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Second Life Virtual Property Boom
The Guardian Gamesblog has an interview with Philip Rosedale, Second Life's CEO and Founder. In the wake of last week's virtual property slaying, they discuss the realities of owning something intangible. From the article: "We launched Second Life without out of world trade and after a few months we looked at it and thought, 'We're not doing this right, we're doing this wrong.' We started selling land free and clear, and we sold the title, and we made it extremely clear that we were not the owner of the virtual property. USD$.4m a month is traded directly to world markets in Linden Bucks on Gaming Open Market. That's USD$.4m redeemed, or Linden Bucks turned into US dollars. In May 2005, the total amount traded in-world was USD$1.47 million. There were 1.3 million transactions between 19,500 unique users."
Actually I have several dozen, in any shade that you choose.
I Am My Own Worst Enemy
So you give them money for land (Lets say 1 block) and they keep said money and give you this block of data.. then.... they keep your money and..?
This is one huge ass scam type deal, yet totally legal and ingenius. Even if someone goes "No thanks, I'd like to sell you the land back, can I have my money please" they still get the intrest in the long turn and make a profit.
It's like selling magic beans, either way they win..
I like muppets.
When I read about "virtual real estate" I can't help but think of the
character who played Woody Allen's father in Love and Death and his
"valuable piece of land".
What's next? Virtual commodities trading?
Yes, I understand it's primarily for entertaihnment value, but somewhere
in Marketing (insert preferred afterlife here), a large group is laughing
themselves silly.
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
and buy the virutal properties before the bubble burst.
virtual loser boom!
second life?
no thanks, i still have to get my first one!
In the case of dot.bomb we had a bunch of non-viable businesses and ideas with no effective business plan that could not stand up to scrutiny. Unfortunately a lot of other viable ideas/businesses got burnt too.
The same goes for pyramid selling schemes. While there are new suckers/members to join up and fuel the system everything is great. Once the sucker/member fuel runs out they crash.
I recall a business selling Kruger Rands about 15 years ago. A Kruger Rand is just a minted ounce of gold, so has the tangible value of an ounce of gold. This crowd, however made a business of adding an enhanced value based on the condition and minting marks, coining phrases like bloom, sheen etc. Some coins sold for 5 to 10 times their tangible value. Eventually this bust and many people got burnt.
Engineering is the art of compromise.
Just wait until they try to wind it down and suddenly the lawsuits start flying for willful destruction of property.
Isn't that the whole point behind MMORPGs NOT allowing actual ownership in-game? Since if there's a server wipe or something they have no obligations to the players to return all their houses/loot?
This is my post. See sig above ^
I'm sure the virtual government will intervene to prevent the virtual economy from collapsing if the virtual real estate bubble does a virtual pop. There's nothing worse than losing your virtual shirt when owning virtual real estate in the virtual world.
This reminds me a lot of website property.
A company -- say, Amazon.com -- owns the title to a website. They have rights to the property at http://www.amazon.com/ . But the actual bits on the server don't have to reside on computers owned by Amazon; they could hire a hosting company to do that.
That's what's going on with Second Life. The video game is hosting the "site", and they're licensing rights to areas of the "site" to individual people.
Come to think of it, it also reminds me of an IPO. But instead of selling ownership, Second Life is selling rights to its product. I don't see anything wrong with this whatsoever.
Fax Baba!
This is no big deal. Are the people who buy paintings for way too much money losers too?
Transcend Humanity. Please.
Everyone gets weirded out when you mention the idea of "intangible" property, yet few people have any qualms about paying bills online, using credit cards, or otherwise using money that they never see. Few get upset when they buy/download software that is just as intangible as the goods in an online game.
So is it really the intangible property that weirds people out? Or the fact that the general media has no damn clue how online games work?
With so many ppl on
So this is like RL all over again? I play games to escape from reality, if rich kids can have all the cool eq/chars/whatever in the game as well, what does that leave me with? I might as well be a poor loser somewhere where I don't have to pay money.
Send email from the afterlife! Write your e-will at Dead Man's Switch.
I think we may be missing something here. The power of the notion of land ownership. In some societies, namely China, Japan, the Phillpines, the idea of land ownership is beyond fathoming for many people, who can otherwise afford broadband and computers.
To them, the notion that land "exists" in the virtual world connects to their ideas of self-worth in a very tangible way.
Selling intangible property is more similar to offering to shovel somebody's driveway for cash, than to selling your old stereo. That the item is neither tangible nor permanent makes it no less legitimate. (However, I would never pay real money for RTS property.)
They say the first thing to go is your penis. Well, it's either that or your brain. I forget which...
I have not played this MMORPG but have played many others. Paying for things in these games may seem insane to you. But once you get addicted and start putting in a few hours a day, $5 for the uber sword of death or some land seems very reasonable.
On the other hand it can turn the game into a "only those with more money have fun" type of thing... Well I guess they are trying to make it more like real life.
