The Otherland Group - Blog

Linden Lab revamps pricing for Openspaces, insults residents

Earlier this week, Linden Lab (in the person of Jack Linden) announced some "significant" - to phrase it politely - changes to the the pricing of Openspace regions in Second Life. For those, who don't know this product: Openspaces are regions (simulators or "sims") in Second Life which offer an area of some 65,000 sqm of virtual land. They come with a reduced performance compared to "standard" regions (only a quarter of the usual number of objects is allowed and the performance of scripted objects is lower, too). Correspondingly they have been sold at only 1/4 the cost of standard regions.

Prices raised by nearly 70%
Linden Lab now announced their intention to raise costs some 70% for this product. Not only the initial price but also the monthly running costs (so called tier). They announced their intention to implement those changes for ALL Openspace regions: for new ones and also for a few thousand regions sold in the last 4 months.  No wonder, many of their customers are crying "bait and switch". As I am of an older generation myself, I can only think of the infamous "Oil for the lamps of China" (also an cheesy novel by Pearl S. Buck).

Jack Linden was citing many different reasons for the price change. The most important one being, that residents were "abusing" those regions by actually building stuff there. He insists, that Linden Lab never intended this product to be used this way and points to an obscure page on the Second Life Wiki, where it is written that these regions are intended to be designed as open sea, forests etc.

Ladies and Gentleman ... this is just plain ridiculous.

There is no widespread "abuse" of Openspace regions. Most residents are using them in a fully responsible way and exactly as Linden Lab has promoted them: "light use" regions.There is a small minority of customers who are trying to implement clubs or malls on these regions - which is NOT always a good idea. But thats a small minority.

Adding insult to injury
If Linden Lab did not intend those regions to be used for building ... one might ask, why the company has doubled the "prim capacity" for these regions just a few months ago. You don't need 3750 prims if all you can do with such a region is to create a large area of open water. Linden Lab is not being honest. They are using Openspaces exactly like that (on the new Nautilus continent, for example.) And they are adding insult to injury, as their spin doctoring is so plump that no one can believe it for long.

In addition: raising prices will never fix the problems they are purportedly experiencing with these regions. The guys which are using Openspace land "intensively" will buy smaller areas and/or use their land MORE intensely now. That's how a market-driven economy works - which always seems to come as a big surprise to Linden Lab decision makers (Oh, we have this product here, which offers a better price performance ratio for a huge part of our target group than our alternative offerings. And now they really buy it in large quantities? How could that ever happen?)

When I read the announcement I was more than a little annoyed. Not because of the new pricing structure. Actually I think an Openspace region delivers more value than 1/4 of a full prim region and should command a higher price. What it tells about a monopolist service provider selling 1000s of them and THEN raising the running costs some 70% is another issue (and has been discussed elsewhere ... )

Incompetency at the Lab in the fields of IT and macroeconomics?
What I found downright hypocritical (please forgive me, Jack) was the fact, that Jack cited "abuse" as one of the main reasons for such an unprecedented price hike. If he had said "Oh, I am so sorry, we have f***ed up again. We did not take into consideration the amount of grid traffic caused by a large number of Openspaces compared to 1/4 of that number in full prim sims ..." that would have been honest. Calling this "abuse" is insulting and utterly unfair.

We at Otherland are renting out more than 100 Openspaces. We do that since 2006 when the first ones appeared on the market. It is the perfect material for our work. The number of problems or complaints about lag or generally low performance, we experienced on this type of region (and we still use some class 4 based ones) is actually LOWER. We get more complaints for our full prim regions. This is because nearly all of land is explicitely sold for RESIDENTIAL use and used like that. On the Openspaces you will rarely find more than 3 or 4 avatars at the same time. The total script time is around (or lower than) one millisecond on most of our Openspaces.

If this constitutes "abuse", I seem to have a totally different understanding of the Englisch language than Jack.

The simple fact is: it is a plain and obvious matter of overall systems architecture of the SL Grid, that 4 Openspace regions will always need more grid resources than 1 full prim sim under similar conditions. This is not surprising and should have been known to every qualified systems architect, when the product was first announced (and then changed to 3750 prims).

