Corporations in Second Life

Hello everybody, today I logged in and I was absolutely socked when I saw that the top 2 ads in the classifieds had real life corporation names on it. At first I was like “maybe some dude didn’t read the TOS and is using trademarks”. After teleporting to those sims I almost had a heart attack when I found out those Sims were founded by real life corporations.

People, maybe I’m not remembering this right but I remember Phillip Rosedale clearly stating that he'd keep out corporations from SL. Am I mistaken? Did anyone heard this too before? I bet I’m not the only one.

All this time I felt safe in my virtual world knowing that none of those corp giants was going to come here and own the place.

What the heck is going on? It sems they can do what ever they want with the rules because they know we “have” to accept them to log in.

Lindens what are you thinking? I thought you were against this?.

I would like to hear the opinions of other second life residents and second life merchants.

I will give you my personal opinion.

I believe this is the end of SL merchants as we know it.

I will give you the most likely scenario. This is what is going to happen in the next months if the Lindens don’t ban corporations from SL:

A lot more Corporations will start to realize the potential for advertisement in virtual worlds and since the L$ is so cheap they can afford a lot of advertisement.

Realize that big companies will use SL as a way to promote their Real life products or services, besides of course some of them may want to make money selling stuff inworld.

People one day you’ll wake up and realize that SL has been completely taken by corporations. You will see nothing but ads of these companies and the small merchants or business people that once were big in SL will disappear.

I’ll put it this way:

Would SL casinos survive if GoldenPalace enters SL and buys 300 sims and fills them with slots?

Would Anshe Chung survive if one day she wakes up and all the land auctions were won by Century21?

Would any cloth designer survive if dolce & gabana, Levi, Armani, etc. start giving inworld clothes away forf ree? Because what they win is the advertisement they don’t even have to charge for the clothes.

Would SLexchange survive if Ebay does what they do?

Cmon people! These corporations can hire hundreds of people in India and have an army of designers, scripters and promoters for their products.

Anshe if you read this, what do you think? Right now you’re making over $200,000 real dollars a year in SL, if a big corporation with big money joins and competes with you, do you seriously think you’d stand a chance?

I am a business man in SL I make real dollars out of what I build, It’s outrageous that Linden lab has dropped the protection we had and allow this corporations to take over.

I know that there will always be creative ideas and new ways to make money and creative products, but the thing is that the existing ones will be totally owned when more giants join SL.

This is not sci-fi people it is happening right now. There are dozens of sims owned by Nissan already. The Islands price was raised, Why do you think that the lindens raised the price? Because corporations can afford that kind of money.

Soon islands will be so expensive that even a good business person won’t be able to afford it. Classified ads will be totally out of reach, look it has already reached 90,000 lindens.

SL won’t die, because for every SL resident with business ideas, creativity, knowledge of scripting or designing, there are 1000 more residents that are just consumers, they log in just to chat, dance have fun and spend money.

Linden lab knows this. Honestly I don’t think they will take this back, because even though people like me are the ones that made SL what it is now, we are now too small compared to their new costumers, and in business there are no feelings, just money.

What do you think?.

Uhm... a good, a really good clothes store can earn perhaps $2000 monthly (USD, not L$) in SL. At most. Do you really think Armani or Dolce and Gabbana need another $2k each month, minus sim costs + upload costs + hiring or training of designers with 3D texturing experience? I can't imagine that.

What companies are here for is a) product placement (like Adidas, giving out some gimmick shoes for near to nothing to boost RL sales) and b) media coverage; whenever SL is mentioned in the media, you'll read names like Amazon, Adidas or IBM too. Basically free advertising.

Perhaps one day some companies will use SL as a platform to sell RL products; but with shops that can't take more than 30 visitors at once and a realistic population of around 100k residents, I think that's rather unlikely. In any case, I can't see why an RL company should offer virtual products for peanuts (like a pair of shoes for L$300 = US$1).

LL will surely keep the prices on an affordable level. After they found a pricing model that enough residents are willing to pay and that creates revenue nonetheless, I don't think there will be further price hikes (well, perhaps a normal 3-5% price increase every year). The companies will even help to keep the prices stable, since without them LL would have to create more revenue through the residents only.

