Saturday, December 31, 2005

Land for the Masses - Magellan did it again!

Less than a month after it became apparent, that with the current landmasses of Second Life the supply of new land might become a problem with the ever growing population of our world, the first new continent (more a large island) has been sighted. Even though I am sure, that the intrepid explorer Magellan Linden was responsible for the discovery, the first to report it was resident Maczter Oddfellow.

I have visited the new landmass this morning and can testify that it is beautiful. It is landscaped in a very different style from the Northern Continent. Not so much a tropical or subtropical land but more of a north European (or - more likely - north American) style; even though it is far in the south of the map. Just now it is virgin country, untouched by building activities, a joy to explore and a welcome addition to SL after a time where nearly all the new mainland was styled according to the subtropical theme. It is very desirable land and I wonder what will happen when these sims appear on the auction block.

The new landmass is comparably small and very far in the south. (the little spot in the bottom right of the map). One may wonder if this was to "hide" it or if it will be used for a special project. The fact that one sim on it already has been opened for the Land for the Landless program indicates that this will not be the case though.

What I am most curios about right now is, if this little continent is a sign that we will more "mainland" in this style - smaller clusters of sims in a similar style which constitute a "landmass" but not a "continent" - or if it is just an exception to the rule and the next "real continent" will be discovered shortly. (There is a lot of room between the mainland and this new island.)

Looking at the rate in which the society of SL is growing currently, it is obvious that clusters of three dozen sims like this, wont be sufficient to satiate the land hunger of Second Life's population for long. Actually an area like this is more or less equivalent to the land supply for one or two weeks. So the true, next "New Continent" is still be awaiting discovery.

Maggellan, where are you?

UPDATE: After googling around a little I found out the most of the sim names here are Korean cities and locations. So this might very well be the Korean sub-grid talked about some months ago. (Nolan Nash already reported a similar assumption on the forums.) It still seems funny that the first area populated on such a national themed grid should be an "open to all" First Land sim.

Thursday, December 22, 2005

Just for the record: 100k residents in Second Life!

Second Life is now 100,000 users strong. It happened around 05:31am SL time.

Many will say "awwwww, thats just alts anyway!" But I still think this is a very important milestone in the history of second life. Is anyone taking bets, when Second Life will hit the next barrier at 200,000?

I would like to predict: sometime around mid-June of 2006.

Wednesday, December 21, 2005

The temptation of one star.

No, I don't have any juicy confessions of a one star rater, but I have a good idea what's going on in their head. If you don't frequent the Second Life Classified forums then you probably have no idea what I'm talking about at this point. Since the ability to reply to product threads in the classifieds was taken away, people have resorted to "rating" the threads anonymously. A five star rating means excellent and then it's downhill until you hit one star which is terrible. It may seem like a harmless idea but in the hands of certain "lurkers" it becomes the weapon of choice.

Not long after the rating party began there came a noticible trend, one star rating. A product of decent quality with an average of four stars or higher would always take a sudden nose dive. Some products never got above two to begin with. Before long people began to post threads with cries of outrage at the one star attacks. Some argued that the low ratings could be the result of honest opinions and admitted to a low rating if an item wasn't "their style". There were more arguments that certain items were obviously high quality regardless of a person's taste or style. One thing is certain, keeping a rating of four stars or higher has become a rare event, especially if you're an established name or a newcomer.

Is the temptation to lower someone's rating without them knowing too great? I doubt any resident will disagree with the fact that jealousy and hostility are alive and well in Second Life. Many business owners and content creators have run into both head first, including myself. I believe the mask of anonymity allows people that would never openly show bitterness, the freedom to do so without consequence. We have been left to wonder about the one star raters and when or if they will grow tired. I know the majority of our virtual community is made up of people who like to encourage the creativity of others and this is why I won't wonder for long.

Creators in Second Life will continue to reach for the stars, though we may look at them a little differently from now on. Some residents have created other ways for people to offer feedback and it seems to be working out well. Perhaps this will lead to a break from the trigger happy raters. We'll just have to wait and see, meanwhile I'm going to enjoy Christmas. Happy Holidays everyone!

Tuesday, December 20, 2005

The SL Economy in Review - 2005 Week 50

The Holiday season is in full swing now - at least in First Life. As it is my first holiday season in SL I was very curios, how the economic situation would develop here. Would residents focus on RL more and spend more (time and money) there or would business take an upswing inworld, too? The few shop owners and designers I talked to had mixed expectations themselves. While it is a little early to answer that question objectively (the inworld ecomic data for last week won't be available from LL for a while), some indicators point in the direction of a little upswing inworld. (If Lawrence assertions in this thread are true, business is really taking on speed.)

Cold facts
The daily trading volume at the LindeX, which did not show much in the way of an upside trend in the last two weeks rose to new heights at the beginning of the weekend. More than 4.2 Million L$ changed hands on Thursday and Friday. Saturday still showed a volume of 3,9 Million. This was not driven by sellers cashing out for RL presents. Otherwise the exchange rate would have fallen because of selling pressur. But the exchange rate seems to really have reached a more or less stable plateau at 265L$/US$, up some 4% from the typical 252L$ - 255L$/US$ in November.

Resident activity was up, too. After a phase of stagnation in the last weeks, the number of concurrent users which were online at around 8pm SL time is again on the rise. It is growing not nearly as fast as the number of residents. This grew from some 95,000 on Monday to more than 98,000 on Sunday.

I am expecting Mr. or Ms. One-Hundred-Thousand onThursday. While business oriented residents often are dissapointed by the relativly meager volume of additional sales all these Basic Accounts generate, the 100,000th resident surely will be an important milestone in the history of SL. (And I hope LL will use this effectively for PR purposes at the beginning of the new year.)

That was the raw data (and a little interpretation). But now, back to "current events and happenings in the SL economy". Last weeks most interesting events with some importance to the SL economy were (in my own completely subjective opinion):

  • P2P teleporting is here!
  • Classifieds revamped
  • A new open API for the Second Life Map
  • Griefer attacks and the FBI
  • Developer incentive phased out

P2P is finally here to stay
With the advent of version 1.8 Point-to-Point teleportation has finally arrived in Second Life. Personally I would have preferred it had 1.8 brought an end to the texture loading and cache problems, but it sure is convenient. It remains to be seen, what consequences it will have for the SL society and economy. Robin has already published some early data about the distribution of sales volume between telehub sims, non-telehub sims and private islands. But it is way to early to interpret anything into this data. I hope she will have at least two follow-ups in the next few weeks so we can really see any trends.

I am expecting some quite significant changes with regard to shop location, mall culture (or lack thereof), buying habits etc. over the course of the next 2 - 3 months. As I already said last week, I would be very wary to invest much in simple malls with many small booths currently. Themed malls MIGHT still be an interesting concept, even though they will face some hardship from the outphasing of the developer incentive.

