Thursday, September 27, 2007

European Residents to pay Value-Added Tax on Second Life

All European users (yes, the 4 or 5 millions of them) received today a nice email from Linden Lab with an unexpected "surprise": starting immediately, all European residents will be charged Value-Added Tax on their purchases from Linden Lab.

According to this page, this will include the following:

  • Premium account registration

  • Purchases from the Land Store

  • Land use fees (tier)

  • Private Region fees

  • Land auctions

So is Linden Lab being very nasty with the poor European users, that suddenly saw their expenses going up, without explanation (not even an official blog post!)? Is LL tired of the growth in Europe? Are they afraid that content creators and landbarons in Europe are too successful and wish the rest of the world to get a chance to catch up?

Not at all.

As the Wikipedia so clearly states,
Following changes introduced on 1 July 2003, (under Directive 2002/38/EC), non-EU businesses providing digital electronic commerce and entertainment products and services to EU countries are also required to register with the tax authorities in the relevant EU member state, and to collect VAT on their sales at the appropriate rate, according to the location of the purchaser. Alternatively, under a special scheme, non-EU businesses may register and account for VAT on only one EU member state. This produces distortions as the rate of VAT is that of the member state of registration, not where the customer is located, and an alternative approach is therefore under negotiation, whereby VAT is charged at the rate of the member state where the purchaser is located.

So Linden Lab is just really complying with European Law. And yes, they have no chance but to comply, if they wish to keep those 4 or 5 million users!

What does this mean for the European crowd? Basically, if you're unlucky enough to be employed (or unemployed), you're going to pay more for having fun in SL — more than your fellow non-EU residents, at least. There will be an assymetry between, say, "cheap" US-based landbarons and more expensive EU-based landbarons. But on the other hand, if you're self-employed or a company (even a one-person company!), this will be a blessing. For the ones unaware on how VAT works, here is a very short explanation (you can read it up on Wikipedia or any other similar site):

VAT is only charged to the end customer. If you provide services and/or goods, you charge VAT, and your own suppliers charge VAT to you. As a service/goods provider, you can subtract one from the other, and have a running account with your local revenue service. In effect, you only pay VAT to the State if you provide more services than the ones you buy (most successful businesses will, of course, be in that situation).

Thus, for a company or a self-employed individual, it's good to be able to get VAT charged to you, since you can now use that VAT to deduct from your regular (monthly, quarterly, or yearly) accounting with the revenue service. More interesting than that: you can now file your expenses with Second Life (assuming you're drawing an income from providing services in SL!) as operation costs, thus, this means less income to be taxed on personal revenue.

Getting billed with VAT is thus a double blessing — less VAT to pay, less revenue taxes to pay.

For end-users — ie. employees (or unemployed people), retirees, etc. — things are quite more unfair. They cannot deduct VAT from the services they acquire; they cannot use expenses with Second Life as "operation costs" whatsoever, it's a service they're buying for their pleasure and enjoyment, and thus taxed as a "luxury" item (between 15-25%, depending on the EU country you're in).

What does this mean for the regular resident? Well, if you have little land, you have no choice really — Second Life will be more expensive for you. Very likely, European residents will simply tier down to Basic and pay in L$ for plots on private islands run by American landbarons. On the other hand, if your business (content or land) is considerable — ie. earning more than €2000 or so per month — it's very well worth becoming self-employed, and start cutting down on taxes!

And finally, as some of you might have noticed, Linden Lab has opened their offices in the UK (Brighton), headed by Babbage Linden. Now that they have European offices, they have to be more careful to comply with European legislation. They're a multinational now! (well, technically, trans-national...) So this means that SL is going to be a very, very complex place to "live" in :)

Saturday, September 22, 2007

Commemorating Three Years of Self-Government at the Oktoberfest '07

Three years after its launch in Second Life, the self-governed, democratic community that started from the old Anzere sim and currently has two sister communities, one in the Confederation of Democratic Simulators (Neufreistadt and Colonia Nova), another in Port Neualtenburg (in Funadama), will commemorate together this year's Oktobertfest together, one party at each location, lasting all weekend.

