Successfully reported this slideshow.

091707 Metanomics 101 Metanomics Transcript


Published on

Metanomics is a weekly Web-based show on the serious uses of virtual worlds. This transcript is from a past show.

For this and other videos, visit us at

Published in: Technology
  • Be the first to comment

  • Be the first to like this

091707 Metanomics 101 Metanomics Transcript

  1. 1. METANOMICS 101 57 MILES: Hello everyone, and welcome to Metanomics ’07, and Cornell University’s Business Series for Second Life and Virtual Worlds. This is the very first in a three-month series. You could think of this as a warm up and an introduction to the series, as we’re officially outside of the scheduled time from October through December. And very shortly I’m going to introduce you to Robert Bloomfield, who is Beyers Sellers in Second Life, who will be explaining a little bit about the course, a little bit about the series, and a little bit about the concept of Metanomics and what it all means. If you have questions, you are welcome to IM me, Onder Skall, or Vertias Variscan. Please do also have a look for the group, because if you want to be notified about these things in the future, it’s pretty cool to be in the Metonomic’s group because that’s where we’re going to be posting all of this information. Just go to the search at the bottom of your screen, choose the groups tab. When the window pops up, type in “Metaversed”--that’s Metaversed with a ‘D’ at the end--and you’ll come up with all our groups, including Metanomics. Feel free to join Metanomics. Thank you everyone. Without further adieu, let me introduce you to Beyers Sellers from Cornell here, who will take the podium. There you go, Beyers Sellers. BEYERS SELLERS: Well, thank you so much, 57 Life, and also thanks to all of you for showing up. I’m absolutely delighted to see so many people here, and so I want to take this opportunity to welcome you to Metamonics 101.
  2. 2. So this whole series started out as just a low-key Johnson School MBA course on business and regulation in Second Life, something that I got increasingly interested in over the summer. And so at first the plan was to come into Second Life, bring some MBA students along, have them hear a few interesting guest speakers, and write some reports. I figured I’d have about a dozen people and now, thanks to 57 Life and Metaversed, it’s turned into a series of events that are broadcast live on the Internet, with some really interesting guest speakers and a full-blown Web site. And it looks to me like we have more than a dozen people sitting out there. I think we’ve basically maxed-out Metaversed Island right now. I know a number of you are watching this on SLCN-TV because you couldn’t get in, and we will see what we can do about that. Okay. Today is pretty much like the first day of any college class that you’ve taken. The professor talks about what the course is going to cover, some administrative details. And they always predict that the session’s going to end early, but it never really does. So I’m going to try. And I’m going to try to leave a fair bit of time for Q&A at the end. If you have questions throughout, you know, it’s nice to know that you’re alive out there in our studio audience on Metaversed Island, so feel free to do a little chatting on the bottom of the screen, so that I know you’re alive. But if you have specific questions you want to have addressed in the Q&A, IM 57 Miles so that he can help me moderate those. Okay. I want to start by talking about the term that you’re seeing on this slide here, “Metanomics.” So people always poke fun at academics for coining terms, but this one just seemed too natural to pass up. So let me just talk about it a bit.
