120307 Virtual Retail 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 http://metanomics.net.

Published in: Technology
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

120307 Virtual Retail Metanomics Transcript

  1. 1. VIRTUAL RETAIL DECEMBER 03, 2007 ONDER SKALL: Hello, everyone, and welcome to another session of Metanomics, part of the Metaversed series of events that we hold in conjunction with Cornell University's Johnson School. With us today is Stroker Serpentine and Temporal Mitra, two of the larger business owners in Second Life. They'll be introduced and interviewed by Professor Robert Bloomfield of the Johnson School at Cornell. The main sponsor of Metaversed Island is the Otherland Group, Making Sense of Virtual Business. I'd also like to take a brief moment to thank the sponsors of the Metanomics series and all of the Metaversed events. They are Saxo Bank, Generali Group, Kelly Services, Cisco Systems, SAP, and Sun Microsystems. And, of course, none of this would possible without SLCN, who are the absolute best ones to talk to when it comes to working with video and virtual worlds. Avatars across the grid at all event partner locations can join the conversation by joining the Metanomics Group. And also remember to join the Metaversed Group for all future Metaversed business events. If you have any questions for our guests today, you can send them directly to me. I am Onder Skall in Second Life, and Caleb Booker in real life. Retail and the trade of virtual goods are of keen interest to many budding Second Life entrepreneurs. So to investigate this world further, I'd like to introduce everyone to Professor
  2. 2. Robert Bloomfield of Cornell. ROBERT BLOOMFIELD: Well, thank you so much, Onder. Welcome, everyone, to another episode of Metanomics. Today we are discussing, as Onder said, some of the larger in- world businesses and these two businesses have a theme, which is that they're making a good deal of money off of scripted products. So these are items that have scripts built in them for animation and information content and, more specifically, are making a fair bit of money off of the adult entertainment industry. So there's an apocryphal rule, rule number 34 of the Internet says if it exists, there is porn of it. Well, today we're going to focus on another side of the adult entertainment industry. And I don't know if there's another--a better way of saying this rule than as it was put by Benn Konsynski, one of our guests last week on Metanomics, from Emory University, who said, "Toys become tools." So while the adult entertainment industry is of interest in its own right, one of the reasons I'm so interested in talking about it here on Metanomics is because I think that the technologies and the business strategies that these two gentlemen are using in their organizations are likely to have some far-reaching implications for the way commerce is done in virtual worlds. So today let me introduce you to our two guests. We have Temporal Mitra, who heads up Temporal Industries. And we also have Stroker Serpentine, also known as Kevin Alderman, of Eros, LLC, and maker, most famously, of the SexGen bed, and also a plaintiff on a couple intellectual property lawsuits in Second Life. Welcome, guys.
  3. 3. STOKER SERPENTINE: Hi, Robert. TEMPORAL MITRA: Hello, Robert. A pleasure to see you again. ROBERT BLOOMFIELD: Yeah, I'm glad to have you guys on. So what I'd like to do for starters is just have each of you summarize what your businesses do. You know, how is it that you make money? What do you provide of value to your customers? Let me start with a bit of caveat here, which is that although you're both making money in mature industries, we are on a PG SIM, so we will need to keep our discussion appropriate for this venue. So Stroker, can we start with you? Tell us a little bit about your business. STOKER SERPENTINE: Sure. Welcome, everyone. Well, our business is actually very diverse. We deal with in-role content as well as real-life content. We basically evangelize the--we [realize?] the adult content industry. We identify the needs and desires of Second Life residents. Most of our content is produced by suggestions, actually, and things that they'd like to see, things that they'd like to have incorporated into their Second Lives. But it's mostly about partnering and co-branding and evangelizing for us. We have an in-world component as well as a real-life component. ROBERT BLOOMFIELD: Okay. Can you talk a little bit about your specific products and-- well, I guess, you know, I don't know how much you're willing to reveal as far as your profitability, you know, your revenues. How large of a business are you able to arrange here?
