United Gamer Online (UGO)

June 25, 2010
Posted in Musings at 10:09 am by zhaewry

Beyond Micheal J Fox’s charming good looks, the Back to the future movies were built around the idea that its as easy to mess things up as make them better. Mark Kingdon’s been sent packing and Phillip Rosedale has returned with the title of Interim CEO, Is this good? Bad? Indifferent? I expect it will be a mixed bag.

Second life is at a crossroads. Growth has stalled, several initiatives havestalled, and 1/3 of the lab staff got handed walking papers. Growing beyond a niche is hard, and several Virtual Worlds and their associated companies have gone bust in the past year. SecondLife has the advantage of basic profitability, and a user base which, has enthusiasm for the environment, when the lab isn’t busy making their lives difficult.

Phillip has remarkable strengths. He has vision, he is charismatic, and he is wicked smart. Above all, he is passionate. . Phillip is also, in part impractical, a dreamer, easily distracted, and undisciplined. These are, in many ways two sides of the same coin. Creativity and Vision are not enemies of disciplined slogging, but they are rarely close friends either. Whether Phillip sorts things out depends a lot on how he parses the basic problems of SecondLife, and how he attacks them.

So.. given this, here are some thoughts on what he should do.
Six things to do:

1. Start by listening to your customers, and listening hard. Feel free to call them residents, but keep in mind they pay your bills.
2. Play to your personal strengths, and bring in people who complement them, and bolster your weaknesses
3. When you look at things like Avatars United, Second Life Enterprise, and other projects which haven’t prospered, look at not the simple fact that they failed, but WHY.
4. While you are getting the core business sorted out, get someone good asking hard questions about how to monetize things which aren’t land. The Lab has resources it doesn’t monetize, and figuring out how to leverage them is vital.
5. Keep firmly in mind that Linden Lab is 200 employees and no longer a startup. If Second Life is to avoid being a niche player, it will have to grow again, and the management team needs to reflect this reality.
6. You have a huge “technical debt” Start paying it down. Yes, its painful, but it prevents Second Life from scaling and evolving. Cleaning up code and architecture isn’t glamorous, but it unblocks progress.

In Detail:
Listening

Listening is hard, but vital. If you pay attention (LISTEN) to only one thing, start here.

Listen to what users have been saying for months. Fix search. Fix Group IM, Raise the Group Limit, Do Windlight estate settings, figure out how to allow megaprims in appropriate settings. Listen to your customers about viewer 2.x and tell them you’re supporting 1.23 while you sort it out.

Don’t run off to “fix” things without listening to the residents. When you think you know how to fix something, describe the fix, and then, listen again, to what people say. Run Serious Betas, and let people play with things early and often, and when they complain, again, Listen. Don’t run a two week beta, fix three bugs and say “We listened.” Start early, share code often and actually allow tester input to influence the end result.

When you listen, actually respond to feedback. Yes, it may take a little longer to complete the process, but Viewer 2.0, and Search have shown very clearly, how badly things go when you build a lot of code and don’t listen to the community as you build them.

Work on saying yes to your customers, not no. The lab has spent a lot of the past two years telling its customers no. Yes is a better answer. This may mean telling lawyers, technical people and maybe even Phillip Linden to figure out how to make yes possible. Second Life needs some yeses.

Look at what people do to make things happen in second life, and then listen to them about how to make it better. A lot of your customers have figured out how to run big events using voice, web streams, chat bridges and other tools. Listen to them about how they do these events, and why, and then talk to them about how Linden Lab can make this easier. Then go back to them when you think you have answers, and listen when they give you feedback.
Play to your strengths and understand your weaknesses

Operations needs a solid hand, make sure you keep one there. The grid has become massively more stable in the past two years, backslide on that, and everything else is at risk. Take your time when piloting and deploying code. The steady drone of pilot roll, rollback, pilot roll, rollback sends a bad, unnecessary message about diligence in testing.

Put in place a full up CTO. Someone with a solid track record in building distributed systems, and understands scale. Listen to them, and give them enough authority to put some focus on solving the long term technology issues which get in the way of growing out the grid and single region concurrency. Tell them you know there is a deep technical debt in the current code base and support them in paying some of it down.

Get someone who is good at communications. Listen to them. Linden’s PR has been painfully bad and needs to get a lot better. Speak to your residents honestly, speak to them often and work to make that communication a two way street. A brown bag where people vent, but have little or no impact on behavior is not communication. When you hold in world events as part of communications, do a better job. The community has worked out how to hold large events with streams both in world and on the web. Linden should learn from best practices and not just “turn on voice and pray.”

