PANEL OF EXPERTS RESPONDS TO ROSEDALE’S VISION

                                    SEPTEMBER 29, 2008



ROBERT BLOOMFIEL...
Worlds. But the whole week is full of interesting guests and panels every day at noon and

1:00 P.M. Pacific Time, on Oran...
Grandma.” So here’s an abbreviated version of what Philip calls a stock question that he

asks rhetorically and frequently...
more whole-scale in this talking point? So I’d like to start with Dusan Writer. Dusan, what’s

your take on the substance ...
reason. And, in his vision, 3D worlds are the place where more and more stuff will happen,

and it will be more intuitive ...
between the power of Web 2.0 and the power of Virtual Worlds. I honestly don’t think we

can define exactly what that will...
getting used to the notion of presence, the presence of others, and I do think that this, of

course, is very immersive in...
the download. He makes the argument that Lively is not as useful as they claim to be

because the download is actually qui...
want to talk about Virtual Worlds as separate and distinct from the web, which is another

logical fallacy, we’re going to...
CHRISTIAN RENAUD: Robert, you know I love you, but that’s just a bunch of crap. At the

end of the day, it’s people. All t...
essentially just steamrolling over them and saying, “Hey, we’re going to do this ourselves.”



So you can either have use...
CHRISTIAN RENAUD: No fair just stating the question without stating an answer. Fair

enough. I’ll tell you what, if you’re...
talked with Philip in the original interview, I basically asked whether he felt like he had

opened Pandora’s Box, losing ...
Christian just said. Usually we don’t agree on everything, but I don’t know what’s happened.



But I think interoperabili...
And that they have this small, it's just a small team.



And I supposed if I quibbled with a section of the interview, it...
managing the virtual currency.



So of course, the question is what will happen in this grand vision of connected Virtual...
A: [NO RESPONSE]



ROBERT BLOOMFIELD: Maybe not. I’ll leave that--oh, Roland, go ahead.



ROLAND LEGRAND: Yes. I’m not s...
there missing out on some of the margin that they could get. And I guess the other thing that

came out today, I guess, th...
Ben Duranske, you’ve talked about really both of these at various times throughout the last

year of Metanomics. What’s yo...
Now, in the Rosedale interview, he acknowledged this. I think he wanted to say we’re not

going to legislate any more than...
Linden is and the precedent so far with wanting to become a carrier but yet invoking policy

and taking people out that vi...
“We have absolutely nothing to do with user interaction. We don’t police this. We don’t

control it. And it’s not our prob...
ROBERT BLOOMFIELD: Okay, Tish.



TISH SHUTE: I haven’t checked the wording, but he said he was going to make bottom of

t...
BEN DURANSKE: I was surprised. This is Ben Duranske. I was surprised just by the

acknowledgement, on Philip’s part and pr...
going to redeem, like I buy an iTunes card.” You could do that in Best Buy and things like

that, not to give the chief pr...
different ways of accessing the World, different clients to access the World, I think is really

important because, when y...
CHRISTIAN RENAUD: At least the last time I--



TISH SHUTE: Yeah, that is--



CHRISTIAN RENAUD: Well, good.



TISH SHUTE...
work. And I’m not the person to really go into the details of this. You could talk to Zha Ewry

or Zero Linden, but I mean...
The other thing I would mention is, while it’s true that it’s hard to find a job in Second Life,

there is a lot of volunt...
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092908 Rosedales Vision Metanomics Transcript

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

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092908 Rosedales Vision Metanomics Transcript

