A fictional currency becoming the gold standard and other tales about business models

Virtual worlds are all around us these days. Google launched its Lively virtual environment (yes, Metanomics has a room there), Metanomics will cover the Rocketon world and there was the Linden Lab-IBM interoperability announcement. Avatars were teleported from the Second Life Preview Grid into a virtual world running on an OpenSim server.

While M Linden (CEO Mark Kingdon of Linden Lab) did not focus on interoperability in his recent letter to the residents, avatar Zero Linden (vice-president Joe Miller of Linden Lab) unveiled some of the ambitions of his company regarding interoperability and the metaverse in a Reuters' interview. In the story it is said that:

The Linden Dollar, with a years-long reputation of solid financial backing, may be positioned to become the gold standard of virtual currencies.

A great ambition for the Linden dollar, which for the Linden Lab officials and the Terms of Service is just a product feature and a fictional currency.

The Reuters' story is fascinating reading. The revenue model of Linden Lab is primarily based on the managing of "virtual land" (CPU time) and it seems the company is doing rather well. So why incite the residents to travel elsewhere and break down the walls around Second Life? One of the very important features of Second Life is its economy, the fact that it are the residents who create the content and who can own intellectual property rights.

Interoperability can have consequences for residents and for Linden Lab.

• Issues for the residents: Avatar Prokofy Neva explains on Second Thoughts why the residents should be extremely worried about these developments. Their creations could very well end up in other parts of the Metaverse, where no intellectual property rights are enforced, where there is even no functioning virtual economy, so Prokofy Neva fears.

  Prokofy Neva is very outspoken and direct in his critique, but I met quite a few other residents which have the same questions for Linden Lab: what will the impact of interoperability be on their revenues, how will intellectual rights be protected etc. Of course there are the "real life courts", but the effort and expense for going to court may be too much for many residents.

  On this site, Professor Robert Bloomfield has yet another question: does Linden Lab allow the export of content to virtual environments not controlled by them? This is far from obvious, reading the Terms of Service.

  Legal scholar Benjamin Tyson Duranske says in his book Virtual Law there is "significant unlicensed use of in-world content creators' copyrighted works by other virtual world users."
  (copyright being just part of the much larger concept of intellectual property rights).

  Maybe the discussion regarding the unlicensed sharing of music, which leads to tough questions about the possibility/impossibility to enforce copyrights and about the business models of the music industry, will be repeated for virtual worlds creations.

• Consequences for Linden Lab : If Linden Lab now has success generating revenue by managing and providing virtual land, how will they benefit from an open metaverse, with lots of competing grids and free circulation of avatars and virtual goods?
  This is an important question for the residents too, because the financial success of Linden Lab is crucial for the functioning of Second Life.

  Joe Miller in the Reuters' interview:
  

  I could see Linden offering economic services, trading services, search services.

  Avatar-journalist Eric Reuters explains that "some OpenSim worlds may respect Second Life’s intellectual property protections and commerce functions. The Linden Dollar, with a years-long reputation of solid financial backing, may be positioned to become the gold standard of virtual currencies."

  But why would competitors of Linden Lab accept the virtual/fictional Linden dollar as the US dollar of the Metaverse? A currency which is so much a feature of the Linden Lab product Second Life?

  Miller "also referenced the role VeriSign plays in the administration of the Internet by managing top-level “.com” and “.net” network addresses."

  In my previous post about the Virtual Corporation, I mentioned that virtual corporations could be hosted by companies offering administrative and technical services and acting as an auction house for those looking for interesting virtual companies. So that could be another idea for "open metaverse" business of Linden Lab.

  However, Linden Lab does not want to elaborate on specific projects the company has for this "open metaverse" era. Right now, providing and managing virtual land remains extremely important for the company, and one can suppose that making Second Life into a stable and easy to use platform remains an extremely important short term objective for Linden Lab and the residents of Second Life.

Metanomics is covering all these issues. We will have Zha Ewry (IBM's David Levine in real life), who made the pathbreaking teleport into OpenSim, be making a brief appearance at the beginning of Metanomics on Monday the 14th.