Second Life -- Deathwatch

By Randolph

After nearly six months of trying my best to ignore Linden Research's game world Second Life, their media cheerleaders, and especially their rabidly vindictive cultist players, time has finally come to call the veritable end game.

With the removal of gambling as the primary source of the Second Life real-cash economy, and the growing possibility of a Linden buyout, the end of Second Life as we know it grows ever near.

I've been otherwise productively consumed launching a new company (in an area entirely unrelated to virtual worlds, thankfully), which I'll write more about in an article later this week.  But I started hearing buzz about Second Life and Linden Research (Linden Lab, LL) the past few weeks.  The short of the buzz is the investors want out and they're looking for a suitor.  Unsubstantiated rumors whisper about Fox Interactive, who everyone knows purchased uber-hyped MySpace and less hyped IGN.  MySpace went for a tremendous premium.  No doubt Benchmark Capital, Globespan and others in the investor syndicate are considering capturing such premiums and getting out of what has become a virtual albatross draped upon their collective neck.

Death Watch

Second Life is doomed.  Well, let me rephrase:  in its current form, with existing management, Second Life is doomed.  Linden is not a well run company; at least not for all the hype and media love. 

For starters, the revenue model for the firm is dependent upon unrealistic growth projections.  I've dissected the growth in quite a bit of detail in previous articles.  What I did not release were other pieces of research I did for potential investors looking to place money with "Second Life Businesses", who after reading my articles, contacted me to for due diligence and other market & economy analyses.  The results of those efforts painted a disappointing picture of real opportunities in Second Life. 

In short, almost no one was making any real money.  Few were counting expenses correctly, let alone considering the cost of capital or applying an appropriate measure of risk.  Remember, Second Life has a pretend, sort-of-floating micro-currency, the Linden Dollar (L$, SLL).  As of February of 2007, I figured there were around 300 entities earning in excess of the top prevailing minimum wage in real, realized profits from things they were doing in Second Life. 

About 18 of those were earning a respectable amount; in excess of $30K USD per month.  But of those 18, all involved significant portions of illegal gambling derived income (either by hosting gambling directly, or by renting/leasing land and services to casinos).  Interestingly, I also ran the Anshe Chung "corporation's" claims of number of employees and widely discussed revenues being earned by Graef's operations.  One investor wanted to know if he could build a rival company of that financial size, what the model would look like.  Well, Graef's company structure doesn't hold up under a simple GAAP model analysis.  There are simply too many employees and too few cash flows to support such an operation unless those "employees" are being paid in non-dollars (or slave wages).  The model even fails when considering 100% off-shore sourced labor.  Oh, and it turns out that Graef doesn't have $1mm USD in annual revenues.  She has $1mm USD in theoretical net worth, which is largely comprised of "virtual assets" which are themselves exposed to legal, market and financial exchange-rate risks, none of which are measured by anyone anywhere I've ever seen or heard, except by me. 

For starters, as a whole bunch of casinos just found out, a Second Life "company" actually has no legal or financial claim on their "virtual assets", as per Linden Research's end user license agreement.  I've always wondered how one calculates an appropriate risk premium for such a situation.  The academics, who are too busy hosting conferences to be bothered by such minutia, will say that Second Life is just the same as an emerging economy.  Or as Edward Castronova put it, "Virtual Mayberry".  The fact that Mayberry used the US dollar as a currency aside, I would remind Mr. Castronova that risk premiums are calculated for emerging market investments ex-ante, meaning that the investor doesn't already know that the government intends to seize its assets; quite to the contrary, the governments have made some credible assurances they will not.  Linden Research, Inc. has already told you they intend to seize your assets if they are so motivated, and has offered no binding or credible assurances to the contrary.  I'm no economics professor, but, seems to me those are Buicks to Boysenberries.

