first life business in second life

i'm not sure i understand this response...

if a business were to try to sell pizzas via second life to first life customers (ie second life avatars buying pizzas in second life for first life people):
- how would a business participate in the sl economy?
-- would they need to sell things in l$?
--- they wouldn't be required to sell in l$ would they?
- where would 'eyeballs' come in? what do you mean by 'eyeballs'?
- how would being in sl (and advertising as appropriate for the sl market) be different than being part of the community?

ps i've been trying to figure out where to put a thread about this... land and the economy seems a little off because i don't see how this relates to the sl economy... suggestions?

I think this would be a good discussion for land and economy, so I'm going to copy it there so others can join in.

Let me start by trying to be more specific. I understood your question differently at first -- I thought you were referring to RL companies coming in to SL solely for the purpose of marketing. "Eyeballs" refers to advertising impressions. If we were to sell a sign, for example, to Coca Cola (R), and guaranteed that the sign would be seen 120,000 times (120,000 sets of 'eyeballs'), that would be one way that RL companies could do business in SL. But as I said, this isn't something we want to do.

If a business wants to sell something in RL to SL customers, say pizza, they would have to do it in L$ if they were operating within SL. They would then have to exchange their L$ for US$, the same as all residents. The bigger challenge here is the sharing of RL information. In order for the pizza to be delivered, the RL company would have to ask for RL delivery information. This scenario is more problematic, since it would be difficult to monitor how that information was being used.

I'm interested in knowing what other people think about how RL companies could be involved in SL, or if they should.

Not necessarily. They could complete their order and then have SL launch a browser window (browser window embedded in SL at some point, too, but for now the browser launcher should work) that takes them to PayPal with Pizza Hut preselected as the recipient and the amount entered, they just hit Confirm and the pizza arrives half an hour later. PayPal can even send them the shipping information, as it were, without that information ever being transmitted over SL.

Of course, given that, there's not much incentive to actually do this, when it's easier for someone to just open pizzahut.com with their browser and place an order.

(Replace Pizza Hut with retailer of choice.)

Feedback to Robin Linden.

Robin, I think both you and other Linden employees (if that is the right US legal expression to use to define a paid worker for a company) have had muddled thinking on this issue for some time. As it happens every time I phone Linden to get clarification on this issue I get told a different story, so perhaps this thread is opportune to clarify this point.

To start off I am prepared to be more open than some about my FL identity insomuch as I am a regulated UK Independent Financial Advisor. This means I have a certain way of looking at things that may be at variance to some confused Californians thinking (smile)

At the heart of the issue is how or what Second Life actually is. Is it a Game, a Platform, or a Ponzi scheme? I am currently prepared to believe it is a Platform, although there is some “in game” evidence that points to both other definitions, especially perhaps both sharply recently increasing land values or themed Sims.

If it is a Platform then that description means to my thinking that within reason, anything I do in First Life is acceptable in Second Life within the ability of the Grid software being able to support that activity. However any serious restriction on any mainstream activity within Second Life that can be legally carried out in First Life would in my opinion constitute a definition of a game rather than that of a platform, although the lawyers may scratch their heads over such issues as gun and drug selling (legal in the US but not in most EU countries)

And of course pornography has its own specific issues and should perhaps be considered outside of any other commercial activity.

The existence of an “in game currency” the Linden Dollar, is I believe core to the issue of defining Second Life because it is freely convertible to US dollars. Given the official existence of such, AND because it is freely traded between Second Life Residents for money or monies worth (i.e. it has fungible value between residents) means that any serious trading restrictions on Second Life vis-à-vis First Life (legal) activity could result in a legal view Second Life is (and was) a vast Ponzi scheme UNLESS Second Life clearly state any limits to trading activity between First and Second Life.

Since I have joined Second Life I have seen clear evidence of trading goods and services between Fist and Second Life, tolerated by Linden, hence my view Second Life is fundamentally a Platform rather than a pure game for entertainment only. Of course on a Platform there is room for artistic/educational and game playing roles, as well as pure trading in First and Second Life.

Therefore in my view Linden should do two things to avoid legal jeopardy,

The first point is to have a Terms of Service agreement that clearly state what can be brought or sold in both First and Second Life. On that point Ebay have an acceptable business model if you are looking for external guidance.

The second point is perhaps more controversial but in my opinion would lead to sustained growth for everybody involved in the Second Life experience, and that is unless Linden decide Second Life is a pure game, you must abandon the Linden dollar and use real dollars to pay for goods and services. It would also remove the element of uncertainty in planning, and to fund it(the free stipend) you allow Real Life advertising. That last point also resolves your Coke and Pizzi post issue.