  1. 1. PANEL OF EXPERTS RESPONDS TO ROSEDALE’S VISION SEPTEMBER 29, 2008 ROBERT BLOOMFIELD: Good afternoon, and welcome to the forty-ninth edition of Metanomics. Today we have a great panel of experts to analyze the comments of Linden Lab chairman, Philip Rosedale, and more generally discuss the state and future of Second Life, Linden Lab and the Metaverse. Our discussion will be based on the many blogposts that have looked at my interview with Philip earlier this month. You can see the complete interview and the other posts at metanomics.net, if you want to follow along during our discussion. At always, thanks to our sponsors: InterSection Unlimited, Kelly Services, Language Lab, Learning Tree International and, of course, my own institution, Cornell University’s Johnson Graduate School of Management. As a nonprofit endeavor, we are always looking for financial support so if your organization is interested in helping out, please let us know. As you can see, we are filming the show right here in a replica of Sage Hall, home of Cornell’s Johnson School. But most of you are watching from one of our event partners: Colonia Nova Amphitheater, Meta Partners Conference Area, Rockliffe University, the Outreach Amphitheater of the New Media Consortium Educational Community Sims and JenzZa Misfit’s historic Muse Isle. We’re also pleased to announce a new event partner this week, Orange Island. We are helping them kick off a whole week of discussion on the future of Virtual Worlds as part of Orange Island’s Innovation Week. This Wednesday at noon, Tish Shute will interview me, Chase Marellan, creator of ChatBridge, and Kevin Kell of Learning Tree International, about communication innovations for live events in Virtual
  2. 2. Worlds. But the whole week is full of interesting guests and panels every day at noon and 1:00 P.M. Pacific Time, on Orange Island, in Second Life. France Telecom Group is one of the world’s largest and most successful integrated communications companies, and they offer telephone, television and internet services through the Orange brand. So through the launch of Orange Island in Second Life, Orange hopes to learn not only more about virtual communities but also about how these communities can be used for collaboration and innovation. So we at Metanomics are delighted to join them in that effort. We use InterSection Unlimited’s ChatBridge system to transmit local chat to our website and website chat into our event partners. This great technology brings you in touch with people around Second Life and on the web, wherever you are. So speak up, and let everyone know your thoughts. Okay, on to the show. We have a great panel of guests today from the business desk of Belgian media company, Mediafin, Roland Legrand taking time away from the credit crisis and the crashing, at this moment, Wall Street stocks, to talk about Virtual Worlds; from the Technology Intelligence Group, Christian Renaud; the CEO of Remedy Communications, Doug Thompson, Dusan Writer; Ugo Trade’s Tish Shute; and author of Virtual Law and the website virtuallyblind, Benjamin Duranske. Thank you all so much for coming and joining me today. I would like to start this discussion with one of the more memorable quotations from the interview with Philip Rosedale, which I quote in a post that I called “Good Enough for
  3. 3. Grandma.” So here’s an abbreviated version of what Philip calls a stock question that he asks rhetorically and frequently, “If you had a grandparent or parent that was intelligent and interested in engaging with a new community, getting an extra job, finding something interesting to do in their older years, and they really weren’t that familiar with the internet at all, would you teach them how to use Second Life, or would you teach them how to more generally just use the web?” Now Philip recognizes that, in his words, “The learning curve would be brutal,” but still he argues for Second Life over the web. He says, “Once you got them to that point (over the learning curve hump), then subsequent to that, everything’s relatively easy. How do you get a job in Second Life? Ask someone. You’ll find your way. How do you get a job on the web? Very hard problem. What do you do, you go to Google and type ‘get a job’ That’s going to be harder. You’re not going to find your way to LinkedIn or Monster.com or Craigslist. I mean it’s hard, so I think it’s very likely that the general application of Virtual Worlds will cover use cases so substantial and so diffuse that we’re ultimately going to see here a situation where Second Life and, more generally, Virtual Worlds, and however we connect all these companies together, spanning an amount of use that is greater than the web today.” So I think there are two issues that I would like to hear about from the panel. One of them is substance. Would you agree, either with the idea that right now you’d tell your grandmother to jump into Second Life, or do you think that that’s feasible in a few years? How many years? And then the second issue I’d like to talk about is more of a positioning issue. Just thinking in terms of talking points and making the case for Linden Lab, Second Life and Virtuals Worlds more generally, would you go this direction? Does this just need to be tweaked a little bit to make it more convincing, or is there something that we need to change
  4. 4. more whole-scale in this talking point? So I’d like to start with Dusan Writer. Dusan, what’s your take on the substance of Philip here? DUSAN WRITER: Thanks, Beyers. And a great interview, by the way. It was a lot to chew over. Sometimes when you’re listening to Philip or reading what he said, I call it a temporal dislocation. I’m not sure whether he’s talking sometimes about the future of how he sees things today. I think that was one of the points I took out of the grandma discussion is, on the one hand, I think he’s talking about where he sees Virtual Worlds going, because I’m not sure I’d have my grandmother in today to find a job, because, other than camping, I’m not sure what kinds of jobs she might do in Second Life. I think what’s interesting about this is that I think Philip’s vision for where Second Life is going is that it is a World as a way of interacting with information and environments. That in his vision or in his view that will supplant the web as the more natural way to access data, access people, access environments and work with companies. So he sees this as either running parallel to or supplanting the 2D web, and I’m not sure I entirely buy that. I’m not sure I buy that the web, as it looks today, is going to look the same five years from now when grandma might come in to Second Life to get a job. But I think he’s also trying to make a case that the usability issues, the issues of just trying to learn the interface, learn how to get around, learn how to find people, will become increasingly worth overcoming because there’s going to be so much stuff to do here. And he always used what I think of it as a little geeky talk because he’s a geek, I think, the geeky talk of talking about use cases. I’m not sure what a use case is. I think a use case means there’s people who are going to come here, and they’re going to come here for a reason, and they’re going to stay for a
