Time Out to Bitch

I get very frustrated at times because I see so much potential in this technology and Linden Labs seems so unequal to the task of exploiting it. Recently, it appears, they have begun a new policy regarding adult content. I say 'it appears' because I've had to piece this together from conversations that I've had with various people and note cards I've collected from unhappy vendors. I'm sure they would say, "well the policy was stated in..." some unclear statement on some obscure page on some obscured blog or forum. If I wanted to get clarification of the policy the chances of talking to a live human are so infinitesimally small that it would not be worth the bother. So, I have to go with what I have garnered.

Apparently, adult content is being moved to a separate area. This is a good idea. I wrote earlier about the need for zoning and this seems to be a step in that direction. And they are requiring age verification for people to visit those areas. This also seems like a good idea on the face of it. It will help ensure that minors are not exposed to adult content. But, when you think about it, the logic quickly begins to unravel.

First of all, minors have access to adult content all over the web already. So, the notion that protecting minors from exposure to these things is a red herring. Second, people who have fantasies involving adult content are the most likely to want to protect their anonymity. So, a lot of these people will be scared away by age verification. The claim is that age verification is anonymous and it may well be. But, people who are doing odd things anonymously in Second Life are not going to want to take the chance. So, this move will have a chilling effect on the red light districts of Second Life.

Some may feel this is a good thing and others may feel differently. I am not here to judge the morality of it. I am only commenting on the business strategy. A while back they banned gambling which seemed to have a serious impact on land prices. I suspect that age verification will have a similar negatvie economic impact.

I have also written in previous posts about the problem of anonymity. People who are in Second Life to conduct real business want to know who they are dealing with. This was part of the zoning discussion. So, I support user authentication.

However, the current policy, as I understand it, will require a measure of authentication from those most likely to desire anonymity and require no authentication whatsoever from those who would most likely benefit from it. So, the current policy seems to achieve exactly the opposite of what they would want to achieve.

I am reminded of a comment once made by ex president Lyndon Johnson. I believe he was talking about the UN when he said "these guys couldn't pour piss out of a boot if the instructions were written on the heel." This quote comes back with a special resonnance every time I hear about another business decision from Linden Labs.

The Paradox of Creativity

Many people have drawn parallels between Linden Labs, the creators of Second Life and Xerox Palo Alto Research Center, the creators of the graphical user interface. For those of you who have not heard this story, I will summarize it. The now very familiar mouse input device and the omnipresent graphical user interface that we have become accustomed to on our computers was originally invented, as the story goes, at the Xerox Palo Alto Research Center. Unfortunately, after inventing this wonderful technology, Xerox PARC was unable to exploit it. That is they failed to employ the technology in useful applications. It wasn't until the Macintosh computer employed the technology that the public became aware of it. Why is it that Xerox PARC was creative enough to develop this landmark technology and yet failed to be creative enough to see applications for it? I am calling this the paradox of creativity simply for lack of a better term. It seems to occur when one has abundant creativity in one area but creative blind spots in other areas that are necessary to fully exploit the first creative leap.

Linden Labs seems to be suffering from the same paradox of creativity. The creation of Second Life required an enormous leap in creativity. Granted many of the pieces were around in video games and other virtual worlds. But, the way these piece came together in Second is truly a leap of creativity of astonishing proportions. And yet, as with the people at PARC they seem unable to envision applications for it.

I think I have had my fill of bashing Linden Labs. Perhaps I have gotten it all out of my system now. So, as I turn this in a more positive direction, I am going to suggest four quite distinct but not necessarily mutually exclusive application areas for Second Life. I call these 1) Creative Second Life, 2) Social Second Life, 3) Business Second Life, and 4) Educational Second Life. Over the next few posts, I will sketch out these very different application area and, hopefully, it will become obvious why Second Life cannot work as long as Linden Labs continues to pursue these possibilities simultaneously.

Linden Labs and the Failure to Understand Their Customers

Sometimes it is difficult to figure out who your customers really are. Universities, for example, will often have vigorous debates over whether their customers are their students, their donors, the employers who hire their students, or the society in which they function that needs educated citizens; just to name a few possibilities. Consider the following two perspectives: 1) Our students are our customers. They pay tuition and receive education in return; or 2) Our students are a raw material that goes into our final product which is an educated person. Our customer is society. Just how different would universities operate under those two scenarios. As it turns out, most universities do not resolve the customer issue. Diversity and richness are far more important to universities than efficiency and effectiveness. And education is so fundamentally important to society that we cannot walk away from these institutions no matter how unfocused or inefficient they may be. But a business such as Linden Labs with a product such as Second Life cannot afford the unfocused approach that a university takes. Their product is not fundamentally important to society. People can walk away. And they do.