This all matters because the entire premise of growth in revenues to Linden depends upon growth of the Second Life economy, which in turn depends upon growth in the active, real money paying customer base.  And that assumes people keep plowing money into the game world, in ever increasing numbers.  This is where the model is profoundly flawed.  There are only two primary reasons people push significant real dollars into the game, and a third source that's just churn:

1. They are gambling.  This is likely the largest source of L$ real dollar purchases.  This is also the source of most liquidity (in both directions).
2. They are speculating.  Usually with land, less so with "business and commercial" ventures.  They put some real money in, normally in order to pay for some in-game help and services, along with the rent, lease or cost of "virtual land".  Keep in mind these speculators may not even know they are speculating.  Indeed, a lot of them are deceived (willingly perhaps) into thinking they're engaging in bona fide business activities.  You'll hear them object "I just like creating cute things!  And I earn some money while doing it, what's wrong with that".  Nothing, but you aren't earning money, you're spending it.  I've yet to hear someone say they like creating things to sell for fake money (or real money less than their real costs), and they're willing to pay real money for the privilege of doing so.
3. They are Looky Loos consumers willing to spend a dollar or two who really represent churn.  They don't stay around long.  Usually less than only 1 login, 2 if Linden is lucky.  In previous articles I showed that there aren't enough internet connected people on the planet to support a churn-based growth model.  Somehow there's a hidden assumption in all this that the churn can be converted into sticky consumers.  Or...more likely they get promoted to #2 above.  Thus the "make real money" focused media message surrounding Second Life.

You can read my previous articles for a thorough debunking of this whole L$ scheme.  Here's a good place to start.  But the real question is whether Second Life can survive the now inevitable changes.

No More Easy Money

The easy money is gone.  Now that Linden has whacked all forms of gambling, a significant part of the real money economy is also gone.  No one but Linden knows for sure how much of the real cash economy this represents, but it certainly represents most of the liquidity.  The end-result of this crunch will probably yield an economy much more like IMVU than like the Utopian, borderless panacea painted by a gushing media.

It's possible to make all kinds of deductive predictions about how this will wind out, but I think the thing to watch is the L$/$USD exchange rate.  At some point it should devalue quite significantly.  That moment shouldn't take long to arrive.  And, at that point my original assertions about similarities to pyramid style systems will become quite apparent to those with what they thought was real money trapped in the game.

Buyout to the Rescue

A buyout by a suitor such as Fox could save Second Life.  But not by the measure of the existing set of players I refer to as Cult Second Life.  Likely any acquiring company will take very specific measures to continue "cleaning up" the mess left by Linden.  First order of business will be to get rid of the floating currency.  Next will be to impose significant content controls, along with elimination of copyright infringement.  After all that, what will Second Life be?  Your guess is as good as mine, but mine isn't optimistic.  I'm not terribly impressed by the technology, and I've been privy to some up and coming competitive technologies that will easily displace the Second Life client & grid model once they are released.

I think Fox, if they do buy, will probably significantly overpay for Linden Research.  I think Linden and Linden's investors are probably putting a multi-billion dollar value on what they've created.  I'd welcome the opportunity to prove that a $100mm valuation is overly generous.  But then again, the investment bankers and top tier consultants hired to do these valuations aren't paid to find the objective answer.  They're paid to facilitate the transaction. 

Don't be surprised if the company and game are sold for a ridiculous price.  I doubt the professionals determining the price tag read blogs like this...

End of the Drama

This whole experience has been a bit of a grand drama.  Not being much of one for drama myself, I could have done without the threats of violence to me and my family I received from psychotic Second Life cultists.  I also could have done without the further erosion of my faith in the media, and my utter disappointment with academia.

As if anyone were listening, some assorted messages I'd deliver:

• US mainstream media including well known television, radio and print:
  • RTFA first.  It's really a turn off when you call all excited about getting a story going and you have no f-ing idea what I even wrote.
  • Speaking of being all excited, when I take the time to call you back you could do the same courtesy.
  • Reuters and "Adam Reuters", GMAFB.  This virtual (as in pseudo) journalist has had his Second Life cheer leading skirt tattooed to his virtual ass for so long he can't even pretend to be objective.  When I contacted him with a mistake he printed about something I'd said (mis-attributing a quote) he purposefully printed his snarky retraction out of context to further amplify his original mistake.  Yes, I got the message "Adam", don't complain or I'll use the good name of Reuters to smear you further.  Back where I grew up we'd call guys like you a "choad".
• Not all media were so bad.  A number of German and a few Asian and Australian media really took the time to read my articles, talk to me on the phone, challenge me with arguments of those on the other side, and then present fairly my argument and position.  Sadly, the 2 UK media I encountered were worse than most of the US media, though.
• "Big Personalities" in gaming, like Raph Koster [I should have taken more care to read through Raph's blog, particularly over the intervening period since my original articles.  Raph gives a reasonable response in the comments below.] are part of some mutual admiration society.  C'mon, why take the time to criticize a blog in your own blog and then retreat to an "I'm a renowned superstar" status, allowing your adoring fans to make totally unintelligible arguments on your behalf, all of which you tacitly agree with?  I'm not a game designer legend, so maybe I'm missing something.  Smells like SoCal "biz" type of bs to me.  And we wonder why it's tough to get VCs to fund MMOGs and VWs?
• Professors who make their main craft studying and writing about games and virtual worlds are even worse.  With sadly few exceptions, these guys bristle with vitriol whenever anyone dare to even comment on their sacred subject.  One guy, Dan Hunter, a professor at Wharton of all places, outright calls people derogatory names if they conjecture on subjects he's claimed as his own.  When one guy offered up a straw man definition of what makes for a virtual world, Dan responded with a "Who is he to open his mouth" juvenile argument, then proceed to shower us all with a string of obscenities.
• Edward Castronova, the oft cited "guy who wrote the book" on virtual world economies.  I originally had quite a bit of respect for his work.  I agree with a majority of his arguments, and appreciate his theoretical treatment of the subject.  But he was so tied to Second Life as a proof of his grand concepts that his response to critics like me was to simply mock us, and utter mysterious sarcasm from time to time.  He said my "white paper" (news to me that it was a white paper, being it was just a blog thread) was "hardly worth mentioning".  So, unless Castronova mentions it, it's not worth mention, despite the fact that my "white paper" thing-that's-really-just-a-blog-thread ended up with multiple references in the official Wikis on Second Life, and was picked up by tens of thousands of industry blogs and quite a few mainstream outlets.
• And it was Castronova who called Second Life, [virtual] "Mayberry", I can only assume as a way to convey some innocence upon it.  It was this "Mayberry" reference that the swooning media picked up as sure evidence from the father of virtual economics that I was full of crap.  Had Castronova only known (oh wait, he would have if he actually read blogs comments on articles he himself authored) that his precious Mayberrians were running around sending me and other critics (even some of my commenters in my blog) threatening emails.  How would you take to receiving an email that said roughly "we know where your kids go to school"?  I missed that episode of Mayberry PFD.

Anyways, on to happier and brighter things in my next article...

...which is about how we're going to save the world with market capitalism!  And yes, it has to do with carbon.

Comments

[Raph]

Hmm, I am unsure was to what your gripe with me is. That I didn't answer your post in comments? I don't answer MOST comments. In fact, your comments on my blog weren't even in response to me and my post -- they were in response to another commenter!

Nor have I been unreservedly critical of your writings -- I've complimented several aspects of them. In fact, the first time i did so, I got those same SL boosters attacking me. :)

FWIW, virtual worlds seem to have no difficulty getting VC funding these days... which I tend to think is not necessarily a good thing.

[randolfe_]

I should have said "VW/MMOGs are relatively hard to fund". Certainly a lot of MMOGs got funded on the blockbuster model, though it's pretty widely agreed that actually earning return on a MMOG investment is a risky longshot. I'm not aware of more than a couple serious VW fundings. There are a number of social-networking with a sprinkle of VW plays, like IMVU, but I'm not sure many folks would agree these are so much VWs as they are Web 2.0 social networks.

I wasn't aware you had taken Cult Second Life abuse yourself, or that you had ever agreed with me. I was under the impression you thought my arguments were entirely without merit. I apologize for missing that. Perhaps I was too harsh...I haven't followed this topic all that closely for the past many months.

[Raph]

With your original analysis, I stated that I thought it was the most scientific take on the economics thus far -- but that I thought it was going too far to accuse Linden Lab of intentionally creating a Ponzi scheme (I believe I actually said it was "irresponsible" to say so -- the presumption of malicious intent there really bugged me). I got bashed by SL boosters plenty for the first remark. :) And I later pointed to your subsequent article terming it a HYIP instead as well...

In general, I have strongly agreed that considering SL or really,any VW as a reasonable place for end-users to make money is a very bad idea. (The other time a lot of SL folks got mad at me was when I wrote about CopyBot...)

As far as fundings... besides my company Areae, there have been a dozen investments at least in VWs of various stripes, and in sister projects that branch into digital distribution.

[FelixTheCat]

Any sort of Linden Labs buyout would be a pure technology play. Figure $1mm USD per C++ software developer, and that price covers all the technology and any of the other easy-to-replace employees like graphic designers, product managers, and so on. So, maybe $50mm USD.