  5. 5. reason. And, in his vision, 3D worlds are the place where more and more stuff will happen, and it will be more intuitive and more robust than the web itself. I guess the question is whether you agree or disagree with that. ROBERT BLOOMFIELD: Tish, you wanted to react to the term “supplant,” that Virtual Worlds would supplant the 2D web. TISH SHUTE: Yes, because I think sometimes when Philip’s been speaking he may have implied that, but I’m not sure that he ever said that, but maybe. You’re not saying we can look up. But I think it’s more what we’re looking at now is what’s the relationship between the web and Virtual Worlds, and what is it about Web 2.0 that’s been so powerful? Because we’re not going to throw that out? And what is it that Virtual Worlds have brought to the picture? What have they added to the game? As far as I can see, the two aren’t integrated at the moment. Real time interaction is not really a part of Web 2.0 as we know it. It’s basically the power of Web 2.0 is to find why O’Reilly is in the network effects and the fact that the more, use the example of self, whether it’s used the more value it has. Virtual Worlds have been isolated from that. We’re not going to throw that out. That is so powerful. It’s not going out of the window, so we’re not going to supplant that, since that is Web 2.0, that’s something that’s going to stick around. But the web does not do real time very well. It certainly doesn’t do immersives real time very well at all, if at all. And I think what we’re looking at now, and that’s why I’m so gung ho on the OpenSim because it’s really facilitated a lot of architectural possibilities that will really open the door to all kinds of integration between those two--I couldn’t say worlds, but
  6. 6. between the power of Web 2.0 and the power of Virtual Worlds. I honestly don’t think we can define exactly what that will bring us. That’s why it’s so amazing, and it’s so exciting. And I think we’re on the cusp of this. We’ve been waiting a while, but we really are on the cusp of it. The architectural roadblocks are moving out of the way. ROBERT BLOOMFIELD: Mm-hmm. Roland, you wanted to weigh in? ROLAND LEGRAND: Yes, Rob. I was just thinking about this distinction Philip is making, of course, between Virtual Worlds and the web. I think what he’s saying is actually that people tend to think that the internet is equal to the web, while, in fact, of course, this is not true. That what we do have now is a kind of dominance of this web thinking, while he would like to have a kind of internet dominance in the sense of connected Virtual Worlds, which would need be more like the essence or the substance of the internet. Now to go back to the grandmother issue, I do think I must say this was a bit of an amazing question, but I do think I would encourage my grandmother or other family members to start out in Second Life because I think that I don’t see just as an opposition or that I don’t even think there is an opposition between the web the Virtual Worlds. I think that, in fact, by learning to use Virtual Worlds, people will understand better what the web is. And to give one example, many people are often shocked when they look into websites from newspapers. They see there is a lot of discussion going on there, and they’re saying, “Well, this is not looking like a real website.” What they actually mean is, it’s not looking like the print newspaper they’re used to. While, in fact, as a resident of a Virtual World, we are
  7. 7. getting used to the notion of presence, the presence of others, and I do think that this, of course, is very immersive in a Virtual World such as Second Life. But I also think there is a kind of immersiveness even to the web. For instance, into live chat sessions or live blogging, for instance, where the audience is participating. I think that, after a while, you’ll really get a sense that people are actually there, even though they are not represented by avatars. But in order to understand that, in many cases, now already, the classical websites are already becoming like cafes or pubs or auditoria. I think it is useful to have the Second Life experience because you look in another way to what other people seems to be a very classical use of the web. So I think, as a starting point, Virtual Worlds, although the learning curve is steep, are really a great place to start. That’s my take on it. ROBERT BLOOMFIELD: Dusan, you wanted to talk a little bit about the web-based Virtual Worlds and how they fit into this. DUSAN WRITER: Well, I should just comment, and I don’t disagree with Tara, I think the problem for me a little bit is how Philip expresses where he sees things today and where they’re going. And what ends up happening then is, he starts talking about web-based or browser-based Virtual World or browser-based environments like Lively or, to a degree, _____, and tries to make an argument for why Second Life offers so much more compared to something like Lively, but doesn’t quite close the sale for me. So I see his vision is sort of saying one of the primary sites of sociality is a Virtual World where you can collaborate and you can create. I think this is one of the largest creative communities on the planet today in Second Life. And I’m not sure he closes the sale though, to say that why is that important compared to something like Lively and instead focuses on technology issues like how big is
  8. 8. the download. He makes the argument that Lively is not as useful as they claim to be because the download is actually quite large. Which doesn’t strike me as the argument to make for why the vision of Second Life is something that we should rally behind. ROBERT BLOOMFIELD: Yeah. Oh, Christian, yeah, jump on in. CHRISTIAN RENAUD: No, I’m just going to jump in real quick. Sorry for not chiming in on the Skype channel to get my token. I think we might be walking down a fallacy if we think that there’s only going to be one dominant form of Virtual Worlds. It’s the technology, and the technology’s going to diffuse its way into the web as a sidecar application, as an overlay like the [AUDIO GLITCH] stuff so a featurette, [Vivity?] scenes, and there’ll be instances when we need an immersive solution, like a Second Life or any of it’s competitors, and I don’t see them as being mutually exclusive or all substitutes for one another. I think, to Tish’s point, the value of these environments is in the people and in the tools that the people are given to either collaborate or co-create with one another. With all due respect to Philip, you can’t compare 50,000 or a few hundred thousand people in an immersive environment to millions of people in web-based environments, as far as the network effect and the benefit of collaboration, either synchronous or asynchronous. And that’s something that we’re going to have to reconcile is the power of immersive environments, like this one, with the network effect that you get by having a lower-barriered entry. What was it, Barbie Girls Online, that had something like 200,000 users in the first week. We’d fall over backwards if that happened in Second Life. They had five million in four months. That’s obviously a formidable force. That’s something that we, as an industry, if you