BTW: I still have not heard much of the "compensation" for owners of telehub land which was announced (for consideration) by Linden Lab and heavily discussed on the forums.

Classifieds revamped
Also changed with 1.8 was the pricing of the inworld classified ads and the ranking system for it. Items are now presented with those first, where the resident paid the most for this ad.

This is not unusual and was not an unexpected. Of course this decision got some flack from residents on the forums, criticizing that this again would favour the big and established residents. This might be the case. On the other hand it is hard to imagine any way to introduce any service with substantial fees that would not favour those who have money.

What I personally like with this development is that the Lindens are introducing new money sinks in the system, features which effectively take money out of circulation and thereby stabilizing the L$s value. Prices are usually now in the region of a few thousand L$ per two-week period for an intended top slot. This is some substantial money.

There is not much more to like with the classifieds in my opinion. It is a horribly limited and severely flawed solution for advertising in SL. It is not much more than a bastard of classifieds, yellow pages and a kind of public product catalogue.

The new classifieds just highlight a gaping hole in the current SL economy: there is simply no way for effective inworld advertising. And it is a “gaping” hole! A mostly free-market style capitalistic economy simply needs advertising. The current solutions for this need are pathetic: signs and posters and a competition for the most eye-catching builds with many results of questionable aesthetics. MetaAdverse? This is a nice and technically sweet solution (cudos to Rathe). But posters are definitely not a perfect form of advertising in the SL we live in. The texture loading problems of 1.7 only emphasize this.

There is simply no way to launch a world wide advertising campaign in SL. Some residents will say: “Good, I hate advertising anyway.” I even sympathize a bit with this attitude. But if we want to have more cool products and services, this means more efforts for the creators. This might mean neglecting RL duties in favour of developing for SL. This means substantial monetary returns for those developers are needed – in a timeframe that is as short as possible. And this means advertising. Word-of-mouth is all nice but sometimes very limited when you need maximum reach - fast!

The different modules of the Find window would be ideal platforms for context based advertising. Google shows how it could be done. But all of these modules are based on very simple database queries (search/select -> list of results > show detail). The engine behind it does not seem very flexible and adaptive. How I wish we already had HTML-on-a-prim and maybe HTML-in-the-UI. This would make it incredibly easy to patch together a few web services and integrate them with basic SL functionalities. *Sighs*

The new Map-API
One first step in a similar direction is the new map-API that Bub Linden introduced last week. This API allows it anyone with a little knowledge of HTML and JavaScript to use the Second Life global map much in the same way as it is shown on the current SL homepage.

Why do I think this is significant for the economy? Because an API like this allow businesses to better integrate web based services much better with SL. It is easy now, for example, for a Land Baron to set up a catalogue of available parcels and show its location on the map. Or take a part of the map and overlay it with positions of shops, other players (in a game), etc. Snapzilla could now display the position where a snapshot is taken easily in its interface and mark the locations of other snapshots nearby. I am not sure what other applications of this simple API residents will develop. But I am sure there will be a lot. Combine this with another API for accessing the internal land-sales database or one in which you can register product offerings (like in the flawed classifieds) and pipe that back into SL via HTML-on-a-prim and some cool things will happen!

This is definitely a step in the right direction!

Griefer attacks and the FBI
The Herald published a story this week citing Philip Linden that Linden Lab has given the data of one (or more) griefer(s) responsible for the latest grid-wide attack to the FBI. This has not been denied it was widely commentated on the web (in many MMOG focused weblogs and even on C-Net). LL has earned a lot of criticism which usually went in the way of “Hey, it’s a game, man! The FBI has real world criminals (terrorists) to investigate!” or “Linden Lab is responsible itself for those attack. If the closed or crippled LSL …” or “Anything that is possible in the game is legal by definition!” Clickable Culture has a nice collections of comments on the issue and links to other weblogs with more.

Most of this criticism has at least some merit. Its interesting, though, that the heaviest criticism comes from people who don’t know Second Life personally. What most people fail to see is, that Second Life is not only a game – at least to some residents. There are a growing number of residents who generate a sizeable part of their income via Second Life. Bringing the grid down is not only a disappointing experience in a game ("sorry you’ve lost ...") for them. It means lost business, real business for cold hard cash. Second Life surely is a game – but it is a business platform, too. And the provider of a business platform would be crazy not to do everything to get hackers who are "having a little innocent fun" by bringing this platform down, prosecuted and punished.

Of course, trying to involve RL law enforcement in inworld problems can have some nasty consequences (the much feared “regulation”). But this is another question.

The end of the Developer Incentives
OK, I am cheating. The announcement of the imminent death of the developer incentive (the monthly US$ payment for the 5% of landowners with the most traffic on their land) was not last week. It happened this Monday. But it is much to important to wait another week.

I have to admit, that I was surprised. Even though I – and many other residents - expected the DI to be killed (see my post from two weeks ago), I did not expect this to happen so fast. But it was foreseeable. And it wasn’t the camping chair phenomenon that brought the DI down. Camping chairs just put the spotlight on the fact that dwell (traffic) is not a very good measurement if the activities of a resident do help Linden Lab in achieving its business goals. And – let’s face it – that is and has always been the purpose of the developer incentive.

The DIs purpose always has been to motivate residents to create (or do) something that makes Second Life more interesting. But this "interesting" is not a goal in itself. What Linden Lab wanted was more revenues, more (paying) residents – or residents paying more (tier). Simply measuring how many residents spend how much time at a specific location is no indicator for that. It was never. Camping chairs just made it obvious. And so the time for this absurd form of subsidy is over.

This will be hard for many businesses; obviously for anyone in the entertainment industry, but hard for others, too. Many shop- or mall-owner counted on the DI as an additional source of income and included it in their business model. All of these models will now have to be recalculated. Or maybe they already had to be. Camping chairs and similar systems made sure (or would make sure in the next one or two months) that not many sites not offering them get much in the way of developer incentive.

In the long run this will be good for the SL economy, IMHO. "Developers" now have to focus on offerings that really make Second Life a more interesting place to be. If these offerings are interesting, entertaining, challenging enough more people might be willing to pay for it. People are willing to pay for entertainment. The offer just has to be "right". Just have a look at iTunes, which came up at a time where not many believed in "selling" music over the internet. Apple showed them differently ...

Of course, setting up an offering for which people are willing to pay, is substantially more challenging then placing some camping chairs near a dance club. But who said that success in business has to be easy?

Sunday, December 18, 2005

Happy holidays!

A collage of some of my favorite recent holiday pictures from Snapzilla,
taken by
(from left to right):
Top: Kim Anubis, Neogrinch Trenchmouth, Kaie Harbinger, Canimal Zephyr
Middle: MeriJayne Hornpipe, Torrid Midnight, Erelas Night, Ingrid Ingersoll
Bottom: PeteWyrm Therian, RacerX Gullwing, Jamie Otis, Sly Vindaloo

Tuesday, December 13, 2005

No, we are not "there"!