Get someone who understands user experience and let them work closely with the resident community and figure out how to move beyond the current viewer 2 mess. Giving first time users a cleaner, simpler experience is important, but not at the cost of neutering the client in daily use. Defaulting some settings to permit a simple experience for new users, while allowing experienced users to personalize the experience is the way forward here.

Put someone in charge of the challenge of connecting users to exciting experiences on the grid. Make sure they understand why people thrive in SecondLife and how to make those experiences more accessible. Events and shared experiences are the hear of SecondLife. New users should have quick and easy ways of finding new experiences. SecondLife is not a game, but look at using game like rewards to get users to explore the grid, explore shopping, explore events. Add some low key rewards for people when they spend their first 100 lindens, when they attend their first event, when they make friends.
Learn from the failures

Look not just at what projects failed, but why they failed. A core appeal of second life is immersion were projects like Avaline and Avatars United helping, or hurting immersion. A core asset of Second Life is the rich content cloud and rich creator community. Did Second Enterprise tap into the asset cloud, or cut off enterprise users from convenient access to the content and economy on the main grid? A core value of any growing environment is the network effect of connecting users to users. Did Second Life enterprise have any ways of connecting enterprise users to the greater community, or did it hide them away from the core experience.

Retrenching to focus on the core experience is fine, but failing to understand why various project failed will prevent similar projects from going forward successfully in the future.

Second Life is an immersive, creative experience. Linden Lab needs to look at projects which enhance the core strengths of the experience, and recognize the unique nature of a virtual world. Turning the lab’s back on the rest of the web, and on customers beyond the current user base is just as much a recipe for failure as ignoring the current users.
Monetizing beyond land (and business models)

Linden lab has several core assets. The grid itself, and the actual regions are the heart of the service. Revenue form land is both the Lab’s most secure revenue source and biggest challenge. At the end of the day, land rental is value added server space rental and servers get cheaper every year, and margins get thinner every year. Second Life has important assets beyond the grid which are not monetized.

The content cloud, and access to the economy of second life is a huge potential source of revenue. Second Life has some of the richest most innovative content in the internet. Competitors to second life are emerging, and will continue to emerge. Helping make Second Life an internet wide hub of content creation and selling is a huge opportunity. This requires getting beyond the current model of a single monolithic grid and into spaces where Linden Lab is a hub not just for land but other services.

Identity and users are another important asset the lab has consistently ignored. Look at how to allow users to take thier digital selves beyond the current SecondLife grid and how the lab can be a hub for identity in other spaces. Don’t couple these opportunities with requiring people to expose a real life identity. Second Life is as much about coming *to* the virtual world as it is dragging the real world into the virtual spaces, but by the same token, people’s virtual identities are deeply important to them, and they want to “be who they are” in many parts of the web, not just the current grid.

Make “premium” membership meaningful, and make “free” membership less valuable. Free, ready access to the grid is important, but, there is no reason to not put significant limits on what you get for free which encourage people to become premium. Free accounts are important, because they let people quickly enter and explore the world, but look at limiting them so that people are encouraged to become premium memberships. Separate out avatar name from account, and allow people to have alts share premium status. Be careful about privacy when looking at these choices, but recognize how and why people create identities within the grid, and work to provide a model which both helps users do what they want to do, and gives the lab better insight into what customers are doing, and how provide them with real value.

As time goes on, Linden is going to face an every more diverse ecosystem of competitors in its niche. The lab needs to position second life to be part of a growing ecosystem, and to profit from the success of the whole ecosystem, not just the current user base. Sorting out how to monetize all of Linden’s opportunities, not just land sales is a vital part of thriving in a larger web of virtual spaces.
The lab is not a startup

You said it yourself this week. You have been working on parts of Second Life for a decade. Even after laying off 100 people, Linden Lab is larger than most startups. The lab needs to be more focused, and more agile. This does not mean the lab can shoot from the hip. SecondLie Scribe used a wonderful phrase in this panel discussion “Manager of managers.” Its a description of something that is very much not what startups are about, but is what bigger companies need. Look forward for how the lab needs to function in its next decade, not back. Take the title of “interim CEO” seriously, and find people who can focus on running the company well, so you can focus on Vision and Strategy, and listening to your users.

Most companies don’t get second chances to grow beyond their initial success. Linden Lab may not either. Second Chances are rare. The lab has a passionate but nervous user base. This is a double edged sword. Passionate advocates can be your best source of ideas, inspiration and new users. Passionate advocates thwarted and made bitter can be your loudest critics and take their ideas and passion and go elsewhere with them. Second Life needs to execute less like a startup and more like a nimble successful company. There are people who have watched what Linden Lab did well, and what Linden Lab did poorly. Unlike the field 10 years ago, there is a lot of technology, there is a large community of developers, users and potential competitors who will be looking to see if they can succeed where Linden Lab has not.