  3. 3. Metanomics is the study of the economics of the metaverse. And metaverse is a term that was coined by Neil Stevenson in his science fiction novel Snow Crash. If you read that, Neil Stevenson describes a virtual world that is much like Second Life. You can call him a visionary, but I have to admit I had a little trouble taking seriously a book in which getting pizzas delivered on time is a matter of life and death overseen by the mafia. That said, “metaverse” is really a great term and more general than just Second Life. We have to include lots of virtual worlds, not just Linden Labs’ Second Life, but Blizzards’ World of Warcraft. Sony Online has EverQuest; Mindark has Entropia. But we can go further than that. We can talk about social networking sites like Facebook and MySpace, connectivity platforms like Skype and so on. So all of these, I think, in the coming years, are going to be integrated in ways that we’re just beginning to see now. And so I think it makes sense to just use the one term, “metaverse,” to describe everything that’s going on. Now, as part of this, I want to emphasize that this course is not only about Second Life. In a few minutes I’m going describe a range of topics that I see as being part of metanomics. But for right now, what I do want to do, despite metanomics and the metaverse being much more than Second Life, is I want to just have a quick and concrete overview of the economy of Second Life, which is the world that I know best. So first I want to apologize to those of you who are Second Life residents who are active in this world because I promise you, you know far more than I do about what’s going on here. One of my big motivations for running this series is so that I can learn from you. So please,
  4. 4. if you feel you want to correct or elaborate on things I want to say, go to our Web site,, and write comments or post your own stories so that others can start their own comment streams. Okay, the next slide just gives a little bit of a summary of the many different industries that we see in Second Life. And so I’m just going to walk through this slide. And they’re in an order that I think will make it relatively easy for those who are not involved in Second Life to see how it all works together. So the first thing to understand about Second Life’s economy is that Linden Lab, which owns and runs Second Life, prints money called Lindens, and they also basically print land. Now money’s fairly easy to understand. Lindens become the currency that facilitates transactions between residents. And the land is a little more confusing. And I see there are some comments about the slides, so I don’t know if we have a little technical problem there, but I’m going to keep going, and we’ll worry about the slides in a bit. I figure I am compelling and organized enough that you can just get it from me alone. So let’s see how that works. Anyway, talking about land. So land is confusing. Buying land from Linden Lab is not just buying a place for people to meet up. You’re really buying server space and bandwidth to support the objects that are being put on the land and the capacity to run the scripts for animations. For example, the animation that you see my body, Beyer’s, undergoing right now as he talks--this is an animation script in the podium that I’m standing at, and it is animating my body. And also the land allows us to get this audio stream that you hear my voice coming through, because I’m talking to you on Skype.
  5. 5. There’s a very active market in real estate. We’ve got land speculators who buy the land from Linden Lab and resell it to others who may resell it again. There are land developers who buy the land, subdivide it, put up houses and other sorts of content that people would like to see. And again, they may resell it for a higher price, or they may rent it out. This active land market then leads naturally into a building and scripting industry, businesses that are creating content to put on the land. Now, this isn’t just architecture, although there is a lot of tremendous architecture in Second Life. Architectural features like windows and doors have scripts in them to arrange how they open and close and tint and the like. So once we have the land and the buildings and the other useful objects created by the real estate, building and scripting industries, we can start talking about giving people something to do. Let’s turn to media and entertainment. Certainly I’ll give a shout out to the Second Life cable network, which is allowing us to broadcast this live right onto the web. And they broadcast a lot of interesting things that entertain Second Life residents. And then there’s also, of course, active dance clubs with live music streamed in-world. And music, again, drives more of the animation industry because the avatars like to dance to the music they’re hearing. So this industry, media and entertainment, just like any other, creates a lot of demand for scripting and for building. Now, one of the best parts of Second Life is the ability to interact with people from around
  6. 6. the world. There are over 100 universities and colleges with a presence here, and businesses are running live events and conferences here all the time. So this creates demand for people, like my colleague, 57 Life, of Metaversed, who manages these live events. And people like, Navillus Batra, of i3D Now, who made our slide projector so that you can see something that’s pretty much like a classroom I would teach in at the Johnson School here at Cornell. Okay. Well, let’s move back to fun away from work and school, and talk about fashion and design. Second Life is intrinsically social and some of you who are watching this on the web, either live or after the fact, may wonder why people would make their way onto Metaversed Island to be here. Well, the reason is that they can interact with others and really build a community. Would you rather see a movie at home alone in your living room, or go to the theater and see 300 people sitting around and be laughing at the same things you’re laughing at? So it’s very social. And fashion, then, of course, is an essential part of social life, and so there are a lot of high- profile designers like Raven Pennyfeather, Nyla Cheeky, Vindi Vindaloo who are able to earn a living from doing something that also seems like a lot of fun because we’ve got fashion shows and parties. And of course, anyone can be thin enough to be a model. Okay, well all of these industries require investments, so there is an active market for financial services. And in particular, there are three stock exchanges in Second Life which
