Business and Technology in Second Life

What is the value of content in Second Life®? This might be the most stupid question to ask, but… did you ever ask yourself why things cost what they do?

We have to turn back the clock a few years, to the time Linden Lab introduced the stipends. Every Basic Account used to get L$50 every week they’ve logged in; Premium Accounts got L$500 every week, no matter if they logged in or not.

This set the reference for the price of things in Second Life: content creators targeting newbies (who would start as Basic Accounts) would know that if they priced it from L$0-50, they would get newbies to buy their content. If they wished to go upscale and sell to Premium Accounts, up to L$500 would mean that they’d get a sale per week. That’s why the first generation of outfits (usually just two pieces!) would cost up to L$500, since you expected residents to buy one per week (hopefully!). Skins, or other items that wouldn’t be bought every other week, like vehicles or animation overriders, would cost around L$2000, since you wouldn’t expect them to buy a new one very often. So that’s why things cost what they do

When GOM first introduced their currency exchange for Second Life, a similar question was asked: what would be the “fair” price to charge, in US$, for a handful of L$? Again, we needed a reference. Since the easiest way to get L$ in-world was by being a Premium Account, and that costed US$9.99/month (less if you paid annually!), and this got you L$2000/month, it meant that LL “valued” (indirectly) L$200 to be worth 1 US dollar. Well, almost: since the cheapest way to get L$ was to pay an annual fee — for US$72 — this meant that you could get L$333 for 1 US$. There’s your range — from L$200 to 333. Average it, and you get L$266/US$. Now you know why the L$/US$ ratio has been floating around that “magic” value for so long

Finally, land is also valued used similar baselines, although here the concepts of “speculation” and “location” play a huger role! Still, like in real life, you can see that the cost of land can be compared to the “base welfare stipend” (the original L$2000/month) which included 512 m² of tier on the mainland. The value of land overall is tied to this and is not totally arbitrary.

So knowing the base metrics that define why things cost what they do in Second Life, we can ask ourselves next: what will be considered a good, successful SL-based business? And what will distort the market? And this will finally let us ask us the last question: should Linden lab attempt to “regulate” the market (in the good, European sense of the word) or just let it do whatever it pleases and whatever the results are (in the American sense of the word)?

On the day that Linden Lab launched their major business-oriented product, Second Life Enterprise® (formerly known as “Nebraska”) and its companion site, Second Life Work Marketplace®, Google links to it went up from zero to 14,000 in a few hours (there are now almost half a million as I write this!). Not only the SLogosphere reported on this very thoroughly, but the major news media didn’t miss the opportunity to talk about it either, from the Financial Times to Information Week. According to Amanda Linden, who lead the incredible effort of promoting this new product with her team, during the official launch, done as a mixed-media event in San Francisco and Second Life, the physical location was so crowded that they had to project the session to the exteriors, where many more people were eagerly awaiting the news but unable to enter the room. Inside Second Life®, partnering with Metanomics, the session was viewed live by over 300 residents spread among many locations (I found it very amusing that Metanomics’ Dusan Writer was picked to talk “in the flesh” in San Francisco as the host of this event; then again, who better than Dusan to explain what business in Second Life means?). The video stream apparently peaked at 2,500 viewers or so at the same time (but will probably have many more downloads in the next few days). So, overall, the product launch might have been followed live by some 3,000 people.

This is no mean feat. Obviously there is still some way to go to beat Steve Jobs’ keynote speeches once or twice a year. But nevertheless I believe it was a huge success (Amanda Linden calls it the largest promotional event ever run by Linden Lab in their decade of existence) — it’s no mean feat to have a product launch with 3,000 users. In real life, on a “traditional” product presentation with a press conference, getting 3,000 people to attend is quite rare! It’s also true that huge countries like the US will attract more people — I’m sure that any product launch by, say, Microsoft, will probably feature a similar amount of viewers — but I’m more used to audiences of 30-300 (and the latter number for Fortune 500 product launches!) for a new product. Your experience might be different, but in any case, we’re contrasting the launch from a relatively small company to a big, huge launch by a Fortune 500 company, which is a bit unfair to Linden Lab