Second Life does not have the excuse of immaturity, or the luxury of obscurity. Customer Service, development, and user outreach need to be professional and serious. If Linden Lab does not learn from its mistakes and move forward decisively others will, and the challenges to Second Life will grow.
Paying the lab’s technical debt

This is a painfully technical point, but not a trivial one. Technical Debt is very real and does huge damage to companies and projects which ignore it. Linden Lab has a decade of technical debt. Some of it has been paid down. The changes which have made going from Havok 4 to Havok 7 far less challenging than the move to Havok 4 are a good example. On the whole tho, the phrase “We can’t do that, our code isn’t in a position to do that” is a phrase heard far too often in Linden Lab.

Technical debt has gotten in the way of scaling regions, adding caching to regions, offloading work form regions and breaking the grid into more manageable chunks. Technical debt gets in the way of supporting new business opportunities for the lab, and slows every type of development. Part of moving beyond a startup mentality is paying down technical debt on a regular basis.

Linden Lab needs to make understanding its technical debt, and planning to pay it down a part of the technical culture. This is part of moving beyond being a startup and becoming a company that can execute efficiently. Someone at the lab needs to be an advocate for investments which will improve long term scale, long term flexibility and long term stability. The lab needs to position itself to adapt to changes in the world such as mobile devices, and cloud computing. Technical debt gets in the way of business and technical flexibility. Arcane, rigid code leads to arcane, hard to fix, change and use systems. Users don’t want to know why its so hard for the lab to permit “undelete” of objects, or rollback of a parcel’s state, they want the grid to what they want, in ways which delight them. Paying down technical debt is a vital part of delighting users.
In closing

Second Life is at a very real crossroads. Linden Lab needs to take serious steps to sort out very real challenger. M was chosen by Phillip, and the board at Linden Lab to lead Second Life beyond where it was in 2007. Bringing back a founder to a startup is fraught with peril. There were reasons Phillip and the board wanted to bring in a new team, and those reasons haven’t gone away because the team they brought in failed to produce the desired results.

Linden Lab is fortunate to have cash, to have a fairly sustainable business model in the short term. The lab needs to fix serious problems and fix them soon. Second Chances in business are rare, and third chances vanishingly so. Linden Lab needs to figure out how to listen to its customers, make a product they want to keep using and figure out how to grow again.

Second Life still has huge potential, but the longer growth stalls and alternatives mature, the harder the road ahead will become. Linden Lab needs to focus on delighting its current customers and positioning itself to grow beyond the current user base. This is a huge challenge. Phillip Rosedale has met a huge challange in getting Second Life to where it is today. I believe that Phillip and Linden Lab can meet the current challenges, but only by being smart, disciplined and willing to Listen and Learn.

Thursday, June 24, 2010
©2010 Bloomberg News

June 24 (Bloomberg) -- Linden Lab's virtual world called Second Life was seen as the Web's next big thing following its 2003 debut.

Investors including Amazon.com Inc. Chief Executive Officer Jeff Bezos and EBay Inc. founder Pierre Omidyar poured millions of dollars into the project, where 3-D avatars sunbathe on virtual islands and operate virtual companies. Businessweek featured Second Life on a 2006 cover, and Reuters opened a virtual bureau. Coca-Cola Co. held a virtual contest.

Philip Rosedale, who founded San Francisco-based Linden Lab, said Second Life has yet to reach its potential. He was named interim CEO today, replacing Mark Kingdon, who stepped down. In 2008, Rosedale predicted that virtual worlds will become "bigger in total usage than the Web itself."

Fast-forward two years. While 1,400 real-life companies still use it, Coca-Cola hasn't returned since 2007. Reuters shuttered its bureau last year. Longtime backer International Business Machines Corp. is exploring competing services, such as unity3D, now that Linden Lab has refocused on consumers, says Francoise Legoues, a vice president at IBM, where more than 10,000 employees use Second Life for meetings.

The virtual world's once explosive growth has slowed. About 1.38 million residents currently log into the virtual world on a given day, little changed from a year ago, according to independent surveyor GridSurvey.com.

In a "strategic restructuring" this month, Linden fired 30 percent of its staff. Over the past few months, executives including Chief Product Officer Tom Hale and Lead Evangelist John Lester have departed.

'Less Better'

"The overall trend for Second Life is stagnation," said Philippe Kerremans, who helps virtual shops track visitors on the site.

Rosedale, 41, seeks to change that. "I want these metrics to improve significantly," he said today in an interview, referring to the hours users spend in the virtual world and to the addition of new users.