After over two years of posts and articles all over the SLogosphere predicting their "imminent doom", both are here to stay, both have not given up, both are growing, and both still get together for this annual events. Democracy is far harder to shake off than the most pessimist doomsayers have predicted and failed :)

So get your Dirndls and Lederhosen dusted and join us at the parties for a nice Stein of Bier and have fun listening to silly Schlager music and dancing the Polka or the Waltz in the streets :)

Political discussion is, of course, not mandatory!

Friday, September 14, 2007

Art Moments

I'm taking a few moments to listen to the Royal Liverpool Philharmonic play in SL (well, actually it's intermission at the moment) after having come from a really neat sculpture by Light Waves over at the "Ebuddy Battle Rezzable" sim. If you have a moment, go check out Light Waves' work. It's some marvelous megaprimmage!

Wednesday, September 12, 2007

Grundfos Energy Saving Island Opening - Presentations and Live Music

So, if you enjoy discussions on environmental sustainability, wish to learn a bit about the subject, watch some pictures from a photographer that works for National Geographic, or simply enjoy music, there is a rather densely packed schedule of events for Grundfos' opening in Second Life today, September 12th.

Grundfos is an environmentally-conscious Danish multinational pump manufacturer, and their approach to be in SL is more to focus on how their technology can help out to solve access to fresh water in undeveloped countries, teach some simple tips on saving energy, water, or limit the carbon emissions, and even raising funds for donating water pumps to Africa, as well as planting some RL trees. It's an experiment that is going to last about 6 months, while several people will present workshops on environmental and sustainability issues, sponsored by Grundfos and see if this model works in SL.

If you're interested, here is the schedule of events for today, as announced on the SL event list:
  • 12 (Noon) to 12:30 - Grundfos Welcome to Second Life
  • 12:45 to 1:00 - Water for Life and Overview of water and other environmental issues we face -- Delia Lake
  • 1:00 to 1:45 pm - Brazillian Music -- DJ Speelo Snook. 
  • 2:00 to 2:30 - Climate Changes -- John Galland, RL climate scientist and researcher presenting the latest scientific thinking about global climate change.
  • 2:45 to 3:15 - You Can Make a Difference -- RiverSong Garden will tell about projects in African villages.
  • 3:30 to 4:00 - Solar Sunrise. -- Bjerkle Eerie will talk about Solar power for Africa
  • 4:15 to 4:45 - Water for Life and Overview of water and other environmental issues we face -- Delia Lake
  • 5:00 to 6:00 - Water Music -- Enniv Zarf, pianist and composer will play piano improvisations inspired by environmental photography

Sunday, September 09, 2007

Verification is Insurance!

It's probably bad form to quote myself, but I think that the message should be spread through all means: Linden Lab's planned verification is not the "end of the world as we know it". What Linden Lab is effectively doing is buying some insurance against lawsuits!

You might have read elsewhere the huge drama about Robin Linden's series of blog entries on Identity Verification Coming To Second Life. If you have missed it, understand that LL will very shortly put a new system in place, where you can optionally go to a special web page, which ties into Integrity' system, and re-type your RL name and addresses, add a number from a valid ID card (which varies from country to country; for the US, you're allegedly supposed to put the last four digits of your SSN), and that's it: your avatar will be instantly "verified".

Very briefly, two points are important to remember:
  1. Linden Lab does not know what information you're sending to Integrity, so they are unable to know what RL data you're actually providing to them.
  2. Integrity has no clue on which avatar is doing the request. All they know is that "someone from Linden Lab's Second Life" is asking to get verified, but they don't know who it is.
Most important is to understand that Integrity apparently gets all their data from publicly available databases. That means that they are not asking you for any data that they don't already have. And they're not passing that data to Linden Lab, either. All they're doing is a check on their databases, see if the addresses match with your ID card, and send back an "ok" to LL. There is no point of "fearing a third party that will now know your ID" — they already have it stored on their databases!

So this is quite different from what certification authorities like Verisign (or even PayPal) are doing, who require you to send them data — usually by fax, in extreme cases through a notary public, or any other form of "real" communication — in order to verify your identity. Integrity works the other way round: first they collect all the data from those "publicly available databases" and store them on their servers. And then they resell the service of allowing people to know if their users do, indeed, match to the data they have — without revealing what data there is.