  7. 7. allow--oh, 70 or so businesses, at last count--to raise capital from other residents to buy land and hire workers and do the other things that require financial investment. The last element of the economy is the personal services industry. This is pretty wide and varied, and frankly I’m not going to talk a whole lot about it in this course because the personal services industry gets a little too personal for me. So right now we should be looking at the slide on regulation. We’re going to move to the slide on regulation--that’s slide number three--because all of these industries require opportunities for regulation. And so let me just very quickly describe the regulatory issues that we see in Second Life. First of all, above everything else that residents may do, there’s the Linden Lab terms of service for Second Life. Every resident must sign-on to those terms and agree to adhere by Linden Labs community standards. There are a few activities that Linden is actively policing: gambling, depictions of underage sexual activity but, for the most part, Linden is taking a hands-off attitude, particularly in conflict among residents. So residents are left in a world that many have characterized as a lawless world, a wild west, and they then need to develop their own regulatory institutions, which, in fact, they are doing. So I’d like to start by talking about zoning and community standards. Prokofy Neva is one of the most prolific writers on Second Life, and she talked with 57 Life on a metaversed podcast about an event called Kong on the Water. The short version here is someone made an enormous model of King Kong that was visible, not only from their own land, but the land
  8. 8. owned by other residents. Now, it’s easy in Second Life, if you own your own land, to remove objects from it and to control it, but what about neighboring land? What about land that you have many people renting on and many of these renters do not have the status, the software permissions to remove something like a giant King Kong that they’d rather not see? In the real world we can deal with this through zoning laws. But in Second Life, residents are struggling to create and enforce these laws, so there are a number of groups who are trying to come up with governance structures. So Desmond Shang has his own community with its standards. Caledon is, as I understand it, successful though there are, no doubt, some Second Life residents who will want to enlighten me on their situation. Metaversed Republic is a group that is trying to come up with a system of governance. And I think a lot of people are concerned that they are not making the headway they’d like to see. And no doubt members of Metaversed Republic will like to enlighten me on their view there. Okay, next I’d like to talk briefly about vendor certification and the resolution of business disputes. So we’ve got a lot of business-to-business commerce in this world, often between people who don’t know one another in real life. So how can you guarantee you’re hiring someone qualified? How can you guarantee that if you buy an object that, in fact, it’ll perform as promised? Now, one issue is trying to resolve disputes after the fact, and there are a number of lawyers now in Second Life and a Second Life bar association and the Dispute Resolution
  9. 9. Organization run by Gwyenth Llewelyn, but after the fact is a little late. And when we think about regulation and oversight, we think about certification and methods of avoiding problems in the first place. So we have groups like the Second Life Business Bureau that is suggested, not only resolving disputes after the fact, but certifying businesses based on past behavior and on their ability to have practices in place to ensure good future behavior. Now, these are incredibly controversial. And if you read through the blogs and some of the suggested readings, when we get to sessions talking about that, you’ll see that people worry a lot about extortionary activity by quasi-regulatory groups. And in fact, I see concerns being expressed in the chat in the Second Life audience already on that one. Finally, let me talk briefly about the regulatory arena that’s nearest and dearest to my heart: the financial markets. There have been a number of scandals this summer in the market, and a group called the Second Life Exchange Commission has been working to develop methods to protect investors, including things like requiring exchanges to be transparent about their activities and requiring listing firms to be transparent about their real-life contact information and their financial situation. This also has a tremendous educational aspect because most of the listing firms and investors are not professional: either they don’t have professional CFOs and CPAs. Okay, so that pretty much rounds up our discussion right now of the Second Life economy. And as we move on to the next slide, I want to emphasize that metanomics is not just about Second Life’s economy. Second Life is just one piece of the picture here--a very interesting one, but just one piece.
