Virtual World, Real Money

BusinessWeek's cover story for May 1st has to do with a little place called Second Life. BusinessWeek Online has several stories related to their exploration on online living. My Virtual Life is a first-time exploration of Second Life, with some examination of the property and financial aspects of the gameworld. It's Not All Fun and Games explores the serious side of virtual businesses, as they interview Ashne Chung (notable real estate baron) in a piece called Virtual Land, Real Money. Ed Castronova has his say in a more general article on virtual economies. Finally, for an outside perspective, the obligatory Terra Nova discussion is always useful.

Comments

I hereby

[UniXY]

stake this first post as virtual property... get with me after this and we can negotiate a pice.

Re:I hereby

[nelsonal]

I'll give you two future second posts and a funny sig.

And yet, oddly enough

[Anonymous Coward]

Second Life itself is, last I checked, still not making a profit. Funny, seems like Linden Labs are the only people unable to make money off of their own creation.

Re:And yet, oddly enough

[Lordfly]

They're growing, which is why they aren't making money. They're adding about a programmer every week or two, not to mention a ton of part-time liasons (in-world helpers) and support staff.

If they stopped expanding their payroll they'd be in the black very quickly.

Re:And yet, oddly enough

[jfruhlinger]

Like youtube, they don't make any money yet, but since investors are keen on putting money in, they must know what they're doing.

Where exactly were you between 1997 and 2000?

jf

Re:And yet, oddly enough

[flyingsquid]

Second Life may not end up taking the world by storm, but it raises some interesting issues. What happens if the total value of goods and services in an online world- its gross domestic product (GDP)- starts exceeding that of, say, small African nations? That idea sounds laughable, but when you consider the billions of dollars involved in movies, music, and video games, it seems more like an inevitability than a possibility. Then what happens? If someone pisses off your Clan by using cheats, do you launch a war against their country, or just an embargo? I'm being a bit facetious here, but you could imagine that a large online community could potentially be a force to reckon with. They might be virtual, but their dollars are real, and that would give them power.

The problem with creating artificial communities of course is that what starts out as a fun exercise in anarchy quickly starts needing rules, just like its real counterpart. Otherwise, people start abusing the system. Multiplayer FPS quickly lose popularity when you've got a handful of people using cheats, and as the reporter found, it's kind of annoying when someone decides to build on top of the virtual property you bought. So you need systems to keep stuff in check, feedbacks like Slashdots moderation system, or something analogous. Of course, if it goes too far with the regulation and ordering, then you're right back where you started: a highly restrictive environment, which is what you went online to get away from.

Re:And yet, oddly enough

[patio11]

Second Life may not end up taking the world by storm, but it raises some interesting issues. What happens if the total value of goods and services in an online world- its gross domestic product (GDP)- starts exceeding that of, say, small African nations?

Dear Sir or Madam,

My name is Humbert Rumpledunk and I am a successful Real Estate Baron on Second (2nd) Life. Recently I sold property worth One Hundred Million Linden Dollars (L$100,000,000,000.00). However, because of a computer error, I am unable to withdraw the funds properly. If you ingame message me your user name, password, and bank information, I will send your account the money, withdraw it, and electronically transfer 90% to me, leaving you 10% (Ten Million Linden Dollars) as a fee for service. Your discretion is requested.

Snowcrash

[ecklesweb]

Man, I need to go back and re-read Snowcrash. Apparently the metaverse is upon us. (I guess that's a blinding flash of the obvious).

Since I can't afford to live in meatspace...

[Anonymous Coward]

...what's the price of a condo in a decent online community? I'm considering emigrating; looking for a good neighbourhood, easy commute and reasonable taxes.

This is downright scary.

[XorNand]

This says something pretty significant and deeply disturbing about society yet the article seems to have glazed over it. Second Life has no point, it's not just a game. It's a reality that simply exists, it's the participants that determine everything--just like real life. People are escaping their own lives, why? Because they feel trapped? Trapped by what? The mindless and meaningless jobs that they hold down working for a multinational corporation. The incessant reminder that they need more material goods to be happy. That they aren't as beautiful as the people on TV. Aldous Huxley seems to have been a visionary. Now corporations are looking to tap into this phenomemon? Holy shit! In my opinion, this trend is more scary than DRM ever could be.

Re:This is downright scary.

[Lordfly]

What's so wrong about wanting to live/play/pretend that you're somebody else? Don't you daydream?

Re:This is downright scary.

[XorNand]

Because it distracts you from the things that trully matter--um, like reality. You're volunteering yourself for Plato's cave (or the Matrix). Can you really not see how that is bad?

From a more pragmatic point of view: Imagine that you're working really hard to build a business in Second Life. You've spent hours doing so, and it's finally taken off. Now the publisher discontinues the world, or decides that it'll automatically take a 50% cut of your profits, or that it'll transfer your business to another character, etc. Maybe Taco Bell paid off the publisher and now all of your virtual products have a Taco Bell logo on them. Or maybe your computer dies, or you forget your password... Get my point?