Second Life is an online game of a whole different sort. You see, the vast majority of the content in the game is player created. As a subscriber, you have the ability to upload textures and sounds. You can create objects in the game and put the textures on the objects. You can program in a proprietary scripting language using a provided API that gives you access to the game's particle system, accounting system, and the game world itself.
The backbone of this economy is the Linden Dollar (L$). Each subscriber gets a weekly stipend of it as part of the package, plus you can trade real money for L$ on the open market. Players create and consume content in the game. For example, some people spend all of their time creating avatar clothing textures (using Linden-provided texture template) and selling copies of them to other players. The ones that make the best clothes make the most bank. Other people (LOTS of other people) re-invent the slot machine or various casino games over and over again and rake the money gambled with the game's they've created. Some people create new games on their own (like one called Tringo that's very popular these days) and license them. Tringo can be played for free, but it takes a lot of land to host a game and organizations that collectively own huge tracts of land and use them as malls use Tringo and like games to attract shoppers.
In other words, the game is just nothing but the foundation upon which an economy can form. One formed there, and Second Life's creators deserve to be lauded for that.
Fun with Anagarams! LADS HOST, SHALT DOS. HAS DOLTS. AD SLOTHS, HATS SOLD. ASS HO, LTD.
For all their stability, dollar bills are intangible. They are linked to no set physical item of value. Even when the country was on the gold standard it did not have enough gold to back all the dollars in the economy.
As for bubbles, the stability of the worth of something (whether its U.S. $ or LindenDollars) depends on the sustainability of the economy (e.g., the extent that its not a Ponzi scheme) in terms of both the materials being traded and the participants. Even real-world tangible goods have no guarantee of stable value. For example, some would argue that real estate in the U.S. is currently a bubble and that the true value of what seems like a very tangible good has become inflated.
The point is that all economies, both virtual and real, are about intangibles defined by people's relationships to each other and to items of reputed value. A dollar is only worth what someone else will trade for it. A block of land or uber sword of death is only worth what someone else will pay for it. Even tangible objects (e.g., a brick of gold) only has value to the extent that others will trade gold for other desirable goods such as food. Value is in the eye of the beholders, both buyer and seller, and has no other value than that. At best, the values of different items may become fixed relative to each other (but not on any absolute scale) becuase of the ability to transform one item (e.g., labor) into another item (e.g., attained goods in a game or in real life).
Economies and the notion of value are a human invention. As such, the dynamics of societies guarantee that even the most tangible of goods can fluctuate in value.
Two wrongs don't make a right, but three lefts do.
Well, how can you virtualize something that's already virtual?
The monetary system in the country (and all others, as far as I know) is based upon a shared (and mutually agreed-upon) illusion of value.
This is what Stephenson's Baroque Cycle (and Cryptonomicon, for that matter) was talking about. This isn't a virtualization of money, this IS money. These people are creating money, printing their own currency in the most elemental way possible, they're thinking it up.
It's interesting for that reason alone, aside from what people are actually doing with the service.
m-
You catch enchiladas by picking them up behind the head and holding them underwater until they don't kick anymore -VeGas
What is particularly scary about virtual property in a massive multiplayer is that the good is so completely unlinked to reality that virtually anything could burst the bubble. An executive in the company hosting is accused of embezzlement -- *pow*. The hosting company enters Chapter 11 -- *pow*. A new fad massive multiplayer starts up -- *pow*.
This is why the comparisons against derivatives are misguided. True derivatives are not physical things, but still, an option to buy pork bellies at a certian price in the future will not become worthless without pork bellies themselves becoming worthless. Whereas property on Second Life can become worthless for an infinite set of reasons.
I believe that the idea of objectively valuable virtual property, as explored by Neal Stephenson in Snow Crash (The Street), will someday become a reality. But not until: (1) hosting the massive multiplayer is distributed among organizations that can't go bankrupt; (2)the massive multiplayer is either continuously upgraded or technology independent (perhaps a standard forum that will be interpreted in different ways depending upon the users client; (3) the massive multiplayer somehow guarantees scarcity, at least of more and less desirability property (perhaps by having a hotspot located near the hubs where avatars log on as seen in Snow Crash); (4) accounts are protected by really, really, really good user authentification programs (or else victims of a dictionary attack could lose 20k over night); (5) at least some of the user base is able to access the universe of the massive multiplayer in a thorougly immersive way.
I think it's just a matter of time before these conditions are met, and spending real money on virutal property starts to make sense. But I don't think we are there yet, and those who are looking at virtual property less as a game and more as an investment are playing with tulip bulbs.
Moiche
It does seem a bit odd after all with processing power/storage growing the way it is, the same computer that can generate say 800sq miles of linden land today will be able to generate a much larger sized plot tomorrow, how does that factor into the equation ?
Also it would be more altruistic if they allowed you to host your own server with your own land that you can control who can visit. That way people who provide their own server get the benefit of not having to pay maintenance fees (they would still pay for the software, developers have to eat I agree, being one myself).
Think of it this way many games i.e. Quake, Counterstrike have worked for years by providing networking functionality and people create their own servers etc.