  4. 4. STOKER SERPENTINE: Well, I will offer this: Our Second Life product services, primarily our SexGen line, our animations, our attachments, are well into a six-figure industry--a six- figure income. As far as-- ROBERT BLOOMFIELD: And that's six-figure, U.S. dollars? STOKER SERPENTINE: Six figures, U.S. dollars; correct. We look at that as an integral component of our overall business. Actually, it's a very small component. We've got several enterprises that we're going to be rolling out this coming spring that are going to be far more successful and profitable than any of our pixel products. ROBERT BLOOMFIELD: Okay. And let's see, Temporal, do you want to tell us a little bit about Temporal Industries? TEMPORAL MITRA: Well, certainly. Temporal Industries began as an umbrella company, more or less. I tend to be interested in a lot of things in Second Life. Real estate, advertising, gadgets, malls, property management, sim liquidation even. And one of my first ventures in Second Life was a fairly large escort club that was never profitable. So I closed it. It was one of the larger ones in-world; it was just not a profitable venture, however. So I began creating objects of--gadgets mostly that supported the adult industry because there are a lot of other people who do become profitable running adult clubs in Second Life. And so I began making gadgets and systems that supported those
  5. 5. enterprises. ROBERT BLOOMFIELD: So if I could follow up on that a little bit, Temporal. So it's very difficult, at least so far for me, having done a little research, it's been difficult to identify exactly how much money there is in the adult entertainment industry in Second Life. Certainly, everyone talks about it. But as far as the hard facts, it's difficult to find good information. Now I hear you saying you had a big enterprise, actually, running an escort club, which certainly we see these things advertised. Why do you think you didn't make money? Is it something inherent about the industry? Did you just not have the luck or the right strategy? TEMPORAL MITRA: No, it wasn't that at all. What it was is my club--some of you may have heard of it. It was called Heaven or Hell--was about 100,000 square meters under roof. It was very large and very well-equipped. At our peak we had about 300 employees. It was, however, an industry that is kind of a shadow industry here in Second Life. It's very easy to circumvent payment systems. And so basically we had employees and people that were drawn to our traffic that basically took all the profit out of the enterprise. ROBERT BLOOMFIELD: Okay. So now you're in the position of providing scripted objects for the people then who you weren't able to control simply by hiring them and trying to give them the opportunities to make money? TEMPORAL MITRA: Exactly. And now we provide gadgets to the never-ending stream of
  6. 6. people who enter that--I'll call it a shadow economy. That business in Second Life, like that business in real life, is something of a shadow economy. ROBERT BLOOMFIELD: Hence, the difficulty of getting good data. TEMPORAL MITRA: Exactly. ROBERT BLOOMFIELD: Now, one of your products is the EscortHUD. TEMPORAL MITRA: Exactly. ROBERT BLOOMFIELD: Can you talk about what this product is? And keep in mind as you're describing this that, although we do have a large in-world audience, we also have a number of people who tune into Metanomics through the Internet and don't necessarily know a whole lot about Second Life. So you'll need to provide a little context-- TEMPORAL MITRA: Okay, certainly. In my estimation, there are between 50 and 100,000 working escorts in Second Life. And with my background running a club, I was able to design a gadget that would simplify what they had to do numerous times every shift or every evening. Basically, an escort gives out a lot of note cards, a lot of pictures. They have to check profiles to see if an individual has payment information because, basically, if he or she has no money, then obviously they're not a viable customer. And so we created a gadget that
  7. 7. automates a lot of that. The EscortHUD basically will tell the wearer pretty much all they need to know financially about a person that comes within range. It tells how long they have been in game, whether or not they've used a credit card, whether or not they've actually used that credit card to purchase Lindens. And-- ROBERT BLOOMFIELD: And all of this information is publicly available to anyone that wanted to get it; this simply automates the process? TEMPORAL MITRA: Exactly. And we automated the process of chat, as well. There are standard things that an escort says when meeting a customer. And we basically created a methodology where they could click on a button, and the HUD would say it for them. It also automates giving out their note cards and photos. And then, of course, it also has a--just like every other HUD in Second Life, it has a little radar so you can find the customers. ROBERT BLOOMFIELD: Uh-huh. Okay. And let's see, this is--well actually, Stroker, one of your big products is this bed. And I know that has--well, I guess if you could give people a better sense of why that is such a popular item. I understand it sells for something around 30, 35 U.S. dollars? STOKER SERPENTINE: That's correct. ROBERT BLOOMFIELD: And so can you talk a little bit about the--I guess the production