He plans to enhance a user's experience in Second Life, so that it takes minutes instead of hours for new users to get up to speed. That will mean changes to everything from servers to the software tool participants use to navigate the virtual world, he said.

"We want to simplify the core consumer experience, Rosedale said. "We are going to do less better."

The strategy may mean that Second Life will become accessible through a Web browser rather than a software download later than previously expected.

"We don't think it's a game-changer in the next year," Rosedale said. "More tactical changes to the product can get us to impressive levels of growth."

Slower Growth

Second Life's economy is still expanding, though at a slower pace. User-to-user transactions rose 30 percent year- over-year to $160 million in the first quarter. That's down from 65 percent growth a year ago. Closely held Linden doesn't disclose its sales or whether it's profitable.

Like popular games "FarmVille" and "Mafia Wars," Second Life may also appear through Facebook Inc., Kingdon said last week.

Rosedale says he'll continue working on his other start-up, LoveMachine, which is developing several projects including artificial intelligence and virtual replacement of world currencies.

"My first priority right now is helping Second Life," he said.

--Editors: Lisa Wolfson, Stephen West.

Company plans to extend the virtual world experience to the social and mobile web

SAN FRANCISCO, June 9 /PRNewswire/ -- Linden Lab®, creator of 3D virtual world Second Life®, announced today a strategic restructuring to increase focus on the company's consumer business including investments intended to enhance ease of use and participation in its virtual goods marketplace through browser-based and mobile applications.

As part of the restructuring, Linden Lab will also improve its geographic and cost efficiencies. The company's product and engineering divisions will be combined. The software development teams will be consolidated in North America and customer support will be reconfigured to provide more scalable services. As a result, Linden Lab anticipates staff reductions of approximately 30 percent.

"We've emerged from a two-year investment period during which, among other things, we've spent a considerable amount of time improving reliability and the overall user experience. Today's announcement about our reorganization will help us make Second Life® even simpler, more enjoyable, relevant and engaging for consumers starting with their first experience. It will also enable us to invest in bringing 3D to the web and will strengthen our profitability," said Mark Kingdon, chief executive officer of Linden Lab.

According to Kingdon, the restructuring also better aligns Linden Lab with its two longer-term goals. First, the company aims to create a browser-based virtual world experience, eliminating the need to download software. Secondly, Linden Lab will look to extend the Second Life experience into popular social networks. "Ultimately, we want to make Second Life more accessible and relevant to a wider population," he said.

About Second Life and Linden Lab

Developed and launched by Linden Lab in 2003, Second Life is the world's leading 3D virtual world environment. It enables its Residents to create content, interact with others, launch businesses, collaborate, educate, and more. Since its inception, Second Life Residents have logged more than one billion user hours and generated more than $1 billion in user-to-user transactions. With a broad user base that includes everyone from consumers and educators to medical researchers and large enterprises, Second Life has become one of the largest repositories of user-generated content and the largest user-generated virtual goods economy in the world.

Privately held Linden Lab, founded in 1999 by Chairman of the Board Philip Rosedale and headquartered in San Francisco, develops revolutionary technologies that change the way people communicate, interact, transact, learn and create. For more information, visit www.secondlife.com.

By Laura Ferreiro, Special to the Los Angeles Times

June 9, 2010

Craig Lyons and other indie artists are leading the charge in the virtual online world. It's a way to earn a living, promote their music, expand their fan base and support causes they believe in.
"If I could get some bubbles, I'd be forever indebted," singer Craig Lyons tells the packed house at his Monday night gig. The crowd promptly complies, filling the room with bubbles while Lyons plays his tune "Under Water."

Two nights earlier, the audience made it snow as he strummed the chords to his song "Winter." Strangely enough, the Los Angeles-based singer-songwriter has come to expect this type of supernatural behavior at his shows, which take place several times a week in Second Life, the virtual online world that allows users to interact with one another as avatars.

Despite declining media coverage after a few years of overexposure, Second Life lives on, and within its virtual borders a music scene has been thriving, with independent artists such as Lyons leading the charge. These artists are earning livings, promoting their music and supporting causes they believe in by performing in this virtual space, which has approximately 1 million users each month.
In addition to collecting fees from Second Life venues (there are more than 3,500 known to exist), musicians are often paid handsomely by fans who tip using the Second Life currency, Linden dollars, which is exchangeable for U.S. dollars via a number of websites. Users can buy and sell the currency at a fluctuating exchange rate that usually hovers around 265 Linden dollars to one U.S. dollar.

