Content Monopoly

Hi Second Life Residents!

I'm a college senior writing an Economics thesis on Second Life -- platforms and application markets.

I was wondering, if you could suggest to me if you know of any particular content market (specific types of poseballs, or textures or items,... any type of content, really) that is monopolized or heavily dominated by one single individual or company?

Similarly, what's your take on the most competitive content market?

Thank you so much for your help,

Many thanks,
Tiara.

I've posted this before and gotten thoroughly beaten-up about it, but I think the human avatar genitals market is as near a monopoly as makes no difference. There are lots of "primnis" sellers for unscripted or minimally-scripted stuff, and one competitor that has a much more sophisticated set of scripts than those offered by the one who dominates the market, but there's a very powerful "network effect" at work here: There's a huge incentive to use the same brand as that used by any pixel-sex partner, both for ease-of-use and because, technically, the "bits" can interact as intended only if they are compatible--and the vendor in question keeps the protocol proprietary and explicitly forbids genitals-making competitors from participating in their partner developer program. Kind of a throw-back to the "good ol' days" for Microsoft (and--wink wink nudge nudge--RealNetworks).

As for most competitive, not sure what that means, exactly. Like a commodity? I suppose Business In A Box is like the ultimate commodity: everything offered is crap and mostly stolen content, and it's exactly like every other crap-selling BIAB on the grid. Weird sort of competition, that, but "pure" in that weird way.

Hi Niangao (年糕! yum!)

Thank you for your reply, very much appreciated.

I was wondering if it was possible to name this vendor/brand that's monopolizing this human avatar genitals market?

As for Business in a Box -- yes, something like a commodity. Any other markets?

Once again thanks for your answers.

Again?

They're standing in line even as I write this up to beat you down for that. Runnnn!!

Xcite is the genital maker/seller, and they dominate the market - almost a monopoly.

I think the "monopolizing brand" for genitals is XCite!, although Sensations competes with it quite strongly.

The Amethyst Collar had no competition for a long while, but I think there are some now. MystiTool is also a potential monopoly, except that it displaced a previous competitor, so that can't be said for sure.

Cartels are a lot more common on Second Life than monopolies, and are much more difficult to manage. The problem is that in a world where a single person can produce and sell goods at a volume which would require a business with a factory to do IRL, the line between a cartel and a friendship becomes very much blurred. I do know there are several businesses where all of the "top end" manufacturers know each other, share technologies and other work to keep outsiders out, and have agreed how to segment the market between themselves. This is particular common when several different businesses share a theme (eg, fantasy role-playing items)

haha, thanks guys, ... more suggestions would be great!

Although I must admit I'm totally "tingling" at the idea of having "human genitals market" all over my thesis

Also, I would certainly be grateful for any insight into the content market in Second Life. Having not much first hands experience myself (very superficial level currently, which gives me very little insight to what's happening that someone with more experience would have) any information would go a long way.

If you would like, my email is [email]tiaravita@gmail.com[/email] .

I would suggest perhaps meeting in SL to talk about this over dinner, but my laptop monitor's gone bad and I'm too poor to get a new computer.

Well, a few observations:

- There is still very little in terms of reliable "business investment" in SL, so most businesses start very small.

- The "informal cartel" that I mentioned above, is common. It's difficult - nobody would really want to live in a world where you can't meet up with some other people who make dresses, share tips for doing so, and agree to make the kinds of dress you like most and trade with the others; but all of the dressmakers in that circle could be business owners who are cashing out US$5000 a month each, in which case they are potentially breaking antitrust law. It's a problem that doesn't arise in RL because most people could not run a US$5000 a month business without incorporating and engaging in more formal business behavior. Nobody has ever filed an antitrust lawsuit in SL to my knowledge, though.

- There are also some informal principles which SL creators tend to follow. The most obvious of these is avoiding undercutting - many creators are reluctant to simply undercut another creator (especially in scripting, where it's possible to make an item that is an outright replacement for another) because they know that if they do that, someone else can undercut them, and that the ultimate result of that will be the product being sold for L$1 or even for free by someone who just isn't interested in making a profit, or is making all of their profit out-of-world.

- InfoNet, and SnapZilla, both held state monopolies at various times. SnapZilla no longer does but I'm not sure about InfoNet.

I'm gonna retreat from the genitals discussion, lest I come away bloodied again, but would just confirm that, yeah, Xcite! has the network-effect market power, and Sensations is the higher-end--but I think pretty distant--competitor.

I'm thinking that Mainland rentals is pretty competitive. There are market leaders (Ravenglass, for example), but the barrier to entry is pretty low (just gotta own Mainland), and there's a wide variety of rental properties and agreements on offer by a large number of landlords. There's "returns to scale" built-in because of how Mainland tier is assessed (much lower cost per sq.m. for larger holdings, up to full-sim size). Mainland "real estate" sales should be the same way, but I don't really know much about that market. (I'm not sure if this is exactly the kind of "content" being considered here, though.)

