Anshe reaches $1 Million

(c) Anshe Chung According to a press release issued today, Anshe Chung’s net worth (achieved through profits made entirely within a virtual world) have just reached the 1 Million US Dollar mark.

Blimey!

Limbering up for the formal press conference on Tuesday, Anshe dropped into TerraNova’s multiversal-uber-plex for an exclusive interview.

TN (RR): How long do you think the SL economy can sustain the level of growth that it has achieved thus far?

Anshe: I believe the real growth of SL economy will be sustained for very long time. At least until one strong competitor arrives, which I think is not likely soon. However, the "explosive growth" with 1.5 million accounts is a little bit of a misleading figure. Our own internal estimate of number of active paying users in SL agrees with Raph's estimate of about 100K. It seems the real growth of SL is about 100% every 6 months, which is still amazing. One must understand that people, once they are really immersed in Second Life and join those who are regular users, don't tend to get bored or to drop out, even not after years of use.  This is fundamentally different from MMORPGs. While 90% of those who try SL don't understand it and drop out before they get immersed, those who do stay seem to stay forever. We really see the birth of one new medium, not simply yet another game that will go away.

TN (RR): Is SL now a closed shop where new people really only have the option of being customers?

Anshe: Definitely not. There are still plenty of opportunities. If you can innovate you can still get rich. You need do careful market research to find something not everybody else already does though, keeping in mind that once enough people compete at the same thing there is a price race to the bottom - and the "bottom" price in SL is set by freelancers in Indonesia and players who do things for free and for fun. Innovation and creativity however rule the Metaverse :-)

TN (RR): Was the business week cover actually good for your business?

Anshe: It was definitely good for Second Life and Rob Hof did an excellent job in the article explaing to people what Second Life really is. I have been very open and not hidden my business model or success story from the public, because I have consider it the right thing to do to accelerate the change and show people the opportunity :-)

TN (RR): You have gone for themed areas and language areas, are there Anshe communities within SL now it might be argued that creating sub-groups is bad for the overall community how do you think it helps?

Anshe: Diversity and choice makes places more interesting. Some communities, especially the German SL community, we have also grow directly by draw in people from outside.


Comments on Anshe reaches $1 Million:

Matt Mihaly says:

Chung wrote in her press release:

Anshe Chung has become the first online personality to achieve a net worth exceeding one million US dollars from profits entirely earned inside a virtual world.

I wonder what Brock Pierce would say about that claim.

--matt

Posted Nov 26, 2006 12:36:23 PM | link

Ren Reynolds says:

@ Matt: I think the distinction might be that Anshe is a 'personality' that exists only in 'a' virtual world, whereas Brock, so I'm given to understand, has a very off-line very physical (as opposed to just virtual) personality.

Though I think you general point is well taken, I'm sure IGE have made much more than $1M from in-world profits.

The questions of whether Brock or Anshe 'contribute' more to online culture though is one that might open some old debates.

Posted Nov 26, 2006 12:49:02 PM | link

Mark Wallace says:

It actually looks like Brock and Anshe are talking about different things. Brock has certainly earned tons of money _trading_ virtual assets. But what Anshe's press release talks about is the fact that her own virtual assets are worth US$1mil+.

From the release: "This estimate only includes the valuation of the avatar Anshe Chung's virtual assets at current market rates. It does not include the real world assets of Anshe Chung Studios."

Posted Nov 26, 2006 2:23:15 PM | link

Ren Reynolds says:

Mark Wallace > Brock has certainly earned tons of money _trading_ virtual assets. But what Anshe's press release talks about is the fact that her own virtual assets are worth US$1mil+.

Good point. Brock and others have stated publicly that IGE does not own any in-world assets they simply facilitate trade between individuals.

Posted Nov 26, 2006 2:38:58 PM | link

Daniel Speed says:

I'm trying to work out if there's actually some irony in this:

It seems that in part, at least, the achievement is earning goods of high value in-game, which have value due to RMT, but buying them would not have been an achievement.

Will we congratulate the first eccentric billionaire who wants to one-up this by buying 10 million dollars worth of virtual property, or will we admit that engaging in RMT reduces the value of accomplishments in a virtual world setting?

Congratulations though, I guess this is the first person to hit level 60 on Second Life ;)

Posted Nov 26, 2006 4:03:36 PM | link

Matt Mihaly says:

Say, here's a question: Given that the land that apparently constitutes most of her in-game wealth has no resale value (if I understand how renting land in SL works at least), what does this mean for her net worth? The land should actually be counted as a liability against her net worth it seems to me. Perhaps someone with more knowledge of the ins and outs of SL's economy could comment on this?