Lyons typically earns $100 to $200 per show, and he often plays as many as three gigs in one day for audiences logging into Second Life from different time zones. The 3-D virtual world was launched in 2003 by Linden Lab, a company founded by technology guru Philip Rosedale, who was named one of Time magazine's 100 most influential people in the world in 2007. In Linden Lab's alternate universe, people can interact with one another, teleport themselves to exotic virtual locales, buy houses, cars and clothing and amuse themselves with countless forms of virtual entertainment.

Lyons, who has released four albums of introspective pop-rock songs that have appeared on "So You Think You Can Dance," "The Real World" and other shows, believes Second Life provides an ideal platform for artists to broaden their fan bases by reaching people around the globe they wouldn't be able to connect with under normal touring circumstances.

"It feels really nice to reach people who wouldn't be able to see these shows otherwise — be it single parents, physically handicapped people who can't get out of the house, or people who can't afford a $15 cover charge and drinks at the bar," he says. The Ohio native's easy charm and charisma heighten his appeal in this interactive environment, as do his matinee-idol good looks, which incite swooning from several fans.

Second Life concertgoers attend gigs as avatars at virtual venues that often resemble "real-life" nightclubs or outdoor amphitheaters. The performances often include live streaming videos from the artists' own studios, while the performers' avatars play on the virtual stage below. During the show, fans mingle and use a local chat feature to applaud, comment on the tunes and even flirt with one another.

It doesn't faze Lyons that the fans filling the rooms are avatars. "Some people are selective about their fan bases. I think that's crazy," he says. "They don't connect the dots and see that they are real people having a real experience." A three-dimensional "widget" on the side of the stage connects fans to Lyons' music on iTunes, as well as his MySpace and Facebook pages — all of which have seen an increase in traffic since he started performing regularly in Second Life.

Helen Harbison, who regularly attends Lyons' virtual gigs, believes the interactive experience that the virtual platform provides can actually surpass that of traditional live gigs. "Gigs in Second Life are a special experience," says Harbison, who lives in Dublin, Ireland. "The interaction between musician and audience makes it special, something that you just don't get at a show in a packed-out venue or bar in real life."

Since Second Life's launch, a handful of major acts, including Duran Duran, Suzanne Vega and Ben Folds, have performed or held events in the virtual platform, but none has made a broad impact. "Over the years, Second Life didn't match the hype," says Nelson Gayton, executive director of the Center for Management of Enterprise in Media, Entertainment and Sports at UCLA. "The technology wasn't quite caught up with what people envisioned it to be."

But now, he says, "There's no reason to believe that this isn't a viable platform to experience or promote music. Why not perform in a virtual space instead of going through the challenges of performing in a live space? It's another platform to promote your talent and whatever it is you want to express so people can experience what you have to say."

Missouri indie rockers the Follow, who also perform regularly in Second Life, recognize the convenience these virtual gigs offer fans, and see it as the next logical step in the evolution of social networking. "It's so easy in Second Life — you can teleport your friends immediately, and you don't have to get dolled up," says bassist Amy Rickertsen.

Drummer Mat Matlack adds: "Once people experience Second Life, it will drive people there. The music scene will give them something to do and create an environment for social mixing. It's Facebook on steroids."

Lyons, a self-professed environmentalist, points out another beneficial aspect of this type of virtual gigging. "I legitimately think that it's the most sustainable method of performing for an artist these days, both environmentally — because you can reach the entire globe without burning gas — and financially." Lyons streams most of his Second Life gigs from his Santa Monica home studio using a basic Web cam and a microphone.

He also created an entire music video in Second Life for his ambitious, strings-laden cover of the Beatles' "Across the Universe." The 6-minute video features the avatars of friends, fans and musicians who volunteered their time and talents to create the video.

"Right now, [performing in Second Life] is kind of like the Wild West, but I don't think that will be the case soon," says Lyons. "I think it will be widely accepted and possibly even necessary for any kind of artist in the near future."

calendar@latimes.com

Copyright © 2010, The Los Angeles Times

04/30/2010
There's no denying it - despite a worldwide consumer recession and spiking unemployment, virtual worlds are still growing with impressive speed.

A report by the Virtual Goods Summit shows that purchases of virtual clothing, weapons, and accessories will top $1 billion for the first time, and will nearly double to $1.6 billion by 2010.

There's only one thing missing: competition..

The Virtual Market is Booming
While it was expected that virtual worlds would draw in hundreds of billions this year, it appears increasingly likely that virtual worlds will top $1 billion with months to spare.

If this is the case, one company is doing the heavy lifting: Second Life alone boasts nearly $500 million in virtual sales.