"And we won't be soon!" I would like to answer to Forsetis post from last Friday.

Like him I am on the one hand excited by the possibilities that SL offers as a platform. On the other hand I am disappointed or maybe even frustrated by the shortcomings of the current SL and in some parts by the decisions (or non-decisions) by our wise overlords at Linden Lab. I agree with Forseti, that there are still some huge barriers between the current SL and a real "platform" for the development of "really cool applications" - next step: The Metaverse! I agree with some of the barriers he identifies, I am unsure about others. And this is an issue that fascinates me so much that I decided to write an answer:

Yes, I firmly believe that for more substantial growth, cooler applications (and a better SL) this platform needs infusion of resources (money and manpower) from RL. And: yes, its a hen-and-egg problem.

I agree with Forseti that better collaboration tools would be very nice. And doing business in a society where everyone can disappear in seconds and appear under a new indentity (or many) the next day sounds very risky. The main issue - IMHO - seems to be another: how can a company (or team) tap a revenue stream that is sufficient to guarantee a sizeable income for the employees (plus a small profit) or team members.

If this is not possible, those people will have to focus on their RL jobs. Of course I am excited about all the projects that already have been created in SL with teams working part time besides their day time jobs. But we all know that such work models have some severe limitations.

Welcome to a small village called Second Life!
For any serious business Second Life is a very, very, small world. Even if it grows tenfold from the current size to 1,000,000 residents, SL will still be relatively small and not really attractive as a target market for a big company in RL. Lets look at some numbers to get a feeling for that: currently SL has nearly 100,000 residents. The average weekly turnover in the SL economy was some 140 Million L$ per week in November equivalent to roughly half a million US$ per week, or 25 Million US$ per year. Whoa! Quite a sum! Quite a sum? No. As an economy this is rather puny.

It's a small world

If we assume a culture with a medium to low prosperity level we might be talking about a buying power of maybe 6,000 US$ a year per capita. An village with 5,000 inhabitants in such a culture has more buying power than all of SL today! And if Second Life grows to 1,000,000 residents (with the same economic parameters like today), we are talking about a small city.

Would you, as CEO of a company would put much money into the development of a product which you only can sell (in the best case) in a city with 50,000 inhabitants? Hardly - at least not when its a large company. For a small business with 2 - 20 employees this could be an attractive market ...

But we are not there yet. This is still a Second Life with 100,000 residents. And that's why the biggest "companies" we can see today are typically lone warriors, teams of people doing some business on the side or mom-and-pop companies like Anshe.

But if I believe in a growing SL and a target market of 1,000,000 (equivalent with 50,000 RL consumers in a low income nation) seems enough for my ideas? Then I still need to secure a sizeable revenue stream. This is not easy in SL currently of you are not selling a "product" - and maybe that would be the most interesting entertainment products. In the current market its not possible to have people pay for entertainment/attractions etc. (similar to the internet). And the dwell system is seriously flawed and won't exist for long anymore.

Bedazzled's U:SL, awesome
but without much revenue possible

There are different models but all of them would need a decision from the side of LL to give up some control over the platform or to really share part of the revenue stream with others who lead people into SL, urge them to stay there and spend money inworld. I believe that such a system is possible. I am not sure if LL is willing or able to implement it. Details to follow in a future post ...

Bridging the gap to RL
All of this was of course said under the assumption that such a business is targeting "residents" and wants to sell them products or services in SL. But residents are real world consumers, too. If one could use Second Life to fuel business in RL the situation becomes somewhat different. That's the reason, why one if the biggest project to date (Stagecoach Island for Wells Fargo) is not meant to make any money inside of SL but is purely intended as a marketing tool for a RL company.

Stagecoach Island - The first big project spanning the gap between SL and RL

There are hurdles for such projects, too. (The current number of "eyeballs" in SL is small even for that kind of project.) Cost and potential ROI inside SL are not huge problems.

For example: A little while ago I did some rough calculations for a project idea I had for one the clients of my company. It included some 18 sims (two clusters of 3x3) and had an intended time frame of one year. So I was planning around 60,000 $ "cost to Lindens" (18 sims setup, still 1,000$ at that time, and 12 months tier for 18 sims.) This was the smallest part of the project business. And the project was a small to medium size one for my firm. Cost was not the problem.

What finally lead me to cancel any further steps in that direction where two other aspects:

  1. Quality shortcomings
  2. Instability of the platform

With regard to point 1: As much as I am fascinated with what is possible in SL already, it is somewhat hard to "sell" some of the current limitations to a demanding customer, who has seen what is possible quality- and performance-wise with console games or platforms like WoW. Oh, I myself can perfectly well understand why these limitations exist and what advantages SL has in other areas. But is "hard to sell".

Even more dramatic is the instability. It is simply not acceptable to most big-brand clients that such a platform - beside the unavoidable crashes - has to suffer updates (at unpredictable points in time) which in the worst case will kill it more or less until another patch is installed. The update to 1.7 has reinforced this feeling.

While it may be hard to understand for the seasoned SL veteran where all the whining and bickering comes from ("hahaha, we had much worse ..."), an update which leaves an application in molasses for weeks - and to the current day regularly throws me into a world of gray goo or a geometric wonderland for minutes after rezzing in a texture rich area ... that is simply not something a nervous client will accept. If I had launched this project, my head would have rolled in November at the latest and my company would have been discredited with an important client.

Developers of such projects would need much more flexibility and control. For example: If I want to host it on more powerful servers, this should be possible. If I want to forego an update while an important RL event is running, this should be possible, etc. etc. I am sure, all this can be done. But honestly I don't want to negotiate for months with LL about it. This all should be standard options which can be selected in a developers pricelist.

Maybe it will happen. But it will be a while, until we are there. Probably a lot longer than the 6 to 9 months anticipated by Forseti. And, yes, I would love to be proved wrong!

Monday, December 12, 2005

Around the SL Blogosphere

SL downtime is always a handy time to read through the blogosphere:

Jauani Wu has an interesting new post on hub land

If you are interested in SL history, check out Phaylen Fairchild's blog Journey Through the Metaverse

Pham already linked to Philip's blog post about P2P and some of Gwyneth Llewelyn's thoughts, but I just want to highlight the comments section, especially Gwen's clarifications on her theories.

Speaking of LL blogs, I'm also a fan of Ben Linden's Bulk Upload.

Have you discovered Chip Poutine's blog, Virtual Suburbia? It's especially interesting if you are into building/architecture.

The Gridsa sploded, round 3.

About 2 hours ago, another Griefersphere attack hit the grid. The Lindens tried to stop it, allegedly with a new "asset destroyer" tool they developed.

Some sims crashed. When they came back up, there was a different problem.

Namely, half the sim was missing.

I only saw Grignano first hand, but as it stands now, 95% of things named "Object" in Grignano are now missing. That means the Brownstone building, half of the texture shop, all roads and canals, my arch, my museum, my house, my shop, and the brick walkway.