I'm kinda thinking that there's a strong tendency for "duopolies" here. (Perhaps the genitals market qualifies, but my sense is that there's a much larger gap between #1 and #2 than there is between #2 and #3, #4, #5, etc.) In Vendor systems, for example, I think Hippo and Jevn kind of dominate (although OnRez may be catching up now--anybody know that market well enough to comment?), and for Rental boxes, again HippoTech, and NDE, with the others pretty distant, I think (again, I don't know any way to get actual market-share, though). And for web marketing, there's SLX and OnRez.

As for the content market in general... awfully broad question. A lot of threads in this forum about that. Might want to pay attention to Intellectual Property issues; there's probably at least a Senior's thesis to be had from considering DMCA, "chilling effects," original intent of patent law to promote competition, and how this all plays out for the in-world economy. But overall, it's gonna be difficult to get real quantitative data--and Economics is not supposed to be an "introspective science."

The definition of a monopoly: "exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices."

I'm not aware of a single monopoly in Second Life. An example of a real world monopoly would not be Microsoft, it would be the "Ma Bell" of yesteryear, which was the only solution for phone service before they broke them up. Microsoft might seem to have a monopoly on the operating system market, but if they actually did, the government would have stepped in long ago. As it is, they have competition from Apple, Linux and others.

Every market has a leader. Every market, in general, comes down to a 2 or 3 horse race, where the top 2-3 brands enjoy a healthy majority of the market. That's what we see in SL, but it's not monopoly, it's healthy competition in a capitalist system. Every example given in this thread enjoys strong competition from all sides. Competition keeps prices honest, and drives innovation.

It's all normal, it's all good.

What Daniel said.

Umm. There was United States v Microsoft, for example, which imposed a number of constraints on that company's anti-competitive market behavior. Granted, the current US DOJ has been extraordinarily lax and slow in enforcement, but fortunately the rest of the world isn't so tolerant of Microsoft's monopolistic practices.

Daniel is right. There are no monopolies in SL. Monopoly of services (there are no products in SL only services) can only exist with the protection of regulation. Thank God LL has stayed out of business regulation so far.

I believe the lawsuits against Microsoft fall under "anti-trust". I'm not a lawyer, but I believe anti-trust is about preventing abusive or anti-competitive business practices, which I'm sure Microsoft HAS been guilty of. I suppose anti-trust practices might lead to a monopoly if left unchecked.

I guess what I'm saying is that the anti-trust laws were put into place to prevent monopolies from happening. They've worked so far in Microsoft's case, because they don't have a monopoly. They dominate the operating system market, sure, but they don't have a monopoly, and that makes all the difference in the world.

(and in case anyone thinks I'm on Microsoft's side in any way, I use a Mac for a reason. )

I don't think that's quite true though. XCite is a great example because it shows how a monopoly can arise as a result of network effect. Yes, anyone can make a prim.. um.. member.. but nobody else can make one that allows you to.. interact with.. as many other people as XCite does. And since the only reason why people buy those parts is to use them to have sex, XCite comes close to the definition of a pure monopoly - no other product can substitute for it, once you allow for "interaction with others" as part of the value of the product.

Amethyst Collars were in a similar position a while back, although for those the network effect was more based on learning. Everyone knew how to use the Amethyst collar, and since people were satisfied with what it provided, why take the time to learn how to use any new features? Since new features had no marginal value and undercutting is dangerous in the scripting market (see my earlier post above), Amethyst remained entrenched for a long time. I still actually have a "collar" I was trying to make somewhere in my inventory, which was abandoned due to the Amethyst market lock (although probably it would have more problems with the fact that I was still learning to script at the time and it has a lot of rather strange ways of doing things)

The issue of MystiTool being a "monopoly" is more complex, and can apply to just about any scripted item with free updates. The issue is that any feature a competitor can offer, Mysti (or the maker of the existing item) can add in a free update, thus maintaining the state of non-substitution. Although this might seem to not be a monopoly because it creates innovation, the result is that there is little profit to be made by innovative competitors (because once every user of the established brand has the function for free, there will be little market left) and thus they don't bother. I don't think that's a monopoly economically but it might come close to being one politically. One of Microsoft's alleged anti-competitive behaviours was that they had threatened firms that, if the firm didn't do what Microsoft said, Microsoft would release an equivalent to the other firm's best application as a free Windows update, thus destroying their market. Not that I'm saying Mysti or others in SL have ever done this, or that they ever would!