It's also important to see through the smoke and mirrors. Linden Lab doesn't really "care" about avatar verification; the whole "story" of "more trust in SL" is, frankly, pretty irrelevant. It's a nice pink & fluffy story for children. What they really want is something way more interesting. As part of Integrity's service, they accept the liability in case of a mismatch in their data. This means that if a minor is "checked" by Integrity (because they're using their parents' ID card), and the parents sue LL for some silly reason, Integrity will pay the costs. It's a risk business. Or, if you wish, Integrity is in the business of selling lawsuit insurance.

This is what you should have in mind when clicking on that checkbox. Forget LL's "change of the world". Forget Big Brother, 1984, or oppressive tyranny in a world where everybody knows who you are and what you're doing. You're completely missing the point! What LL is doing is buying insurance, since they're scared of those crazy individuals with nothing else to do but filing lawsuits against LL and getting a pro bono lawyer willing to spend a few hundreds of thousads of US$ in court just because of the huge media splash. LL can't afford to continue to operate with all those lawsuit-trigger-happy fanatics who live in our era and age. So they pushed all responsibility towards a third party. Like they have their servers insured at their co-location, they're now getting insurance against lawsuits, too.

You have to admit that is pretty clever of them. And for us SL residents it also means that we can sleep in peace knowing that people won't be able to sue LL so easily any more.

But LL is not an Evil Corp™. They even tell us more: if you flag your content, and keep your land parcel blocked to unverified avatars, we'll extend the protection towards you, too. This is what scares the merchants who fear that nobody is going to use verification, thus forcing them either to block unverified avatars (and lose customers), or risk the liability of having minors showing up, or, well, shut down and go. In the short term, losing customers might be unavoidable — but in 2008, we'll have another 10 million fresh users who will all be verified since their rezdays, and they'll be the good customers of the few adult content providers that had the courage to remain in SL for a few more months instead of packing and going.

Incidentally, you now know why LL shut down gambling: Integrity's insurance does not work (yet) for gambling sites. So now you know: no, it wasn't the FBI that forced gambling out of SL, but a requirement of Integrity's contract with LL. And the good news: Integrity's own political agenda is to lobby for a change in legislation that allows verified adults to gamble online while keeping children out. Of course, they're promoting their own service here, and they will be able to insure those sites then. I have no idea how strong this lobby might be, but you have to admit that it's a pretty cool idea — no matter your personal feelings about the "morality" of gambling. All that Intergrity is claiming is that the US could make a few billions out of taxes from Internet gambling, so long as they could guarantee no access to minors.

For a more thorough analysis, feel free to read my own blog.

Tuesday, September 04, 2007

Letter to Linden Lab: Intellectual Property, and Respect [Edited]

EDIT: someone from Linden Lab has reached out to me and let me know that this is a video file error, not a deliberate edit, which is nice to hear (and yes, I do believe them!). I did note in my discussion that this letter was more about Linden Lab's need to deal with a perception among the community than a particular case. Even if this perception is due to misunderstandings, it is something to actively address because it's been simmering for some time.

Dear Linden Lab,
For a company that prides itself on fostering a world of user-generated content, for a company that has reaped the benefits of a savvy decision to grant users IP rights to creations, you can be awfully casual about customers' intellectual property.

I've been listening to upset Second Lifers for years complain that Linden Lab takes their objects and images and uses it for marketing purposes, with nary an attribution. Shaun Altman, a fairly high-profile SL resident, bent my ear on the subject for an hour the night before SLCC. Here is someone who wants to see Second Life succeed, and who I think would not begrudge Linden Lab very much, but was seriously angry at a perceived lack of courtesy when using his creations, land and virtual home for Linden Lab's own promotion.

Now Linden Lab clearly states in their TOS that by "submitting your Content to any area of the service", you are giving Linden Lab the right to "use and reproduce...any of your Content in any or all media for marketing and/or promotional purposes in connection with the Service."

The agreement states nothing about notification or attribution, which is understandable in terms of business burden and the letter of the law, but shouldn't Linden Lab try to hold itself to a higher standard?

How about for things that aren't actually submitted to the Second Life service?

