Roblox: work and play in the metaverse

If today is an ordinary day, more than two million British children will sit at their computer, or pick up their phone or tablet, and log into Roblox – the $55bn massive multiplayer online game that describes itself as “…building the metaverse: a space for people to adventure, experience, and explore”^[1]. The average child will spend 2 hours and 32 minutes per day in this metaverse.

That’s a lot of people. It’s roughly the same number of people as are incarcerated in the US. In fact, children usually play Roblox off and on for two years, which is about the same length as the average custodial sentence in the US.

If we zoom out and consider the rest of the world, our two million Brits are joined by c.41 million other daily users from around the world. This is c.43 million children who could be reading, practising music, learning how to identify trees, or scrolling through Tiktok.

I met one of these Robloxians over the Christmas period, and she explained to me with great patience how it all worked. There’s also a couple of long (but fascinating) videos here and here that give some further context.

What is Roblox?

Roblox is not a single online game. It is a platform that contains millions of user-designed “experiences”. Each player has an avatar, customisable with virtual items, that the player inhabits when inside an experience. These experiences are mostly multiplayer games, but they are not all games; some are spaces where players socialise, like a clubhouse, others are aesthetic spaces – landscapes, beautiful houses etc. – where players can explore and take scenic photographs of their avatar.

This is the consumer aspect of Roblox. Through their avatar, players consume experiences and items.

There is also a creative aspect. Roblox provides software tools for players to create experiences, items, and artwork. Let's call these players "creators".

This is Roblox’s marketing magic: if a child is spending two and a half hours a day playing mindless games, then parents, teachers, and regulators will be concerned. If a child is spending that time coding, designing games, and becoming a digital artist, then there’s no problem. Roblox can argue that it is preparing kids for the future digital economy in ways that schools aren’t.

Is this creative stuff work, study, or play? It’s probably some combination of all three, but there’s a final aspect of Roblox that makes user generated content look more like work: the Roblox economy.

To understand this, it’s helpful to think of Roblox as a fairground.

When a gaggle of kids arrives at this fairground, they head to the entrance gates and change their pocket money into fairground tickets. Sure, you can walk around the fairground without having bought any tickets, but you can’t go on the good rides or win any cool merchandise.

Roblox’s fairground tickets are called Robux. You can exchange £s for Robux through a monthly subscription (the cheapest plan gives 450 Robux for £4.59, the most expensive gives 2200 Robux for £18.49), or through the ad hoc exchange of hard currency (via the website, gift cards etc.). The average user spends around $15 a month buying Robux.

Back to the fairground: the kids now rush from ride to ride, spending their fairground tickets on games and virtual stuff they don’t need. The fairground workers that run the games and sell the merchandise receive the tickets. These workers are teenagers and young adults – still mostly kids, but savvy enough to know how to make games and merchandise that kids will enjoy.

The teenagers who design and run the games now have a load of tickets in hand. They can either spend those tickets within the fairground, just like those kids rushing from ride to ride, or they can head to the exit gates and exchange their earned tickets for hard currency.

The unscrupulous fairground owner would rather not give out his cash to the teens running his stalls, so he sets capital controls that would make a Soviet customs official blush; you can only exchange your fairground tickets for cash if you have over a certain number of tickets, if the owner likes you, and if you can prove that you earned those Robux by running your game.

In this way, the Roblox creators that get users to spend Robux on their experiences / items earn Robux and, if they meet the requirements, real money:

"For the twelve months ended September 30, 2020, over 960,000 developers and creators earned Robux on the Roblox Platform, of which there were over 1,050 developers and creators that earned $10,000 or more and nearly 250 developers and creators that earned $100,000 or more in Robux."^[2]

Photo by Kevin Jarrett on Unsplash

How does Roblox make money?

The central challenge for Roblox is to sell lots of Robux to players, and not to have to buy lots of Robux from creators. This explains everything that Roblox does:

• Roblox charges creators Robux for use of its development tools; they have to spend Robux to upload audio files, to make items available for sale etc. And so, creators have fewer Robux to exchange for £s at the exit gates.
• Roblox charges creators for advertising space. If you’re a creator and you want people to see your game/experience, then you can pay Roblox in Robux to make it visible – like a Facebook or a Google ad.
• Roblox applies a hefty sales tax on every virtual transaction. If a player pays for your item or experience, then Roblox will take a substantial two-digit percentage cut, reducing the amount of Robux the creator receives.
• Another point about the sales tax: Roblox has an enormous secondary market for consumable items. If you have an item, whether you designed that item or not, you can sell it to other players on Roblox’s virtual marketplace. The marketplace on the Roblox client looks like a Bloomberg terminal with lots of data about the price history of each item. Unsurprisingly, speculation is rampant; e-tat, such as this rare hat, sells for thousands (that hat sells for 1,453,877 Robux or c.£15k). Every time an item is sold on via this marketplace, Roblox take a further cut of the sale price.
• Roblox is also in control of the exchange rate at the exit gates. This is its final chance to claw back Robux. And, boy, do they! The spread between the price they sell Robux to players and the price they buy Robux from creators is enormous. Roblox sells Robux to players for around c.£0.01 per Robux. It buys Robux from creators at c.£0.0026 per Robux. This is worse than an airport currency exchange!
• As mentioned above, Roblox imposes restrictions on creators who try and exchange their Robux for money.

This is a virtual economy where the cost of doing business is high. The great Roblox overlord takes a cut of every transaction. Why wouldn’t it? Its control of the platform gives it an unassailable monopoly.

There is great beauty in this system. A more boring games company would simply charge players a subscription to play, or charge players a single fee for the game (remember that?). Instead, Roblox has created an economy that uses real-world incentives (earning real money) to encourage children to buy Robux (ads, cool music, cool effects: gotta spend money to make money), to buy and sell items, and to create and market addictive content. The ability to turn dollars into Robux and Robux into dollars tethers the virtual economy to the real world in a way that other online game economies have so far failed to replicate.

But tying your virtual world to reality should bring consequences.

What’s going on?

How should we think about what’s going on inside the Roblox metaverse? Are the kids working when they build and sell stuff? Do (and should) our existing systems of contract law that govern real-life work apply to these activities?

One view: everything the kids are doing in Roblox is play. The virtual economy is a fiction, separate from the formal system of contractual obligations that exists in the real world. The kids’ work has no meaning outside of the Roblox metaverse.

Another view: the Roblox economy is real. The kids are the modern equivalents of pieceworkers sitting in tenements and sewing clothes. Yes, modern kids are making and selling virtual clothes, but the principle is the same – work is work. And if the kids are working and the economic activity is in some way real, then these workers are entitled to the same protections as they would receive in the real world – we must pick up our legal system and bring it with us into this metaverse.

Before we put these two sides into a ring and make them fight, we should try and pin down some definitions – “work”, for example.

A reasonable way of thinking about work is to consider it in contractual terms: Party A works to provide goods and services to Party B, and in return Party B gives Party A something of value. This is obviously a partial definition – it doesn’t cover housework for example – but it does cover every category of employment recognised by English law (e.g., employees, workers, self-employed). So, if we have a contract, we have work.

Unsurprisingly, Roblox takes the view that economic activity (e.g. selling virtual goods to other players) within its metaverse is not contractual. It is not contractual, because (i) Robux aren’t something of value (and therefore cannot form the basis of a contract) and (ii) no goods are created and sold (virtual goods are not goods). In other words, the economic activity is all play. The Terms of Use (the contract between the player and Roblox) say this:

[cl. 4A(3)]: "Robux Not Redeemable or Exchangeable. Robux do not: (a) have an equivalent value in real currency (except as through the DevEx program); (b) act as a substitute for real currency; (c) act as consideration for any legally enforceable contract (except where We grant a license to use Robux or as through the DevEx program); or (d) earn interest. Robux are not redeemable or exchangeable for real currency, monetary value, or convertible virtual currency from us or any other third party, except as expressly provided in these Terms or otherwise required by applicable law. Transactions involving the exchange or Robux for virtual items or virtual services on the Platform are not legally enforceable, may not form the basis of any private right of action against Us or any third party, and are governed solely by Us in our sole discretion and application of these Terms.
…
(5) No Obligation. Neither us nor any third party has any obligation to exchange Robux for anything of value, including, but not limited to, real currency, except as expressly provided in these Terms or otherwise required by applicable law. We, in our sole discretion, may impose limits on Robux, including, but not limited to, the amount that may be acquired, earned, or redeemed."

This is very neat on Roblox’s part. It saves a whole load of hassle. Roblox doesn’t need to think about the contract, employment, or consumer law of its users’ many jurisdictions if it makes the purchase of the virtual currency conditional on the purchaser disclaiming her right to enter into a contract using that currency.

This is Roblox as prison guard, stripping you of your belongings and anything that might be useful to you, but troublesome to Roblox, before you go inside.

