Perfect copies in a virtual world

The economy of Second Life, the virtual world created by Linden Labs and inhabited by hundreds of thousands of real people, is in turmoil. The economy of Second Life is based around people designing, making and selling virtual objects such as clothes, cars and assorted widgets. Each day something around $500,000 to a $1,000,000 US dollars changes hands in Second Life. Very recently someone developed a script that allows the user to point at any object in the game and create a perfect copy. Ed Felten, ffom Freedom to Tinker makes this analogy,

To understand the possible impact of CopyBot, imagine such a thing existed in real life. Point this CopyGadget at any real-world object, push a button, and you get a perfect copy of that object. Want a new Lambourghini sportscar? Just find one in a parking lot and copy it. Like the lime sorbet at the local ice cream parlor? Buy a cup, take it home, and fill your freezer with copies. When you get down to the last cup in the freezer, just copy it again. You get the idea.

What interests me about this is whether the virtual world will develop new and unique business models to deal with this issue and develop a thriving economy, when there is no cost to distribution and anyone can have anything that has already been made. I could actually see designers benefitting from this, creating highly personal objects on a commission basis, rather than broadly popular objects. The more specifically tailored to the individual the greater value it will have to them and less meaning for others. It might also be possible to build reputation into the world more explicitly. For example, you might use the copybot script to duplicate a Lambourghini but if you then like the object and choose to reward the creator financially you gain some form of kudos/karma/respect that indicates the kind of approach you have to intellectual property. Those that have lower or non-existent karma might find themselves pushed to the edge of society, where no one would want to interact with them. Perhaps this offers us an interesting insight into the future of digital distribution. Via Freedom to Tinker and Reuters who have a news desk in Second Life