  8. 8. and the marketing of that item? STOKER SERPENTINE: Sure. Well, my background--I do have considerable experience in the adult industry. I ran an adult nightclub in Fort Lauderdale for several years. And even when I first came into Second Life, which was four years ago this last 8th of December, it was pretty wide open, Wild West experience, inasmuch as there just wasn't a lot of interactive, immersive entertainment out there. Yes, you could stand around a campfire and you could chat but, with very few exceptions, were no interactive animations whatsoever. So we started out--actually we did a rudimentary hack of several of the animations--the OEM animations that Linden Lab supplied to the grid. And through that we've built a business now that has been very successful by branding it, registering the trademark, partnering with other adult content providers and scripters, and we've managed to market it into a grid-wide presence and actually, with the advent of these lawsuits, have kind of made it an international brand now. I notice that we're getting several hundred thousand hits on Google for SexGen now, which I kind of find interesting because it only exists in Second Life. ROBERT BLOOMFIELD: So this is another advantage of filing a lawsuit? It's a marketing endeavor? STOKER SERPENTINE: Well, the lawsuit was definitely not anticipated. We were very frustrated with the DMCA system that Linden Labs--and how they apply it. We had done as much as we could in-world as far as chastising and ostracizing these individuals. They would basically just--they would close their accounts and open up another account and set
  9. 9. up shop somewhere else. So-- ROBERT BLOOMFIELD: So can I ask you--let's just take a step back. STOKER SERPENTINE: Sure. ROBERT BLOOMFIELD: The mature of this lawsuit--and I know Temporal, you're not party to either of these lawsuits, but you have shared the concern. It's basically that they are copying and reverse-engineering your products? Am I understanding that correctly? STOKER SERPENTINE: That's correct. They're using just about any methodology available to them, either through print copying to geo-intercept to taking advantage of lag, symbol backs, whatever--it's a game. It's an in-game that goes nowhere, and it's participated in by individuals who either think that it's some sort of a challenge, or they just lack total creativity whatsoever. And so like I said, given the inability or apathetic--I know that's a harsh word, but--attitude from Linden Labs, we didn't think that we had any other recourse but to look for really--in real-life courts. ROBERT BLOOMFIELD: Okay. If I could, I'd like to defer--we'll discuss the lawsuit and also the relationship both of your businesses have to Linden Lab in a little bit, but for now I would like to focus on some more basic issues in your business.
  10. 10. STOKER SERPENTINE: Sure. ROBERT BLOOMFIELD: And one of them is whether what you're doing is adult or something much more mundane. You are managing virtual businesses, and I'd like to hear you both talk a little bit about the challenges that you have. So if you could--when I think of just any type of business, it starts with trying to attract and compensate and then retain your employees. So let's start there. Temporal, can you tell us a little bit about how you actually manage your business, what sort of business structure you have with your employees? TEMPORAL MITRA: Certainly, I'll be more than happy to. And I use an interesting model, in that we employ, oh, about a dozen people right now. And they're everything from professional writers to graphic artists to animators to scripters. We're kind of top-heavy on scripters. And the way I compensate them is I pay them in Lindens by setting up a split of the product sales. This keeps them incented; it allows me to pay them without having to worry about income taxes. With my method, basically everybody pays their own taxes when they exit the Lindens into U.S. dollars and then remove them out of the game. I prefer that method because it, quite frankly, saves me from having to pay taxes twice. ROBERT BLOOMFIELD: Now, as you mentioned--oh, first of all, I should say those of you who are interested in the tax issue, you might look back to late September when we had
  11. 11. Professor Brian Camp from Texas Tech University, a law professor, and we had an extended discussion on taxation. Going back, Temporal, to your description of your employees, one of the things that I noticed--maybe I missed it but it didn't seem like you mentioned hiring people to do marketing and logistics for you. TEMPORAL MITRA: That's because I handle that, for the most part, myself. Basically, that's my full-time job. There are individuals that do product scripting. There are people who do the graphics and the document work, and then I pull it all together into a marketable product. I use my own advertising companies to advertise it visually in-world. I also contribute quite a bit of money to the Linden classifieds, as I'm sure Stroker does, and basically, I handle the marketing of it myself. ROBERT BLOOMFIELD: Okay. Stroker, you want to talk a little bit about your business organization? STOKER SERPENTINE: Sure. We use a variety of compensation packages. Right now we've probably got 20 real-time--or I'm sorry, real-life employees. Some of them get paid in Lindens, some of them actually get a paycheck every week through Pay Pal. They're 1099 employees, sub-contractors, designers, developers, builders, scripters. We have an in-world staff of 14 people. Most of them are compensated in Lindens and land. We have a-- ROBERT BLOOMFIELD: And if I can ask--so do you--as far as the tax side, do you provide