As I have said, a small minority of residents is overstressing the resources of this product. But that has been the case with full prims, too, as long as I can remember - especially on mainland. If this was the cause behind the new pricing, mainland prices should have been raised 3 years ago.

It is an insult to everyone in the IT profession with a little understanding of grid architecture, to say that this is a new problem or that this constitutes a surprising and unexpected "abusive" usage pattern.

Every responsible company interested in a partnership relation with their customers (and not in a monopolistic position) would attack this issue with constraining features in the software. Not by an unprecedented price hike.

I am worried, very worried. This move shows not only that Linden Lab does not care about relations to current business partners. The idea behind this move is probably that new customers will be much more important for the company in the long run, so it doesn't matter to much to alienate their current customers. This idea might even be true, unfortunately, but it shows a business ethic, which is more than a little questionable, IMHO. This move also shows an utter lack of understanding about how a market-driven economy works with some of the most important decision makers at Linden Lab. (The "unexpected" success of the Openspace product has been no surprise to anyone in the real estate market). This show of incompetency is scary, more than a little scary.

What can be done?
I do not expect Linden Lab to get through with their intentions. In the nearly 4 years I have spend in Second Life I have never seen such a huge protest of residents. This is no storm in a tea pot. This is a revolution. Alternate solutions to the issue at hand have been discussed on the forums and on many blogs. Linden Lab could implement more severe performance limits for Openspace regions, they could add a third kind of low performance product. They could adjust pricing to actual usage patterns etc. Contrary to the statements in LL's official communication this is no rocket science. The correspending changes to the server code could easily be implemented in the 2 or 3 months until the proposed changes go into effect.

The alternative?
If Linden Lab does not listen to the customers which are filling their coffins (estate land is MUCH larger these days than Linden Lab's own main land), they might have to realize that they are doing themselves a great disservice. All that will happen is, that they drive those customers away to alternate platforms or to alternate grids based on the OpenSim technology. This could be the beginning of the end of Second Lifs's dominant position in the open Metaverse.

I hope that this will not happen, as I still believe in the value of a large connected virtual world as the Second Life Grid delivers today. Let's just hope, that someone at Linden Lab will see the light in the next few weeks. I have not given up hope.

dana.bergson on October 31, 2008 | Permalink | Comments (16) | TrackBack (0)

Tags: metaverse, openspace, real estate, second life

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Second Life worth more than 1 Billion US$ ?

Hard to believe, but that's what TechCrunch said yesterday:

Jed Smith, the Catamount Managing Director who sits on the board of Second Life’s parent company, Linden Labs, confirmed today that they did sell part of their holdings - 10% - to a third party eight months ago. But he would not comment on the price of the sale. A source with knowledge of the company has said it was well above half a billion, but declined to name a specific price.

While I think that Second Life is a very interesting platform with a few USPs, which no one else dared to replicate so far ... this sounds a bit far fetched. What seems to be substantial is the sale of shares. The valuation is just a rumor so far.

Technorati Tags: 3d web, metaverse, second life, virtual worlds, web 3.d

Markus (Pham Neutra) on November 06, 2007 | Permalink | Comments (0) | TrackBack (0)

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What Makes an Online Platform a 'Virtual World'?

It is 'definition time' in the virtual worlds industry. As this industry is growing, it is becoming more and more important to define categories, to draw border lines - especially between 'games' (bleh) and 'the other worlds', the 'serious stuff'. Check the ongoing discussion over at Metaversed for example or Raph Kosters blog.

I always liked definition games - especially after the third or fourth beer. So here goes my own one (which I had it laying around from a book chapter, which I did a month ago):

The most important 'feature' of a virtual world is, that it should facilitate a sense of immersion, the feeling that I am not sitting in front of my PC's screen, but that I am 'inside' at another place or time, together with other users, which are not physically present with me in physical reality. This is a bad definition, though, as it is terrible subjective.

Fortunately, there are four easily detectable characteristics which are necessary and sufficient to create the feeling mentioned above: Space, Avatars, Consensus and Persistence.

