business

(adding first results of an in-world discussion about this project, at the end of this text)

How important will virtual worlds become in the global village? In order to answer that question, one has to have an idea what the big issues will be the next 50 years, what "the big picture" will be and how it evolves. Often Virtual Worlds Roadmaps are being studied in splendid isolation from the rest of world history. References are made to the cost of energy or to the financial crisis, but often no attempt is made to describe the issues which will define our planet from now to let's say 2050.

In a previous post, Second Life, OpenSim, Web2.0 point to a different future for the global economy, I used some ideas of Immanuel Wallerstein to get such a big picture.

This time I invite you to consider various concrete aspects of the evolution of the world system, and to meditate what role virtual worlds can play for each of these aspects.

Even though still inspired by Wallerstein's text, the big picture I will present here does not imply one has to agree with his visions. Personally I am convinced that the next 20 to 50 years will be a period of chaos, of unexpected disruptive events, of important mutations in the financial and business world.

However I simply don't know whether this can be adequately described by Kondratieff cycles, or by Wallerstein's vision on the long term evolution of capitalism. I will just list a number of big issues, and I really would like getting feedback on these topics (which issues did I forget, which are far more important than others, extra information) and on the way virtual environments could be involved.

I think the work we would do in situating virtual worlds (and other new media?) in the broader context of the future of our planet, could very well complement work which is being done elsewhere, such as in the Virtual Worlds Roadmap group.

The "big issues" are based on a book and blog (in Dutch language) by Geert Noels, the chief economist of the Belgian investment bank Petercam.

Noels identifies six "econoshocks" which will have an impact on our lives and which can be compared to the Industrial Revolution:

- demographics (including urbanization in Noels' book, but I'll propose to create a separate entry for this phenomenon)

- the shift to the East

- the information- and communication technology

- energy

- the new capitalism

- the green economy

I will briefly discuss those issues, not necessarily sticking to what Geert Noels says (for instance, I added my own take on urbanization, adding the security and geo-political risk stuff, I lumped the green economy and the energy/raw materials stuff together, I have another take on the New Capitalism etc).

I think studying the possible evolution of virtual worlds in relation to the global context can provide new insights, and I invite you to contribute to this text on the MixedRealities Wiki. Of course, all contributors will be free to republish the evolving text as they see fit.

From the Department of Wild Hypotheses

(update: providing a concrete example at the end of the text)

Second Life, OpenSim, web2.0, open source stuff are pointing to a possible different future for the global economy. In a very negative sense, this future announces itself through the current financial crisis. In a positive sense, extreme customization, collaboration and more egalitarian organizations make part of a bifurcation of the development of capitalism. However, there is a very considerable danger that the other part of the bifurcation may prevail: a more protectionist, authoritarian version of capitalism.

The basis of my hypothesis is the text The Depression: A Long-Term View from Professor Immanuel Wallerstein.

Leading venture capitalists are inciting Silicon Valley companies to switch to survival tactics. Om Malik on GigaOm writes that

Sequoia Capital, arguably the smartest venture capital investor in business, is sounding the alarm and asking its portfolio companies to buckle down for what could be the worst economic downturn of their relatively short lives.

GigaOm is not the only one to report these developments. Mike Arrington at TechCrunch reports that angel investor Ron Conway, who has backed start-ups such as Google, sent a letter to his portfolio companies suggesting they lower their burn rates.

Are the prospects for the Valley, for web2.0 and virtual worlds companies gloomy?

I wrote an article concerning ethical business behavior in Second Life a while back, and it seemed to be well received, so I have included the contents of it here, I hope you find it appropriate for this venue. I wrote it to be of interest and understandable to the average Second Life resident, purposely keeping any legalese to a minimum. I have never subscribed to the notion that law has to be obtuse or beyond the easy grasp of the layman:

THE BASIS OF AN ETHICAL SECOND LIFE BUSINESS AGREEMENT
Author: Temporal Mitra

A contract simply needs to state a clear agreement and mutual promises to exchange things of value.

Although lots of contracts are filled with mind-bending legal gibberish, there's no reason why this has to be true. For most contracts, legalese is not essential or even helpful. On the contrary, the agreements you'll want to put into a written contract are best expressed in simple, everyday English.

All that is necessary for most contracts to be legally and morally valid within Second Life are the following two elements:
• All parties are in agreement (after an offer has been made by one party and accepted by the other).
• Something of value has been exchanged, such as Linden cash, services, or goods (or a promise to exchange such an item) for something else of value.

Does a contract have to be in writing? In a few situations, a contract must also be in writing to be valid. Most countries and states laws often require written contracts for real estate transactions or agreements that will last more than one year. I recommend that all business agreements (beyond a simple vendor purchase) that will require an outlay of linden funds be in some form of written agreement. Of course, it is wise always to write out most business agreements, even if not legally required, because oral contracts can be difficult or impossible to prove. This will also decrease any potential differences in understanding of the terms of the contract as fulfillment of it progresses.

Let's look a bit more closely at the two elements necessary for a valid contract: agreement between the parties and exchange of things of value.

Agreement Between the Parties

Although it may seem like stating the obvious, an essential element of a valid contract is that all parties must agree on all major issues. In real life, there are plenty of situations that blur the line between a full agreement and a preliminary discussion about the possibility of making an agreement. To help clarify these borderline cases, the law has developed some rules defining when an agreement legally exists.

Offer and Acceptance

The most basic rule of contract law is that a legal contract exists when one party makes an offer and the other party accepts it. For most types of contracts, this can be done either orally or in writing.