  10. 10. So I want to take a step back and look at the bigger picture. And here I guess I’m going to sound all academicy because you know how we academics like to make lots of distinctions. So that’s what I’m going to do now. I’m going to make some distinctions that I have found very useful in trying to communicate with the many different people who seem to be interested in the economics of virtual worlds and the larger metaverse. The first distinction that I would like to make is between immersionists’ and augmentationists’ views of virtual worlds. Now, I didn’t make these terms up. They actually come, my understanding, is from role-playing communities in virtual worlds. And Second Life blogger Gwyneth Llewelyn has written a nice definition of these terms as they pertain to Second Life. What she says in here--I’m just reading from one of her blogs—“Immersionists are those who want to live a parallel Second Life, completely separated from their real life, while augmentationists are those who want to use Second Life as a means to enhance their real life.” Now, you can imagine immersionists and augmentationists don’t necessarily get along all that well. If they’re on a medieval island, the immersionists are going to be the ones who are saying “thee” and “thou” and “Hail there, fair fellow,” while the--I’m sorry. The immersionists are saying that, while the augmentationists are seeing, “Yo, dude, what’s up?” So it’s very clear that in the first group people are immersing themselves in the role of being in a medieval sim. And in the second case it’s some guys who want to make some friends and maybe have a beer in their living room with someone who’s having a beer in their living room 3,000 miles away. Okay. Well, this course is about business and economics, so not so much about role
  11. 11. playing, but the distinction is really a very important and useful one. Immersionist metanomics studies the economics of virtual worlds as parallel worlds separated from the real world with their own dynamics and their own inherent interest. So what we just did, talking about Second Life, was very much an immersionist perspective. Augmentationist metanomics studies how real-world organizations are using and responding to the virtual worlds and to other aspects of the metaverse. So to make this very concrete, let’s go back to financial market regulation. And I see some comments about the slides. We should be on the Three Subfields of Metanomics now. So to make this concrete, let’s go back to financial market regulation. Someone who is interested in immersionist metanomics might ask a question like, “How does the Second Life Exchange Commission, the SLEC, try to regulate Second Life stock exchanges?” You know, that’s an interesting question. They are in a difficult world because they don’t have the power of a government to enforce whatever it is they come up with. So if you’re a libertarian I think you’ll love this picture, because there’s no daddy government to come in and enforce rules and regulations. Is it true that we’re better off without insider trading? We’re going to see. Now, if someone is coming to study financial market regulation from an Augmentationist’s perspective, they might ask a question like, “Well, should the SEC be regulating these exchanges?” Could a real-world bank or exchange find some opportunities in these exchanges, maybe by educating investors and getting a marketing benefit from that or helping firms develop more credible financial reporting for a fee, like a real-life auditor
  12. 12. might?” So that’s the Immersionist and the Augmentationists' perspective on metanomics. There’s a third subfield of metanomics, which I call Experimentalist. Now, Experimentalists want to use virtual worlds as laboratories to study real-world issues. And I want to say this is how I got interested in this topic. For the last almost 20 years now I’ve been doing versions of what’s called “experimental economics.” I’ve managed a laboratory here at Cornell since 1991, and what I’m doing is creating what I now think of as extremely small and simple virtual worlds in which I study financial markets. So in those experiments, I create two settings that are identical, except for one feature, and I compare how the settings behave. Well, experimental metanomics can be a lot more ambitious than Experimental Economics because we can have two virtual worlds with tens of thousands of people that are identical except for one feature. And we can compare how those entire worlds behave. Now, Experimentalists are not really a totally distinct category from Immersionists and Augmentationists. Experimentalists are definitely Augmentationists because they’re using the metaverse as a tool. But, unlike the Augmentationists’ perspective on metanomics, the object of experimental study is not to typically the metaverse; instead, it’s the real world. So for example, I might run an experiment to ask how the SEC should be enforcing, implementing insider trading laws or whether Sarbanes Oxley makes sense. Well, what I can do is create two worlds that have different insider trading laws, or that do and don’t have Sarbanes Oxley provisions, and I can see how they vary. And I’m not learning, necessarily, much about the virtual worlds; instead I’m learning about insider trading and Sarbanes Oxley and what the SEC should do.
