For years I festered over the problem of how money was being made in Second Life. I asked students to study businesses there and ran several business models on my own in an attempt to find out how money was being made. First, I have to say that very often either money is not being made or people are duplicitous about their presence in Second Life.
In the first case, I have always been skeptical of the real estate barons. Real estate prices have been in steady decline for the entire time I have been in Second Life (after the first six months or so) and I just can't work out a model where anyone could be doing anything but hemorrhaging money. I recently abandoned my academy in Second Life because I couldn't even give the land away. This is land I paid over $100 for four years ago and paid $15 per month tier and $6.95 per month for the right to own land as a premium member. That is roughly a $1,200 investment that returned $0. If somebody can make money with numbers like that, I like to hear about it.
Second, I think a lot of people in Second Life are just shills. They are Lindens pretending not to be in order to promote SL hype. Or they are one of the many satellite SL groups developing something such as a new client as Linden Labs continues to pursue its failed collaborative vision.
I feel vindicated in a perverse way as Linden Labs takes the one of the most impressive computer applications ever developed and lets opportunity after opportunity slip through their finger. It is almost like a Greek tragedy where the core of who you are prevents you from fulfilling your destiny.
But, the thing that really caught my attention in recent weeks was an article about Money Laundering in Second Life. When I read that, so many things made sense that did not make sense before. Has it really come to that? Has LL blown so many opportunities that it has to rely on transaction fees from laundered money to stay afloat. I suspect we will never know the answers to that or many other plaguing questions. But, it would sure be great to know them.
Sunday, January 23, 2011
Tuesday, July 6, 2010
I Think I'm Giving Up Again
In the late 1980's a personal computer appeared called the Amiga which was known for cool features and a small but savagely loyal customer base. Few people today would remember this name as it has drifted into the mists of computer history. However, it serves as warning. Having a technologically sophisticated product is not sufficient for success.
Another good example is a collection of computer companies in the 1960's and 1970's called the BUNCH (Burroughs, UNIVAC, NCR, Control Data Corporation, and Honeywell) that competed unsuccessfully with IBM. IBM was never known for technological superiority. And yet it managed to beat out all the other companies that were.
What do these two examples have in common and what does it have to do with Second Life? Second Life is the most impressive technology to come along in a long time. And yet it is failing to capture the market, even though it is really the only competitor in the market. It is on wobbly financial ground. And it shows no prospects for living up to the hype it generated in late 2006. Why is this?
Having a technologically superior product and no business plan is a formula for failure. I have complained many times in this blog about how LL does not seem to have any idea what it is doing and events are beginning to bear that out. I think that Second Life is likely to go the way of the Amiga. It will have some cool features but no plan for business applications. It will have a small but savagely loyal customer base. It will continue to pursue the "fantasy world created by its users" strategy despite the fact that this has proven to be a faulty strategy. And it will fade into the mists of computer history. It is sad but I am having a hard time trying to justify wasting any more time on it. So, I am closing this blog with the following quote:
“For all sad words of tongue and pen, The saddest are these, 'It might have been'.”
John Greenleaf Whittier
Another good example is a collection of computer companies in the 1960's and 1970's called the BUNCH (Burroughs, UNIVAC, NCR, Control Data Corporation, and Honeywell) that competed unsuccessfully with IBM. IBM was never known for technological superiority. And yet it managed to beat out all the other companies that were.
What do these two examples have in common and what does it have to do with Second Life? Second Life is the most impressive technology to come along in a long time. And yet it is failing to capture the market, even though it is really the only competitor in the market. It is on wobbly financial ground. And it shows no prospects for living up to the hype it generated in late 2006. Why is this?
