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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
second life?
no thanks, i still have to get my first one!
What's next? Virtual commodities trading?
I believe those are called 'Derivatives.'
In the future, I would want to not be isolated from my friends in the Space Station.
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.
Its more like a Tax on the virtual land. The tax (monthly payment) pays for the servers needed to host your virtual land.
Now, your land could be in a highly marketable area, and be worth MUCH more than normal. Just like real land, location makes it more valuable. Waterfront, Adult areas, private location, no wierd neighbors. Of course, nobody is stopping you from buying your own server for a giant piece of land, setting up a community and leasing it out to people. Its done all the time, private clubs, etc.
I picked up a lot near a major building area, and had water front on 2 sides. Now, when I switched my account to free, I gave the land away to a friend, instead of defaulting it back to Liden.
Liden's cant give away the land, servers cost money, someone has to pay. They just figured out how to make it self sustaining by the customers, and then spin off the technology into other markets. They have developers to pay also.
I'm not seeing the sinister plot here....
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.
Game players have been trading the rights to pixels on eBay for as long as there have been persistent-state worlds. Sony is in an endless fight to keep EverQuest items off eBay so they can create their own service that does the same thing, while EA pretty much ignores Ultima Online real money trade. Now, Second Life has merely chosen to cut itself in on the action.
This isn't even a new business model. Magic: The Gathering Online does a brisk trade in completely virtual playing cards. There was a game before them called Star Trek ConQuest Online or something like that, which did the same thing and didn't even give you the option to convert a complete virtual set of cards into a complete real set of cards.
And, how's this really different from buying the rights to use a bunch of bits that make a song come out of your computer's speakers?
Fun with Anagarams! LADS HOST, SHALT DOS. HAS DOLTS. AD SLOTHS, HATS SOLD. ASS HO, LTD.
On the flip side, isn't paying for webspace on a server the same thing? You're paying for virtual property on a host, so that others can access that host and enjoy your creation.
If the webhost goes under, files bankruptcy, shuts down tomorrow... do you have any legal basis for a lawsuit? Just because they're not hosting you anymore?
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.
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