In Roblox’s view, there are two moments when you might contract with Roblox: first, when you buy Robux and receive the following in return:

"For the sale of Robux for which we receive consideration [i.e. money], we concluded that our obligation to our users is to continue to make available the virtual currency, associated virtual goods, and the online experience (which is collectively a single performance obligation comprised of an integrated and enhanced online experience) over the time period for which the user is estimated to access the Platform."^[3]

Second, when you exchange Robux for £s (see cl.4A(3) above: this is an exception to the rule that Robux is not something of value).

There is then no contract when you spend or receive Robux in-game.

This isn’t legal advice(!), but I’m not sure why, as a matter of policy, the use of a virtual currency should turn things that would otherwise be contractual activities into non-contractual activities:

• Robux clearly has de facto value. You can sell it back to Roblox! You can value everything on Roblox by the Robux exchange rate.
• Players expect to contract with one another when they interact: those players that have spent £1,000s on hats would, I think, be surprised to find out that nothing of contractual significance occurred when they handed over that sum in Robux to another user.
• Roblox players create games and items on the reasonable expectation that they will make real money (via receiving and exchanging Robux). This is an expectation that Roblox curates. Yet under the Terms of Use, Roblox is under no obligation to pay a creator any Robux, however popular that creator’s game is. Dodgy!
• Some Roblox games are massive, requiring dozens of creators/developers. And some of these developer teams are organised on the Roblox platform itself (via a feature called “Groups”), with developers receiving a share of the Robux profits in return for their work on the game. On Roblox’s interpretation, these profit-sharing agreements are void, because Robux is of no value. That’s bananas. These creators are often teenagers that are spending hours working on their games; they must have some right to payment.

There are two things Roblox can – but won’t – do to solve these problems.

One: It can stop buying Robux back from creators. If it does this, it formally untethers its economy from the real economy. Its economy becomes the same as any other online game – a fiction.

Two: It can invite the law into its metaverse by: introducing the digital ownership of virtual items; acknowledging the fact that Robux can constitute sufficient consideration for the formation of contracts; contracting with those who create experiences (if X number of people play your game, Roblox is obliged to pay you Y amount of Robux); allowing players to formalise their economic activity on the platform via contracting with one another.

Conclusion

You may think “why should I care about a children’s game?”, but looming over this discussion – like that spaceship in Independence Day – is Facebook and Mark Zuckerberg’s vision of the metaverse (let's call this “Meta”).

Four things are certain: "Meta" will have Terms of Use that no-one will read; there will be a virtual currency (Libra); virtual property rights will be the topic du jour; and, finally, "Meta" will do everything it can to exclude national legal systems under the guise of “frictionless connection”.

Roblox, then, offers a little taste of what’s to come. In particular, it forces us to confront the following question: what are we willing to give up to play (or work) in these virtual worlds?

So, when you’re spending several hours a day in a virtual sweatshop producing Non-Fungible Tokens for scraps of Facebook’s virtual currency, don’t say I didn’t warn you.

Platform capitalism means that the metaverse will be run by a few large companies, the big dogs.

Bonus round: other mad Roblox stuff

Roblox has been accused of permitting experiences that simulate strip clubs and fascism.

Roblox's Chinese expansion will be carried out via a joint venture with an affiliate of Tencent. Here are the rules that creators must abide by if they want their experience to be accessible by Chinese users. They include:

• NO dead human bodies to remain in experience more than 15 seconds…
• NO content that desecrates, distorts, or makes fun of any religions or beliefs…
• Quotes pertaining to Chinese history, tradition, culture or literature must be in a neutral manner…
• Adaptation of Chinese history, tradition, culture, or literature must be moderate and appropriate; no malicious content…
• NO content that promotes militarism such as Nazis, the Japanese wartime flag, etc.
• NO content that harms Chinese national honor and interests…
• In order for UGC to comply with PRC laws, China, Hong Kong, Taiwan, and Macau should not be referred to as separate countries…
• NO encouragement of minors hating and quitting school…
• NO content (names/events/images/likeness/comments) relating to past or current national leaders or political figures…
• NO content that damages, defaces, defiles, or insults the Chinese flag, national emblem, Party flag, or Party emblem…

If you’re keen to learn more, the documents that Roblox had to upload as part of its aborted IPO in 2020 are a fun read.

If you've enjoyed this newsletter, or know anyone locked in combat with their Roblox-obsessed children, feel free to forward it on.
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