So, the VC guys would be lucky to get their investment back and the Lindens who are not hard core developers would be out of a job.

I agree with the premise of this article...Second Life is doomed. It cannot scale and its acquisition would only serve a big player like Sony, Google, or Microsoft that has proven it can manage sites/projects with hundreds of millions of users, which is the number required for anything like this to turn a profit.

It would make a good extension to XBox Live...maybe Microsoft will buy it to jump start a competitor to Sony Home, but they'll only want the C++ guys...everybody else will be out of a job.

[randolfe_]

Felix,

I hadn't thought about console plays for the SL platform. Clearly it could be positioned as a competitor to Sony Home. They'd have to do quite a bit of rejiggering to the architecture in addition to porting challenges in order to get it to be performant. XBox customers won't stand for the ugly, clunky interface and sometimes/sometimes-not streaming content. It goes without saying that the whole freedom-of-design would have to go too.

I'm probably a bit more generous than just putting a $1mm/developer head price tag. I'd be willing to value them on an ad-revenue and social networking basis. But given the small size of the persistent community, that wouldn't yield as much as people think. After all, SL is a drop in the bucket compared to MySpace.

[Rezolved]

"You'll hear them object "I just like creating cute things! And I earn some money while doing it, what's wrong with that". Nothing, but you aren't earning money, you're spending it."

I never understand this part. Tell me again, if this is the case, how do I end up with more money than I started with?

[randolfe_]

I never understand this part. Tell me again, if this is the case, how do I end up with more money than I started with?

This book linked on the left might help you understand better.

Anyway, my complaint has nothing to do with people spending their money any way they wish. It is with you guys who simultaneously claim you're "running a virtual business" while insisting you're not bound by the methods we use to evaluate business performance and effectiveness.

If you have a hobby that happens to put a dollar or two in your pocket for every 100 hours you invest, then hats off to you. But you aren't running a business anymore than is the coin collector who occasionally sells a rare item for decent money.

[Rezolved]

I've been unable to log into SL for nearly three months and yet I'm still pulling roughly $700 a month (after tax and expenses) from my existing setup.

/shrug, That won't make me rich, but it's still cash in the bank for a whole quarter of sitting on my rear and twiddling my thumbs.

Put another way, if my day job boss offered me an extra $12K a year, I wouldn't be turning him down.

[randolfe_]

Congratulations to you then. These guys make similar claims.

One definition that might be relevant here, in light of the fact Linden's own data shows there to be no more than a couple hundred player earning your level of money:

Some forum and blog users may gain a reputation whereby others will trust their word that they have been able to withdraw their profits, encouraging others to invest in the hopes that more will enroll after them and that they too can therefore make a profit. As these games are by definition Ponzi schemes [note: I do not believe this is currently true, legally --RH], it is inevitable that the vast majority of investors who are not at the top of the pyramid will lose their money and/or time invested.

[Rezolved]

I'm not really 'making a claim', just an observation, and I don't really have any idea how my experience compares to others (other than random anecdotal stuff).

The thing is, I'm not trying to sell SL to anyone, or claim that it's some amazing get rich easy scheme. In fact, by your logic, that would be putting myself out of pocket. I don't actually care all that much, I just like creating cute things and I earn some money while doing it, what's wrong with that?

The only reason I've piped up here is that I watch that money wend its painfully slow way through paypal every month and into my grubby little paws and then here you are telling me "...but you aren't earning money, you're spending it."

So I don't get it.

[Rezolved]

I mean, it's quite possible that the new tent I bought myself with last months proceeds in fact belongs to some obscure nuance of a seasonally-adjusted fiscal analysis on a scattergraph somewhere.

But if that's the case then I hope it doesn't want it back any time soon, because I'm supposed to be going camping the weekend after next.

[randolfe_]

If you're just an extremely lucky "outlier" then I'd say enjoy it while you can. A few people win the Lotto too. It's just not a strategy, and people who play the Lotto are not "making money", they're spending it.

My real question is, why bother? What's your motivation to tell your story? If you're not trying to counter my article in order to convince others that they should play-to-get-paid, then I'm not sure why you even care. Maybe it's because you're not so sure people are coming to "buy your cute stuff" so much as they are coming so they can make money like you claim to have, and in the process, "buy your cute stuff".

[Rezolved]

I make prefab items that I texture and script as amuses me, put them in a box and then rent a little space to set them for sale.