  9. 9. want to talk about Virtual Worlds as separate and distinct from the web, which is another logical fallacy, we’re going to have to reconcile all of these different instantiations of Virtual Worlds with one another and say they’re not mutually exclusive. They’re complementary, and, by the way, they’re integrated and complementary with the rest of the internet, bit it the web or anything else. ROBERT BLOOMFIELD: Christian, if I could follow up and actually lead us on to the next topic, you commented quite a bit on the part of the interview where Philip talked about broadening use cases. Let me just quote a little bit here. I mean I’m thinking about--you talked about Barbie, which has a very narrow demographic, really is a pretty much a single use World for that demographic. It’s chat and play, not much content generation and so on. Not much enterprise use. Philip says, “Sometimes you have a product that starts out kind of diffuse, and then it focuses itself on one use case. So that would be like if Second Life were all live music, something like MySpace, where everything that was going on in Second Life was basically around live music. And if you just did the numbers, it was all there. Well, that’s not true. What it seems to me (this is Philip still talking), what it seems to me has happened, we’ve seen a significant broadening of the large use cases. So education and business are now something that people are actually doing in Second Life where, two or three years ago, they really weren’t. It was playful. People talked about it maybe being useful for education and business, but there was no actual pragmatic use.” And so my question to you is, you point to some of these Worlds that are huge successes, but those Worlds seem to be fairly narrowly targeted demographics and are used primarily for play and socialization.
  10. 10. CHRISTIAN RENAUD: Robert, you know I love you, but that’s just a bunch of crap. At the end of the day, it’s people. All the marketers in the world will sit there and go, “There’s this little frigging group of people over here on the left, and there’s just people over here, and there’s these use cases, and there’s these use cases,” and, at the end of the day, it’s society, and they’re all using this for play and for work and for buying and selling things. I mean currently a flaw in the Virtual World industry, that we have Worlds that are specialized for simulation and training, like Forterra OLIVE. We have things that are specialized for education and learning, like Proton Media. You have broader social Worlds that try to be a floor wax and a dessert topping, like Second Life. And they’re trying to do everything for everybody, but they don’t have the hundred percent of features necessary to make that a viable solution for, let’s say, education. It doesn’t have SCORM integration. So although I concur with Philip that there are numerous examples of, “Let’s take a general purpose tool and try to use it for something specific,” that does not come without cost. Right now the value in Second Life is the people and the community and the intimacy that we all have. And, if all of a sudden, I start saying, “Hey everybody who did,” just as an example, “Sloodle, and the huge Sloodle community that rally around Second Life and Moodle, thanks a lot for all your hard work. But you know, we’ve decided we want to focus on the educational vertical because we’re getting our asses handed to us by people who are specialized in that space.” We’re going to go after SCORM integration, which is a necessary feature to go after that market and alienate the core that actually added the value to your platform up to now. So they can’t be viable in that market, without somebody doing that. But they can’t really crap all over all the people who’ve added the value to the platform so far, by
  11. 11. essentially just steamrolling over them and saying, “Hey, we’re going to do this ourselves.” So you can either have user-created content and all the value that the crowd-sourcing creates and all of the benefit, or you can focus your organization and say, “We’re going to go after enterprise collaboration and encryption and enterprise integration with other collaboration applications.” But, you can’t necessarily do both at the same time without putting a very chilling effect on the core constituency, the people that added your value of that user-created content. And we’ve seen this happen time and again with brands trying to go mainstream, like tribe.net, like Sims Online, where they said, “Hey, we’ve been enthusiasts up to now, but now we’d like to get big and mainstream.” And what do they do, they alienated their core, drove them all away, and then all the brands who were there because the people who were there said, “Oh, look, it’s a ghost town. I’m leaving too.” And then you don’t have to worry about anything else because it’s a ghost town. ROBERT BLOOMFIELD: It sounds like what you’re saying is, they can’t narrow and alienate part of their current customer resident base. But, on the other hand, it sounds like you are saying there are costs to trying to be everything to everyone. What would you advise them positively to do to dramatically increase-- CHRISTIAN RENAUD: You sound like my old boss in Cisco. ROBERT BLOOMFIELD: Yeah. That’s right.
  12. 12. CHRISTIAN RENAUD: No fair just stating the question without stating an answer. Fair enough. I’ll tell you what, if you’re going to go after one, go find something--for example, I’d say--and this isn’t just my enterprise bias showing through--but find an area that hasn’t had a lot of work done in the user-created content community in Second Life, like enterprise. There’s been some work, but not a ton of work. And pursue enterprise tools. Go after the wish list that--for example--I see Rand Heinrichs in the audience here, he was part of the Second Life Corporate Business Council too. We gave this big long laundry list to Linden Lab for the things they needed to do to go enterprise business, and that was, what, Rand, a couple years ago? I don’t think they’ve done any of them yet. So go after those. Nobody else has gone after those, but they can’t. It’s a platform thing. And then you’ll be able to go after and get some of the enterprise business and start dropping strong hints to the user-created content community that, “Here are the things we need to do to be viable in the educational space. Here are the things we need to be viable in whatever other markets that Philip and Mark decide to go after.” But saying we are all about user-created content and then going off and focusing the organization and doing specific feature functionality to go after those spaces is sort of trying to have it both ways. ROBERT BLOOMFIELD: Okay. I’m going to actually deviate a little bit from the plan that we initially had because this seems like a good time to talk about the interoperability and OpenSim directions that Linden Lab has been going. And, in particular, it just seems to me that when we talk about things like creating vertical worlds, narrowly focused worlds, one way to do that is through OpenSim, to have separate Worlds using largely the same capabilities that Second Life has, but instead, just devoted to a narrower purpose. So when I