Similar problems have been reported in Abbots, Io, and elsewhere.

This is one of those cases that need to be tried in a RL court, methinks. WHile it's cute to bring down a server farm, it's another thing entirely to be reponsible for the deletion of several gigs' worth of data.

Sigh... back to term papers.

The SL Economy in Review - 2005 Week 49

This week marks the beginning of the Holiday season so to speak and is shows - visually with all kinds of Christmas decoration, lots of snow particles falling everywhere and some sims even changing the terrain to snow textures. Maybe the season is showing in "the numbers", too. There are some indicators for that. Next week will tell more.

The most interesting events influencing the SL economy in the last week were (IMVHO; in my very humble and totally subjective opinion):
  • P2P knocking at the door
  • The InfoNet case
  • An island on the block
But first ... the raw numbers:

Cold facts
The exchange rate for the L$ seems to stabilize on a new level or 265L$/1US$, up some 4% from the typical 252L$ - 255L$/US$ in November. The daily trade volume at the LindeX exchange isn't growing much any more. Quite the contrary: after reaching some 4 Mio. L$ per day at the beginning of December, its back to a volume of 3.1 to 3.5 Mio. L$ per day again. As the LindeX is mostly a demand driven market, this might be an indicator of lessening resident activity - with residents spending more time (and money) in RL during the holiday season and less in SL.

That would fit with the measurements for "concurrent users online". While the curve for "residents grows steadily with some 10% to 15% per month, the number of residents online concurrently more or less stagnated. There is no detailed data available for inworld sales in December yet. So its hard to say if user activity (the commercial side) is really slacking or if this is just an impression. (Still hard for me to understand why this data is updated on a monthly basis and obviously in a manual way.)

Residents on the rise; concurrent users stagnating

Total inworld sales in November hovered around some 140 Mio. L$ per week. More than half a Million US$ every week. Not a huge market in RL terms - but "not bad" either.

But now, back to "current events and happenings in the SL economy":

P2P knocking at the door
Point-to-Point teleportation was still in heavy discussion on the forums with lots of residents still arguing pro or contra. Anshe - and other Land Barons - are still mad because of the lost value in Telehub land. But as usual - and rather understandable - LL proceeds with its plans without much visible reaction to residents comments or suggestions. Except ... Philip has written one of his rare blog entries to show us that "P2P is good for you!" Check it out! Even if it is nearly as long and meandering as one of my own posts it does contain some very interesting food for thought.

BTW: Has anyone heard of the "compensation" for owners of telehub land lately?

The arrival of Point-to-Point teleportation is now scheduled for Tuesday this week. And I dare to predict that it will have some interesting effects on the economy in the coming weeks and months. The devaluation of telehub land and the fall of the Linden are just the most visible effects. For example: Will it still be valuable for content creators to have smaller satellite stores at many malls? (With P2P there is not that much added convenience in browsing goods at a small stall. Two mouseclicks and you can be at the flagship-store.) If not, the mall business might have to take a further hit, maybe a hard one.

I for one would be very wary to invest much in simple malls with many small booths currently. That might be a business model of the past. Well done malls like Midnight City might be a different case. I am not sure, though.

I wonder, too, if poster-based advertising might not become much more interesting in the near future. In the past, these posters were a little like RL posters: eye candy, with not much interactivity. Now they can be like banners on the web. Not just a visual reminder but a device which gets you into the shop with just two clicks. Nice!

And I wonder too, what will happen, when scripted teleportation is implemented. Will we see "virtual malls" then, "rings" of shops which are not in a physical proximity but connected through teleportation gates? Just step through a door and walk on to the "next" store.

Interesting times for the retail business!

The InfoNet case
Another event which I found very telling again, was the reaction of the community (mostly the forum crowd) on the decision of Linden Lab to install InfoNet terminals in the WA and at all former telehubs. While much of the feedback LL got for that (and some "nice" feedback it was), can maybe described as envy, some of the participants had valid points.

InfoNet is a commercial endeavors which gets (presumably) free exposure in very high traffic areas with this deal. Other businesses with potentially competing interests are understandably worried. Some of the content in these terminals is of questionable nature - perfectly OK in a private publication but maybe not so OK when it gets the Linden stamp of approval by being integrated in Linden owned installations.

The InfoNet headquarter - with room for expansion

All of this is no big deal and could be corrected in a number of days. InfoNet is a nice solution to the information dissemination problem that will continue to be huge, until we will finally will get "HTML on a prim". It has no real competition (none visible to me). But still, the incident deal was not handled very professionally IMHO and is maybe an indicator for some "identity problems":

To me it seems that some people at Linden Lab still do not understand their delicate role between "managers in an RL business" and "part of a virtual government". Linden Lab is - or could be - the biggest and most important customer many SL business can have. So LL should be very careful with all their inworld deals, if only to kill any suspicion of favoritism or competition with SL businesses before it can even develop.

Island on the block
Another example of an ill received Linden idea was the Island Auction which went on to eBay last weekend. A complete island, together with two handful of premium and basic accounts, all recurring costs included for one year and landscaping and building services included. All this for only 10,000 U$ or best bid!

Contrary to some fellow residents opinion, I think this is not a bad deal and an interesting PR gimmick; not terribly innovative, but it should result in some media coverage. Its understandable that some residents who are in the land development business themselves are concerned about renewed Linden competition. But I would not see this more as a "one shot" just now.

But the devil is in the details - as usual. What I found most astonishing was the following excerpt
120 Hours of design and building development to build your dream island valued at $6,000
In effect, this means that the typical services needed in landscaping and building are valued at around 50$/hour - US$ mind you! This is not extraordinary. Actually it is a nice price for professional design services. Depending on the combination of agency and client rates are much higher often.

But compared to the prices the Lindens are paying themselves when comissioning resident work this is quite a sum. Eggy Lippmann thinks so, too. I wonder what the official publication of such rates will do for that market. Maybe its getting harder now to let the natives do the work and pay them in glass beads in the future.

But probably Linden Lab will always find residents willing to work for fame, honor and some Linden$. And who would condemn them? It's just too tempting and a very attractive business model for the company ...

Saturday, December 10, 2005

Your business is their game?

I could write a long post based on the title above, but largely it would be obvious facts about the risks of starting a business on an undefined platform with a startup company that is still trying to perfect its own recipe, let alone yours. No, actually my title here is meant quite tongue-in-cheek. I’m not here to write a counter to Kim’s post (I agree with parts, disagree with parts, and overall largely agree that I’ve been silly to jump the gun on that particular issue on the SL forums). Rather, I want to take this moment to highlight to our readers an important fact about SLOG:

There is no official SLOG stance or message.

When you read a post from one of our writers, whether from me or anyone else, it is that writer’s thoughts and opinions alone.