Finally sorry if I have expressed myself bluntly but no disrespect is intended.

couldn't ll do both to some extent?

that is continue the exchange of l$ for us$. and let l$ be used for virtual objects.

but also allow us$ for services, fl products that are sold through sl, and other "real" goods.

thanks for the answer.

Is that partly because everyone here knows, and LL won't admit, that those figures are vastly inflated and do not reflect the true active playerbase?

Looking at the front page there's typically 3000 - 5000 people online at any given time. A large proportion of those are camping and 'alts' doing the same. That represents 3% or less of the "playerbase" actually playing at any one time.

Those figures are pretty poor, wouldn't you agree? So, what do you propose to do to correct these figures and measure them in such a way that the true playerbase can be reflected?

Of course, these figures can be entirely false anyway, because there's no way that anyone except LL truly know either overall or in-world population at any given time. As there is no independent verification available of these claims, I would take them with a very large pinch of salt.

Presumably LL's definition of an 'active player' as far as the resident population goes is one who completed the sign up process, and nothing to do with their activity in the game - or if, in fact, they ever managed to log in in the first place.

Lewis

Robin:


Under such a scenerio, yhou do understand that it would increase
the amount of Linden's being sold and exchanged for USDs? Which
in turn would cause the value of the L$ to decline.

You can't exchange Linden Dollars for USDs, unless somebody with
USDs is willing to buy Linden Dollars for a specific price. If the
supply of Linden Dollars being sold exceeds the supply of USDs
trying to buy those Linden Dollars, you will get a Valuation Decline.

Linden Labs needs to focus on the issue of getting more USDs to
chase fewer Linden Dollars being sold. Not the other way around.

3% at any one time. however, the more interesting number is how many unique accounts long in a day. the relation between number of logins at one time and number of unique logins is unclear.

also, sl is a pretty narrow demographic... (free time, disposable income, computers in a certain range, dsl or other reasonably high bandwidth). say there are only 6000 unique logins in day... but if the product is well target the conversion rate could be higher than 5%. in marketing/sales terms a 5% conversion is way out of the ballpark.

people who are camping, are theoretically bored. targeting bored people with interesting interactive adverising (ala yahoo games) might also be fruitful.

people would still need to buy l$ to purchase whatever is being sold.

so us$ would be chasing l$.

i think ll should allow micropayments in us$

One of the roles that arts and culture play in first and second life is that of early adopter. Examples in First Life abound: an avant garde theatre moves into the redlight district of a city because the space is cheap, the neighbourhood gentrifies over time and other businesses move in. SoHo in NYC was made a neighbourhood after the industries moved out because artists moved in first to use the large spaces for galleries and studios.

So it is in Second Life (another reason to preserve arts and culture in world). Artists along with the Technically Gifted folks in sl lept in and began selling their first life wares in SL ages ago. The Phoenix Art Gallery (like many other SL galleries) currently has the work of a rl artist exhibited with a link to that artist's website. She has only sold $14 USD worth of paintings in SL, but she has seen, in the last month, a substantial increase in website visits which makes me think it is good publicity for her RL work. Isn't it a good idea? Buy a painting in sl, take it for a spin, and then if you like living with it in your SL house, buy the original for your rl house!

Anyway, I'm all for first life/second life partnerships just so long as the rl organizations coming in have a sense and appreciation for the cultures and values of SL. This awareness would also, naturally, contribute to the likelihood of success for the First Life in Second Life endeavour.

as sl become more commercial (if it does), the culture will shift.

the notion that sl has a single monolithic culture or set of values is not helpful.

IANAL, but I believe this would lead to serious legal issues. One of which Linden is currently skirting. Things like online gambling, with their place of bussiness (location of servers) being in California. Casinos are a regulated bussiness in CA. And if gaming in SL directly used USD, then the CA gaming commission would like their part of the "action."

Rather by stating (paraphrasing) in thier TOS that in-game content, including linden dollars, have no actual value -- and that they aren't responsible if it goes "poof" -- they skirt this and many other issues.

yes, but then ll would show real daring and it would really then be the cutting edge of the 3d web...

the most successful websites are commercial websites.

ll could rewrite the tos. or allow us$ payments and retain the l$ to continue skirting the gamgling issue.

btw, i'm not convinced that ll has skirted the issue because ll runs the l$-us$ exchange. this is akin to saying ll is using poker chips in a casino. real money isn't actually exchange hands, but the value of money is. anyhow, i think the only reason ll has managed to "skirt" the issues it that the us government's attention hasn't looked very closely at what's happening in ll.

Nonsense. L$ don't vaporize when sold for US$. And they aren't "printed" when bought for US$ either. Both just change hands.


Interestingly, it's not up to LL to decide that, ultimately I believe the US authorites, either the CA governement or federal government or court, would decide of the "value" of L$...

LL is better up presenting self as a service carrier instead, and expect SL businessess to abide by applicable regulations by themselves.