In February 2007, I was involved in the iVillage fashion show and took some machinima, posting it up on and YouTube. I was intrigued today when someone brought me to's fashion page and pointed out that not only was my video on Linden Lab's website, but it had been edited and the credits removed.

Given that this film was not Content submitted to the Second Life service, how exactly did Linden Lab's actions fit with the TOS? Someone must have taken the video from Blip or YouTube. On it is clear that the video is posted under Creative Commons-No derivs license (i.e. you must give attribution and you cannot make derivatives). YouTube makes it less clear, but since Linden Lab never approached me, the rights of the filmmaker appear to be irrelevant in someone's eyes. I can understand why you would crop out the racy ending to the video, but why strip out the credits (including the music attribution)?

Now, as a pragmatist, I feel a bit for Linden Lab's position on this general issue of "credit". You cannot stop a demo to rattle off names, and you cannot give attribution in every situation and for every prim visible in a scene in a user generated world. I will also admit that I'm not really upset about this incident personally, since I really made the video for some designers I admire and I'm glad to see greater awareness of their work. If Linden Lab posted this video, and you think it will help Second Life, then great - you are welcome to continue using it. I have more important things to worry about.

However, as an idealist, I am upset by what this represents. I am upset for all the folks who have been hurt by this very thing for years, and now I have something concrete that I can write about.

Respect and courtesy. It shouldn't be that hard.

I am rather fond of my fellow entrepreneurs over at Linden Lab. I think there are plenty of people in Linden Lab, like Robin Harper, who understand the need to respect residents not as worker ants building Linden Lab's work of genius, but as equals in creating something amazing together. Clearly there are some who let ideals slide in return for expediency.

Linden Lab, you can do better. I know you have it in you.

Forseti Svarog

Sunday, September 02, 2007

Tiberium Earth

I stumbled on this neat project a couple of days ago, which I thought I should share. EA has made models available in google's 3dwarehouse of Command & Conquer 3(c&c3), a rts game set 40 years in the future. What they ask of the fans now is to populate a new layer over Google Earth with your vision of what the C&C3 world will look like. You can use their models with is simplest, but you can also add your own.

In the year 2047, Tiberium-a self-replicating alien substance-has invested the planet, which is now divided into zones based on the level of Tiberium infestation...

How do you envision a Tiberium-infested world of 2047? How have popular world-wide landmarks changed? Showcase your talents and imagination by creating your own 3D models using Google SketchUpTM and then upload them for inclusion in the official Tiberium Earth project.
Tiberium earth

You can see this as a community mod project, but it has some interesting side effects. By doing it over google earth they are basically creating their own virtual place based on their story and world but with minimum investment. In the same time engaging and empowering their fans to contribute to the world. very web 2.0 ;)

What makes it even more interesting if you add other addons to google earth at the same time. Recently Unype was released which makes google earth a multi-user experience. Combined with Tiberium Earth you suddenly have a new virtual world, based on a post Apocalypse story, where you can meet and socialize with your friends.

It is all still very basic, but it shows that Google Earth is slowly moving in the space as a platform for virtual worlds. As long as google keeps it open, all they have to do is keep moving the software forward and focusing on delivering the meatspace, others will just build on top of it and create the fantastic.
It might be one of the most accessible platforms, what is more accessible then the earth it self?

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Saturday, September 01, 2007

Don't signup to Quechup

This post has very little to do with SL, other then that everyone in and out of SL that i have ever emailed or have emailed me, has recieved a invite from me to join And this a good way to reach a lot of those people.

If you have recieved a invite from me or anyone else, don't signup.
They pose as a normal social network site, and ask you, just like linkedin if they can look in your adress book to see if your friends are already signedup. But instead they just send every adress in your adress book a invite to Join.

What makes it worse, I had cancelled my account with them many hours before they started sending the invites. I thought i was lucky and had cancelled soon enough, because stories of this practise where already being twitterd and blogged. But alas 30 minutes ago the emails, and all the email list and out of office replies it got back hit mine and my contacts inbox.

So seriously if you have signed up, cancel your account and if you get a invite just trash it.

I apologise for haveing become so trusting in web2.0 sites.

Other blog posts about Quechup:
Techorati blog list about it.

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