which includes a guitar-style controller Gibson is claiming that the game, in conjunction with a gaming console (Sony's Playstation 2 and Microsift's Xbox 360)contains elements that infringed its rights under the '405 patent.  In addition to a claim for direct infringement, Gibson alleges contributory patent infringement and inducement of infringement.  Gibson is seeking a preliminarily and permanently injunction, treble damages and attorneys' fees. 

Around the Virtual World


A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

On Microsoft and 'Contributory Cybersquatting'

A federal judge in Seattle on Wednesday issued an interesting decision concerning cybersquatting, the act of setting up sites with the intent of selling the domain names, or, more pertinently, setting up sites with URLs that are a typo or two away from those of popular sites.

Augmented Reality Ads on the Rise Around Europe

A growing number of European startups have taken to creating virtual experiences that double as commercials. But as this sector is rapidly expanding, challenges remain.

Augmented Hype? Mobile's Next Big Thing

Some executives in the mobile industry think AR will be huge. While revenues from AR alone amount to no more than a few tens of millions of dollars, that number is set to double annually to reach USD 350 million in 2014, according to New York-based ABI Research. The impact across the broader mobile and computer industry could be much bigger, convincing consumers to use their mobile devices even more than they already do.

Google to Launch Groupon Competitor

One of our sources has sent us a confidential fact sheet straight from the Googleplex about the company's new group buying service. "Google Offers is a new product to help potential customers and clientele find great deals in their area through a daily email," the fact sheet says.

U.S. Army Launches Social Media Handbook

The United States Army has officially announced the release of the 2011 Army Social Media Handbook, a document that's meant to offer social media guidance for soldiers, personnel and families alike.

Verizon Makes First Legal Challenge to FCC's New Net Neutrality Rules

Verizon has filed an appeal challenging the net neutrality rules that the FCC adopted last month, which aim to prevent Internet providers from blocking or slowing legal content.

Zynga Rolls Out RewardVille Virtual Currency Program

RewardVille, which went live in beta today, will "slowly roll out" to a small group of users in coming weeks. According to Zynga, the program works like this: Each time you play a participating Zynga game, you'll earn Zynga Points (zPoints) and increase your Zynga Level (zLevel). At every zLevel, you'll earn Zynga Coins (zCoins) to use on free, exclusive in-game items in RewardVille.

What Happens When Social Media Environments Die?



Despite supposedly having millions of users (to Facebook's 3/4 of a billion), social networking pioneer MySpace appears to be headed out to pasture. Last week, the company laid off 47 percent of its workforce, lopping off 500 employees from its nearly 1,100-person payroll. Rumors that MySpace's parent company News Corp. wants to sell are all over the tech and mainstream media. (see Link) This is despite a widely publicized "redesign" intended to focus the site on "social entertainment." (Link)

Assuming the redesign doesn't provide the boost News Corp. (or a potential buyer) would be looking for, what will happen to all of the material on users' MySpace pages if the service shuts down? A similar question faced users of Second Life's Teen Grid when Linden Labs announced that portion of the virtual world would be shut down. (See Link).

But closing down Teen Grid doesn't come close to the scale of shutting down MySpace. If done right (i.e., with plenty of notice and providing members a user-friendly option to export content), the passing of this early social media icon could be the model of the right way to wind things down.

The idea that a social media platform with millions of members (and millions more still joining), could "go gently into that good night" should serve as a warning to those investing time, energy and money into virtual assets - if you're on someone else's platform, and you're not big enough to get anything other than their standard user agreement, you need to plan for the day when your platform could turn off.

Around the Virtual World


A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Why Groupon and Foursquare Should Mate

Each company has its flaws and strengths.  The beautiful thing is they both have strengths where each other lacks.  To say it simply:

Groupon has many businesses on board off the start and they give great deals for consumers.  But customers don't come back after they have used a Groupon.  Leaving businesses completely upset and losing money. Foursquare motivates people to come back to establishments for mayorships and badges but leaving consumers wanting more for their efforts.  Plus the lack of involvement from venues is hindering the process.

Venezuela and Ecuador Make Trade Using New virtual Currency

Ecuador sent Venezuela an initial shipment of crude palm oil under a new trade currency regime known as the Unified System for Regional Compensation, or Sucre, the Ecuadorian government said.

Social Gaming Market to Pass $1 Billion in 2011

The social gaming market is expected to pass $1 billion this year, thanks to a rising number of users and a projected increase in advertising, according to research group eMarketer.

Non-profits Ride Social Gaming Trend Too

It is not surprising non-profits are entering this space: social gaming is expected to become a billion dollar business this year, eMarketer estimates. Nearly 62 million US internet users, or 27% of the online audience, will play at least one game on a social network monthly this year, up from 53 million in 2010, it said. As these numbers increase, so will the money spent on virtual goods, lead-generation offers and advertising.