Having a technologically superior product and no business plan is a formula for failure. I have complained many times in this blog about how LL does not seem to have any idea what it is doing and events are beginning to bear that out. I think that Second Life is likely to go the way of the Amiga. It will have some cool features but no plan for business applications. It will have a small but savagely loyal customer base. It will continue to pursue the "fantasy world created by its users" strategy despite the fact that this has proven to be a faulty strategy. And it will fade into the mists of computer history. It is sad but I am having a hard time trying to justify wasting any more time on it. So, I am closing this blog with the following quote:
“For all sad words of tongue and pen, The saddest are these, 'It might have been'.”
John Greenleaf Whittier
Tuesday, June 29, 2010
Phil's Back
Apparently part of the reorganizing at Linden Labs, that led to layoff's of a third of staff, also lead to a replacement of the current CEO with the once and future CEO Philip Rosedale. I have a suspicious nature and can't help but wonder if the old CEO wasn't kept on long enough to lay off the people so any residual resentments would accrue to guy who left. But, that is just idle musing on my part.
I thought about this quite a bit and decided that this is probably a good move. Philip Rosedale is a likable, charismatic visionary kind of person who is needed to provide visionary leadership for a product like Second Life and a company like Linden Labs. I saw a recorded video of a talk that he gave and you cannot help but like the guy. And his childlike enthusiasm with technology is infectious.
This kind of leadership energizes a company and so I see it as a positive move. My main concern is whether or not that energy will directed into productive applications. And, I guess, that remains to be seen.
I thought about this quite a bit and decided that this is probably a good move. Philip Rosedale is a likable, charismatic visionary kind of person who is needed to provide visionary leadership for a product like Second Life and a company like Linden Labs. I saw a recorded video of a talk that he gave and you cannot help but like the guy. And his childlike enthusiasm with technology is infectious.
This kind of leadership energizes a company and so I see it as a positive move. My main concern is whether or not that energy will directed into productive applications. And, I guess, that remains to be seen.
Tuesday, June 22, 2010
Voice Morphing
Linden Labs introduced a new feature for Second Life - voice morphing. For three dollars a month you can alter (read disguise) your voice. The vast number of free accounts compared to premium accounts attests to the fact that most people are unwilling to pay even a token amount for their Second Life experience. And yet Linden Labs believes that these people will fork over $3 a month to disguise their voice. Who would do such a thing? Well, several categories of people come to mind.
Celebrities who have very recognizable voices and are incognito in Second Life may wish to alter their voice so as not to be recognized. OK, that covers a dozen or so people. But really, aren't we talking about a different market here entirely? Who would need to disguise their voice? A few possibilities come immediately to mind: 1) men pretending to be women, 2) women with husky voices from too many years and too many cigarettes, 3) teens pretending to be adults, and 4) over the hill pedophiles pretending to be teenagers.
Do you get the point? Of all the things that LL could have spent development money on to make the product viable voice morphing is NOT one of them. After having laid off a third of their work force you'd think they would stop barking up the wrong tree. But, they seem to like that tree and they seem to like to bark. So, I guess I shouldn't expect any better of them.
Celebrities who have very recognizable voices and are incognito in Second Life may wish to alter their voice so as not to be recognized. OK, that covers a dozen or so people. But really, aren't we talking about a different market here entirely? Who would need to disguise their voice? A few possibilities come immediately to mind: 1) men pretending to be women, 2) women with husky voices from too many years and too many cigarettes, 3) teens pretending to be adults, and 4) over the hill pedophiles pretending to be teenagers.
Do you get the point? Of all the things that LL could have spent development money on to make the product viable voice morphing is NOT one of them. After having laid off a third of their work force you'd think they would stop barking up the wrong tree. But, they seem to like that tree and they seem to like to bark. So, I guess I shouldn't expect any better of them.
Tuesday, June 15, 2010
Downsizing at Linden Labs
There were numerous articles, forum posts, blog entries and the like, this past week, about the major downsizing at Linden Labs. The staff was cut by 30%. Operations are being consolidated in North American. And they are focusing on a new strategic direction.
