Insuring a God: How to insure companies hosting a virtual world?
This article is not about insuring items in the virtual World. What it is about is how to get insurance for a company which hosts a virtual world. By that I mean the company who designed and manages the virtual world, a company like Linden Labs, the owner of Second Life.
The issue
What would happen if all of the Linden Labs server would crash at the same time? No backups, so all of the virtual world called Second Life would be lost. Linden Labs would probably (if it doesn’t already) want to have an insurance for such an event.
The issue at hand is how to insure such a company. In Second Life the currency “Linden Dollars” is used. On several sites one can exchange Dollars or Euros for Linden Dollars. Most users of Second Life own property, which they paid for using exchanged real life currency. In the event that Second Life would cease to exist Linden Labs would probably find itself facing numerous claims of people who want either their online property restored, or a sizeable sum of money. How can you insure a company which owns a world?
And then They created an object
In Second Life objects are constantly created by users. These can be all sorts of things, from something such a piece of clothing up to an entire city (piece by piece). All of these objects have value. This means that there is constantly a creation of valuable goods taking place. The amount of money in Second Life is constantly increasing as a result of this: if User A creates a new house and offers this for 1000 Linden Dollars then he created a new object valued at 1000 Linden Dollars.
Increasing value
Since the virtual world constantly gains new objects the world becomes more valuable. How can you possible insure something that constantly increases in value? Since objects are rarely destroyed in Second Life the value is unlikely to drop. Would Linden Labs constantly have to be paying a constantly increasing sum of money for insurance every month?
More questions than answers
In this article I pose more questions than I give answer. The reason for that is because I simply don’t know. The most practical approach to the problem in the past would be to say: ok, insure the value of the servers, no more. However, since these servers constantly generate money (I’d like to have one of those by the way…) in the form of valuable objects being created they are becoming ever more valuable. The servers themselves become more valuable? No they don’t, but the data on those servers does. This perhaps defines the problem a little better, but it’s still quite hard to actually value the item.
Insuring a God: impossible?
I don’t know whether insuring a “God”; the developer of a virtual world, is possible since I’m not in the insurance branch. Therefore I can’t answer the question I posed in this article. When I find out more about the subject I’ll post that here.