  13. 13. talked with Philip in the original interview, I basically asked whether he felt like he had opened Pandora’s Box, losing control by Open Sourcing the client and creating essentially an Open Source version of a server that would allow everyone to create their own Worlds. He laughed and said he didn’t think they ever had control of Second Life in the first place. But now, Tish Shute, you have written extensively on the Open Source movements, and you actually have as part of your blogpost, you have a part where you say, “A system without an owner is a beautiful thing.” So I guess, what’s your take on what OpenSim and Open Grid are going to mean, and, in particular, for Linden Lab? Philip talked extensively about how their revenue--he didn’t see this affecting their revenue model much at all. That he was saying, “Our revenue per user hour has remained pretty much constant, and we just expect the nature of the money that we get, the sources to change, but not the amount.” Tish, what’s your take? TISH SHUTE: Yes. Well, he actually said a little more than that because he basically said, “We’ve always been able to go with the flow and stay ahead of the game. We’ve never actually been able to predict where this technology would go, and yet we’re still able to utilize it and make a business out of it.” It’s sort of more what he said than, “Well, we’ll just be able to keep our business model going as it is.” So I think the heart of that is really, I mean, all that sounds kind of flakey, it actually is a really, really good policy in this space. And particularly when you actually look at the specific things that they’re doing--I mean, to give them credit, they’re doing--in terms of rolling up their sleeves and really doing the work that will create the kind of standards that we need for the integration into web 2.0 that Christian’s been pressing. And I wholeheartedly actually agree with most of the things
  14. 14. Christian just said. Usually we don’t agree on everything, but I don’t know what’s happened. But I think interoperability is really misunderstood a lot, and people see it as this kind of just because this is where it’s begun, with avatar hopping and just sort of popping around disparate Virtual Worlds. Well, yes, that’s I suppose the kind of idolized part of it to that you can pop in and out of all these disparate spaces. But, actually, to me, that has very little to do with where it’s going. What the work of interoperability does is, it gives you a chance to create the kind of standardization, documentation of protocols, that will give us the chance to integrate with the web. We have to break out of these limitations. At the moment, OpenSim, the client and server very tightly coupled, and right now that isn’t something that the architectural working group is working on. They’re doing a lot of rest-enabling, which is basically documenting, standardizing all the http. This is kind of boring, and no one wants to blog about it. But, as you do this, piece by piece by piece, we get the opportunity for this technology to be set free, to become a system without an owner. I mean there are obstacles. It’s like the licensing, as I mentioned, I don’t want to go into it because it’s a long discussion, although it’s actually just a small piece of licensing would really help at the moment, to put LGPL. But it’s this work that will set this technology free, and that’s why I really have to say I really admire Philip for having had this vision. I can’t think about any other CEO from Virtual World technology that’s had this vision, that’s publicly kind of stood by it. And we could comment on his language about whether it’s like supplant the web. But the actually moves he made of, even though we can criticize, you know, the open sourcing of the client, how that worked with the community. The fact that he did it made this incredible test platform arise, which is the OpenSim platform, just so quickly.
  15. 15. And that they have this small, it's just a small team. And I supposed if I quibbled with a section of the interview, it was like he kept saying to you, “That’s just right at the minute. The energy’s just right. And I would like it to be bigger.” But he has a team working on interoperability, working on standardizing the protocols. Yes, they might not be in the areas that some of us would be more interested in, which would be breaking loose the viewer from the client so you could create lots of new viewers. That would significantly create many more situations for not just specialized uses, but generalized uses of Virtual Worlds, if we had a situation where we could create viewers in any language, easily integrate them with OpenSim. But Linden Lab, in two basic areas in interoperability and the fact that they did Open Source that client when they did, it was extremely visionary. I mean who else has done that? Give me an example. ROBERT BLOOMFIELD: Roland, you wanted to talk a little about the post-OpenSim business model for Linden Lab? ROLAND LEGRAND: Yes, indeed. In fact, it’s true that it’s quite visionary what Philip has been doing there. But what happened also was that there was a kind of reverse engineering of Second Life technology. And, instead of seeing this as an attack by the competition, Linden Lab seems to embrace this development. So I asked Philip, when I met him a few days ago on the PICNIC conference in Amsterdam, and of course, I asked him, “What’s your business model now, and how will it develop in function of this project of OpenSim?” And he told me that, in fact, the business model now is rather simple. It’s that of a hosting company. It’s not very glamorous. It’s a hosting company, but there is also revenue from
  16. 16. managing the virtual currency. So of course, the question is what will happen in this grand vision of connected Virtual Worlds, and what other possibilities are there to develop new revenue sources? And, well, he told me that, for instance, that this could be services like managing accounts, managing inventories, hosting once again, but also virtual currencies management, which is not such an easy task as many central bankers would admit. And he, in fact, is quite proud on the job Linden Lab is doing in managing virtual currencies, which are kind of important for virtual economies. So it seems to me he wants to use this knowledge or this know-how in the broader context of interconnected Virtual Worlds. Whether he will succeed is another question, but that seems to be the vision he has. ROBERT BLOOMFIELD: I have concerns. I mean I understand the argument. They’re managing the Linden dollar. They could do that for multiple Worlds. They’re hosting now. They could do that for multiple Worlds all based on a similar sort of standardized OpenSim type of platform. So I have a couple concerns on that. On the currency aspect, I mean it’s true that they are managing the Linden dollar, but what about all these groups that have done micro transactions for a long time, for very large companies, the ones that have set it up for cell phones. Why Linden instead of PayPal? And on hosting, I feel like if you just do the math, it seems like right now, if you look at the pricing right now, Linden is way, way overcharging for a pure hosting service. And so it’s difficult for me to see how they can retain that sort of margin. And so I’m wondering if anyone on the panel has a reaction to that perspective, that I guess is a more bearing one for Linden.