What is so interesting about the Virtual Goods Summit report? For starters, it shows that consumption patterns are changing. More virtual world users are purchasing items with real money than in previous years, meaning this all-important revenue stream is moving away from the hands of a few "power users."

In other words, virtual worlds are expanding their membership not only to curious new players, but new players willing to spend money. As Facebook browser-game creator Zynga's rapidly-expanding pay-to-play figures show, more paying customers lowers the risk of a flight of virtual capital.

Unfortunately, the virtual economy will be especially susceptible to shocks and sudden declines so long as one world controls nearly 50% of all revenue. However, with Blue Mars set to tap major developers as a revenue stream, Second Life may find its position as the Metaverse commercial center challenged by an upstart.

Despite initial suspicions, this challenge will be good for the Metaverse. Concentration of capital, as we've seen in the United States, leads to economic boom-and-bust cycles. If a suitable challenger to Second Life develops over the next year, it will be a net gain for the Metaverse.

A world where Second Life only controls 30% of U.S. virtual world revenues may mean a reduced position for Linden Lab, but it also means a more stable virtual environment. A dose of competition might spur Linden Lab to fix the myriad bugs, broken features, and user-unfriendly elements of its otherwise solid virtual world.

The Metaverse has plenty of money. What it needs is a good dose of competition.

April 28, 2010 Dean Takahashi


Virtual worlds, those fully-formed, three-dimensional renderings of the real world, are waning as apps take off on social networks and mobile phones. But the mother of the virtual-world craze, Second Life, is bucking that trend and growing.

What’s more, Linden Lab’s Second Life virtual economy is adapting to the new business model of virtual goods. Last year, in the midst of the recession, Second Life’s virtual goods economy in user-to-user transactions was $567 million, up 65 percent from the year before. And in the first quarter, the growth continued, according to Mark Kingdon, chief executive. The world remains the largest user-generated virtual economy.

San Francisco-based Linden Lab is announcing today that March user-to-user transactions topped $57 million. For the quarter, user-to-user transactions were $160 million, up 30 percent from a year ago. The company’s monthly unique user number peaked in March at 826,000, up 13 percent from a year ago. This was at a time when virtual worlds such as There.com, Vivaty and Metaplace were closing down.

“It has been a vibrant market, and has become a full-time job for some people,” Kingdon said in an interview. “We set another record in March.
While user-to-user transactions make money for Second Life Residents, as members are called, they indirectly benefit Linden Lab, which makes money through sales of virtual land, premium subscriptions, and sales of Linden dollars, the virtual currency which Residents use to engage in transactions inside the world.

Kingdon believes that Second Life has continued to thrive because it nailed a particular kind of customer: the creative class. These are the artistic people who have fun creating avatars, or virtual characters, goods, and homes inside the virtual world. They put those goods up for sale, making the world more fun and the economy more vibrant.
On a trip to Paris, Kingdon met a Parisian boutique manager who designed her own fashions in Second Life. She quit her real world job to work on a Second Life business that had partner designers in Japan. Members are creating 250,000 virtual objects a day and are uploading them for sale in Second Life. That’s a long way from the giant beanstalk, which was the first virtual item created in Second Life, back during its beta test in 2003.

On top of targeting a creative class, Linden Lab has poured resources into attracting new users. It is doing a small amount of search engine ads and affiliate marketing deals, and it is also making improvements in its user interface. Back in December, the company started offering homes to new users. With a single click, a user could move into an incredible Japanese home or a cabin in Lake Tahoe.
It has also redone the experience that users have when they first log into the world. On March 31, the company launched a new viewer, which is used to view the world. It was designed to make 3D browsing feel more comfortable for new users and to make it easier to find places in Second Life.

Second Life has come a long way from its hype cycle a few years ago, when everyone in the media from Time magazine on down predicted a huge gold rush for virtual worlds, led by Second Life. Journalists opened up shop in Second Life, as did major corporations. Reuters opened up a virtual bureau and dedicated a full-time reporter, Eric Krangel, to the beat.

Knockoffs proliferated. At one point, there were more than 200 virtual worlds just for kids. Many have collapsed.

Inside Second Life, lots of companies left ghost towns. But about 1,400 businesses remain, and the online voice chat they engage in generates billions of minutes of usage. Companies such as IBM are staging virtual conferences inside Second Life.
“A fair amount of the press left,” Kingdon said. “The customers stayed.”

Even as Facebook grows past 400 million –dwarfing the numbers of Second Life — more than half of Linden Lab’s customers report that they are active on Facebook. Hence, Kingdon argues that Second Life is complimentary to other social media, which generates traffic for the virtual world.