Or maybe I'm completely mistaken ?

*touches finger to nose*

There's another point that hasn't been mentioned yet. (Or it might have been, since financial talk makes my head spin) Selling real-world items/services for L$ might create an huge jump in inflation.

Say Domino's opens a pizza parlor where you can order a pizza delivered to your RL house. THey already have a website, so it's not a far fetched idea.

Say you do the 5-5-5 deal and get a couple drinks, making your bill $20US. That's over L$5000! Now, those who have purchased L$, know the basic exchange rate and the RL value of their $L. But There are many who don't know about the exchange, or won't make the visceral connection. To them, they're buying a pizza for the price of a small house, or a stable full of cars.

Either they will refuse to buy the pizza, which will hurt the viability of Domino's buisness in SL, or worse, it'll create a new standard. Here you have a well-known and recognizeable commercial company setting a price. In a consumer society, that carries a lot of weight. So if a Pizza costs L$5K. what should a Car, or Clothing cost? At least the clothing is something you can enjoy past the transaction.

There's no math here, because I see this as an issue of perception. Because despite all the exchange rates, histories, graphs, charts, and experts, what it all comes down to is what does the *buyer* perceive as good value AND what are they using as a basis for that valuation. Selling real-world products for L$, Ithink, will skew what people percieve as good value for SL products. And I don't think that can come out well.

This is all purely opinion. I have no education in money and markets, just my observations of people and their buying habits.

when it comes to consumerism... people learn quickly...

and if people buy with l$ the "bigpizzamaker" will need to sell the l$. so that will be downward pressure.

l$ doesn't magically enter and leave the economy (except in the stipend and dwell).

And the Pizza company would turn right back around and sell it.
So unless there are new buyers, the sellers will win out and push
the valuation lower...

Last I checked, the documentation stated that the Linden $ had no "inherent value". That's not the same as saying it has "no value". This has been discussed previously and someone last year requested clarification in the old Hotline regarding the seeming disconnect. The Linden response/defense, iirc, effectively hinged on this distinction.

well... if people wish to continue buying pizzas in sl... i think they'll have buy more l$.

if they don't continue to buy pizza for l$, the bigpizzmaker will not have any lindens with which to push the valuation lower.

you keep only looking at one half of the equation...

that last sentence points to the fundamental decision about whether you are building an online community or a 3D web platform. Does policing become an integral part of the LL service or does it get "privatized"?

An ISP cannot monitor what every hosted website asks for. By divorcing itself from the content that it carries, an ISP tries to create a legal shield. Perhaps the irony here is that the more it tries to do good, by getting actively involved, the more liability risk it takes on (note that I am not a lawyer, so this is merely my potentially erroneous interpretation).

This is not a new thought, but it may make sense at some point for LL to split into two companies: a technology company and a community company. Since the community company would be competing against existing community services (like anshechung.com), ideally there would be no special licensing or technology privileges that were not available to all (or at least to all partners who proved that they could operate at scale).

- - - - - - -

On the currency side, yes if RL things are sold for L$, there will be increased demand for people to purchase L$ but with the current stipend value will it be enough to compensate for the RL-corporate selling pressure, even with decent SL population growth? It is an interesting question. The potential to buy RL goods would increase the rewards of stipend farming. My guess is that the exchange rate would indeed slide until stipend farming no longer made sense.

Now a lower exchange rate may not be inherantly bad -- rather it is an unstable exchange rate that is bad. One exception is if a significant percentage of a merchant's income is derived from stipend money (with the merchant relying on SL population growth to prop up the exchange rate). If the stipend becomes relatively worthless and SL residents are not willing to purchase L$ to buy the merchant's goods, then that merchant will be in trouble.

I can understand why LL uses a local currency both for micro-transactions (the concept of L$1 does not exist in US currency since there is nothing smaller than a cent), and for potential legal protection. I would think that the legal protection will probably fade, as regardless of the TOS, a judge and jury can clearly see that there is a currency exchange mechanism. I'm not going to weigh in on whether SL *should* run on the Linden dollar or the US dollar because I haven't properly thought through the issues.

From an RL company's perspective, the L$ is problematic because of the currency exchange rate risk. Now, a global coorporation is used to dealing with currency risk, but at least with nation-state currencies there are hedging mechanisms you can use to protect your bottom line. With the L$, there are no real hedging mechanisms, no currency options market. Under this scenario, SL remains an interesting place for marketing, but actual commerce would still need to take place outside of SL and in the 2D web where credit card processing/paypal etc options are available.

... my off-the-cuff reactions anyway...

(p.s. Robin, I don't know who LL's law firm is out there, but I hope your Partner -- for all the headaches that come with this -- is having fun. There are some seriously fascinating issues at stake here.)

Well it seems that....

errr - never mind!