So if you see opposing viewpoints on SLOG, don’t be surprised. Hopefully you will enjoy and value the fact that we have multiple voices and perspectives, just as I do.

Maybe this is a nice time to thank every one of our writers for contributing, and every one of our readers for attempting to make sense of our meanderings.

Your Game Is Their Business

This is an interesting time in SL, with the return of P2P teleportation and the repurposing of Telehubs. I'm pretty psyched about it myself.

Although I would like to see hubs still used for their original purpose, about a year ago I suggested to a LL staff member that the hubs would be much stronger focal points if their offerings were expanded. I suggested adding a way for members to check for LL news and announcements right there -- inworld -- new freebie content, and some sort of seating area (maybe like a cafe) where people could hang out. No, I don't figure I influenced the Lindens, nor do I believe I had a psychic flash. I think it was just the right idea, which the Lindens naturally had as well. Sharp folks, those Lindens.

Yeah, some people who hold land near the hubs are going to take a loss. Sort of the way I did, when LL released an avalanche of snow sims and the value of my snow land, in particular, plummeted. Good thing I was only reselling land on a very small scale, and that was when I got out; I don't risk more money than I can afford to lose. You know, no one cried for the land barons then! But since then more people have come to accept the reality of the SL real estate market. I guess some have forgotten (or weren't around during) the dark ages when it was considered sinful to turn a profit on land sales. Never mind that, by buying large blocks of land, subdividing them, writing up the listings, carrying the tier, etc. the horrible land barons save Linden Lab the cost of at least one or two (or more) full-time land-sales-managing employees -- a cost that would have been passed on to members. I dunno, maybe LL could have formally hired someone on a contract basis, and that would have been more palatable?

Oh wait, no. I mean, when LL announced a formal agreement with InfoNet, the forums rang with screams like unto those one would suffer in Dante's lower bolgias. It's pretty awful to watch, but sort of humorous, too. Awful in that I figure the nice folks running InfoNet had no idea they were suddenly going to find themselves in this shitstorm one day, and they don't deserve it. Humorous in that . . . well, watching a grown adult whining and stamping his or her foot like an overtired five-year-old ("Mommy, it's not faaaaaaaaaaaaaaiiiiiiiirrrr!!!") is the sort of thing that makes me love the forums. Okay, so InfoNet got the contract. Other news outlets want to put their info there, too. How many of them asked and then got no for an answer? Even a two-year-old ASKS before settling in to hold their breath til they turn blue. The answer might be surprising to some, but I'll bet L$ to virtual donuts that LL is already working on plans for the inclusion of other media at the hubs.

LL is a private company run by smart people. Your game is their business. But, immersion is a powerful thing, and some folks just can't separate the two. I mean, we have people saying that they can't do business in SL because they can't have an enforceable contract . . . wtf? I mean, sure, so long as you won't use your real name and get a real signature on real paper, yeah. That's because you're playing a game, not doing business. Big clue: Don't play Monopoly with real money, kids!

This InfoNet deal -- or any deal where LL hires someone without searching through fourteen tons of craptastic submissions -- isn't about an unfair ref playing favorites at a sandlot ballgame. It's about a business deal where one company is hiring another (you know, just like big grownup online services hire content providers or have corporate partners). They can hire whomever they wish . . . their friend, their nephew, or even (gasp) someone they don't really know who happened to have built and maintains a strong product and service that fits their needs and style really well.

Some people protest that this whole idea of repurposing the hubs is just a waste, and LL should sell the land and be done with it. But those plots of land all over the world, marked on the map, held by LL, known by all, will prove valuable to LL in the future. LL should hang onto them and maintain their visibility. They're going to find those useful for various projects of their own. And, in fact, established high-visibility spots like those could be rented for a pretty penny to corporate partners who'll come to LL sometime down the road. O noes, but money is so *dirty*! The thing is, LL is a business and it needs to make a profit, or we won't be having any more of these charming conversations . . .

Friday, December 09, 2005

Are we there yet?

I’ve been rather tied up with building/photoshop projects lately, but I’ve had a question floating around in the back of my mind for a few weeks. We have ongoing debates throughout the SL forum/blogosphere about the state of SL, the retention rate of new residents, and recipes for success. My immediate reaction is usually to advocate patience: "you cannot judge the business model or the platform yet, because the technology is still only partially baked."

I can think of lots of really fun things to do in SL, but the trouble is, I can’t do most of them yet because the platform is not ready. I content myself with creating, chatting, and exploring. To someone like me, that is plenty fun in itself, but I can understand why it might not appeal to the mass market. SL requires a lot of self-motivation, and it helps if you have a strong interest somewhere on the social, creative, or business front(s).

However, I wanted to try to project forward 6-9 months and think about an SL without these technology problems. Imagine a Second Life where we have fewer building bugs, Mono, havoc 2, and html-on-a-prim.

Will SL look that different? Will we see an explosion of this great content we all eagerly look forward to, or will it be incremental… cool things here and there in bits and patches? (By content I mean things to do, not just pretty things to see.) The world will run a lot faster but will we see amazing new content appear at scale?

Let me clarify that it is the “at scale” issue that I am focused on. A few really amazing projects scattered around the grid may not be enough to draw and sustain several million new users. The “at scale” issue is why I believe in monetary rewards for great content rather than a “do it cause you love it” world. The latter is a lovely concept, and works really well to a certain size, but will never be a large scale system or solution.

So how do we get past the chicken-and-egg problem where high-end teams (and eventually professional-caliber) refuse to invest time on SL until the market opportunity looks big enough, and the mass market won’t waste time on SL until high-end content is here to entertain them?

As a reminder, our world, while impressive, is still pretty small, with maybe four thousand concurrent users and monthly total in-world sales of US$2 million as of November. That’s not chump change, but that’s also a total market size figure for EVERYTHING – certainly not enough to cause professional business formation around SL in numbers.

*100% growth over the equivalent figure from November 2004, and made up of land sales ~13%, object sales ~11%, payments into/out of scripted objects ~34%, and avatar-to-avatar money transfers ~42%.

Here are a few challenges I see standing in our way:
  • significant investment required not only in hours but in tier fees
  • social reluctance to pay for intangible goods (a funny concept since everything is virtual)
  • weak group and permissions tools which hinder collaborative building, land management, and money management

Tier Costs
A big project requires land (unless it is distributed by others, like Tringo), and land we all know requires money. Now, a few hundred bucks is a pretty small investment for a new venture, but this must be weighed against the risk, the amount of time-value a team will be putting in, and the market opportunity (currently relatively small).

There is also the problem that SL goes through fads, and if an in-world game is going to stick around, it somehow needs to maintain interest in order to continue supporting high tier costs. I have wondered if it is tier costs or an awareness of our faddish culture that is behind the short-lived nature of cool projects like Chinatown.

