Philip Rosedale on OpenSim/OpenGrid: Pandora's Box was Already Open
Naturally, a major topic of my interview with Philip Rosedale was on the implications of OpenSim and the open grid project, which both involve creating open source server-side implementations of virtual worlds that can replicate Second Life® funcationality. As a relative newcomer to this corner of the tech industry, I still find myself asking what a company would essentially create its own competitor. Here is what Philip had to say; I have asked Tish Shute of ugotrade.com to comment, as one of the people who has covered the OpenSim/OpenGrid movement with more detail and passion than just about anyone.
PHILIP ROSEDALE: … I just really hold true to the strategic belief that there’s going to be a tremendous amount of consolidation and interconnection between these worlds because the content development process is so challenging that the content developers are going to push us all together. They’re going to say, “Give me a file format. Give me an interchange format. And let me move that chair from this grid to that grid. I’ve got to be able to do that because I’ve got a customer here who wants to buy it.” And so I think that that consolidation is going to happen, and it’s going to happen earlier than people would have thought.
ROBERT BLOOMFIELD: And this is looking at the success, the energy around OpenSim, open grid.
PHILIP ROSEDALE: The energy, yeah. I think, at this point, we’ve got an appropriate level of energy – I think that’s exactly the right word – around exploring how quickly we can generalize all this stuff and open and interconnect everything together. I really think that’s going to continue.
ROBERT BLOOMFIELD: [D]o you feel like you might have opened Pandora’s box and that it’s not really under your control now?
PHILIP ROSEDALE: I think that Second Life has, in many ways, not been under our control from the beginning and that it’s been a basic operating assumption that to create the kind of incredible place and business opportunity, and social opportunity more broadly, that Second Life would require a certain lack of control. And that was true with the content from day one.
So for us, oh, we open-sourced the client a while ago, and now we’re trying to do the same thing with respect to operating standards to interconnect grids. This is a pretty logical progression, using worlds that we’re pretty familiar with. I mean we’ve always felt that, if you have a compelling use proposition, which certainly Second Life does, in other words, if there’s real utility, real fun or real business or real whatever in what people are doing, then there should be a way, as a company, to be open, global and still make money on an hour-to-hour or a user-to-user basis or whatever on what we’re doing. And the economic aspects of the business have been fantastic from the very early days, and we don’t really even worry about them.
Our ability as a company to find a way to make a reasonable amount of money per hour that people spend in Second Life, it’s really never been that much of a problem. It’s actually been fascinating as we’ve changed pricing and as we’ve changed the ways that we make money. Introducing new ways of making money – like selling currency on the LindEX – it’s been amazing how stable our revenues have been as a function of usage hours. It’s one of the things that we sometimes marvel at. It’s almost an emergent effect, if you will, that the company’s business, its operating revenues are really very stable.
ROBERT BLOOMFIELD: Even though they’re coming from different streams.
PHILIP ROSEDALE: Even though they’re coming from different streams. And sometimes the requirements of the platform and decisions that we make will really substantially change the nature of those streams, but when you put them all together and you divide them by the number of usage hours, it’s like a constant. It’s almost a magic number. And it’s a magic number that allows us to be profitable, and therefore, is certainly adequate to make a business in the future. I don’t think that continuing to open Second Life up as we have been is going to impact that. Again, I just think there are so many opportunities to make money that we shouldn’t have to worry about that too much in the company. And, again, I think that’s a lot like the early internet. I mean if you step back and look holistically at the internet – you look at PayPal, the payment systems, auction systems, transaction systems, posting, naming – you look at all the businesses that comprise the internet, well, those are all the kinds of businesses that we as a company can be in, in this emerging market. There’s no business that’s denied us. We are in the hosting business. We can continue to be in the hosting business long term, putting servers up and providing access to them.
We can certainly be in the naming business. We’re in the currency and transaction support business. It’s funny, it’s something that’s often discussed. We worry much more about improving the scalability, stability and the usability of the system: reducing that initial user experience, reducing the time associated with it, making it easier. That’s got to be the lever that drives more growth in the overall industry, more revenues for us. So it’s really all we worry about. But I don’t think that the open grid will impact our revenues any more than open sourcing the client did.
I think a number of people don't share Philip's optimism on this. After all, simple hosting is not that expensive, and what is Linden Lab's competitive advantage in things like fostering microtransactions (why can't Paypal or FatFooGoo do that better?) or providing naming conventions or any of the other streams. But I do think those who are skeptical should be questioning some of their own assumptions? Do you really think any of the groups that are building their own server technologies now are really going to do a better job, given Linden Lab's 200+ employees? And why would Google or Microsoft or some other tech giant try to start this themselves, rather than simply buying a company that has already made this much progress?
Of course, Tish Shute will have a more informed take, here at ugotrade.com.
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