Let's say, for instance, you're shopping around for a Second Life Builder to build you your dream house. One builder specifies that he or she will build the home to your exact specifications for L$10,000. This constitutes his/her offer.

If you tell the builder to go ahead with the job, you've accepted his/her offer. In the eyes of the law of most countries, and for our purposes in Second Life, when you tell the builder to go ahead, you create a contract, which means you're liable for your side of the bargain (in this case, the payment of L$10,000). But if you tell the builder you're not sure and want to continue shopping around (or don't even respond, for that matter), you clearly haven't accepted the offer, and no agreement has been reached.
Or if you tell the builder the offer sounds great, except that you want the builder to provide the land as well, or to add a swimming pool at that price, no contract has been made, since you have not accepted all of the important terms of the offer. You have actually changed one term of the offer. (Depending on your wording, you have probably made a counteroffer, which is discussed below.)

When Acceptance Occurs

In day-to-day business, the seemingly simple steps of offer and acceptance can become quite convoluted. For instance, sometimes when you make an offer it isn't quickly and unequivocally accepted; the other party may want to think about it for a while or try to get a better deal. And before the other party accepts your offer, you might change your mind and want to withdraw or amend your offer. Delaying acceptance of an offer and revoking an offer, as well as making a counteroffer, are common situations that may lead to confusion and conflict. To minimize the potential for a dispute, here are some general rules you should understand and follow.

How Long an Offer Stays Open

Unless an offer includes a stated expiration date, it remains open for a "reasonable" time. What's reasonable, of course, is open to interpretation and will vary depending on the type of business and the particular fact situation.

To leave no room for doubt as to when the other party must make a decision, the best way to make an offer is to include an expiration date.

If you want to accept someone else's offer, the best approach is to do it as soon as possible, while there's no doubt that the offer is still open. Keep in mind that until you accept, the person or company who made the offer -- called the offeror -- may revoke the offer.

Revoking an Offer

Whoever makes an offer can revoke it as long as it hasn't yet been accepted. This means if you make an offer and the other party wants some time to think it through, or makes a counteroffer with changed terms, you can revoke your original offer. Once the other party accepts, however, you'll have a binding agreement. Revocation must happen before acceptance.

An exception to this rule occurs if the parties agree that the offer will remain open for a stated period of time.

Offers With Expiration Dates

An offer with an expiration date is called an option, and it usually doesn't come for free. Say someone offers to sell you a parcel of land for L$10,000, and you want to think the offer over without worrying that the seller will withdraw the offer or sell to someone else. You and the seller could agree that the offer will stay open for a certain period of time, say 5 days. Often, however, the seller will ask you to pay for this 5-day option -- which is understandable, since during the 5-day option period the seller can't sell to anyone else.

Payment or no payment, when an option agreement exists, the offeror cannot revoke the offer until the time period ends.

Counteroffers

Often, when an offer is made, the response will be to start bargaining. Of course, haggling over price is the most common type of negotiating that occurs in business situations. When one party responds to an offer by proposing something different, this proposal is called a "counteroffer." When a counteroffer is made, the legal responsibility to accept, decline or make another counteroffer shifts to the original offeror.

For instance, suppose your builder (here, the original offeror) offers to build the home for L$10,000, and you respond by saying you'll pay L$7,250 for the job. You have not accepted his offer (no contract has been formed) but instead have made a counteroffer. If your builder then agrees to do the job exactly as you have specified, for L$7,250, he's accepted your counteroffer, and a legal agreement has been reached.

Even though a contract is formed only if the accepting party agrees to all substantial terms of an offer, this doesn't mean you can rely on inconsequential differences to void a contract later. For example, if you offer to buy 100 pairs of ladies prim shoes with 12 bling prims, there is no contract if the other party replies she will provide 100 pairs of men's prim shoes with no bling. But if she agrees to provide the 100 pairs of the ladies prim shoes, a valid contract exists, and you can't later refuse to pay if the 12 bling prims turn out to be a bit brighter or dimmer than you anticipated.

Exchange of Things of Value

In addition to both parties' agreement to the terms, a contract isn't valid unless both parties exchange something of value, in anticipation of the completion of the contract.

Consideration Defined

The "thing of value" being exchanged -- which every law student who ever lived has been taught to call "consideration" -- is most often a promise to do something in the future, such as a promise to perform a certain job or a promise to pay a fee for a job. For instance, let's return to the example of the home building job. Once you and the builder agree on terms, there is an exchange of things of value (consideration): the builder has promised to build the home and you have promised to pay L$10,000 for it.

Gifts vs. Contracts

The main importance of requiring things of value to be exchanged is to differentiate a contract from a generous statement or a one-sided promise, neither of which are enforceable by law. If a friend offers you a gift without asking anything in return -- for instance, such as offering to stop by and help you terraform that new parcel you just purchased -- the arrangement wouldn't count as a contract because you didn't give or promise your friend anything of value. If your friend never followed through with her gift, you would not be able to enforce her promise. However, if you promise your friend you will make her a new prim skirt on Sunday, in exchange for her helping you terraform your land on Saturday, a contract exists.

Promises vs. Action

Although the exchange-of-value requirement is met in most business transactions by an exchange of promises ("I'll promise to pay money if you promise to build my home next week"), actually doing the work can also satisfy the rule.

If, for instance, you leave your builder an IM or email message that you'll pay an extra L$2,000 if your home also has a private skybox added, the builder can create a binding contract by actually creating the skybox. And once he does so, you can't avoid paying by claiming you changed your mind.