For Linden Lab to achieve its goals, will it need to offer developer discounts to certain groups, the way New York City offers tax breaks to keep high-profile businesses and employers (i.e. jobs and continued tax revenue) from moving out? This is a classic example of where blind fairness conflicts with the greater, long-term good. The SL equivalent of tax breaks would no doubt bring cries of FIC and unfairness, but it may be exactly what we need.

Do we need to create an in-world venture capital fund that can back projects like this in return for either profit-sharing or equity? Do we say that this is an RL-problem, and you really should get your backers, your business plan and your contracts locked down in the real world? The answer may be all of the above.

Social reluctance
First and foremost, this will depend on the service offered. For example, I would happily pay for a round of golf in SL, an aerial dogfight, or an organized dramatic/roleplay session (think a less advanced version of the ractors in Neal Stephenson’s Diamond Age) if it was done well enough (I’m in the future, remember). But I would not pay to listen to an indy band or a poetry slam (I rarely do in the real world too, and SL lacks the crowd-energy that vitalizes these events in RL).

A year after event support ended, we still see a paucity of great events due in part to the market’s reluctance to pay, a poorly designed events calendar (being fixed I hear), and a small base of concurrent users. I still think that we will eventually see entrepreneurs experimenting with business models to try to crack this nut with clever services and techniques. It may be we just need someone to show everyone else that it can be done, but regardless, in terms of business models, the market’s reluctance to pay makes this area highly risky. We still need someone to build an effective ticket/access system if LL refuses to do so.

Weak collaborative/business tools
Entrepreneurs prefer few rules, but all ethical businesses like a reasonably stable foundation of rules to build upon. In particular, I refer to legal recourse for broken contracts, or even simply identity assurance (i.e. even if I don’t sue you, I want to know that I will never do business with you again –impossible in a world of multiple credit cards and thus unlimited alts).

SL’s notary system and things like voluntary arbitration will help here. I also think that we could use a baseline technological solution to complement the social trust-based connections that enable teamwork (and teamwork enables large projects). Business managers need to be able to control role-based permissions when it comes to money, land and objects. Hopefully this is included in the new group tools spec that Robin’s team is creating.

We also need to have project-based collaboration support with the permission system.
  • I might hire sub-contractors on a large build, and I want them to be able to move or edit my prims (and vice-versa). Neither they nor I want to grant the other access to modify everything we own and have made – there is way too much exposure there.

  • We need permissions granting that is effective – if I say you can mod my work, you should be able to move it, resize it, and re-texture it JUST as if you had made it. Currently, it doesn’t work this way.

Personally, I think we’ll get there, but it will just take some time.

What do you think? Are there non-technical bottlenecks to great content in Second Life, or is it just a matter of waiting for Linden Lab to catch up to our visions? IM me in-world or PM me on the forums.

Tuesday, December 06, 2005

Intrepid Explorers Needed ... Where is Magellan Linden?

Did anyone of my readers take a look at "The Map" lately? I do not mean "a closer look," but rather take a step back and look at the whole world. And then zoom in a little bit on the continent in the North. Since another batch of sims came online on monday this continent looks rather complete! Maybe a few squares could be added here or there. At the rate the Lindens are currently putting new sims on the block (some 20 per week), though, there is not much time left till a new land mass is needed!

A "complete" continent

So I guess it is maybe time for the daring explorer Magellan Linden and his intrepid team to sail the globe (is it a globe?) of Second Life again and look for undiscovered land. Otherwise the residents will soon run out of "fresh" land. And lets not forget: selling land (and later earning tier for it) is the main source of revenue for LL - and the reselling of this land constitutes a sizeable chunk of Second Lifes economy (some 12% as of last counting).

So, I can't wait to hear rumors of Magellans next journey. What will his team discover this time?

I wonder if we will witness a similar land rush with this presumed land mass as there was with the last, with land prices on the old continent dropping and the L$ rising? Who knows. But it sure will be one the of the most important events in the beginning of 2006.

Monday, December 05, 2005


The following may not make sense yet. But it will.

Feverish was the feel of her mercury tears, and that's exactly the choke-'n'-sputter I confronted myself with this morning. Coughed away the dull shards of a sickness. Tried OXO soup for the first time in—effectively as long as I can remember—with noodles. Downed it, recalling OXO is also believed to be the first computer game.

In the contemporary times of the last few days, I've been seeing diagrams during my sleep, not unlike an expanding tic-tac-toe board with variations. A variant could include needing "four in a row" to win, which places it closer to an endgame of Connect Four. I'm all for connections.

One of the great tragedies of dreams is, to put it lightly, how lonely they are. You can dream about other people, but that won't actually aeffect them—well, unless they've dreamed of you too, reaching out there somewhere. And even when that happens, how readily available do strangers make their night visions accessible in a database, perhaps not locked under key (unless the privacy of intimates is greatly desired) but tagged, catalogued... or even the more mundane but nevertheless effectively valid, written about in a "dream diary"?

So perhaps there's some small chance you may find out, but for practical purposes, you don't.

A seminal work I'd initially heard of many years ago (it'd won a lot of awards and everything) but only just read yesterday, is Harlan Ellison's "I Have No Mouth, and I Must Scream". You can click on that link to read it, it really works, this is hypertext. Younger audiences, upon completion of it, may say it's like The Matrix, the part where the robots go evil. Older readers, by way of the ex-zeitgeist, will draw straws pointing at Colossus: The Forbin Project mixed with some other unwary mecha-rabbits in the stew.

You know how it is with dinosaurs, how archaeologists—the general public, really—come up with all these nifty ideas of not only what dinosaurs looked like, but moved like, fed on, and many other things we consider mundane of the living but exotic of the extinct? That's what it's like for me and a collection of media. I may watch a movie trailer, and then let my imagination run wild, hinting at what this film I'll finally see in its (sadly not often as glorious as hoped for) entirety will be like several years later. Same goes for books: novels, novellas, novelettes, short stories. (They sound like a wry family of country bumpkins, don't they?)

This is what happened with "I Have No Mouth, and I Must Scream".

Now, without spoiling the ending, or perhaps more importantly, the milieu of richness with all the literally meaty bits in between, I'll preface this by stating a couple things: 1) there is an abandonware computer game based on the short story, and 2) we are still at a stage where humans do awful things to one another with technology not doing awful things to us of its own accord.

Let's go back to OXO—noughts and crosses, not the soup—for a moment. Any respectable sci-fi buff recalls Star Trek's "A Taste of Armageddon", which actually aired at about the same time as the publication of "IHNM, aIMS" (1967). I reference it not just because of thematic content, but because of visual imagery like this matte painting composite.

There are several other visual points of light that quickly become suspect: the movie poster of Logan's Run (also taking place in the 23rd century, like Star Trek), the planar scaping of Silent Running, and in a nudge towards the cyberpunk aesthetic that would later blossom in my own heart, the designs of Sid Mead, who really doesn't get enough Google matches.