A process not unlike many entirely fictional 'management games' that have been around almost as long as goofing around on computers.

The added interest is that the proceeds can be traded for actual spending cash, something that you can't do in a completely fictional games, which I find highly amusing. It's like cashing out of Rollercoaster Tycoon.

I don't have a very solid idea of why people buy my stuff, but I suspect there are as many reasons as there are customers. I think mostly it's just to make whatever fantasy they are building look better than they could achieve on their own and there's no harm in that.

Maybe that's just luck, but I prefer to think of it as a nefarious, money-swindling scheme I like to call "Capitalism 1.0", money in exchange for goods and/or services.

I don't have any particular motive for wanting anyone else to fall in behind me any more than a streetfood vendor wants another cart across the street, that's why your comparisons to Ponzi schemes or other network-based rip offs leave me cold.

If anything I benefit from customers not competitors, so it'd be more in my interest to convince you not to try and make money but to spend freely in SL for your own entertainment without giving a thought to the person behind the curtain, namely me.

The reason I'm pointing this out to you is the same reason I'd pull up on someone who, for example, said New York City was a nasty place, full of mean-spirited assholes and muggers on every corner.

The comment doesn't match my personal experience (in which New Yorkers were uniformly lovely) so I feel obliged to point out that there's something wrong with your conclusion, based on my first-hand experience.

You appear to be trying to dismiss that as either irrelevant or some kind of deception on my part and hey, it's your blog, but the comments are open to the public, so there you go.

[randolfe_]

I'm confused. Is this a hobby or a business? I'll assume from your "Capitalism 1.0" reference you believe it to be a business. If so, I and others have long past sufficiently challenged the validity of that notion.

Your analogy to NYC denizens continued: You are not running a design studio in Silicon Alley so much as you're selling tourists free subway maps. There is a difference between capitalism as an adjective and capitalism as a definition. I guess by your interpretation the prison guard selling cigarettes to inmates is just a 1.0 capitalist also. (That last statement is meant to demonstrate the futility of analogies as much as prove my point).

I think it would be informative for you to read or review my previous articles so as to understand my position and criticisms better. I'm not about to redescribe previous work in the comments of this thread.

[Rezolved]

I'm not sure if it's a hobby or a business, probably somewhere in between. What would you call someone who regularly gets in from their day job and spends evenings buying and selling on eBay for profit? Hobbiest or businessperson?

Don't forget (or gloss over) that I'm taking specific issue with your casual dismissal of the "cute things" vendors.

From your OP, you made it sound like an activity that costs money rather than generates it, which, based on no more than my own experience, isn't true.

If you aren't including those people in your commentary then maybe you shouldn't include them in your commentary.

[randolfe_]

Again, people who play the Lottery do not make money. In aggregate, by and large, they spend money to play the game. If I blogged about it and 2 of the 2,500,000 people who played that month commented on my blog that their own experience was that they made plenty of money playing the Lottery, would that invalidate my assertion?

I have no way to evaluate your specific claim. If I take it at face value, and assume you are honestly calculating your total expenses and opportunity costs properly, then I can state cleanly that you are one of a few hundred people and are not representative of the hundreds of thousands Linden themselves claim are "making money" playing Second Life (including by building "cute things").

If you're playing merely to build cute things then what's the difference whether you're turning a profit or not? It shouldn't matter that you're just a lottery winner and not a shrew business mogul.

[Rezolved]

Yeah, if you said "no-one wins the lottery, so don't play it" and I'd won the lottery, I'd think you were wrong.

Likewise, if you said "no-one makes any money selling things on eBay" and I was making money selling things on eBay, I'd think you were wrong then too.

So when you said I, as someone who is supposed to fit into your three categories of SL player, has been deceived into thinking that the money that turns up in my bank account each month was actually me *spending* money, then I have to question the accuracy of your statement. Don't I?

Because you know, new tent.

I don't see where your argument is, frankly. If you're saying "not many people make money", or "people make money, but only about so much" why didn't you say that instead?

Or "you're just lying about your income, Rezolved"?

And in any case, I can't use my skills to influence my chances with the lottery. I can however, use them to improve the tidy little sum of pocket money that SL brings me, so again I think your statements need a little more rounding if they are going to be considered accurate.