First, I would like to offer my condolences to all those people who were laid off. Losing your job is never a pleasant experience and in the current economy is it even more dire. Add to that the special status of Lindens in the Second Life world. It will be very difficult to return to being a normal person.
I suspect that many employees got caught up in the hype just as the residents did. There is no end of bitter residents who thought their Second Life careers would make them millionaires only to find their dreams dashed and their wallets a little emptier. Now I suspect that there will be no end of ex Linden Lab employees who saw themselves as the next generation of Internet start up millionaires only to find themselves unemployed. For these people there is no upside to this situation.
Nonetheless, there is a potential upside for both Linden Labs and the residents of Second Life who still see its potential value and have hung on all these years despite the problems. I say potential because, although this is a good step, it is still unclear that thinking at Linden Labs has turned in a fruitful and positive direction.
There are two elements of their new strategy as noted in several of the postings and articles that give me pause. The first is the elimination of the custom client in favor of a web browser based client. And the second is the improvement of the "In world experience". I will take these topics up in the next few posts.
First, I would like to offer my condolences to all those people who were laid off. Losing your job is never a pleasant experience and in the current economy is it even more dire. Add to that the special status of Lindens in the Second Life world. It will be very difficult to return to being a normal person.
I suspect that many employees got caught up in the hype just as the residents did. There is no end of bitter residents who thought their Second Life careers would make them millionaires only to find their dreams dashed and their wallets a little emptier. Now I suspect that there will be no end of ex Linden Lab employees who saw themselves as the next generation of Internet start up millionaires only to find themselves unemployed. For these people there is no upside to this situation.
Nonetheless, there is a potential upside for both Linden Labs and the residents of Second Life who still see its potential value and have hung on all these years despite the problems. I say potential because, although this is a good step, it is still unclear that thinking at Linden Labs has turned in a fruitful and positive direction.
There are two elements of their new strategy as noted in several of the postings and articles that give me pause. The first is the elimination of the custom client in favor of a web browser based client. And the second is the improvement of the "In world experience". I will take these topics up in the next few posts.
Wednesday, May 19, 2010
Same Ole, Same Ole
I get Google Alerts for Second Life. I should say, in passing, that I highly recommend setting up an alert for any topic that you would like to track. The alerts are not perfect, of course. Some times the key word Second Life refers to a rejuvenation, rebirth, or second chances. But, by and large, the items selected are about Second Life and worthwhile to know about.
I mention this because I was looking over the most recent set of alerts. There were several stories about new applications for Second Life. And a number a alerts about LL getting sued by residents who are unhappy about policy changes in virtual property rights.
This is significant largely because it is not significant. When I first joined in the Fall of 2006 there were residents who where unhappy about something and new users who were trying to develop novel new applications. In 2006 that was expect and hopeful, respectively. In 2010 it is just tiring. Unfortunately, the cycle of enthusiastic new users who go from excitement, to realization, to alienation, to bitterness has been repeated too many times while the anger and resentment of residents who feel they have gotten a raw deal somehow just seems to shift from one group to another.
It would be nice to open up my alerts one day and see an application that has some real business utility; one that may get some traction and enjoy some longevity. A killer app as they say. One that would put Second Life on the map read by regular people. It would also be nice to hear about a mutually beneficial strategic partnership between LL and some residents that may prove to yield a bounty for both. But, alas, maybe that is just not realistic to hope for.
I mention this because I was looking over the most recent set of alerts. There were several stories about new applications for Second Life. And a number a alerts about LL getting sued by residents who are unhappy about policy changes in virtual property rights.
This is significant largely because it is not significant. When I first joined in the Fall of 2006 there were residents who where unhappy about something and new users who were trying to develop novel new applications. In 2006 that was expect and hopeful, respectively. In 2010 it is just tiring. Unfortunately, the cycle of enthusiastic new users who go from excitement, to realization, to alienation, to bitterness has been repeated too many times while the anger and resentment of residents who feel they have gotten a raw deal somehow just seems to shift from one group to another.