It's interesting to me how goal-oriented "dystopian" science fiction can be. Not out of pleasure, but quite frequently, the sheer necessity of survival.
And consider how much more engaging that becomes when placed in a vividly memorable environment, with the escape of the replicants in the film Blade Runner being a prime example. Goal-oriented, like a game (including that of life) would be played, whether it's a complex electronic simulation as in that Trek ep, or the venerable roots of tic-tac-toe, which has existed for hundreds of years on sand, paper, and wood before becoming digital.

Have you ever thought what it might be like if an X, or even an O wanted to stop "playing"? What if it—he, for the sake of personalization—wanted to end being confined to 1/9 spaces, and walk between them at will? To trot off into the distance and see the world, perhaps risk everything to fall in love, write an award-winning handbook teaching others to do the same, or even achieve peace with the enemy?

(A starfield of variable-flavored candy pieces fell out of the pinata we just wacked.)

One possible pathway leads me back to the dream I had—or, wish I still have.

Feverish was the feel of her mercury tears, and no song of the siren could quiet the amber awakening of this crystalline sea. A golden shiver gilded its way up the arc of the waves nearest to the star, appearing anemic but growing bolder. She sat.

It was Antioch climbing up the path next, scurrying with all sixfold legs, eyes ablink with the stubbornness (and some would say sagacity) of his patience. He could smell the fruit, dangling from the angled tree. A lure, not alluring enough, for he had recently eaten. Antioch scrunched up on his haunches and patted his tummy, looking at her. She didn't look back.

The sky to the east looked like an almost-broken stainglass window, dull shards nestled in gossamer clouds, an almost celestial avarice gobbling each oblique triangle of color up.

Time elapsed, and twilight had grown a maw.

Antioch leaned against the bench. The wood was old, but it never decayed. It became very cold; and yet, she was still so very warm.

I sometimes wake up, cry for a little while, and then login to the belly of the beast, the great supercomputer that is Second Life. It's not lonely.

Friday, December 02, 2005

15,000 Words

The potential removal of telehubs has led to gnashing of the teeth in certain quarters about the future of SL. There are some valid concerns being put forth by opponents, although how much is simply resistance to change I do not know. Perhaps not surprisingly, I happen to take a more sanguine view of the matter.

Will our world become a horror zone of grey boxes and red ban lines as a few currently warn? Oh, I agree that some will be inevitable, but then again, we already have these things in Second Life. Red ban lines already exist throughout SL, but there are also remarkably large swathes of land that are free of them -- and this in the telehub era where strangers are forced to fly through your neighborhood as opposed to skipping over your land altogether.

However, instead of a long treatise on the subject, I thought I would let Second Life and pictures from its residents make the argument why beauty, a sense of space, and exploration will not die. Hopefully no photographer will mind my putting together snapzilla photos for this collage. So with no further ado, here are 15,000 words on the subject (click on the image to see a larger version):

[Snapzilla Photos taken by (in alphabetical order): Crow Brotherhood, Shack Dougall, Launa Fauna, Salazar Jack, JellyBean Madison, Sam Portocarrero, Baccara Rhodes, Ilianexsi Sojourner, Forseti Svarog, Laukosargas Svarog, Adam Zaius]

Thursday, December 01, 2005

The SL Economy in Review - November

Time flies - at least when you have reached a certain age and the timespan between Thanksgiving and Christmas does not feel like an eternity anymore. In SL time flies even faster; by a factor of four at least I would say. In a single month a lot can - and will - happen in here.

The last month was a very "interesting" one for the SL economy - the aspect of Second Life which fascinates me most. And I would like to "look back" on it a little; not in anger but in awe. Here is my - completely subjective - list of most interesting events and developments:
  • The Aftermath of 1.7
  • Anshe's Crusade against Ginko
  • Lindens entering the "Zoned Residential Business"
  • The Killing of the Telehubs
  • The Rise (or Fall) of the Linden
  • The Invention of the Camping Chair
But first ... the raw numbers:

Cold facts
In the last month the official population of Second Life grew from some 20% from 75,000 accounts (I am very intentionally not speaking of "residents") to more than 90,000. In the same time the average number of concurrent users inworld grew some 15%. The second number is much harder to measure as it varies greatly over the day and over the course of a week. I am using a procedure of taking a measurement every day at 8pm and I guess generates comparable numbers for statistical purposes.

The number of concurrent users inworld grows fast but not as fast as the number of residents; sometimes the growth even comes to a grinding halt (see the time between the 12th and the 24th)

Whats to interesting with these numbers? Simple: The difference between those two growth rates surely signals an ongoing change in the population. Second Life grows; fast! And at the same time the structure of the population changes. The trend is towards more residents that spend less time in SL; less intense user, more casual ones (and probably a much lower percentage of premium accounts).

The LindeX clearly is establishing itself as the premier curency exchange and is accepted more and more by the residents. The average daily trade volume grew from something around 2 Mio. L$ to now more than 3 Mio. L$ per day. Thats roughly 11,000 to 12,000 US$ per day at current exchange rates. Not really "BIG MONEY" but still ... nearly 90 Mio. L$ (350,000 US$) in the month. And the trend is "up".

There is no detailed data available for the SL economy. Current statistics have not been published since October, which is a pity. Many important facts about the SL economy seem to be generated by manual processes.

And now back to the "events" mentioned:

The Aftermath of 1.7
Its now more than one month after the update to 1.7. And still threads like "I want to go back to 1.6" get updated. I am not sure if this is "normal" for a "first digit update", as I have been in SL only for a year now. Personally I found the first days and weeks after the 1.7 release to be the hardest time I have had in SL so far. And it worries me a little that - maybe purely subjective - the user experience in SL seems to be still worse than in 1.6 one month after the update. Some details surely are improved. Some of the first HUD applications are nice. Load balancing on the servers is much better and it is not a big problem now to have a wedding with some 60 or 80 people in a fast sim. Nice, too! On the other hand texture problems are still annoying, the new default textures are giving the surrounding a surreal geometric look when you teleport into a new region and the local cache seems to have become utterly useless.

Happy shopping in the gray goo

Why do I mention this in a post on the SL economy? Because business surely has taken a hard hit. Shopping was not much fun for many in the first weeks of November. And browsing malls even now is sometimes more "work" than fun. You have to very patient sometimes till you see the product pictures. Aditionally I am not sure what impression newbies got, when they rezzed in the Welcome Area for the first time in those first weeks of 1.7. While I applaud the continued development of the platform Second Life, I dare to say that the poor quality control that was visible in this update surely was not very "business friendly".

Anshe's Crusade against Ginko
Anshe was not the first resident suggesting that the interest rates Ginko is promising for deposits are only possible in a so-called "Ponzi Scheme", an elaborate systenm of investment fraud, that is more or less a Snow Ball model dependant on a continously growing number of members. (More at the Wikipedia here.) But she surely was the most prominent - and vehement - proponent of that theory. No one can say for sure if Ginko is a Ponzi Scheme. I am unsure myself. But I am sure no one will get me to "invest" my money at an institution with no independent oversight and a complete unwilllingness to disclose any details about investments or even investment strategy ...