  12. 12. them with 1099s or do you take Temporal's view that Lindens earn money and so, when they extract the Lindens, they're going to be taxed on it? STOKER SERPENTINE: Well, that's pretty much the view that our accountants have pretty much suggested to date is that, you know, as long as we're giving them--providing them a virtual currency, if they spend it on virtual products, then obviously we're not having to tax them for that. It's up to them whether or not they pay their individual income taxes, if indeed they use the exchanges to cash their virtual currency into real-life dollars. But our organization is pretty expansive. Like I said, we have a real-life component as well as a Second Life component. I do primarily most of the marketing, as Temporal does. I do take advantage of the classifieds. I'm very pleased with the new classifieds that Linden Labs has implemented. Up until recently I had pretty much boycotted the classifieds, only because they were being gamed. ROBERT BLOOMFIELD: Can you explain what you mean by that? STOKER SERPENTINE: Meaning that--well, what key works for one, obviously skin manufacturers have nothing to do with dancing or virtual sex. So they would write a one- sentence description—“We sell skins,” and then the remaining text would be nothing but key words to try to pull up their classified ads on every single search for any virtual product. So with that in mind, we do most of our evangelizing through events, through our support groups, through our membership groups. We've got about 5,000 people in our Eros group
  13. 13. now. And our administration groups, we've got a 500-member support group. We feel that pure peer marketing is the most effective use of marketing in Second Life. The grid is about interactions. It's about relationships, and word of mouth has been more successful for us than any other form of web-based classified peripheral marketing we've done to date. And I challenge anyone to show me that they've got a better method because it's the old-- like the old shampoo commercial. She tells two friends and she tells two friends. Before you know it, 40 people have turned into 40,000. And we've basically built our marketing model on that. ROBERT BLOOMFIELD: Now, you mention so many people being involved. One of the challenges you must face is guaranteeing that the people that you're giving power to are people you can actually trust with that power. And so I have some questions for both of you on how you hire people. How do you-- especially, you know, people like to maintain their anonymity. Temporal, in fact, right, we're only using your SL name in this show? So they need to also have faith in you. How do you deal with these trust issues in the employer-employee relationship when so many people hide their real-life identities? Temporal, maybe we can start with you on that. TEMPORAL MITRA: I'll be more than happy to answer that one. I've had some really bad experiences because over the last 18 months--I've only been in the game for 18 months, so I've built a lot in a relatively short period of time. I can hardly wait till I've been in as long as
  14. 14. Stroker has and get up to his level. But I had some very bad experiences in that I come up with some of my employees have told me that I think way far outside the box. So I come up with some very interesting concepts for gadgets. And in the past before I learned how to script with LSL, it was a situation where I would bring a concept to a scripter and, for the first six months or so, they would take my money and they would take my concept. They would disappear and, two weeks later, somebody new with my product would show up. And so I learned by trial and error to not give away the entire concept all at once. What I have done is come up with projects, and I have individual scripters work on portions of them, with one exception. Well, Bo Peep Yosarian(?) who is one of my managers and partner here, she has access to all of our projects and all of our scripts. Everything else I've kept compartmentalized so that no one scripter can walk away with an entire project. ROBERT BLOOMFIELD: Okay. Now, when you say Bo Peep is a partner, is that in your real-life--the real-life aspect of your business, and that you two know one another's real-life identities? TEMPORAL MITRA: We do know one another's real-life identities. We've never met. She lives 1500 miles away from me, and is a time zone away from me, but we have worked side by side on dozens of products. Right now we are marketing somewhere around 250 different products. And she is the one avatar--or one personality in Second Life that I trust with my property, my bank account, literally everything, just because she's paid her dues
  15. 15. with me. She's proven herself to be trustworthy. So all of my other employees, what they do for me is totally compartmentalized. And when they have worked for me for a while, I give them more responsibility, more freedom, and more access to larger portions of larger projects. ROBERT BLOOMFIELD: Okay. And Stroker, do you want to talk a little bit? It sounds like you might have even more of a challenge with managing your people, since you have so many of them. STOKER SERPENTINE: Well, Temporal is actually right. It's a matter of trust and responsibility. Obviously, I'm not going to, you know, as any organization wouldn't bring someone in and give them the keys to the kingdom from the beginning. Most of our staff we have real-life contractual agreements with, non-disclosure agreements. They are officers of our corporation. They have specific responsibilities they're expected to perform. We have employees all over the world and the States and the U.K. and Australia. And it is; it’s really is a matter of trust. As far as hiring new people, escorts for example, we give them a probationary period. They are expected to perform and interact with the customers. And if they don't do so, then we cut 'em loose. ROBERT BLOOMFIELD: Okay. And--okay, I'm just--sorry, was distracted by the fact that I appear to have crashed in Second Life. So fortunately, we're on Skype.