If people are that malcontent slaving away for someone else that they have to start their own virtual business to regain a sense of control over their life, then they need to grow some balls and start their own real-life business. Sorry, but I have no respect for these Soma-addicts who prefer to play out thier lives within a safe, little, virtual sandbox. Every hour spent in their virtual life is an hour wasted of their real life.

Re:This is downright scary.

[Lordfly]

I guess I'm still missing the point. The economy works in SL just like the real world. There exists demand from consumers. You go in and fill that need, and make money.

Assuming you're doing it for the hell of it, it's fun, and thus doesn't feel like work. Your hobby soon sustains itself, and maybe gets you a few extra bucks on the side. If you really get into your hobby, it can make a sizable contribution to your income.

That's what most "businesses" in SL are; hobbyists who are passionate about their playtime making a few extra bucks on the side (that's me currently) The real big-money businesses are content teams doing contract work for real world firms (Wells-Fargo is one, for instance) to build prototypes and locations inworld for more RL business things. They're analogous to consultants in the real world. The economic benefits of consultants are best discussed another time. :)

Re:This is downright scary.

[pla]

What's so wrong about wanting to live/play/pretend that you're somebody else? Don't you daydream?

Nothing... I enjoy a little escapist fantasy myself, whether watching Star Trek or role-playing a dwarf with a big axe and a bigger beard. Nothing wrong there... Not productive, but at least entertaining.

But 2L satisfies neither the "escape" nor "fantasy" part of that. Just trading one mundane dog-eat-dog existance for another, without even the perk of entertainment. And you can't even call it an even trade, because while trudging along in "real life" might get you fed, sheltered, and offspring, no amount of success in Second Life will keep you alive and viable.

So yeah, I'd certainly call it scarily unhealthy that people will trade an unsatisfying life for an unsatisfying non-life...

Re:This is downright scary.

[Lordfly]

I guess. After coming home from work or university, I can grab a beer, sit down, listen to some Beethoven, and build a virtual house. Then I can plop the house into a box and sell it, and put it in a virtual "shop". Eventually somebody enjoys the house enough that they buy it. Over time, the house pays me handsomely for the time "invested" in me "working" on the house. Which is silly, because I built the house for fun in the first place.

Some folks watch TV, I doodle around in a collaboritive building environment. To each their own. :)

I found a better online game

[coldtone]

I have found a way better game to play online. It's a lot more challenging and fun then Wow, Second life, or Ever quest combined! This online game also allows you to earn real money!

It's called running an online business. You can pick from a range of class types, (blogger, storekeeper, programmer) or create your own!

The game content is simply amazing! It is virtually infinite, and changes daily!

You can play as much or as little as you want. Spend an hour, a day or an hour a week, it's up to you!

I've been playing for a few months now and its a blast! Check out my avatar cl1p!

Maybe they are trapped by...

[gatkinso]

... the inability to take a shower, hit the gym, and subsequently get laid.

It's not what it's made out to be

[jasonhamilton]

SL isn't nearly as great as it's made out to be in the media. Even their best example - Anche Chung was banned from SL and their forums the other day. Moderators were then unleashed to remove any thread about her ban.

The only people making income are the land barons who buy up huge sims (servers) then sell off the land. It's a lot of work to cut it up and sell - and the profits are small unless you do this large scale. To get that kind of scale you'll need 10's of thousands of dollars invested. There is already a land glut and the profits are hard to come by even with a lot of money to invest. Because of the land glut, the market is facing inflation. We're seeing over $300 second life dollars per $1 USD.

If you want to try your hand at developing land to run things like casinos, malls, etc. You will have to upgrade your account to a paid version. You then need to find some land to buy. The monthly fee on a fairly modest 16,000m plot of land is $75. The initial cost for that amount of land is around $300 - $400. Much of the main land has no rules besides "PG" and "R" rated areas. So people build horrible objects and structures. The more prims an object takes up, the more lag the area gets. Anyway, people have issues selling clothing, skins, etc. because there is no way to prevent others from stealing them directly from the local client's graphics cache or directly from video memory. People steal then resell other's work.

You also have to watch out for gotchas in the game. They have rules such as a user needing to belong to a group that owns the land, in order to set "Home" to that location. The problem is, if your land is owned by a group, and you sell the land, all members in that group get an EQUAL cut of the selling price of the land. This is not something they mention to you when you click SELL. So if you're selling a $500 USD plot of land and you get $4 back, you'll not be too happy. Calling SL's tech support will yeld such gems as "If you were planning on making a mistake, you should have called us up before you made the mistake and we'd be happy to help you"

I don't want to rant on too much about it - I haven't even gotten started on the negitives ... but there are some positives to SL. But the hype is about making money - something that is extremely difficult. Most are lucky to even break even.