Granted MMO networks need to be much larger and persistent, though why can't they take the BitTorrent approach. Rather than have one central bank of many powerful servers, all computers running the game could connect together to form an adhoc grid with just as much computing power if not more. This would negate the huge maintenance costs required and hence the need for monthly fees. Which is where I see the sinister part, it's like saying rather than lets look for a better solution, lets look for the most expensive solution.
Like one of the comments posted on the article, I also wondered what happens 10 years down the line when the company goes out of business, or the game is no longer profitable and is shut down?
I guess consumerism has reached it's logical conclusion. How long before companies start selling us our own thoughts and emotions? I guess they already have, in indirect forms (entertainment/media). Meanwhile in the real world, millions of people die every year of starvation and disease.
Virtual property is a way for China to completely destroy America's economy. Labor can be directly converted into property, without regard to physical limits, or even investment capital (except living expenses to grow a person to about 14 years). A hundred million Chinese play-workers playing games for property which they sell to American gamers too lazy to play-work for it themselves will sap the Americans' money quickly. And when the Chinese mafia government prioritizes MMORPG development, with their vassal industrialists running the servers, there will be plenty of inside jobs. Just like the Roman Empire outlawed much trade with the more productive Indus valley to keep their trade imbalance under control, America's economy could be threatened by removing all limits to American dollars flowing to China for virtual property that doesn't increase American productivity.
--
make install -not war
People are forgetting one thing: in this game, the game creators are basically gods. Even if they promise to not change anything on the perfectly located beachfront property with gold mines and AI bikini girls, there's nothing that can stop them from making a hundred more islands with identical property when they feel the need to squeeze a bit more cash out of the game. Or what if they release an expansion with new content that makes assets in the old game worth almost nothing in comparison? People who have played Everquest for a moderate amount of time will know what I'm talking about. When the game was first released, a rare sword from the bottom of a high level dungeon was something everyone wanted to get. A few expansions later, it became completely worthless, not because anything about that item or the difficultly in getting it changed, but because equivalent and better weapons were easily gotten in the new areas from the expansions. Having not played Second Life, I can't say that example directly applies to the game, but it does illustrate the omnipotent amount of power that the game designers have over your property and its worth.
It's scary to rip into someone because they've committed a crime no more serious than enthusiasm.
Hi, how's everything way up there above the rest of humanity!
There actually is a tangible aspect to virtual property...the time and effort used to produce the property. The theory of labor pretty much sees the amount of labor needed to produce a good as the major component of the price. The price of gold is largely determined by the amount of effort it takes to get find and get more gold.
The reason virtual property is a bad investment is that the people who define the virtual world can change the rules and change the time needed to create goods. People in power changing the rules happens all the time in the real world too.
BTW, I doubt you will find any investment tool that does not have legions of people telling stories of how they were burned by their investment.
Simply put, a derivative is as security whose value is derived from that of another, underlying security.
For instance, a stock option is a derivative whose underlier is an option.
In practise, complex derivatives have values that are functions (often very, very difficult or indeed unknowable functions) of various aspects of a range of underliers.
For instance, a credit default swap is a derivative whose underlier is a debt obligation, but its value usually varies only with the creditworthiness of the underlier, not with the other aspects.
Another way of looking at derivatives (depending on what you do with them) is to call them a contract which deals with your rights pertaining to another contract.
For instance, a commodities rollover is a contract that gives you the right to buy and sell two underlying commodity futures contracts. These underliers are themselves derivatives of an actual commodity such as gold. Rollovers are also used in finance (as opposed to commodities trading); in that case, the underliers may well be index-tracking products.
None of this has ANYTHING to do with virtual commodities trading, except that people engaged in virtual commodities trading usually trade futures, which are simple derivatives. They trade futures because it's damn hard to actually take delivery of 1,000,000 tons of orange juice.
Now, how the hell did the parent post get +5 informative?
The parent poster goes on to say a lot of very inaccurate things about derivatives -- for actual information anyone interested should check out a financial website (not Wikipedia!) such as http://www.investorwords.com/
This has been a PSA. Don't do drugs! Stay in school! And FFS don't day trade if you are at the level of the parent poster!
Whence? Hence. Whither? Thither.
It's no different to the question "what happens 10 years down the line when this hard disk I paid $150 for dies?" or "what happens 10 years down the line when this car I paid $12,000 for dies?" or pertinently right now, "What happens to my Rover car that I paid $15,000 when it breaks down and I can't get spares because Rover just went bankrupt?"
Virtual property is like anything else that can be traded; its value can increase or decrease relative to something else. It has a set of 'what ifs' attached to it like any piece of real property. Its value can be affected by the segment of the economy it's in (for example, the game developer can't just decide to make infinite land as a way of printing money, because if it's infinite it'll be worthless thanks to the laws of supply and demand).
Personally, I'm not interested - but that doesn't mean that I can't see that other people might find value in property within an online game. They can make up their own minds.
Oolite: Elite-like game. For Mac, Linux and Windows