  17. 17. A: [NO RESPONSE] ROBERT BLOOMFIELD: Maybe not. I’ll leave that--oh, Roland, go ahead. ROLAND LEGRAND: Yes. I’m not sure whether I can really give an answer which is very concrete on it, but it’s a good question, of course. And the feeling I have of it is that one should also look at the management structure of Linden Lab and organization structure. And there what I’m seeing is that Philip Rosedale is a person with the great vision. He has very interesting ideas, and he’s very eloquent in explaining them and very convincing even. But, on the other hand, there is this pure management aspect. How do you get people to actually do what is in the line of the grand visions? And, of course, we will have to look at what the new CO kingdom is doing right now. But I guess also a bit in the way in which the chairman is steering this company in order to get into details of, “Okay, who is the competition out there? What are the strong and the weak points that we have as a company?” That’s really kind of businessman approach, of course. And, of course, I only met Philip Rosedale for about half an hour. I cannot judge whether he is actually more a visionary or a businessman or whether he actually combines both personalities. But I think it will be very important for the company to know how it’s organized and what kind of people are actually determining the fate of the company. ROBERT BLOOMFIELD: Well, one of those people partially determining the fate of the company is Sidewinder Linden, who is watching, and points out in the backchat that application hosting is not the same as simple web hosting or server hosting. So I could be
  18. 18. there missing out on some of the margin that they could get. And I guess the other thing that came out today, I guess, the second most important news of the day second only to the failure of the bailout bill to pass the U.S. Congress, is that Linden Lab did hire someone new, who, in part as I understand it, is going to be looking at the business models of Linden Lab. So it’s the new chief product officer, so that’ll be very interesting to get more detail on and find out what it is that that person is going to do. We do have a lot of backchat and a lot of questions out there and things that we’d like to address, but before we do, I did want to turn to one other main topic of the interview with Philip Rosedale, which had to do with regulation, so there’s a long section of the interview where Philip talks about regulating in-world behavior with a very light hand. So Linden Lab has imposed regulation in only a very few areas so far. They banned gambling. They banned depictions of underage sexual activity, and they banned engaging in certain [AUDIO GLITCH] activities without documentation [AUDIO GLITCH] you have Real World regulatory oversight. Most recently they have announced, but not yet implemented, bans on advertising without a licensing agreement with Linden Lab. And so it’s really a fairly interesting section here where Rosedale is saying, “I know what it’s like to be the President of a country. It’s been an intriguing experience because you really can’t please everybody on these global policy issues. I think the only way you can please everybody is to simply have as little policy as possible.” Which sounds like a wonderful libertarian type of experiment. There are two perspectives that you could take on this. One is a legal perspective, and the other is just more of a product perspective, a customer satisfaction perspective. And
  19. 19. Ben Duranske, you’ve talked about really both of these at various times throughout the last year of Metanomics. What’s your take? Pick either one, legal or more just business strategy. What do you think about this perspective that Rosedale is describing? BEN DURANSKE: Well, I think that it would be easy to say that they’ve done very little, and that wouldn’t be entirely accurate, to be honest. I think most of us who have been involved in this dating back into the first half of the decade, remember Second Life as a place where there were really no restrictions at all. Literally no restrictions on what users could do, the way they could appear, the sorts of businesses that they could run, anything like that. And that’s changed a lot. I think we’ve seen a lot of regulation, in my mind. We’ve seen regulation of the kinds of avatars people can have, the kinds of stores they can run, whether or not they can have financial institutions. Casinos are gone. Advertising is limited. In many ways, I think these have been good decisions. I’m not particularly critical of them, although I think implementation was poor in a couple of early cases. But they were business decisions, and they’re business decisions that are driven by legal concerns, but they’re chiefly business decisions. Second Life isn’t actually going to be on the hook. Linden Lab is not actually going to be on the hook for most user behavior. By virtue of the way the law works, you could bring a lawsuit against Linden Lab if you lost a bunch of money in a Ponzi scheme that somebody called a bank. But it would be hard to establish that Linden Lab knew that that fraud was occurring and participated in it in a meaningful way. There’s a lot of requirements for that kind of a suit. So there’s legal concerns behind these decisions, but they’re chiefly business decisions. And I think that they’ve generally been good ones.
  20. 20. Now, in the Rosedale interview, he acknowledged this. I think he wanted to say we’re not going to legislate any more than we have to. We don’t want to be the heavy-handed government, but he acknowledged also that they have a fairly small window of opportunity to legislate. To the degree that they want to legislate Second Life, it has to be done before this becomes bigger. And drawing on the conversation that we just had, I mean I think we can, without talking too much about specifics as to how it’s going to happen, agree on three things: that the 3D internet is here for good, that no one company is going to own the 3D internet, and that pieces of the 3D internet will be geographically dispersed. In other words, interoperable servers will be located all over the world. From a legal perspective, that means that different local laws are going to control. So there will be gambling on servers based in Antigua. There could be age play on servers based in the United States, that weren’t run by Linden Lab, where that’s prohibited in Germany and in other countries. A dispersed grid, I think, means that their ability to govern it will be limited. And so, to the degree they want to form the society, shape the society, now is the time to do that. CHRISTIAN RENAUD: Ben, can I ask you a question? BEN DURANSKE: Yeah. CHRISTIAN RENAUD: One of the words that keeps coming up when we talk about Second Life and Linden Lab is governance, and it’s anything from Philip’s comment about he know what it’s like to run a country, to the old mining towns and sort of the social responsibility of the private government and that sort of thing. What do you think, right now, based on where