Just who is the customer for Second Life? Let's lay out a few possibilities and see how each possibility would have different needs and demand different responses from Linden Labs. Consider the following possibilities: 1) The customer in Second Life is the Basic Account holder; 2) The customer in Second Life is the land owner or business owner; 3) The customer in Second Life is the real life business who wishes to sell their product or service through a virtual world; or 4) The customer in Second Life is the corporate research and development group who is using Second Life to develop new ideas and new products. This list is not intended to be exhaustive. It is only intended to show how these stakeholders have very different needs. Let's consider each in turn.

1) The customer in Second Life is the Basic Account holder: We can dismiss this one from the start. Basic accounts are free accounts which do not yield any direct revenue to Linden Labs. They may yield indirect revenue if advertisers are will to pay based on traffic or if Second Life businesses make money off of them. But, in those cases, the customer is the advertiser or the Second Life business. So free basic accounts are, at best, a means to some other end, although that other end is not entirely clear.

2) The customer in Second Life is the land owner or business owner: This is a possibility. Linden Labs earns revenue by selling and taxing virtual land. If this is the customer then LL would want to provide services to support Second Life businesses and would want to attract high quality residents who are likely to spend money at these virtual businesses. Neither of these goals is met particularly well. While Second Life businesses can down load spreadsheets of their business transactions, that is pretty much it for customer support. Issues like security, performance and reliability, all of which are critical to Second Life business is wanting. Further, the basic account policy in conjunction with anonymity tends to attract low quality traffic thus limiting the revenue potential of the businesses. The basic account policy is like going to a homeless shelter to generate traffic for your shopping mall.

3) The customer in Second Life is the real life business who wishes to sell their product or service through a virtual world: In the previous scenario the customer was a Second Life business. In this scenario the customer is a real life business looking to sell products through a virtual world presence. You can think of this as having an island as an alternative to a web site. While this scenario has promise there are three major flaws. First, as sited above, the basic account policy tends to generate low quality traffic. So revenue potentials are limited. Second, the learning curve for Second Life is very high and customers who are used to the ease of using the web are not going to switch very readily if shopping in Second Life requires a big investment of time in learning how to get around. Third, the Linden economy works well for a fantasy environment; but only for a fantasy environment. Paying L$250 ($1 real money) for an item of clothing encourages one to dress up their avatar and enjoy the fantasy. However, an inexpensive book in a Second Life store would cost L$5000 while a computer would cost L$250,000 and a car would cost L$5,000,000. This scale benefits inexpensive products like virtual clothing but prohibits sales of more expensive real world items.

4) The customer in Second Life is the corporate research and development group who is using Second Life to develop new ideas and new products: This is another, and very different, possibility. These developers would be attempting to use Second Life technology for distance education, business meetings, virtual conferences, virtual tourism, and so on. These are all very promising ideas. However, if this were the customer, then LL would be investing a great deal more in infrastructure, development tools, performance, reliability, training, consulting and so on. And perhaps they are. But, if they are, it is a well kept secret.

The point here is that you cannot be all things to all people. Different potential customer groups have different needs which are often at odds with each other. If you try to satisfy all of them, you land up not satisfying any of them. In order for a business like Second Life to be successful in the long term, they have to figure out who their customers are and make sure that they are keeping those customer happy.

The Mall vs the Red Light District

In real life we have a wide variety people pursuing a wide variety of interests. And, in general, this is a good thing. Within reason, people should be able to find socially acceptable vehicles for their self expression and need fulfillment. But, we also realize, in real life, that one person's pursuit of well being might conflict with another person's pursuit of well being. So, we segregate interests. You would not expect to find, for example, an adult book store next to a church, nor a half way house for pedophiles next to a high school.

These are extreme examples but more subtle examples are not hard to find. Most cities and towns have zoning restrictions. So you cannot place commercial establishments in residential neighborhoods. People need to live and people need to shop so both are legitimate needs. But, most municipalities feel that orderly development is preferable to letting anyone do whatever they wish where ever they wish. In fact, a town or city who followed that philosophy would deteriorate and become unlivable in very short order. And that is exactly the problem that has occurred in Second Life.

Linden labs makes a faint and almost perfunctory effort at segmentation by marking islands as PG or Mature. However, this is grossly inadequate for the variety of activities found in Second Life. The answer, somewhat glibly, is that Second Life needs zoning. Actually, the answer, somewhat more seriously is that Second Life needs to develop a segmentation scheme so that conflicting interests do not collide. Using very broad strokes their needs to be areas in Second Life where you go for business or education, and other places you go to explore personal expression and needs. I would characterize these broad strokes as The Mall vs the Red Light District. And over the next few posts we will explore the possibilities and pitfalls of segmentation.