I'd say this is a great turn of events for many content creators, many of whom are unaware of the possibilities yet. It would do many of us good to adapt to meaningful change instead of whining and postulating about things that we have yet to have a clear picture about.

Even if the companies give away free what people sell? How do you compete with free? They make hundreds of millions of USD a year (if not billions). They have money they can burn, we don't.

Anshe Chung Studios is a RL corporation.
SLExchange is a RL corporation.
etc..

Anshe Chung does not deal in real-life goods. (As far as I'm aware.)

She deals only in pixel products and services of use only in SL.

There should be three tiers of pricing for land and tier in SL:

Commercial rate - for those promoting a service or product that exists outside of SL. This would include those companies existing to help such companies get set up in SL and in other mileaus. (High)

Resident - for residents and those residents selling products and services that can be used only inside of SL. This would include land dealers like Anshe, whose product or service can be used only within SL. (Medium)

Educational/Charitable - for non-profit educational, charitable, and support organizations. (Low)

These tiers should apply in other areas besides land, as well; such as taking out in-game classified ads, cashing out Lindens on Lindex, etc.

coco

There are hundreds of freebies on the SL market, many of them almost identical with products that other shops sell. Usually those freebies are crafted and offered by other residents, not by RL companies. The only brand name I know of who offers virtual goods is Adidas (shoes for L$50, http://www.3pointd.com/20060914/virtual-adidas-store-sells-second-life-shoes/). A nice promotional strategy, no real threat for any long-established shoe store.

News websites and blogs publish articles about RL companies in SL (like http://news.bbc.co.uk/1/hi/entertainment/6122140.stm), those news reach an audience that didn't know of SL so far, we get more residents (like the recent onrush of yahoo users) and all those newcomers need clothes, skins, hairstyles and entertainment. I can't see any real downside for SL business owners.

Well, wait around a little bit, Ishtara. You'll see lots more.

I wouldn't mind it if they were at least charged appropriately for using SL only to advertise real-life goods.

coco

From a financial point of view, as a vendor, would you rather get a fraction of those millions of dollars, or would you prefer to continue living off the inworld consumer economy selling a thousand variations of a pair of panties?

The pioneering RL companies aren't aware yet of the demographics of the so called 1 million residents here yet. They have money to burn. Let them burn it on the content creators while it lasts.

I highly doubt RL companies moving in 'destroy' SL..... It all depends on how LL lets them advertize in the future... If they are allowed the current rules (building sims, distributing products, classified ads) I have no problem with this... this is completely not in my way, in no way bombarding me, and basically, I'd never even see their campaign unless I was looking for it. .... Now if LL decides to let RL corporations have advantages because of the money they're flashing... then we have a problem.

... consider what happened to myspace.... myspace was a community of friends. Everyone was on there to connect with friends and make new ones. then companies and commercial entities started to realize there are lots of various ways to promote... so myspace became less about friend connecting, and more about bulletin ads, comment ads,random friend requests, random emails .. myspace has blown up into a huuuge network filled with spam... and it died at the same time.

... Secondlife can be different.... if they have to live by the same TOS we all do.

What I believe the future of SL will be: The big corporations will move into SL... they will take over the classifieds.... SLers will not read the classifieds... then, this is the crutial turning point: the corporations will offer SLers incentive based jobs (this will replace the camping chair epidemic).... the corps will pay SLers to spam other residents with their info and ads. This is where LL will need to put their foot down... if they do nothing about this, that will be the end of SL. If LL declares the corporations responsible for the spamming, and not the individuals the corps are paying, SL will be saved... we shall see....

by the way, a year from now, I'll bump this thread up, because this prediction is where I see SL going.... it's ALL up to LL to stop it before it starts.

They already are starting to. The top 2, 97.5k and 97k, are owned by Nissan and Toyota. Oh joy!

I got this strange green message saying something about low prim condos from someone I don't remember.
So its my first official spam in SL.
Just hope that they don't start using as way to bombard people to buy their products on regular basis.
I would hate to come to this game and get bombarded with hundreds a message like that a every time I play longer then few hours.

I think this comes right around to the fact Second Life is a technology platform not a game, or if you like a fair comparision is that S/L is a 3D webpage with personal interaction.

Given that to be the case, the Metaverse is now large enough to support us all, and for those who just wish to use the platform as a type of excapism there is no need to visit a corporate Island.