[randolfe_]

Many people *think* they can influence their odds in the lottery. They have systems, they use psychics, they gaze upon the stars or read tea leaves. I don't happen to think those are effective techniques, but I will never disavow them of those notions.

There are pre-requisites to playing the lottery. They have to be of minimum age. They have to be able to get to the point of purchase. They have to be able to pay and to read their ticket.

In the end, a few outliers win and everyone else is deceived into thinking they've got a realistic chance of winning themselves. Sadly, most will have died 10 times over in automobile accidents before they are likely to win.

Have you ever seen interviews with lottery winners (big winners)? I studied this a while back. Nearly all of them believe they influenced the outcome, whether by prayer or karma or some power of will. Like you, I will never be able to convince them their "tents" aren't the product of material merit.

I'm not saying you did *nothing* to allegedly earn your real-dollar-positive-flows. You showed up early with the minimum skills required to participate, _and_ got lucky. Do lottery players really play "just for the fun of it", or do they want to win money? Likewise I am calling into doubt that Second Life "cute things" sellers who enroll today are really just endeavoring to experience the joy of selling cute things. I propose they are endeavoring to make money.

Even that doesn't disqualify you from turning that early luck into a going concern. But you haven't, by your own admission.

I'm saying that _at best_ making any real dollar returns in Second Life is only slightly more likely for anyone entering today (or over the past 6-12 months) than winning the lottery. They payoffs are also far smaller for Second Life. Remember, I computed that if "Anshe Chung" were extracting $1mm USD per annum as alleged in so many print rags the past year, that there couldn't be more than 18 other people earning even the level of money you are claiming (as of 2/2007).

If you reread my article you will see that the context of the "cute things" part of the enumeration was in reference to new player growth

[Rezolved]

Heh, I'm that lucky *every* month? Fancy that, maybe I /should/ play the lottery.

So you are discounting the possibility that someone with better modelling skills, or better texturing skills or better scripting ability or just a better sense of what people playing SL will pay for can start today and knock me off my albeit limited perch? Pfft, I don't think you've a very good idea of what goes on in SL at all.

"Making any money" and "making money above a certain threshold" are two completely different worlds that you are pretty cavalier about blending together. It's one thing to attack brands that are laboring under the delusion that they are about to make millions of dollars in SL, but it's quite another to dismiss the existence of a supplemental income for the average joe (average though photoshop savvy perhaps).

You might move in circles where people make and lose a pile of money on stocks as a matter of course, but where I come from I don't know anyone who would turn their nose up at half my *alleged* real-dollar-positive-flow as a supplement to their income.

Maybe I am one of a limited number (although if I am, I only found out from you), but not everyone can be the world's best Battlefield player either. That doesn't stop people logging on and trying to get up there though, does it?

There are a lot of factors missing from your 'analysis' and more than a few added in, I suspect, as a bias to negative experiences you've had at the hands of individuals. I think it's clouding your vocabulary and I think a more impartial viewpoint would let you get a better perspective.

I'm sure that a lot of what you've said can and will be borne out, but if I can come along and find my own situation entirely missing from your picture then what else have you missed?

[randolfe_]

Pfft, I don't think you've a very good idea of what goes on in SL at all.

I have a much better idea than you might think. Think again. Perhaps you are missing the forest for the trees yourself. But if I must establish my credibility you should know I was operating various Second Life experimental ventures long before GOM, and I was around for some time after the demise of GOM.

but not everyone can be the world's best Battlefield player either

I missed where EA pushed Battlefield as a way to "play our games and pay your rent". Please, show me the reference and I'll retract that entire portion of my argument.

You might move in circles where people make and lose a pile of money on stocks as a matter of course

Then why has Second Life been squarely marketed to "these circles"? If you don't want such people to play your game then don't advertise to them.

There are a lot of factors missing from your 'analysis' and more than a few added in, I suspect, as a bias to negative experiences you've had at the hands of individuals.

Your suspicions would be wrong. If you won't read the materials presented prior, then I can't help you.

The bottom line is you misinterpret this entire analysis, perhaps intentionally, by personalizing it. By your logic lung cancer is not terminal and smoking is not hazardous, because I can find one person who smoked his entire life with no ill effect and I can find one in a million lung cancer survivor. I still maintain that smoking is not a strategy.

I'm still wondering why you are so invested in discrediting my little blog thread? Pardon me if it smells like it did when Edward Castronova claimed that, by criticizing Second Life, I was ushering in the demise of virtual worlds. Is this emperor wearing any clothes?