  1. Space. A virtual world has to present the context in which users are interacting as a kind of 'space' where each object has a location, where there is distance and proximity.
  2. Identity - the Avatar. In a true virtual world each user is represented by a persona or character, which is usually called an 'avatar' and is controlled by the user (not by software). The avatar is unique and has a certain set of attributes (at least a name, usually a lot more). It has a location inside the virtual worlds space and can be seen by the user and by other avatars which are located in the proximity of this location.
  3. Consensus. All users at or near a certain location can see the same objects and avatars - from different perspectives, if the platform supports 'perspective' and viewpoints. Any change in the world is reflected in the world view of all users present.
  4. Persistence. When a user (avatar) changes something in a virtual world, this change is permanent. If the user leaves the world (logs off) and comes back later, the change is still in place (if someone else hasn't reversed it.

This definition is a broad one - intentionally so. It encompasses text based MUDs. It encompasses online games like World of Warcraft, and it certainly encompasses platforms like Second Life, There, Kaneva at al.

The latter type of platforms is actually the smallest one in terms of user base and revenues. Still it seems the most interesting to me. How to define this segment? Easy. Just take away predefined goals and add Freedom (credit goes to Joel Greenberg/Giff Constable and to John Lopez here):

Freedom. A Social (open-ended) Virtual World is a virtual world, in which their are no predefined goals, which the user has to achieve, no artificial barriers the user has to overcome to be able to enjoy his or her 'virtual life' in this world. In an open-ended virtual world users have the freedom to define and pursue their own goals.

That's it. Space, Avatar, Consensus and Persistence are the ingredients of a virtual world. Add Freedom and you get a social, open-ended virtual world.

Some additional thoughts and explanations ...

Technorati Tags: 3d web, second life, virtual worlds, web 3.d

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Markus (Pham Neutra) on October 30, 2007 | Permalink | Comments (2) | TrackBack (0)

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IBM gives Second Life the Accolade

200710120813This is a good week for business with and within virtual worlds. The place, where most of the good news originate is San Jose, the Virtual Worlds Fall conference - (which I sadly had to miss because of a pressing project deadline). And the most important announcement from a pure PR point of view was the agreement between IBM and Linden Lab to work on the standardization of virtual worlds technologies, probably. The areas of standardisation are:

  • Universal Avatars
  • Security-rich Transactions
  • Platform stability
  • Integration with existing Web and business processes
  • Open standards for interoperability with the current Web

200710120752So, will we have stargates between rival virtual worlds soon? Let's see. I don’t want to report on the (nonexistent) details of this agreement. You can find them at IBM, Virtual Worlds News, Linden Lab's company blog Reuters or eigthbar. What I find much more interesting are the repercussions this announcement sends through the industry.

IBM's very active involvement can be seen as a kind of accolade for the whole industry. And it certainly does not weaken Second Life’s position as one of the leading platforms in the virtual worlds market. IBM sends out a very strong signal, that it is taking virtual worlds seriously – and not just for entertainment applications purposes. And at the same time it recognizes Linden Lab’s efforts - not only as one of the most popular platforms but also as one of the platforms which might be on the forefront of a standardization movement.

Don’t hold your breath, though, if you want to travel with your level 75 mage from World of Warcraft to Second Life and expect to bring all your weapons and armor with you. I don’t expect this to be possible in the next three years. And it might never be possible in the way a few people are interpreting the goal of this agreement. ...

Technorati Tags: 3d web, second life, virtual worlds, web 3.d

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Markus (Pham Neutra) on October 11, 2007 | Permalink | Comments (5) | TrackBack (0)

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IBM gibt Second Life den Ritterschlag

Nach all dem Anti-Hype der vergangenen Tage ist das mal eine gute Woche für den Markt der virtuellen Welten. Die meisten guten Nachrichten kommen aus San Jose, von der Virtual Worlds Fall Konferenz (die ich aufgrund drängender Deadlines leider verpasst habe). Die PR-seitig wichtigste Nachricht ist vermutlich die Vereinbarung von IBM und Linden Lab gemeinsam an der Standardisierung virtueller Welten zu arbeiten. Konkret sllen die folgenden Themen angegangen werden:

  • Universal Avatars
  • Security-rich Transactions
  • Platform stability
  • Integration with existing Web and business processes
  • Open standards for interoperability with the current Web

Werden wir also bald Stargates zwischen den rivalisierenden virtuellen Welten haben? Ich habe da so meine Zweifel. Ich möchte hier auf die (nicht vorhandenen Details) dieser Vereinbarung nicht gross eingehen. Fakten und Spekulationen gibt es bei IBM, Virtual Worlds News, Linden Lab's company blog, Reuters, eigthbar und in Deutschland bei Robert Basic, bei ITW, bei SLTalk und auf dem Web3D-Blog. Was mich mehr interesssiert, sind die Auswirkungen, die das kurz- und langfristig für den Markt haben wird.

