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.

No comments:

Post a Comment