Like I said six months ago: if one grumpy guy with a tech/finance/venture blog can pose such a threat then there really was no there there to begin with.

[Rezolved]

Oh come on, now you're starting to sound a little paranoid. If you don't want people to offer opinions on your blog entries then why do you have open comments?

Of course I'm going to personalise what you've written here. If you write a blanket statement like "There are only three reasons why put people put real money into Second Life" then I'm going to look for the one that best fits me, aren't I? Being someone who pays a regular subscription.

I can't see my situation in your list and I said so, that's all. Why are you looking for a conspiracy?

Seems to me you're the one with an axe to grind, every time I point out a missing detail from your article you find a spurious reason to dismiss it, is that the better to fit your preconceptions?

If it's making money then it's either not enough money, or money that shouldn't be accounted as profit, or not enough people making money, or vague insinuations that I'm lying about the amount, and now it's about the marketing not being aimed at me, which is just bunk.

Anything at all, rather than say you've missed me off your list.

[randolfe_]

It is prerequisite that you have read my previous analyses and that you understand the difference between an analysis and a narrative.

I'm sorry that I didn't write a story about you and your own anecdotal experience. If it helps, add yourself to my list with the number 350 next to it denoting the number last known to me of users out of some 5,000,000 Linden Research claimed at that time who's story reads like yours.

You're of course welcome to comment on my blog, and I am appreciative of your attention. But know that this is a forum that actively challenges comments -- much like we all wish political debates were like. I allow the readers to form their own opinions from these debates.

[Rezolved]

I've read your previous articles (the reason I read this one).

And you're pot-calling-kettle about narratives and anecdotes, your "analysis" up there is peppered with them.

"After nearly six months of trying my best...", "...media cheerleaders, and especially their rabidly vindictive cultist players...", "But I started hearing buzz...", "Unsubstantiated rumors whisper...", "One investor wanted to know if he could build a rival company...", "I could have done without the threats of violence to me and my family I received from psychotic Second Life cultists...", "when I take the time to call you back you could do the same courtesy...", "This virtual (as in pseudo) journalist has had his Second Life cheer leading skirt tattooed to his virtual ass...", "When I contacted him with a mistake...", "he purposefully printed his snarky retraction out of context...", "Back where I grew up we'd call guys like you a "choad"...", "a few Asian and Australian media really took the time to read my articles, talk to me on the phone...", "Sadly, the 2 UK media I encountered were worse than most of the US media, though...", "When one guy offered up a straw man definition of what makes for a virtual world, Dan responded with a "Who is he to open his mouth"...", "I originally had quite a bit of respect for his work...", "He said my "white paper"...", and on and on.

All personal, all narrative. Why shouldn't I take it in the spirit it's given?

I agree, maybe one shouldn't let ones own personal experiences lend credence to a purportedly empirical conclusions.

:)

[randolfe_]

I was referring in context to the supporting analysis for my statements, not to this article. Thus the reason I referred you back to them.

This article was about why I believe Second Life is at an inflection point, and secondarily about the people who've pissed me off.

[Amarilla]

Well, after visiting your this site, i think i owe you an apology. Sorry for the off-topic.

[randolfe_]

Amarilla,

Apology accepted, and thank you.

[atimesa]

You're technically wrong in suggesting an in-world crash of the L$/$USD exchange rate when things turn sour.

Linden Lab acts as a strong "market maker" (or "Central Bank" if you wish) to maintain the exchange rate within the narrow range observed. In the event of a mass flight into $USD LL is more likely to simply close the Lindex.

Then you look at eBay to discover the actual rate.

[randolfe_]

atimesa

How is that technically incorrect? If they close the Lindex that is simply a form of capital controls. The real-rate will still change even if Linden attempts to control the nominal-rate, just like happens in the real-world in currency peg regimes.

That inflation has to burn off somewhere; there's no free lunch. In your scenario it burns off through the private exchanges and eBay, where the real-rate will drive the currency devaluation. Even if Linden shuts down the private exchanges somehow, then they'll simply succeed in destroying the purchasing-power-parity of the L$.

There's no free lunch.

[Awaken Yoshikwa]

I sure would like to see some of the worlds created by all these experts who say second life is dying. If they know so much, how come they don't own a virtual world, that is better.

Or is is that they make money criticizing people who actually do something.

Awaken Yoshikawa