Linden Lab has 350 employees, but they aren’t creating virtual goods for the company to sell. Linden Lab leaves that up to its Residents, while most of the company’s employees work as developers or in customer support. The developers are hard at work on ways to connect Second Life to the social Web more explicitly, so that content created in Second Life can flow into other places.
“Our strategy is to bring more of Second Life out to the Web,” Kingdon said. “The distinctions between Second Life and the Web will blur more and more.”

April 28, 2010






Today Linden Lab announced that Second Life's economy had grown to an all-time high in Q1 2010, defying recent trends toward decline in virtual worlds. Users spent $160 million in user-to-user transactions, a 30% gain year-over-year and a new all-time high. Over half a million Second Life residents were active in the world's virtual economy and over 800,000 unique users logged in repeatedly every month. Second Life continues to be the world's single largest virtual economy, despite the record-breaking sums spent in rival virtual world Planet Calypso.

In its report, Linden Lab attributed its economy growth to several different factors. Perhaps the most important was Valentine's Day, which is usually a major virtual goods-selling holiday. Linden Lab reports that this year's Valentine's Day saw the highest-ever single day sales of virtual goods on the Xstreet SL marketplace.

Xstreet SL sold $2.3 million in virtual goods throughout the quarter, up 82% year-over-year. Xstreet Valentine's Day 2010 sales were up 28% over the previous all-time high for single day sales, Christmas Eve 2009. Linden Lab noted that it made changes to the Xstreet marketplace that made it easier for users to access their L$ balances through the Web interfaces, which drove a 25% overall increase in purchases.

Linden Lab also attributes a major cultural factor to Second Life's growth in Q1 2010, the release of the James Cameron film Avatar. Linden Lab believes the popular film's themes may have sparked new interest in exploring virtual spaces, by making the concept of online avatars easier for mainstream audiences to understand. Avatar was screened widely in 3D, which Linden Lab believes may have driven desire to interact in an online space rendered in three dimensions. Linden cites, as evidence, increased traffic to Second Life's Web destinations and increased search traffic.

Coincidentally, Linden Lab had chosen Q1 2010 to begin an advertising campaign designed to attract new users. Advertisements for Second Life began appearing in Google searches, on Youtube.com, in display ads, and in affiliate website programs. Linden Lab reports that the amount spend on advertising was not significant, but probably acted as a key driver in the overall increase in number of repeated monthly repeat logins that occurred during the quarter.

New Features, New Growth

This quarter saw Linden Lab introduce a new feature, Linden Homes, that it believes increased the overall number of premium subscribers. In particular, Linden Lab states that many Residents reactivated lapsed subscriptions in order to gain access to a Home for their avatar. Linden Lab also believes that Homes helped drive Xstreet purchases during the quarter, with users purchasing furniture items and media players for use in their new virtual living spaces.

Other factors cited by Linden Lab include technology upgrades, like moving critical databases to new generations of server hardware and migrating the Second Life data center from San Francisco to Dallas. Linden Lab believes these moves increased uptime, decreased latency, and overall helped hold onto new and returning users through increased performance.

Linden Lab believes winter seasonal issues like fewer daylight hours may have driven more users into Second Life from northern hemisphere territories. A trend toward declining user hours spend in the virtual world reversed itself, with users spending a total of 116 million user hours in Second Life. While this number is still a 6% decline from Q1 2009, it is a 3% increase from Q4 2009. Linden Lab expects further growth in Q2 2010, driven by ongoing efforts to promote Second Life.

Linden Lab's plans for Second Life are as visionary as ever -- "to enhance and improve the human condition." But the company is working to marry those dreams to more practical goals for the immediate future.

"I'll settle for a million active users by the end of the year," said Tom Hale, chief product officer for Linden Lab, which develops and operates Second Life. The service now has about 700,000 active users, who spend more than an hour per month logged in, up from 680,000 active users in February.

One million active users is a big goal, but it's more modest than the dreams of the Second Life boom a few years ago, when Linden Lab founder Philip Rosedale talked about Second Life becoming bigger than the Web in 10-15 years. For example, see this 2008 video of Rosedale at TED Talks.

What's the plan today? "Our mission is pretty clear, and it's pretty broad. It's to enhance and improve the human condition," Hale said. "I think that's a pretty noble mission. If you think about what the experience, and the product, and the platform actually enable, they enable people to communicate, express themselves, and connect in a rich, immersive, shared context. That's fundamentally what it's about."

He added: "People talk about Second Life as a place where you go and look at things, but I think it's actually more of a place where you go and communicate with people."

I interviewed Hale on my podcast, Copper Robot. Listen here:


DOWNLOAD

We talked about version 2.0 of the Second Life viewer, and the new orientation areas, which new Second Life users visit immediately after they register. I interviewed Tom on March 31, when Viewer 2.0 went out of beta and the new orientation experiences launched.

