Software versus Fantasy

Linden Labs currently sells fantasy. The Second Life experience from creating your avatar look, to social experiences, to buying clothes or land, to attending classes is all fantasy. There is nothing wrong with this and they do an excellent job. However, from a business perspective there are two major problems. First, the market for self induced fantasy experiences is somewhat limited. And, second, this is a fickle market with little in the way of loyalty. I don't mean to demean the fantasy market. I can easily see a day in the future where somebody creates a compelling fantasy experience and others pay to participate much in the same way you would pay to see a movie. But that day still lies too far into the future for today's business plan. So, in order to remain economically viable, Linden Labs needs to move into a new market. That market, I believe is the software and services market. Today, I will consider software. In future posts I will address services.

In order to have a virtual world, you need a simulator which is the virtual world equivalent of a web server and a client which is the virtual world equivalent of a web browser. LL has both of these, of course, but they are proprietary. There are open source versions but the development required removes them from consideration. So, the first thing LL needs to do is make freely available versions of their simulator and client that anyone can download and install. Currently, there is is a dearth of imagination regarding virtual world applications. Until talented people can download the software for free and play with it the dearth is likely to continue. But, it is difficult to make money on free software.

The second thing LL needs to do is provide a subscription service for enterprise simulator features. Anybody can download the basic software and play with it. But, if you want enterprise applications, you will have to pay. I am not prepared today to describe these enterprise applications. I will save that for a future post. However, I can say that if we look to the early days of enterprise web servers we can get some ideas.

So, free software goes out to anyone who wants it. They, in return, develop applications and new ideas. Corporate sponsors pay subscription fees and in return get advanced enterprise features. The subscription fees pay for the free software deployment and the free software deployment provides ideas for more (enterprise) applications.

This effort should be kept completely separate from the current self induced fantasy market. In fact, that service should be treated like just another client. Hopefully, by the time this fickle market finds a new home, the software business will be sufficiently viable to thrive without it. But, the software subscription service is not the only new business. In fact it is only the beginning. In the next couple posts we will look at two additional markets: Development and Consulting, and Training and Publications.