IBMs sehr aktives Involvement in diesem Markt wird für viele (potentielle) Anwender auf der Industrieseite sicherlich als eine Art Ritterschlag empfunden werden. Und die Vereinbarung mit Linden Lab wird Second Lifes Position als eine der führenden Plattformen hier sicher nicht schwächen. IBM sendet starke Signale aus, dass Virtuelle Welten ernstes Business sind – und das nicht nur im Entertainment-Bereich. Zugleich wird Second Life als Marktführer und mögliche Speerspitze von Standardisierungsbemühungen anerkannt. Wer hätte das noch vor einem Jahr gedacht?

Ich würde nicht darauf warten, dass ich mit meinem Level75 Nachtelfen aus World of Warcraft morgen nach Second Life wechseln, meine Ausrüstung mitbringen und mein WoW-Gold in L$ wechseln kann. Das wird sicher mehr als 2, 3 Jahre dauern und vielleicht nie so funktionieren, wie sich einige das vorstellen. ...

Technorati Tags: 3d web, second life, virtual worlds, web 3.d

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Markus (Pham Neutra) on October 11, 2007 | Permalink | Comments (5) | TrackBack (0)

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Second Life and "The VAT Question"

When I wrote the last post on this topic I was assuming that the decision to add VAT (value added tax) to its billings meant, that Linden Lab was opening a European subsidiary. Boy, was I wrong. What I wasn't aware of, was the fact that every company selling "electronically supplied services" to EU residents has to charge VAT to these customers according to the local rules in the respective country of residence. It doesn't matter, where in the world this company is located.

Hmmm ... On the one hand I can understand the reasoning behind this construction. Because in all the countries in which the principle of VAT is implemented, the government expects this tax to be charged for any goods sold to its residents. This usually doesn't apply to physical goods that are bought in other countries and wich are transported into the country (for example, when I, as a German, buy a book at Amazon USA and the book is shipped to me). In this case, though, VAT is charged to me directly by the state when these goods cross the border. So it actually seems plausible to me - because it is consistent -, to implement such a scheme for electronically supplied services, too. BTW: what is an "electronically supplied service"?

Here is the definition (cited from the digital library of the Internet Business Law Service):

An 'electronically supplied service' is a service that, in the first instance, is delivered over the Internet or through an electronic network. These services include the provision of digitized products, such as software, and the provision of any service which provides, or supports a business or personal presence on an electronic network; for instance a website or a Webpage.

And this is exactly what Linden Lab does. It offers a software (at no charge), which is used to access a service provided through the internet. Additionally, the company sells storage space and processing capacity (land) like many ISPs and hosting services do. So far so good.

On the other hand it seems completely unrealistic to me, to expect that business in other countries will abide to this law. It might be possible to enforce it with a large or with some middle sized companies (like Linden Lab) doing business in the EU. But what about the guy dealing in land or providing some advertising service in SL, who is located in Asia, South America or in the US but is doing business with residents of an EU country? Does anyone really expect them to charge VAT and forward the money paid to the EU?

And what about the different handling of currencies. If we apply the same principles, Linden Lab is planning to apply, to other "virtual" companies (with very real businesses) the handling of currencies becomes real funny.

For payments done with L$, no VAT is applied (because you would never know, in which country the customer avatar resides anyway). If it is done with US$ through a service like PayPal (where you learn about the customers nationality), VAT has to be applied. This does not strike me as very consistent. Applied to a virtual business in Second Life this means that a land lord accepting monthly payments in US$ or EUR through PayPal or Google Checkout has to add VAT, while no VAT is applied, if the customer decides to pay in L$ for the very same transaction. Plausible ????