(There is a lot of entrenchment in the scripting market though. As an example, more than a year ago there was a MAJOR security breach found in JEVN networked vendors which essentially enabled people to get products for free. In spite of this, JEVN continued to be one of the most popular vendor brands even though many other brands of networked vendors with no security breaches existed. I remember that this was much discussed by several scripters at the time as being evidence that the RL strategy used by many software companies - release a bugged product quickly, in order to claim "first mover" market share, and then fix the bugs once the customers are locked in - was working in SL too, and many of them didn't like that idea..)

Microsoft is still politically considered a monopoly in both the US and the EU, I believe, and is coming close to pure monopoly status. No other product can substitute for Windows once level of software compatibility is factored into the value, and most people no longer buy operating systems for any purpose other than for the software they run.

Edit: Here we go: http://en.wikipedia.org/wiki/Natural_monopoly describes most SL "monopolies" far better:

Are there other options? Are people freely able to choose who they want to buy from? If so, then there are no monopolies. Don't confuse the choices made by the market with with the smothering effect of monopolies.

I used to use Xcite. I quit. I didn't care for their product and now I use another. If I wanted I could create my own version and sell it. Xcite does not have a monopoly.

In the US, there are few monopolies. The big one is the US Post Office. The AMA and the various Bar Associations have imposed monopolies on us by government regulation.

People can't freely choose to buy a brand other than XCite if everyone else at the orgy has XCite parts. Just like, while you could technically buy BeOS instead of Windows, you aren't free to if you are buying the computer to run Photoshop.

So what do we do? Force 51% of the population to buy a product they don't want in order to foster competition? Require the owners of Xcite to quit making quite so many options? If the other people at the orgy are using Xcite, well I would probably find another place. I still have my freedom of choice.

As for Microsoft, they have the market share for one reason, they have a product that works for most people easily and cheaply. The whining of the tech heads and governments be damned. Microsoft is providing a product people want.

The idiocy of the EU in saying that providing a free product that consumers are not forced to use is bad, well it boggles my mind. Just like France's recent attempt to bully Amazon over free shipping. I applaud Amazon for having the balls to stand up and say "Fine us, we are not going to screw our customers because the French government says we should."

i can't believe no one mentioned real estate.

I just cite that to point out that the latter part of that definition, the part about manipulation of pricing, is really the point of all the pro-competition regulation of anti-trust laws. From an economics perspective, it's all just a continuum of "market power" and the methods used to dominate a market. There are, of course, government-imposed monopolies (like the regulated phone system was, once upon a time), and they often were constructed for their social benefits. (E.g., the investment required to build the phone system would have been delayed by decades had there not been assurance that, for a time, it would enjoy exclusive market access.) So, "monopoly" isn't necessarily a bad thing, and I took the OP's question to be a quest for information, not a witch-hunt. Modern economics is supposed to be descriptive, not prescriptive, to avoid recurrence of such diverse historical embarrassments as Marx and von Mises.

"An industry is said to be a natural monopoly (also called technical monopoly) if only one firm is able to *survive* in the long run, even in the absence of legal regulations or "predatory" measures by the monopolist. "

Even with that definition, I disagree that any monopolies exist in SL. You may be able to argue that there are some anti-competitive practices in SL, such as cartels, but I see no evidence of any monopolies where only one company can survive in a given market. Now, if you want to discuss anti-competitive practices, that's a whole different discussion and I agree an interesting one, but I'm not sure it falls under the scope of this thread.

There's a difference between acknowledging that they have a monopoly, and intervening to prevent it. And you are quite right, trying to intervene in this case would be very damaging for everyone - just the same with the "friendship cartels". (The most likely method of intervention would be to force XCite to reveal their communications protocol, mind you.)

And giving a product away for free in an environment where making things costs money is an _extremely_ aggressive market move.

Oh. If that is indeed the intended sense of "monopoly" here, then it's quite correct that no real natural monopolies exist (although... that "network effect" thing... maybe not now, but, it could happen in some market, some day). Except, as 3Ring may have been suggesting: at least for now, LL has a monopoly on the manufacture of new land--a monopoly enjoyed in RL by God, and to a lesser extent, the Dutch. They're also kind of the "central bank" inasmuch as they control money supply, but that's even further from being helpful, I suspect.

another business with ungoddly market share would be Material Squirrel (maker of wings) although this is less so than in the past as there are a few quality competitors now.... once upon a time Luskwood Creature Creations (furry av maker) dominated their market (at least the commercial end) but fur tends to be attractive to some very creative DIY folks so that didn't last long....

truth is it's hard to monopolize in SL when everyone has the same tools. Even Anshe Chung (land baron monster) can't claim a true monopoly, just a bigger business... the biggest individual traits that lead to a person standing out in an SL market, generally don't lend themselves to monopolies, those are artistic talent (the biggest), dedication, and occassionally enough cash to match your ideas.... and while many don't have them, many do, and tastes differ