But the Internet itself was in the begining more or less non commercial, it was the introduction of the early brousers such as Mosaic that drove the initial commerce.

Within Second Life I see the two key points as "here to there", insomuch as it is now possible to go outside the 3D S/L metaverse to a more conventional 2D webpage and of course the reverse, and the second point is the virtual economy itself and the fact the Linden dollar has fungible value

Finally as I was typing this post THIS came in via a Google feed

http://www.informationweek.com/news/showArticle.jhtml?articleID=193600812

A perfect example of what I have just said, ....and PS note the phrase at the end...."I think that we'd be OK with virtual items listed, but we'd have to take payment in U.S. dollars for now," he said."

Regards

John

If they want to advertise their real world products they have much better places to do that than on Second Life, such as on the big community sites like Yahoo, YouTube, etc.



That will eventually happen anyway as a result of the consolidation effect of the economy.



If there is one person winning all the land auctions, what difference does it make to most people in SL whether it's Century21 or Anshe?



Yes, I think they would - making them free would devalue them. Wearing the paid-for clothes of SL designers would be a status symbol. That's unless of course there's a culture shift in SL, which is possible - but there's already at least some "freebie culture" and it hasn't had much influence yet.



How big should Linden Labs allow your business to grow before they stop you, because you're becoming a corporation?



And because in-world businesses can afford it too. I'm sure there are in-world companies that pay for their own islands and then cash out more than $100. Couldn't they have triggered the price rise just as much as external corporations could?

But what does this really mean in terms of the freedom for small creators, which seemed to be what the original poster was talking about?

If there's a firm that's making enough money to out-bid, out-market, and out-produce any new entrant, what does it matter how whether they made the money inside or outside SL? From the point of view of the average Joe or Jane arriving in SL and wanting to start a business, the market situation is the same.

There's always going to be someone at the top of the market, and they're always going to grow fast as a result, and they're going to use that growth to expand further - improving things for their customers, but incidentally making it harder and harder for smaller creators to get into the market. Because Second Life is still quite a small market, the existing market leaders haven't grown enough to completely dominate yet, but unless for some reason they decide to just give up trying to improve themselves, they will do so in finite time. If it isn't Century it will be Anshe (or another land dealer), if it isn't Nissan it will be Abbotts or Aubretec or another vehicle maker, if it isn't Adidas it will be PixelDolls or BareRose or another clothes maker, etc.

At this point (speaking with my clothes designer hat on) I'm not overly concerned. There's already a wealth of free clothing out there in SL.

The thing is, if an item of clothing becomes commonplace, it becomes less desirable. It's human nature -- a law of fashion -- if _everybody_ in the world is given a free Armani suit, _nobody_ will want to wear an Armani suit. People like to be unique; like to be special. And they're prepared to pay for that uniqueness.

(As an aside: The existing corporates in SL are well aware of this fact, and seem to be introducing "artificial scarcity" in their promotions... I don't think any of them have introduced a truely "free" product yet - even with the Nissans, you have to track down a character and extract a PIN code before you get your hands on the goods. In the eyes of a consumer, effort to obtain is proportional to perceived value.)

The other thing that you overlook is, where would Dolce & Gabanna, Levi, Armani etc suddenly gain the technical expertise to flood SL with good quality clothing? My assumption is -- like the existing corporate brands in SL -- they'd need to recruit indiginous resident talent to their teams in order to even get to this scenario. (and If Anne Summers or Agent Provocateur are reading this, feel free to PM me for a resumé!!).

Alternatively, I can see a business model where we - the resident content producers - *also* give away our wares for free... in return for dropping sponsored content into our stores (or whatever kind of gathering place our stores might "evolve" into, under the brave new economy). Think along the lines of the way people that people out on the 2D web are monetizing amateur web pages through schemes like google ad-words. Such schemes would have been laughed at a few years ago, before web advertising hit its tipping point; now they're ubiquitous. It's not unreasonable to expect something like that to translate over to the world of SL, somewhere down the line.

As for the classifieds... to be honest, I'm surprised they took so long to get around to it. I'm not so worried about the classified ads myself; I did a bunch of pricing experiments earlier this year, and actually discovered that the sweet-spot classified spend for _my_ clothing business is the bottom-rate L$50 a week!!... (and I'm by no means a small-time operator in the field!).