We certainly do live in interesting times. Maybe it is time to think about implementing the principles of granular identity.

Technorati Tags: 3d web, second life, virtual worlds, web 3.d

Markus (Pham Neutra) on September 29, 2007 | Permalink | Comments (2)

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Granular Identity - the future of trust and identity in virtual worlds

One of the main criticisms with virtual worlds like Second Life (but others, too) has always been related to the concepts of identity, trust, authenticity etc. Many people accuse users of these worlds of "hiding behind a mask" (of their avatar). I find this a bit ignorant and hypocritical, because I don't know that many people in the physical world who are always completely honest about all attributes of their person and personality. This is not outright lying usually. But most of us tend to exaggerate our positive sides and hide the negatives - especially when flirting or in business negotiations. Avatars are much more honest on average. I have rarely met an avatar in a virtual world who said: "this is an exact replica of my humans body" ...

But there are some very real risks involved with misrepresenting your identity - or certain aspects of it. In most jurisdictions it is illegal to present "adult" material to minors for example. And if I give someone money in exchange for certain goods or services, and this someone does not honor this deal, it is very hard to enforce my rights without knowing who the other guy really is - even harder if he never logs on after the deal.

200709241606A few weeks ago, Linden Lab took a first step towards attacking this problem by introducing a workable solution for age verification to its virtual world Second Life last week. Some users now (and all of them soon) have the option to register with their address and some personal data (passport ID for example) and get their ID verified. The service is in an experimental state currently, but in a very near future, users of second life will be obliged to make "adult" content available only to those other users, which are verified to be adults. Is this the beginning of the end of anonymity. Will avatars be obliged to carry passports around (like the one to the right here, which Gwyneth Llewelyn designed for her great if lengthy blog article on the same topic)?

Not every user will like this. But I think it is a very important first step for making virtual worlds more of a "platform" and less of a "game". Why? Because anonymity (or virtual identity) is fine for many contexts. But in other situations (some) verifiable information about the guy at the other end of the connection is necessary - and even might be required legally. And despite fears to the contrary, this could be done without giving up all privacy - if solutions can be found for providing 'verified attributes' without always giving out full identity info. But that's certainly possible.

Technorati Tags: 3d web, second life, trust, virtual worlds, web 3.d

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Markus (Pham Neutra) on September 24, 2007 | Permalink | Comments (0)

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Personal experience not necessary!

syndicated with _notizen

A funny phenomenon, which I experience again and again when talking about virtual worlds (which many people still equate with "Second Life") are those grumpy commentators, which already come with a very dedicated opinion - and are not afraid to voice it. They know exactly that Second Life is completely superfluous, or even dangerous, is populated by (only a very few) losers and only came to fame through paid PR. But they never have been in SL or in any other virtual world or gave up "disgusted" after a few minutes. o.o

This is quite common with professionals from the marketing and IT industry, too. Joseph Jaffe did a wonderful quote about this type of "professional" yesterday, when talking about the iMedia Brand summit in San Diego:

Whilst the entire crowd cheered at Second Life being the most “overhyped” component of marketing today, when pressed (by me), it become apparent that almost all of these folk have never actually been in SL, let alone piloted any programs in-world

OK, ok, of course it is grossly unfair, to ask if someone arrived at his opinion from personal experience or by reading the trade press. :) What I found quite striking is another bit of wisdom from the same post.

On a different front, the whole concept of "failure" still holds us back from venturing too far from our comfort zones. We move one step forward...with such low tolerance for "failure", such that when we don't hit it out the park, we end up radically recoiling and taking 2 steps backwards for every forward step. [...] As Tim Mapes, CMO of Delta, said, "Innovation = bold ideas that work; Mistakes = bold ideas that fail" - I guess we need to decide whether we're in the bold ideas business or not ... irrespective of the outcome.

The last sentence should provoke a contemplative moment with everyone in the o-so-creative business of marketing. If you are so afraid of making mistakes, that you never take a path that doesn't lead to an easy success in 90% of all cases ... maybe you are not so 'creative' at all.