  16. 16. STOKER SERPENTINE: [INAUDIBLE] ROBERT BLOOMFIELD: Yeah, but fortunately we're on skype, one of the nice things about redundancy. STOKER SERPENTINE: _____ as far as our organization's concerned, I mean, stability and reliability of the grid is a key component. It's very difficult to do business in this environment when we have database crashes and when you have a heightened sense of impatience from your customers, inasmuch as in-world delivery and those types of things, so it does present a customer service challenge. We actually have to be--and I've had considerable experience in real-life with customer service. And this takes it to the nth degree inasmuch as--fortunately, they're virtual products. They're easily replicated. But I find that the level of impatience is considerably more intense than it is in real life. And so it does have its difficulties, inasmuch as a grid-based virtual property that people want and they demand in nanoseconds and so, from a customer standpoint, you have to be very keen and very fleet of foot to capture these sales. ROBERT BLOOMFIELD: Yeah. So this actually gets to a topic that I'm hoping we can spend a fair bit of time on, which is that both of you are relying heavily on a proprietary platform that is still relatively young, somewhat unreliable, and very frequently changing.
  17. 17. A couple weeks ago we had the author, Ted Castronova, on the show, who's written frequently about the economics of virtual worlds and synthetic economies. And we had a bit of a discussion on interest groups in Second Life, and he made a remark along the lines of there aren't interest groups in Second Life, which is surely not true. There are certainly people who are trying quite hard to actually influence Linden Lab in what they're doing. And one of the questions--and this is unclear to me--is, although these groups are here, I don't know how effective they are or they can be. Can you talk a little bit about your association--your attempts to control Linden and the Second Life environment that you rely on? TEMPORAL MITRA: If I could respond to that, there's an old adage about you would be more successful controlling the tides than you are controlling Linden Labs. They tend to go their own way. And what happens is I think everyone here at one time or another has commented on the fact that Linden Labs is not overly responsive to individuals within Second Life. I mean, if you have a griefer on your sim that is dropping particles all over and hurling obscenities and attacking individuals, they won't do anything about it. I mean, you can file an abuse report, and you'll get a message two weeks later that, “Oh, gee, it doesn't seem to be a problem anymore.” Because, of course, that griefer is not going to sit there for two weeks and wait for them to show up. And I think that is pretty much what I have experienced on the business end of it. So we try to be self-reliant. One thing that I do know is that my profits, my sales, are directly tied to the amount of unplanned outages on the platform. And I--
  18. 18. ROBERT BLOOMFIELD: I assume that's a negative association? More outages are bad? Just to clarify. TEMPORAL MITRA: Exactly. The more outages, the less money I make. And I never thought there was a direct correlation. I thought that certainly it would have an effect on it. But literally, you can put the metric that they have published of unplanned outages side by side with my total sales and my profitability, and the unplanned outages are like a negative chart to my sales. I mean, I can pretty much anticipate whether or not I will have a good month based on how long the platform is up-- ROBERT BLOOMFIELD: Now, can I ask--you know, one of the things that I would worry about in the longer term is that poor performance in, say, October won't just hurt the October sales when people aren't able to get to your goods or just don't spend much time in-world but then, in November, presumably, there are people who are leaving and less interested. Do you see a lead-lag effect, as well, in the data? TEMPORAL MITRA: Not to any large degree, because one thing that Stroker said--time seems--well, he didn't exactly say it this way. But time seems to be compressed in Second Life. So people are looking for instant gratification and they also seem to--if they can't buy something today, they will buy it tomorrow. And there is a constant stream of short-term residents, people who come in-world who may buy a few things and a month down the road they're bored with Second Life because they haven't really gotten into it, and they go away. But there's a constant stream of people
  19. 19. coming in all the time. So we obviously look for repeat customers. And we are fortunate in that many--I would say a good 50 percent of our sales--are to people who have purchased another item from us. As an example, we sell the EscortHUD, as I mentioned. We also sell a club version of the EscortHUD that allows a club owner to purchase it and hand out an unlimited number of HUDs to his employees. The advantage is that those HUDs only work within his club. So they can't take them to another club and expect them to work. So what happens is a lot of club owners will see the EscortHUD that an individual escort will have. He or she will come to our shop and purchase the club version, which sells for a little bit more than the individual version does and, while they're there, they may pick up one of our DVD players, or they may pick up one of our other adult-oriented systems. And currently we're working on more adult-oriented systems. We're designing and creating a total club system that will have dance poles and like an escort payment system and a skybox rental system that's all servered and all in one comprehensive system. We also brought out our TIM DVD players, which if you'd like to chat about a bit later, I'm more than happy to. ROBERT BLOOMFIELD: Okay. Yeah, well, let's get Stroker in here on this. So Stroker, can you talk a little bit about your dealings with Linden Lab, your experience with, I guess, the platform's reliability, and also maybe how you deal with changes and features or absence of features you would like to see?