OK, a classifieds invasion *might* harm those who still use that channel as their primary method for getting warm bodies over the threshold... but (speaking with my mercenary businessman head on) - to me, having real-world corporations dump unfeasibly large quantities of L$ into the classifieds is actually a *good* thing. Classifieds are an L$ sink, and any mony poured into them _strengthens_ the L$ economy against the US$. Get a few more real-world companies agressively bidding for front page of classifieds, and the L$ will soar!

Most of you are probably not old enough to remember a time when the Internet was non-commercial. Such a time did exist. The Internet was originally for government/military and educational research. No commercial interests at all were allowed.

When they first started allowing people to sell stuff on the Internet, people said it would destroy what was there. Obviously, it did not. You can complain all you want about Corporations coming to SL. But they are already here, and they are not going to go away. There is money to be made in SL, and the LL folks are heavily pitching that to Corporate clients with lots of money to spend. The small contributions the initial SL community have made pale in comparison to the millions of real dollars that the large Corporate interests could, and eventually will, spend here.

For the immediate future, yes, commercialization of SL sucks. In the long term, it will probably make it stronger for all of us. Different, but stronger.

The big Corporations will not put up with a laggy, unstable, and completely unregulated environment. How long do you thing Nissan will put up with their Corporate Islands getting firebombed by an unending stream of unregistered alt griefers? How much interest will Corporations have in Mainland properties, if land extortionists can ring their business with gaudy signs and charge millions of Lindens to remove each 16M2 parcel? The answer is, they won't put up with it for very long at all. Money talks. You and I can gripe all we want about griefers and land extortion, and it will fall on deaf ears. But when a corp that is spening MILLIONS of real dollars on SL says "Fix this, or we will leave"? LL will sit up like a trained puppy and roll over eagerly to fix it.

What's probably going to happen is that it will get a lot more expensive to do some things in SL. For a while. But at the same time, the environment will get more stable. Eventually they will have to offer a tiered pricing structure, so that those who make a profit form RL world sales pay one rate to be here, those who sell content only in-world pay a lower rate, and those who simply want to live here and shop here pay fairly little, or nothing at all. If they have any brains, the "resident commercial rate" will be a sliding scale, or will be based on a cut of profits, so the little 'mom and pop' stores can flourish, while those raking in money hand over fist pay their fair share.

I sell clothes, textures and building services in SL. In some ways, this is really going to hurt my business interests. It already has cost me hundreds of real dollars in lost sim design work, because increasing sim costs are causing work in progress to be cancelled. And I am just a pretty small fish in the big pond of SL. But in the long run, If SL makes it through these changes, I'll bet I'll be able to continue to play and have fun with my friends, and at the same time I'll be able to earn far more real money, by doing work for some of those big corporations, or for those trying to compete with them.

Nobody likes change. But life IS change. No change at all is stagnation and death.

Bravo!! Bravo!!!!

When I order a movie from Direct TV, its a bunch of data coming over a wire. I suppose I could call it a "non-real life good"?

If I buy an item in SL, it's data coming over a wire, and just like that Direct TV movie that gets sent to that other type of CRT (my TV set), it's primary purpose is for entertainment.

If I lease server space from Anshe, is that really so different from leasing server space from a web hosting company to host my personal web page? Is my personal web page not real world?

Cable television companies sell "pixel products" too. Are they not selling real life products? Should they enjoy some sort of exemptive status then?

When we purchase software in real life, we are buying the right to use that electronic data. In fact, most software company's terms state that they can come take the discs from you if you breach the licensing agreement. So you really don't own it at all, you just paid for the right to use those intangible bits of code.

Coco, you may wish to draw sharp lines in the sand about what is real life and what is not, but there are a great deal of people who don't and that number is growing all the time, not to mention, non-tangible electronic goods and services have been real world goods and services for a long time now.

Good posts, that also includes Sunspot and Shep

It's not so much free advertising but good press, it's to make you think better of the companies mentioned. It is common for oil companies to purchase ad spots on TV; they are just buying good press (usually to offset some scandal).