I guess this fear of trying uncharted pathes is the biggest hindrance for a more widespread acceptance of the new communications vehicle "virtual world" - and for more really creative experiments in this realm, too.

Found through Giff's blog.

Technorati Tags: 3d web, net marketing, second life, virtual worlds, web 3.d

Markus (Pham Neutra) on September 17, 2007 | Permalink | Comments (0)

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Websites are useless, so are virtual worlds ... and TV anyway

(syndicated from _notizen [german])

Last Thursday I was interviewed by a German podcasting group "Vier Nasen tanken Super" about The Otherland Group, Second Life, virtual worlds etc. And of course, one the guys on the other side couldn't help but accusing the whole idea of virtual worlds to be useless, senseless and stupid - because companies and marketing agencies are using them to "replay" all the old marketing models from past areas and avoiding the new paradigm of the web 2.0 Actually, Mario, with whom I had this - always pleasant - discussion, put forth this argument a long time ago. Since then it has become a mainstay of Second Life bashers in the publishing and advertising industry.

The problem with this line of reasoning is: is has a true core. Many advertising agencies are using virtual worlds as a vehicle to reuse old concepts. Sometimes this works (people are still the same), most often not. This does not mean, that virtual worlds do not offer a fertile ground for innovative new ideas, though. It only means, that all those "creatives" need some time to adapt ...

The web was considered a boring copy of print media once
When the web began to grow in 1995/96 many corporate websites were so called brochure ware: HTMLisized copy of the corporate brochure. This resulted in many low effort, easily done - and useless - sites. When TV came to Germany, many entertainment formats basically consisted of pointing a camera at a stage in some downtown theater. Does this mean that TV is superfluous? That there are no new means of artistic expression possible there in this medium? Does it mean, that websites are just another channel to publish a linear series of pages (layouted with Quark XPress in the way a printed page is)? Certainly not!

It just means that people need a little time to adapt and to start innovating in a new medium. Actually, Web 2.0 principles already are an important part of successful projects in virtual worlds. But that's just a copy of a web phenomenon. I expect completely new marketing models in the coming months (or innovative combinations of established ones).

Coincidence or not, but just this morning I found the article Online gaming hits its groove on ZDnet where Cory Bridges from Multiverse phrased it like this:

"I don't think we're on the immediate verge of that," said Corey Bridges, co-founder of The Multiverse Network, a developer of virtual world platforms. "The funny thing is that any time you have a new medium (like online games), you see people dragging (in) the constraints and tropes of old media. For example, the first Web sites were like brochures. It's predictable stuff like that."

I guess it always needs some time, for people to see the light. And nearly always they will put the blame on the medium/platform - not on their inability to adapt to "the new" ...

Technorati Tags: 3d web, second life, virtual worlds, web 3.d

Markus (Pham Neutra) on September 10, 2007 | Permalink | Comments (1)

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The other Otherland Group

Yes, while The Otherland Group GmbH is a brand new company, there has been a business called 'The Otherland Group' within the virtual world of Second Life for quite a while. And, yes, those two are related. You could say that the Second Life company was kind of the first incarnation of a vision. It has grown to be something larger now - but the old Otherland Group is still part of the new one. It will grow and go through a kind of metamorphosis in the next months, probably. But those, who know it, will still recognize it.

But first a few words about the history of the Otherland Group brand. It is an important part of my life in the realm of virtual worlds, too. The first Otherland Group was a real estate firm in Second Life. It was founded in the autumn of 2005, nearly two years ago and a little more than half a year after I discovered virtual worlds. This virtual (but somehow very real) company has been a great hobby for me in the last 2 years. It wasn't the business side of this company, which I enjoyed most. I have enough of that in my first life. If was the creative side, which lead to the creation of this business - and, which made me spend so many weekend hours in Second Life especially during 2005 and 2006. Some of the results can be seen in the pictures of this blog entry, btw. They are all pictures taken on The Otherland Archipelago.

Otherland Impressions02-1

I know a lot people who might ask "But whats the 'creative' side of a land business in a virtual world?" Be assured: there is a lot of it. Just read on ...

Technorati Tags: second life, virtual worlds, web 3.d

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Markus (Pham Neutra) on September 04, 2007 | Permalink | Comments (0)

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