  21. 21. Linden is and the precedent so far with wanting to become a carrier but yet invoking policy and taking people out that violate either legal things in particular countries or--I think there have been some instances of people complaining very, very loudly to Linden about various things and protesting and being banned. Where do you think Linden stands as far as that line between “I have common carrier immunity because I’m just the conduit and the governance that I have is the same as a web hoster” versus “I’m a very active participant and have an editorial policy, and therefore, can be held liable for the content in this environment,” because they have taken an editorial stance. Where do you think they are on that continuum? BEN DURANSKE: That’s a great question. They’re much closer to the line than they were in 2005. There isn’t a lot of precedent on this, and there’s a whole lot of different laws that could apply. There’s the Communications Decency Act. Then there’s a variety of different civil actions that you can bring that also depend on degree of control that somebody’s exerted. But this is what Professor Joshua Fairfield, a law professor--I don’t remember where he is right now. He was at Indiana. ROBERT BLOOMFIELD: Washington and Lee. CHRISTIAN RENAUD: Washington and Lee. BEN DURANSKE: Washington and Lee. Thank you. This is what Joshua Fairfield refers to as the God paradox, and I think others have too. In law, the more control you have, the more responsibility you have. And so, to the degree that the company was in 2005 saying,
  22. 22. “We have absolutely nothing to do with user interaction. We don’t police this. We don’t control it. And it’s not our problem,” the law would respect that, the more control they exert. For instance, by banning banks, if somebody managed to run a bank without getting it thrown off the grid, and residents lost a lot of money in that, there could much more legitimately be a lawsuit against Linden Lab for failing to enforce their policy of banning the bank because they sort of encouraged users to trust their efforts at keeping the grid safe from financial fraud. So to the degree that there’s always allegations of fraud in the local in-world stock markets, Linden Lab is potentially exposed to greater liability for that because of their decision to eliminate the financial fraud in the non-stock banking industry. I think it’s a question that Linden Lab has to very carefully consider. The more control they exert, the greater the potential for their liability. I’m actually a little surprised, in some cases, to see them taking the steps that they’ve taken, but I suspect that they weighed that increase in liability against the positive business aspects of making the decision to, say, ban fraudulent banking enterprises and decided that it was worth it. ROBERT BLOOMFIELD: Okay. We’ve got about ten minutes left, and we definitely want to end on time because Cybergrrl Oh’s RealBiz is coming up next on SLCN. People can stick around and learn about Orange Island. But we still have ten minutes to go, and we have some questions, the first actually that just came in from Fleep Tuque for the panel: Of everything that you heard and read Philip say in this interview, what piece of information surprised you the most? Anyone? TISH SHUTE: Yes, I will go.
  23. 23. ROBERT BLOOMFIELD: Okay, Tish. TISH SHUTE: I haven’t checked the wording, but he said he was going to make bottom of the pyramid work his priority and his personal priority. I mean I know he’s always been interested in it, but I never heard him say that quite as strongly and that he came up with an actual concrete proposal in the interview about setting up teachers and then parent-teachers in an internet café situation. And he really sounded that he had thought this through. I can see Alamyk(?) in the audience so perhaps she has some things to say on this. But that surprised me, but it was really it wasn’t just rhetoric. He really made some very concrete statements there, and I thought that was, you know, what originally inspired me to get interested in this space, and so I was surprised. I thought it was very interesting and good. ROBERT BLOOMFIELD: Mm-hmm. Let me just mention on that one that we’re actually planning on doing an entire show to follow up on that, in part, because there are a number of other people--we could only get so many people on this panel, and there are a number of people who want to weigh in on that, including some people right here in the Johnson Graduate School of Management at our Center for Sustainable Global Enterprise. And so it’s going to take a little bit of time to pull that show together, but I agree that that was pretty interesting that he’s basically saying if we can get Second Life capable connectivity and hardware in the hands of people, in developing nations, then they can become knowledge workers and provide far more value than the cost of their connection, and so on. So I do think that that is pretty interesting and definitely want to follow up on that. Anyone else want to respond to Fleep’s question on that?
  24. 24. BEN DURANSKE: I was surprised. This is Ben Duranske. I was surprised just by the acknowledgement, on Philip’s part and presumably to some degree at least on the part of the company, that they were having to be guided by Real World legal concerns. I have a quote on virtuallyblind.com, on my post about this from Second Life’s first birthday in 2004, where Philip Rosedale said, “Virtual nations like Second Life will grow so rapidly that the Real World legal system will be forced to follow the things that we’re doing.” And that really is the perspective that Linden Lab had taken for a long time. I’m encouraged by what I’ve seen, from a legal perspective, over the last year and a half. And I’m hoping that that means that they will be more open to the creation of alternative dispute resolutions to [AUDIO GLITCH] systems to some sort of in-world governance that would allow residents to resolve disputes, even in something as simple as the way that eBay does, which is mostly automated, because I think that our inability to contract at all really hinders in World development. ROBERT BLOOMFIELD: We have another question here from Valiant Westland: Why don’t we see Second Life being sold at Best Buy, like the Sims? Anyone want to take that? Christian? CHRISTIAN RENAUD: Well, I think a few people in the chat window already said, “Because it’s free.” But I mean we’ve had lots of instances where there were semi-free services where--I mean Second Life is free to the degree that [AUDIO GLITCH] we can do in Second Life and still be free. And then there are things that you can do in Second Life, if you want to enjoy it more or experience it more, that do cost money. So there’s always the opportunity to say, “The things that do cost money, you know, I’m going to buy an island card that I’m