The new software and orientation experience are the culmination of nearly a year and a half working to improve the "first hour experience" for new users, and improve the rather dismal rate of people who continue in Second Life after first trying it. As part of that effort, Linden Lab worked on improving the service's stability, Hale said.

Now, the company plans to turn its attention to improving the experience for content creators, including support for mesh import, to allow people to use standard 3D authoring tools like Autodesk Maya or 3D Max, to create objects for Second Life.

Much of the discussion was taken up with complaints from Second Life users about Viewer 2.0's usability. Some said it was a giant step backwards from the previous Version 1.2. Hale said it was designed with new users in mind, making the client more simple and easy to use, and experienced users might very well be put off by some elements. Creative people complained loudest, saying the new viewer makes it more difficult to build 3D objects in Second Life, and publicize events. Hale said the viewer is a work-in-progress, with changes coming out on a quarterly basis, starting with Version 2.1 this summer.

PHILADELPHIA (CN) - Linden Research, creator of the massive multiplayer "Second Life" Internet game, induced thousands of players to invest as much as $100 million in real money in "virtual" properties, then took the properties back without just compensation, four former players say in a federal class action.
Plaintiffs Carl Evans, Donald Spencer, Valerie Spencer and Cindy Carter say that throughout the early 2000s the company and its founder, Phillip Rosedale, promoted the concept of property ownership and commerce in Second Life through press releases and media interviews.
Linden Research and Rosedale claimed they would protect rights to virtual property and that the virtual real estate could be used to earn money for its owners.
But the plaintiffs say they were duped into increasing the value of the company in anticipation of an initial public offering or sale of the Internet platform to another entity.
They seek declaratory and injunctive relief, compensatory and punitive damages on claims of fraud, conversion, intentional interference with contractual relations, unjust enrichment, wrongful expulsion, and violations of California's Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law.
Developed by Linden Lab and launched in June 2003, Second Life enabled its users, called residents, to interact with each other though avatars traversing a three-dimensional virtual world.
Entry into the realm of Second Life is free, requiring users to download Linden Lab's software. A premium membership allows for a fuller experience, including participation in Second Life's "market economy."
Unlike other virtual or role-playing type games, such as Blizzard's World of Warcraft and Sony's Everquest, which retained rights to anything occurring within the games, Linden represented Second Life as a platform in which participants could secure actual property rights for "land" purchased from Linden, and retain intellectual property rights for any virtual items or content the participants created.
"Desperate for a participant base to generate profits, Linden made a calculated business decision to depart from the industry standard of denying that participants had any virtual items, land and/or goods," the plaintiffs say.
Linden Labs announced the policy in a November 2003 press release titled "Second Life Residents to Own Digital Creations."
"Until now, any context created by users for persistent state worlds, such as Everquest or Star Wars Galaxies, has essentially become the property of the company developing and hosting the world," Rosedale said in the statement. "We believe our new policy recognizes the fact that persistent world users are making significant contributions to building these worlds and should be able to both own the content they create and share in the value that is created. The preservations of users' property rights are a necessary step toward the emergence of genuinely real online worlds."
A subsequent press release was titled, "Now Selling: Real estate on the Digital Frontier."
In an interview with the London Guardian in 2005, Rosedale said, "We started selling land free and clear, and we sold the title, and we made it extremely clear that we were not the owner of the virtual property."
The plaintiffs compare Second Life to Disney World, where "shops selling merchandise exist and a variety of transactions occur."
Unlike Disney World, however, Linden was also in the business of selling the land inside the theme park. "Thus, Linden no longer owns the very world they created, instead choosing to sell the world/land to consumers," the plaintiffs said.
Under the arrangement, participants could not only "buy" virtual parcels, they could resell it, subdivide it, even rent or lease it.
But the class claims that the business model - and Linden's relationship with the players - began to change markedly in 2006, after another player filed a consumer lawsuit.
During that case Rosedale, admitted that representations of ownership were "in fact, false and misleading," according to the complaint.
Shortly thereafter, the plaintiffs say, Linden Labs began removing such representations from its Web site and began to deceptively and quietly strip ownership rights from players.
At no time did Linden Labs make any attempt to compensate what the plaintiffs estimate were as many as 50,000 participants who bought virtual land based upon the earlier promises.
The class action, the plaintiffs say, will put corporate entities that own virtual worlds on notice that "where large amounts of real money flow, legal consequences must follow."
The plaintiffs are represented by Jason A. Archinaco of Pribanic, Pribanic & Archinaco in Pittsburgh.