One to Watch: Caped Koala Studios

Caped Koala Studios has stormed into 2011, ready to launch what it believes will become the world's top online education and entertainment destination for kids. The firm has developed an online 3D virtual world called Pora Ora (www.poraora.com), which combines games, education and social networking. Pora Ora made its public debut in London on 12 January at BETT 2011, the UK's largest educational technology trade show.

Next Stop: OpenSim!

An emerging virtual world platform is the destination of droves of emigrant avatars, as a price hike and the shutdown of the teen-only grid have prompted an educator exodus away from Second Life.

Social Gaming Ads to Soar - But Virtual Goods Still Lead Revenue

With the still rising popularity of social media games like Zynga's Farmville and Mafia Wars, advertising is naturally beginning to follow. But at least for the next few years, despite a major growth spurt, ad dollars will continue to lag virtual goods when it comes to making money in the social gaming. "Understanding the popularity of social gaming is simple," said eMarketer senior analyst Paul Verna.

New Survey Ranks Pillsbury Among Top Three in US For Video Game Law


A new survey by Interactive Age about the best law firms advising on video games and other interactive entertainment named Pillsbury one of the Top 3 firms in the nation.

According to the survey, more than 530 attorneys at 30 major law firms now practice in the area of video games, new media and interactive entertainment, so it is increasingly important to know which firms have the most experience and widest range of offerings. With over 30 attorneys on Pillsbury's multidisciplinary team, it is also one of the largest and most diverse in the nation.

"The numbers indicate that big firms are staking a claim and operating significant video game practices. The appeal for these big firms is that this sector lets them leverage all of their expertise across the board for a single client," said
Interactive Age's Evan Van Zelfden in the press release announcing the survey results.

"We are delighted that Pillsbury ranked among the foremost video game and interactive entertainment law firms in the United States, said Pillsbury partner Jim Gatto, who founded and heads our Virtual Worlds and Video Game team. "We have been involved in this space for a long time, but this recognition validates our firm's decision to formally create and invest in the nation's first multidisciplinary team focused on Virtual Worlds & Video Games more than three years ago, and our recent decision to expand the team to cover other aspects of Social Media, Entertainment and Technology."

Pillsbury's Social Media, Entertainment and Technology team includes the Virtual Worlds & Video Games team and also covers other emerging areas such as: Virtual Goods and Virtual Currency; Location-Based Services and Mobile Applications; Augmented Reality and Mirror Worlds and other aspects of social media and interactive technology.

Court enjoins Second Life from taking action on DMCA Take Down Notices, even though Second Life not a party to the lawsuit.



In Amaretto Ranch Breedables v. Ozimals, Inc., Case No. 10-05696, the Northern District of California granted a temporary restraining order enjoining Second Life from honoring Defendant's take down notice under the Digital Millennium Copyright Act ("DMCA"). Defendant sells "ozimals" which are breadable "living" bunnies that users can purchase and take care of in the Second Life virtual world. Defendant sent Second Life a take down notice under Section 512(c)(3) of the DMCA, requesting that Second Life remove Plaintiff's virtual horses based on the allegation that such horses infringed Defendant's copyrights in its virtual bunnies. Plaintiff filed suit, alleging that it did not violate Defendant's copyrights. Plaintiff also filed a request for a temporary restraining order, seeking to enjoin Second Life from removing its virtual horses from the virtual world, rather than enjoining Defendant from sending allegedly improper DMCA take down notices.

The court granted Plaintiff's request for an injunction under Section 512(f) of the DMCA, which permits an injunction against complying with a take down notice if a party knowingly misrepresents that the material is infringing. Defendant's take down notice alleged that the act of having a "live" virtual animal that needed food to "live" was protected by its copyright and was thereby infringed by Plaintiff's virtual horses which needed virtual food to live. The court reasoned that Defendant was likely trying to protect the functionality of the virtual animal via copyright. However, copyright does not protect functionality. Because Plaintiff submitted declarations supporting that it did not copy Defendant's code, which would have been a valid copyright violation, the court held that Plaintiff had "raised serious questions" as to whether Defendant materially misrepresented the likelihood of an actual infringement in the take down notice sent to Second Life. Thus, the court held that Plaintiff would likely be irreparably harmed if Second Life did take down its virtual horses, as Plaintiff would lose customers and income.

What is interesting about this case is the fact that the court enjoined Second Life, who was not a party and did not have a chance to litigate on behalf of itself in the proceedings. Thus, Second Life is apparently subject to an order to which it did not have a chance to weigh in on. The preliminary injunction hearing, to decide whether to maintain the injunction, is set for January 11, 2011.

This case also highlights the need for companies to understand the limits of the DMCA. Making overreaching statements in a DMCA takedown notice can lead to the copyright owner being liable.