  20. 20. STOKER SERPENTINE: I would like to see a variety of media formats, for one. I think Quick Time is antiquated. It's obese. But as far as interaction with Linden Labs, I appreciate the difficulty that they have dealing with such an expansive customer base, but you can't strip customer service. I've learned from my real-life experiences that there's no replacement for a kind word or even if it's just, you know, “We're working on it” or “We’ll get back to you.” The blogs have been implemental in disseminating information, but they're very one-sided. I don't know if anyone's been following the Second Life blogs, but there's a lot of literal animosity in there, and it's difficult at best, given the constraints of their staff, to deal with such a large member base. So I'm willing to give them a hall pass on that, but there are basic tenants of customer service that every business must adhere to to survive and compete. I think that they could go a long way in making it a lot more personalized. The JIRA(?) or “gyra,” or however you want to pronounce it, is very convoluted and complex. I don't need the Lindens to actually be involved in my organization or my activities; I just want a stable grid, as many do. And I want them to concentrate their efforts along those lines. We can't expand these virtual markets, these virtual worlds, and these micro economies without some degree of stability. We kind of balance our in-world and real-life industries so that, as Temporal mentioned,
  21. 21. when there are performance difficulties, we can concentrate in other areas. We partnered with a lot of real-life adult content providers. We have relationships with Playboy and Jenna Jamison and Kink.com, Bang Brothers. These are billion-dollar industries that are interested in penetrating these virtual world markets, but they read the blogs. They Google; they see that it has its inherent limitations, and so they're hesitant to make considerable investments with that in mind. ROBERT BLOOMFIELD: Okay. So actually, let me follow up a little on that and, Stroker, ask you a question, which is, you’ve mentioned that you have real-life enterprises in the adult industry. And now you, at least personally, are doing things, you know, trying to make a go of it in virtual worlds. And so one question I have for you is, why try this small-market, newfangled thing, that a lot of people still can't quite figure out what the attraction is of, you know, avatar intimate activities? And you know, instead of the multi-billion dollar RL and traditional web-based models? So that's question one. And--well, actually, let's just start with question one. Why are you--yeah, go ahead. STOKER SERPENTINE: You can't talk to a web page. Sure, you can stream content. You can develop a variety of profitable models that--you know, subscription-based or download- based, whatever, but you can't replace the immersive, interpersonal connectivity of having someone else actually respond to you and your content on platform. I believe wholeheartedly this is the attraction of these social networks inasmuch as you're
  22. 22. able to share your thoughts, your feelings, you're able to create a content in real time. It has relevancy to someone that may be halfway across the world. You can't get that from a website. And the industry--the adult content industry realizes this. I mean, it's a $4 billion industry, according to Forbes magazine. And they want to be able to advance their product models, their profitability. They understand the interactivity, but they also understand that on the bottom line. These are start-up organizations. They're minimally capitalized. They're used to much larger content delivery networks. And so it's a challenge. I personally am motivated by the ability to actually connect with people on the web. It's not a static environment. It's chaotic. It's responsive. And I think that that's the primary attraction for the majority of us. ROBERT BLOOMFIELD: Yeah. Temporal, you want to add in on that? TEMPORAL MITRA: Certainly I do. And I'd like to apologize. I got a little bit off the subject last question. It was the marketer in me coming out there. ROBERT BLOOMFIELD: Well, yeah, that's something we're used to on this show. TEMPORAL MITRA: But if you look at what they're saying about Metaversed and virtual worlds and the coming together of virtual worlds into a virtual universe--if even, you know, 10 percent of that actually comes to fruition, the Internet will not look anything like it does now. Right now it's mostly--the web pages feed information to you, but they don't take any