Additionally, the Ginko affair shines a bright light on one of the gaping holes in the current SL economy: there are no Banks! (To call Ginko a "bank" would be a gross misunderstanding of the workings of a bank in the RL economy.) Banking would be a very helpful addition to the SL society. Like in RL their most important function job would be "Savings and Loans": collect money that is not immediately needed and lend it to others who like to fuel their businesses with some cash. Sadly this is not easy to implement in SL. Banking is based on trust and legal recourse. And trust is a rare currency in SL - with so many possibilities for fraud and no institution willing to provide the needed oversight and protection of small customers.

The problem vice versa (for any potential bank business) is the complete lack of ways to collect debts and to protect themselves from residents simply leaving SL. That problem could possibly be solved with mortgaging land and some better group management tools, though (with banks and customers in the same group). Maybe a promising idea for some entrepreneurial spirits? (If someone is already doing something like this in SL, I beg for forgiveness. I did not know.)

But all in all I guess the whole Ginko affair did not further the willingness of the average resident to give money to someone they know nothing about. But I am sure that some kind of true banking will come to SL in the course of 2006.

The Killing of the Telehubs
While the "Crusade against Ginko" maybe only a storm in a waterglass (a.k.a. SL forums) another development immediately showed significant consequences - and will have far reaching consequences over the next months. The Killing of the Telehubs annnounced on the 23rd not only lead to nearly violent controversies on the SL forums. It significantly devalued the land holdings of many residents (not only land barons) and lead to the recent dramatic drop of the L$s value. One might argue the last point. It is hard to see only accidental coincidence in the fact that this drop started on the same day and up until now led to a drop of 7%, though.

One possible way to see this, is, that in the long run the value of land only will be distributed, with telehub land falling in value and land far away from hubs rising (because it is easier accessible now). For all those landlords heavily invested in telehub land this is a small consolation. Some serious money already has been lost here. I am just waiting for some to start more or less desperately liquidating their assets. (Not Anshe; she is very well diversified.)

But there are some who specialized in telehub land, which - in hindsight - might have been a very risky strategy; especially, when taking into account that the lobbying for P2P teleportation has been going on in the forums for quite a while and the official reaction on the Linden side was never to oppose this clearly.

The publicly-stated consideration of some kind of compensation for owners of telehub land adds another twist. While such thoughts surely are not without merit - government intervention in RL often leads to similar compensation programs - they set an interesting precedent. Nearly every change in SL is bad for some business owners (and maybe benefitial for others). Will every significant feature change lead to a rally for compensatory measures from now on?

The Rise (or Fall) of the Linden
As I already mentioned, in the last two weeks of November, the Lindens value dropped some 7% from 251 L$/US$ to 266 L$/US$. While this drop might not seem overly concerning to many residents - maybe even advantagous ("Woot! I get more Lindens for my Dollar at LindeX!") - for low-margin businesses on the edge of RL and SL this is rather dramatic. In the land business this can easily eat up most of the profit for a sim auctioned based on the assumption of an exchange rate of 250 - 255 and now sold in the era of an exchange rate around 270. That is true at least for land that is bought at the auctions, because winning bids have to be paid in US$. It is true also for all those using their SL business as a significant part of their RL income. The margin question is not so dramatic here but their counter measures will be the same.

While some will rejoice at this thought ("Finally those greedy capitalists will get what they deserve!") there is not much reason for joy even for Joe Averageresident. The land barons simply will raise land prices! And other content producers will follow ... There is a name for that phenomenom: its called "inflation" and is no fun at all. But maybe its all not as dramatic as it seems now. It all depends on the length of the drop. There is no fundamental reason for the Linden losing value like this; just selling pressure and psychology. And maybe some business people realized just how risky business in the SL economy can be; with real "gods" that can change the basic laws of the universe ...

And this is at least one reason why "Economy in SL" continues to be as entertaining as any soap opera.

But. oops, I forgot. This can't be the end. (Yes, I know, it is a long post already.) There is still one issue: Camping chairs.

The Invention of the Camping Chair
But as fascinating as this concept is, it has been discussed more than thouroughly on the forums already. And Ingrid and Flipper already have written in this weblog about them at some length. When you read the SL forums nobody seems to like them very much. Still they have taken the world by storm.

Personally I don't like them much, but thats ... personal. What I find fascinating with camping chairs and their derivatives is how good an example they are for the inherent cleverness of an economic system. Because Camping chairs are a perfectly logical solution for making money in SL; a solution that is a true win-win situation for nearly everyone involved. Their invention was inevitabable!

Its as simple as that: a growing number of residents is looking for an easy way to make money. They are not much qualified in the skills that in the past were most important for making money in SL (designing, building, scripting, dealing ...). So a job is needed that can be done without any of this qualifications. And what those residents do is better something that is of immediate value/results in a fast return. Otherwise giving those newbies a job does not make much sense for the "employer".

In the past the typical jobs in this category were dancer, host etc., jobs where the intent was to attract other residents to a club. Having them at the club is interesting in two ways for the owner: 1) the residents attracted might buy something in the nearby shopping malls or employ the services of an escort in the clubs pay. 2) At the same time their presence generates "dwell", which the Lindens reward with bonuses and developer incentives. The first aspect has some disadvantages: you never know if customers actually buy something. And in addition they have to have money for that, which is a problem with newbies on basic account.

Generating dwell costs the customer/employee nothing! And thats why camping chairs are a much better and perfectly logical solution which is beneficial to both, employer and employee.

I am no specialist for dwell calculation. So I am unable to judge how succesful the idea can be in the long run. For example: what is an hourly rate you can pay a professionall "sitter" and still make a profit - in a calculation model which is changed daily right because of the advent of the camping chair? Many a club that based its payouts on last months dwell calculation might be making a loss fast. But anyway: I will risk the prediction that we won't see them for long. The intention Linden Lab had with the introduction of the dwell bonus (motivating residents to produce interesting content which attracts other residents - and keeps them in SL), is perverted by camping chairs. While camping chairs - or any comparable business model - in itself might do not much harm. A very unwelcome side effect is, that they reduce the motivation for other residents to produce other kinds of interesting content. Next months developer incentives will be paid in a large part to clubs with dwell chair.

Dwell - and the exploitation of this incentive by camping chairs - is a good example for the big problems with any kind of subsidy. After a short time clever businesses will allways find some holes in the rules for the payout of this subsidy. And then they will "milk" the state (in this case Linden Lab) with some business model which is far away from the intent that subsidy had, when it was introduced. There are enough RL examples for that. Now we have a nice one in SL.

So sooner or later - despite denials from Robin - we will see a change in the rules for bonus calculation. Some clubs will have to change their business models rather fast then - but maybe they will get an nice compensation for it.