  13. 13. Okay. So that, I hope, gives you a larger sense of how I see metanomics and what this course is likely to be about over the coming months. Now, as we move on to the next slide, I just want to talk briefly here about features of the metaverse that people who do not live in a virtual world may not quite understand. And these really become very important no matter what perspective you are trying to take. So here I have a slide that lists different features of the metaverse, and I want to start with Collaboration and Networking. So virtual worlds are absolutely wonderful vehicles for global networking. This event is a good example. I mean, I’m in Ithaca, New York, a small town that we like to call “centrally isolated” because, no matter which direction you go, you’re far from anything. 57 Miles is in the south of Denmark in an area pronounced The Lowlands, which I’m told makes Ithaca look cosmopolitan. SLCN, who’s broadcasting this live, is actually in Australia. So I guess I want to take a second to apologize to SLCN. I must really be messing with your sleep habits here. But we are delighted that you are here. And of course, I’m looking at faces of 70-some avatars who I know are from all over the world. So that’s the first thing to understand about virtual worlds. The second thing is to understand how immersive they are. There are countless stories about World of Warcraft addiction and students who fail out of their courses because they spend their entire time leading a guild of 40 people, basically running their own business. Now, those stories might frighten parents, but they really excite educators. Why can’t I have students staying up until 4:00 a.m. because they feel they just can’t stop until they
  14. 14. accomplish a quest that I set up for them? Okay, information capture. This is a key element of virtual worlds. I talked yesterday with a gentleman who’s created a bot, an automated object that scans all of the mainland areas of Second Life and captures incredible data about land ownership, selling prices, sources of streaming content, lots of things that many Second Life residents are going to think is confidential. Well, sorry, it’s not. It’s not just that Linden Lab could hack into their servers and check that out; another person who has the ability to get on the land can get that information as well. And for people interested in marketing, there are obviously tremendous opportunities, financial analysis and prediction. This all has implications we’re only beginning to sort out. Now, along with information capture--and you might think of this as the flip-side of a virtual environment--is that we also have the ability to use code within virtual worlds to enforce the laws. So this harks back to Lawrence Lessig’s book Code and the notion of code as law. The notion here is that you can use code to keep people doing things you don’t want them to do, so rather than deterrents with penalties and punishment, we simply have prevention. So that’s great. But oh--and I see someone say, “Oh, here come the infomercials.” I don’t know if it was in response to this, but it does fit, because I think there are a lot of business opportunities in selling code-as-law products. Finally, I just want to mention a few differences between virtual and real worlds that are pretty interesting. In a real world, a building is called a rival-risk good because either I own it or you own it; we can’t both be using it and living in it. In Second Life, someone can make a
  15. 15. building and create 100 copies, give them away while still retaining their own. So when we talk about scarcity, which is the foundation of economics, the allocation of scarce resources, we have to remember that the goods are rarely the scarce items. Instead, it’s server space, it’s bandwidth, and it’s people’s time and labor. Any Marxists out there who want to talk about labor and the value of capital? I don’t know if I’ll have any of those in a session. Okay. More surprisingly, even when people are in the same place at the same time, they may be seeing totally different things. At the last Metaversed Live event that 57 Miles put on, I believe it was Timporal Mitra who presented an object that would stream video to anyone nearby; they could all watch it, but they would actually be seeing different streams. So you have a group of people looking at the same object having very different experiences. I think social scientists are going to have a great time taking the Experimentalist’s perspective. I know we can do lots of fascinating experiments with a tool like that. So social scientists, I hope you’re listening. Okay, and related to that, by the way, is the notion of flexible identity, which social scientists have looked at in tremendous detail already. You can be a man and come into Second Life as a woman or vice versa. Or you can be any type of animal. I think I saw someone as a soft-drink can the other day. So there are lots of possibilities, and again, I think social science is going to have a lot interesting to find out about this. Okay, I’m just about out of time. So all I want to do on this next slide--very quickly mention
  16. 16. some of the upcoming talks that we have. And I have taken a stab at splitting these by Immersionist and Augmentationist. So we’ve got Josh Fairfield, a law professor, who’s written on antisocial contracts, basically looking at contracting as a way that residents in the world can arrange their affairs with one another: community standards, zoning, and everything, and their limitations. Jon “Neverdie” Jacobs, Anshe Chung and Raven Pennyfeather are all going to be featured, and they are all basically making good money in businesses within worlds. Neverdie is actually Entropia, and the other two are in Second Life. We’ll be talking about financial market behavior. I haven’t set up yet the people who are going to be on that. Richard Bartle, who is one of the original names in virtual world development, is going to be with us, and Ted Castranova, who wrote an excellent book and is coming out with another, is also going to talk about what’s on his mind. We’re going to have a very heavy Augmentationists focus starting, actually, this Thursday with Sandra Kearney from IBM talking about what IBM is doing in virtual worlds. We’re going to have Brian Camp, a law professor, and Dan Miller, who works for Congress as a senior economist on the taxation and regulatory outlook of virtual world commerce. And finally, Julian Dibbell, who many of you I think may have seen, had an article in the New York Times magazine recently about gold farmers: people who have massive server farms or human farms of people in China and other places who are making money in games like World of Warcraft and Entropia because the profit is there to be made. I don’t yet have any Experimentalists lined up. We are going to get there. I view that maybe