  23. 23. reactive information from you, other than filling out a form or clicking on a link. Basically, Second Life is a chat room with visuals. And not only with visuals, but with resident-created content. So what is happening here is not just cutting edge, it's bleeding edge. And if the big companies like IBM is working with Linden Labs right now to push this into its next generation--I was fond of saying, you know, ten years ago, back when everybody was paying 3,000 for a PC, there's gonna be $500 PCs available. And sure enough, there are now. Well, what is going to happen, from what everybody is saying, is Second Life will be a world in a universe, and you'll be able to freely travel from world to world within this universe. So the Internet of a decade from now will not be web pages; it will be avatar to avatar. It will be video conferencing. It will be much different from Googling something and seeing a web page. There will be true interaction between people across the globe. ROBERT BLOOMFIELD: So yeah, this--you know, it's very interesting to hear two purveyors of adult products saying things that really are very similar to what I hear when I talk about educators, talking about the intimacy of the environment, talking about the ability to make very real and lasting connections with other people. Now we're talking about maybe different degrees of intimacy and connection. But I think the lessons are very similar, and the proof will be--at least in my view, you know, Linden Lab and other platforms still have a long way to go beyond proof of concept to actually get the technology working smoothly and not demanding quite so much on the hardware.
  24. 24. TEMPORAL MITRA: I'd like to throw something else out there. Historically, on the Internet from the time when it was billboards with plain text to gooey interfaces and browsers and the like, adult content has always played an important part in pushing the technology. I mean, video on the Internet was not created for somebody to sell coffee. That's all there was to it. And as a result, the technology is created to support this industry in many cases. So sexes-- or sex or intimacy or adult content has always driven the technology. That's how I see it. ROBERT BLOOMFIELD: Let me move on. We only have about ten minutes left. And I'd like to talk about some legal issues. And we did touch on the intellectual property side of things. And I'm hoping we'll get a chance to go back to that. But there are other legal issues involved, particularly in adult industries, that I think become even more difficult in identity-free environments like Second Life. So in particular--and I should mention also, it isn't clear what jurisdiction you guys are actually going to be subject to. You live--if you live in Florida, Linden Lab is headquartered in California. They have servers in Texas. And you may be selling escort services to somewhere in--you know, to clients somewhere in Europe. And so in particular, you know, prostitution and child pornography would seem to be concerns. Can you talk a little bit about your approach to these potential problems?
  25. 25. STOKER SERPENTINE: I can. ROBERT BLOOMFIELD: Okay, go ahead. STOKER SERPENTINE: Adult is adult content, whether it's a pornographic image, whether it's an intimate animation. I challenge that skins are adult content. They're a graphic portrayal of a naked body. I think as long as Linden Lab is headquartered in San Francisco, they will be predominantly watched over by the Justice Department along these lines. They have a long way to go as far as compliance with USC2257. Age verification is going to be an albatross for them. Adult content is going to be very difficult for them to police and control and maintain, inasmuch as what's appropriate and what's inappropriate, even across all international boundaries. ROBERT BLOOMFIELD: Yeah. So let me ask how about your personal or corporate liability as opposed to Linden Lab’s? STOKER SERPENTINE: Well, we're excited about partnering with the Electric Sheep. We're going to be offering an alternative grid this spring that will allow adult content providers the opportunity to get off of the main grid, where they will be assured that a client base is age-verified, that they have payment info on file, and that they are compliant with the vast majority of international regulation. ROBERT BLOOMFIELD: Okay. So for the people who aren't that familiar with the jargon in
  26. 26. Second Life and virtual worlds, can you just describe what you mean by a separate grid? STOKER SERPENTINE: Currently, Linden Lab offers membership registration to anyone. There is no age verification necessary. There is no payment information necessary. There actually--yes, sure, they capture your IP address, and you could possibly track down someone in Bulgaria, if necessary, but we find that very inadequate, in terms of adult content. We are planning our own series of simulations. We've got currently 20 sims that we're going to be taking over to our _____ grid. We're going to be providing payment alternative solutions through our IPSP, our Internet Payment Service Provider, Cardzilla. ROBERT BLOOMFIELD: So as I understand it, then, the technology within the world that people go to will be basically the same as the public Second Life. STOKER SERPENTINE: Right. ROBERT BLOOMFIELD: It's just that you are controlling access to this subset of servers that are-- STOKER SERPENTINE: Correct. We're controlling access and content. We're able to control content. I know it's a very difficult challenge to do so, but we plan multiple clients. We're gonna have a developer client. We're going have a resident client. We're going to police our content. We're going put an emphasis on public service.