  25. 25. going to redeem, like I buy an iTunes card.” You could do that in Best Buy and things like that, not to give the chief product officer any ideas, but there’s lots of things that could be done in that regard if it was more of a household name. I think right now what the Linden folks are doing is a little bit of brand repair because there was a lot of--in the negative press that blew back, there was a lot of emphasis on age playing, gambling and banking and things like that, prostitution, so they need to sort of repair the brand a little bit before then you can go out to mainstream distribution. And they also need to increase the content that is in there, and I think that’s the push behind, if you would, the attacking in all directions at once of going after those verticals. Once they have a little bit more critical mass in each of those areas, they have a little bit more value proposition, and therefore, they can improve their retention rate beyond, I think, the current eight percent figure of people who come and look, and eight percent of them stay. That’s my [AUDIO GLITCH] ROBERT BLOOMFIELD: I think that’s actually high. I think it’s actually worse than that these days. DUSAN WRITER: If I could just pick up on that a little bit. ROBERT BLOOMFIELD: Sure. This is Dusan? DUSAN WRITER: Sorry. This is Dusan. I may be not in the browser, but to pick on Tish’s comment about sources of innovations for Open Source, but I think because they went Open Source with the viewer, you are now seeing all kinds of different ways of accessing Second Life, and you’re being able to access it through cell phones, on your iPhone, even with the SLim client. So you may not be seeing it at retail, but the idea that you have
  26. 26. different ways of accessing the World, different clients to access the World, I think is really important because, when you talk about browser-based Worlds, you’re talking about both the client and where does the World exist. Whereas, with Second Life, you have a World that can be accessed potentially through the browser and through other platforms, and I think that’s really important. And it was because they Open Sourced the viewer code that that became possible. ROBERT BLOOMFIELD: We have a question actually from the Metanomics staff, producer Bjorlyn Loon and our imagineer JenzZa Misfit, who say: Philip commented on the download time is an obstacle for Second Life adoption, but what about the fact that the certificate isn’t verified and that Microsoft and most anti-virus programs ID Second Life as dangerous? And I guess I would add to that, what about the incredible firewall problems that I had when I have tried to do this show from various corporate or educational locations? So if this were fixed, would adoption be increased? What are the obstacles? Anyone want to take that? Or does the answer suggest itself? Ouch. CHRISTIAN RENAUD: There’s a broader problem with just ports used on network perspectives. Sorry, this is Christian. There’s a broader problem with ports used for Second Life and other Virtual Worlds, and I think the newest generations of Virtual Worlds that are trying to use more http ports to get around it just like Skype did and got around video conferencing issues by using standard http ports. I think that is going to, in many ways, address this issue. I haven’t seen Linden move towards that very aggressively though. TISH SHUTE: I think they are, Christian, though.
  27. 27. CHRISTIAN RENAUD: At least the last time I-- TISH SHUTE: Yeah, that is-- CHRISTIAN RENAUD: Well, good. TISH SHUTE: They’re trying to do 90 percent http, last I heard. CHRISTIAN RENAUD: That’s great because I mean last time I spoke with him in an official capacity, in my working for the prior company, they said firewalls were sort of an awful nuisance, and that was kind of naïve, I thought. ROBERT BLOOMFIELD: So I’m curious-- CHRISTIAN RENAUD: Usually uses of firewalls like protecting financial loss and things like that that are much more significant than Virtuals Worlds today. ROBERT BLOOMFIELD: Yeah. And, Tish, I’m just wondering, you say they’re going to go 90 percent http so does that mean that it will function at 90 percent effectiveness all the time, or that it’ll work 90 percent of the time? TISH SHUTE: This isn’t an inside joke about these percentages, but I mean there’s just been a lot of work on rest enabling, and the architectural working group is doing a lot of this
  28. 28. work. And I’m not the person to really go into the details of this. You could talk to Zha Ewry or Zero Linden, but I mean really you can’t do everything at once, but certainly the focus has been a lot on this. They have a large amount of people, in Linden Lab, who are interested in this. So I would expect we will see some good results soon. But you could ask Zha and Zero to put more in this. ROBERT BLOOMFIELD: Well, we probably will have to have that discussion with Zha and Zero and others in the future because we’re basically out of time today. I would like to close just by looping back to the very first topic that we had and making my own very quick observation about bringing grandma into Second Life. Because I think we do have these very real problems on the technical side, very real problems, especially for people who work with enterprises, especially with people who run live events and know that they have to be up and running with a hundred percent surety at a given point in time, like, say, Monday at noon Pacific time. But when I look long-term, I actually have a lot of sympathy for Philip’s vision that, if you had someone who wanted to engage with a new community, that you would bring them in to a Virtual World, like Second Life, rather than just sending them onto the web. And, in particular, I’d like to point out a couple things. One is that I’m probably not the only one who has met a number of families in Second Life, who are finding this a useful way to connect with their elderly parents after they have moved across a continent or to another continent. Better than a phone call. I’ve seen mothers and daughters doing what mothers and daughters always seem to do in Real Life, which is go out and shop for shoes. And, of course, we know that’s probably the number two activity, as far as I can tell, in Second Life.
  29. 29. The other thing I would mention is, while it’s true that it’s hard to find a job in Second Life, there is a lot of volunteer activity. There is a lot of community organization, and I would point, in particular, to the Nonprofit Commons, which I learned just today from Buffy Beale, is adding a Sim and is going to have a hundred different nonprofit organizations. So I think that I would encourage Philip to hone and refine his talking points on that and probably not talk about finding jobs, but talk about connecting with family, with friends and with communities, probably nonprofit. Anyway, we are out of time. The wonderful thing about hosting this show is, I get to close without Christian Renaud saying that, like he said, is “a load of crap.” So thank you all. Thank you all for joining us this week, and we’ll see you back next week at the same time. CHRISTIAN RENAUD: I guess that was my last time on this show. ROBERT BLOOMFIELD: No, no, no. I love it. Keep it up. Keep it up. BEN DURANSKE: I’ve got the record now, Christian. You’re toast. ROBERT BLOOMFIELD: Bye, all. Document: cor1034.doc Transcribed by: http://www.hiredhand.com Second Life Avatar: Transcriptionist Writer

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