It would be nice to open up my alerts one day and see an application that has some real business utility; one that may get some traction and enjoy some longevity. A killer app as they say. One that would put Second Life on the map read by regular people. It would also be nice to hear about a mutually beneficial strategic partnership between LL and some residents that may prove to yield a bounty for both. But, alas, maybe that is just not realistic to hope for.
Tuesday, May 4, 2010
Coming Soon
LL has added a new blog or a new section of their blog called Coming Soon which is intended to alert users and businesses to new features and upcoming changes. The current page mentions the new viewer, an update in a graphics format, and some issues with related websites. It is, as they say, down in the weeds.
Anyone who may be planing a serious business in SL would like to know what the overall strategy and direction is for the product. Having been burned several times in the past with tanking land prices, the elimination of gambling, the exile of adult content, and most recently the revised licensing policy, serious users are reluctant to invest serious time and attention in a product whose direction seems to be driven more by whims than by a coherent business plan.
The apparent lack of a strategy is not a major problem for the business person who owns a few islands and sells virtual products like hair and clothes. In the worst possible case they would be out a few thousand dollars for the land, a few hundred dollars a month in revenue, and many hours of invested time. However, despite these set backs, they could rationalize that it was great fun and the experience was worth the money. I do not, in any way, mean to demean the small business people of Second Life. But, in the scheme of things they do not have a great deal on the line.
What, on the other hand, if a company was considering the investment of tens of millions of dollars into virtual meetings, distance education, virtual tourism, or any of the potential applications of this technology. Is Second Life the platform they would choose? I suspect not. It just seems too risky. It isn't just the lag, or the instability or even the griefers that are the problem. It isn't the poor documentation or lack of development tools or the lack of management tools. It is the fact that there is no plan for addressing these issues that keeps investors at bay.
But what are the alternatives? Well, there appear to be two. First, is the option of using the open source software to create your own virtual world. Some companies are doing this. Second, is the option of just waiting. Wait until somebody comes along who will embrace this technology and offer it to others in a form that seems worthy of investment. And, overwhelmingly, this second option is the most popular.
Here is what I would like to see. Coming Soon: A company that knows how to develop, advance and market this impressive virtual world technology. That would make me very happy!!
Anyone who may be planing a serious business in SL would like to know what the overall strategy and direction is for the product. Having been burned several times in the past with tanking land prices, the elimination of gambling, the exile of adult content, and most recently the revised licensing policy, serious users are reluctant to invest serious time and attention in a product whose direction seems to be driven more by whims than by a coherent business plan.
The apparent lack of a strategy is not a major problem for the business person who owns a few islands and sells virtual products like hair and clothes. In the worst possible case they would be out a few thousand dollars for the land, a few hundred dollars a month in revenue, and many hours of invested time. However, despite these set backs, they could rationalize that it was great fun and the experience was worth the money. I do not, in any way, mean to demean the small business people of Second Life. But, in the scheme of things they do not have a great deal on the line.
What, on the other hand, if a company was considering the investment of tens of millions of dollars into virtual meetings, distance education, virtual tourism, or any of the potential applications of this technology. Is Second Life the platform they would choose? I suspect not. It just seems too risky. It isn't just the lag, or the instability or even the griefers that are the problem. It isn't the poor documentation or lack of development tools or the lack of management tools. It is the fact that there is no plan for addressing these issues that keeps investors at bay.
But what are the alternatives? Well, there appear to be two. First, is the option of using the open source software to create your own virtual world. Some companies are doing this. Second, is the option of just waiting. Wait until somebody comes along who will embrace this technology and offer it to others in a form that seems worthy of investment. And, overwhelmingly, this second option is the most popular.
Here is what I would like to see. Coming Soon: A company that knows how to develop, advance and market this impressive virtual world technology. That would make me very happy!!
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