  27. 27. We're going offer alternative payment solutions. We've actually been able to work with Visa Europe. We've been working on this for the last year to develop a virtual MCS(?) code. We'll be able to--and this is something we're going to roll out this spring. Merchants, Stroker's Toys, pixel(?) balls. Temporal Industries will be able to have a virtual Visa and MasterCard merchant account, with no other information necessary but their real-life information and a place to send the check to. ROBERT BLOOMFIELD: Now, that's just on your grid, you're saying? STOKER SERPENTINE: No, that's-- ROBERT BLOOMFIELD: That's--okay, that's public grid-wide. STOKER SERPENTINE: Yes. ROBERT BLOOMFIELD: Well, now, let me ask--we had Chris Corella, the chief creative officer of Electric Sheep on a month or so ago. STOKER SERPENTINE: Uh-huh _____. ROBERT BLOOMFIELD: He didn't happen to emphasize Electric Sheep's exploration of the triple X markets. Is this separate grid is specifically going to be adult-oriented? STOKER SERPENTINE: Absolutely. It will be very similar in respect to the CSI New York
  28. 28. grid. It will--the biggest difference will be age verification and payment _____. ROBERT BLOOMFIELD: Okay. Wow. Well, that's very interesting news. And I expect--at least I should say that's news to me. Maybe I'm behind the times. But if it's news to-- STOKER SERPENTINE: It's something we've been working on and discussing and kicking back and forth for, like, the last year. I have considerable relationships with a lot of the staff and administration of Electric Sheep. I really believe they are on the cutting edge of developing these virtual worlds. Between them and our staff, I think we're going to be able to offer one of the most exciting venues in Second Life. And I wanted to touch on it a little bit, something that Temporal had mentioned. And that is the expansion of these presences. I see a time where the clients will be basically in our favorite space on our individual browsers. If you want to visit World of War Craft or if you want to go to Second Life or Dare(?) or Multiverse, you'll be able to just click on your favorites. Your client is loaded within your browser, and there you are. I anticipate a resilient avatar, inasmuch as Stroker will be able to go from world to world to world and conduct business, to interact, to create content within these. And that's where we're putting our investments is, you know, eight years from now. How these environments are going to transform, how they're going to develop, how they're going to be able to cater to the demands of these instant gratification web enthusiasts?. And I'm very excited about the potential and the future of virtual interactive experiences.
  29. 29. ROBERT BLOOMFIELD: Yeah. Well, I'm going to let you have the last word on that, partly because that is a wonderful segue to what we're going to be doing next week on Metanomics, which is we're going to be talking with Dr. Yesha Sivan, who's a professor in Israel and focuses specifically on interoperability between platforms. I think many people are probably aware that there is now an active interoperability effort involving not just the world developers, but also the major tech firms. Sun, IBM, Intel are involved. The cell phone manufacturers are involved because you know it's only a matter of time before you can use your cell phone and get Stroker to send an IM to someone in-world and maybe see something on a two-inch screen, a little bit of Second Life or other world content. So that will be a major aspect of discussion when we come back to Metanomics next week. We are out of time. I'd really like to thank Temporal Mitra of Temporal Industries and Stroker Serpentine of Eros, LLC. Thank you so much for coming on the show. And-- STOKER SERPENTINE: Thanks for having us, Robert. ROBERT BLOOMFIELD: --look forward to watching your businesses grow. And if half of what you hope for comes true, this will indeed be a very new world of global commerce. STOKER SERPENTINE: Thanks, Robert. TEMPORAL MITRA: Thanks for having me, Robert.
  30. 30. ROBERT BLOOMFIELD: Thank you so much. Bye all. [END OF AUDIO] Document: cor2013 Transcribed by: http://www.hiredhand.com Second Life Avatar: Transcriptionist Writer