  17. 17. as a little more graduate level, and I know I need to learn a lot more. And I think the researchers need to catch up a little bit before we’re going to have a whole lot of that to talk about. But that to me, personally, is going to be one of the most fascinating parts of this endeavor. Okay, so that’s pretty much what I have to say. In closing, I just want to mention, as it says on this very last slide, that this is more than just a series of live events. This is, I view, as I said on the Metanomics Web site, I view the live events as the grain of sand in the oyster. And it’s everything we do around it that creates the pearls. So we are going to be working to post pre-events, suggested readings, questions for speakers, post-event analysis, but we really need your help. My goal here is to build a community of people who are interested in these topics, and that’s one reason I’m so delighted to see you all here. So if you can get on the Web site and write some comments, and if you feel like you’re going to say something that you think is insightful enough and controversial enough that it’s going to create its own comments stream, register on the site, post a story, and it’ll have its own comment thread. The other thing is that already this is just becoming a sort of a data clearinghouse. I have people coming to me saying, “I have interesting data.” And I’d love to find those econometricians out there who are good with data-mining, time series. This is pretty high- level stuff, and I think very interesting. So if you’ve got the econometric skills or the data- mining skills, let me know, and I may be able to link you up with someone who’s got some really fascinating data. Last thing I want to mention is there’s no such thing as a free event. As far as I can tell, I am
  18. 18. the only one who’s a volunteer in this series. Everyone else needs to put food on the table, and so we are looking for corporate sponsors or other people that can help us out. So if you’re interested in being part of what we’re doing, talk with 57 Miles of Metaversed for financial support. If you want to talk about being on the show or someone you think should be on the show, probably go directly to me. Okay. Well, I’m afraid, as I said I would, I went a little longer than anticipated, but we’ve still got about 15 minutes here for Q&A. So thank you all for listening, and I’m going to then let 57 Miles moderate some of these questions. Or you can, at this point, maybe also IM me because I’m done with my planned presentations. 57 MILES: We have a couple of questions coming in. Thanks, Beyers Sellers. BEYERS SELLERS: Great. 57 MILES: Thanks everyone. Sequoia Hax says, “Is Second Life generating value, i.e., could it be considered an underground service economy that’s generating value which can then migrate from online to offline?” And if you want to ask a question, guys, please right-click me and choose IM. I’m standing on your right. I’m the bald guy in the black t-shirt. BEYERS SELLERS: Yeah, so Sequoia, I think the answer to that is definitely yes. And there were a few parts of that question. First, is it creating value? Well, I can tell you that what I am doing now and the connections I’ve made outside of Second Life I never could
  19. 19. have done this without something like Second Life. Another thing you mentioned was “Is it an underground economy?” and I think at this point, I would have to say, by definition, yes, because really, as far as I know, no one is paying taxes on anything until they’re converting their Lindens into dollars. And then I do hope everyone listening is being a good citizen and paying taxes because I’m pretty sure you owe it then. So Sequoia, actually chatted on a little clarification saying, “I meant real-life value.” And I think that’s there, too, absolutely. And I hope that by the end of this series a lot of you are realizing that there is a lot of value to be made here. That said, I think that there’s a huge amount of hype surrounding Second Life, and a lot people who are doing things that I think is not going to earn them money. I think it’s also a very realistic possibility that some company, with a lot more money than Linden Lab, like an IBM or a Sun or an Intel or a Sysco Systems or a Sony could simply just eat--they could create a competing platform and potentially eat Linden’s lunch. Okay, do we have any other questions, 57 Miles? 57 MILES: No, I think we’re good. I think we’re going to call it a day there. I have a whole bunch of IMs here, but most of them are people that couldn’t get into the sim, unfortunately. You will be able to see this archived on We’ll also be putting up a video on both and Metaversed YouTube channel. We’ll get an audio podcast out for you guys tomorrow as well. I think it’s just remains to thank Beyers Sellers for getting up there and introducing the event and everyone for coming and for turning up for the Metanomics 101
  20. 20. event, which was just fantastic. Thanks everyone. BEYERS SELLERS: Okay, thank you all for coming. I’m actually going to hang around a bit to answer questions, and hopefully urge you guys to get on the site. [END OF AUDIO] Document: cor2001.doc Transcribed by: Second Life avatar: Transcriptionist Writer