clipped from: www.wired.com   
No recent event made a bigger splash in machinima makers' world than Tuesday's record-smashing release of Halo 3. But last month, a different kind of Microsoft release came pretty close.

In August, the company set forth guidelines (innocuously titled "Game Content Usage Rules") governing how its intellectual property could be used for such works as machinima. A growing genre of digital film, machinima uses gameplay footage from popular games -- including World of Warcraft, Second Life and Microsoft's own Halo series -- to create original content.

Suddenly, the pleasant courtship between machinima and the Master Chief became slightly strained.

To summarize, the rules prohibit:

  • The creation of anything "pornographic or obscene ... or otherwise objectionable." The vagueness of this rule upset many creators.
  • The use of soundtracks or audio effects from original games. Microsoft said it often licenses music and sound effects and is unable to pass on usage rights.