We cannot expect any large corporation to just show up in SL and push a smaller business out. It just won't happen. SL is an equal opportunity place. The biggest risk is for those in the mid size range. The only way to push a company out of SL is to steal it's customer base. For a corporation from outside of SL to do so they would need to directly compete. Capitalism favors long time businesses with name recognition. In SL you can have a virtual business, one with no Real World assets, that actually produces products and is competitive; with no risk. Part of RW businesses is managing risk. SL capitalism is more pure then RW capitalism. Capitalism in SL is free, RW capitalism isn't; as long as that doesn't change, corporations are on equal footing with players and vice versa. There is the opportunity for anything to happen. There is alot more that could be said but I'm not keen on writing a thesis on SL (and your probably not keen on reading one).

I do agree with coco, a tier system would be a good thing. It would help better define the roles of organizations & pay for SL.

The biggest concern I have about corporations inside SL, is their lawyers. RW corporations have a tenancy to play by the rules "if we can get away with it...", and that means suing the pants off of anyone to get ahead. LL thank god isn't that type of corporation. LL is very friendly and laid back.

Edit:


I almost forgot about that. If the companies get *really* entrenched, there is the possibility for the L$ to really grow in value. It has been the trend in all other games for the value of game currencies to decline in value. Wouldn't it be something if the L$ was the exception?

Don't forget the possibility of getting commissions to design the virtual goods for those RL companies. Some SL designers have already been doing that: MillionsOfUs did Scion City, and Aimee Weber did American Apparel.

Direct-TV is company profiting from a product/service to be used in outside of SL. It's not whether the product itself involves electronic data such as a ringtone, or words, or electrical impulses.

The nature of the product itself is not in question. Whether that product or service exists and is sold in the real, non-SL world is the key distinction.

In simple terms, is your product - say a shirt - an actual shirt, which you can and do sell in the non-SL, real world, and which you could sell in the real world whether or not SL even existed?

If so, you are using SL to advertise a real-world product or service. Commercial rate.

Or - is your shirt a pixel shirt, one you sell only to other avatars in SL, which does not exist as a real-world product, and is of use only in SL?

If so, you are using SL to sell a virtual product or service only to other avatars within SL. Resident rate.

How much money you make from sales of the product, or how much you report to the IRS, is irrelevant.

Resident activity may be viewed as that which may sell products or services, but only to other residents, confined entirely within SL.

Commercial activity may be viewed as that which supplements, promotes, advertises, or sells products and services that are sold in the non-SL, real world.

Likewise, consider your movie analogy, and let's draw it out a bit. Say a real-world movie studio wanted to present their movies inside of SL. (Similar to what a real-world TV studio, and a real-world radio station, are both planning even as we speak.)

At the same time, a resident has a drive-in movie theater which shows only public domain movies.

The real-world movie studio, using their land to promote their movie studio's offerings, which exist and are sold in the real world, would be charged at the commercial rate.

The resident, using their land only to show movies to other residents, with no real-world movie business to promote, would be charged at the resident rate.

The fact that the movies themselves all consists of bits of data is irrelevant.

coco

Of course there will always be someone at the top of the market.

I'm saying that there are two entirely different markets here, with absolutely zero purpose in common.

Anshe does not sell real land, in the real world. Century 21 does. If Century 21 decides to come play SL, and give away land (since of course SL land itself wouldn't be their real product or their real purpose), then that would be very bad for Anshe, et. al, indeed.

That's because Century 21 and Anshe are not the same market at all. Century 21 wishes to advertise Century 21. That makes it commercial. Anshe wishes to sell, lease or rent land to other avatars - she has no real world land. That makes it residential.

If Anshe actually had a real-world real estate company, and she, too, wanted to give away land to advertise, as Century 21 would be doing, then yes, they would be in the same market. Both commercial.

The commercial and residential markets are so markedly different in purpose (and pocketbook), that it's only fair to charge the commercial concerns more than those who are operating entirely within the SL economy, with no real-world business paying their bills for them, merely as a miniscule part of their advertising budget for their real-world company.

The least we can do with this rampaging elephant that is going to give away the store is to expect them to be charged more for the pleasure. And since they are an entirely different animal from us, with an entirely different market locus, it's only fair.

coco

There have been freebies in SL since beta. They did not destroy or otherwise ruin the SL economy. Corporate freebies will not destroy SL. Once the novelty wears off, it will be business as usual.