--matt

Posted Nov 26, 2006 4:09:27 PM | link

Mark Wallace says:

@Daniel - Earning is different than buying. Anshe started out with very few assets of any kind, certainly nothing near US$1m, either virtually or in real life. The thing about SL is, with no native game mechanic, there is no intrinsic "value of accomplishment" (as you could say there is in WoW, for instance, gauged by level and xp). Earning your way into $1m dollars of physical real estate would be no different from what Anshe has done; that too takes its value solely from the effects of "RMT."

@Matt - Same goes here. The resale value of Anshe's assets is based not on some arbitrary value set in a piece of code somewhere, but on a very active market for those assets. Exactly the same condition that prevails in the real world. I'm not clear on how you figure SL land has no resale value.

Posted Nov 26, 2006 4:25:24 PM | link

Ren Reynolds says:

Daniel > Will we congratulate the first eccentric billionaire who wants to one-up this by buying 10 million dollars worth of virtual property, or will we admit that engaging in RMT reduces the value of accomplishments in a virtual world setting?

Neither. If you just turned up in SL with $10m and bought land, well, this would be interesting and if you used it for something innovative then we might congratulate you, indeed if it were a mega-property speculation it would be interesting. I think the point here is that the money that is held in land value was earned in-world, which is a slightly different take.

I think that talking about levels and RMT diminishing things conflates MMOs with things like SL and There. There are many valid comparisons but this notion of accumulated value I don't think is one.

Posted Nov 26, 2006 4:28:26 PM | link

Matt Mihaly says:

Mark Wallace wrote:

@Matt - Same goes here. The resale value of Anshe's assets is based not on some arbitrary value set in a piece of code somewhere, but on a very active market for those assets. Exactly the same condition that prevails in the real world. I'm not clear on how you figure SL land has no resale value.

Well, again, I'm not super-familiar with how the land leasing works in SL, and some cursory research on SL's site hasn't helped. I posted in the (quite possibly incorrect) belief that users in SL don't sell land to each other, and that it's only available for rent from Linden. I'm guessing from your response that my assumption is incorrect?

--matt

Posted Nov 26, 2006 4:39:20 PM | link

Ren Reynolds says:

@ Matt - I hate analogies for virtual world things. But I think it works like this: think of Linden as the Freeholder and land ‘owners’ as Leaseholders (if you have those concepts in the US), land owners can rent or sell their freehold to others, but even if they own an island they cannot demand that Linden give them the server. To put it another way, what is owned is a limited right to use.

Posted Nov 26, 2006 4:50:19 PM | link

Mark Wallace says:

The Linden Lab site is definitely confusing.

As Ren says, what happens when you "buy" land (which should really be "land", I guess) is that you first pay an initial purchase price for it, and then pay a monthly fee to rent a portion of LL's server resources. New land is bought from Linden Lab, but once it's on the market, residents can and do sell it to each other every day. Some parcels are even flipped several times in a day. So no, you don't actually own the server, you own the right to a resource (CPU cycles). That right, however, has seen a very active market grow up around it.

Posted Nov 26, 2006 4:58:07 PM | link

says:

I respectfully disagree, Ren.

If we look at much of the press about Second Life, one of the most talked about things is the ability of players to make money in it as a virtual world. Making "real" money has pretty much been enshrined as the official meta-game of Second Life.

What's really the difference between achieving something difficult in a "game" world (rare item, level 60) and a "virtual" world (1 million dollars of in-game assets)? Is it really that different because someone designed some easy ways in which people could do it through grinding, which we could equate to jobs if we were feeling adventurous?

Games are Worlds, but Worlds are not Games? Worlds do not have Games?
I think it's perfectly reasonable to see business and profit making within a virtual world as a game.

On that basis, if we're going to celebrate an achievement in a virtual world on the basis that it was achieved solely within that virtual world and without out of game assets, I think that we have to conceive of the possibility that the same applies to achievements within Game Worlds.

This press release, in some ways, reminds me exactly of looking at a level number in a game. It's an artificial value, picked to be a nice round number, that announces the success of the person behind it within that world.

At the very least, I think it's worth raising these questions here and thinking about them, even if you disagree. I also think it's strange to treat games as virtual worlds most of the time, but to grant special status to an achievement in a world that isn't a game, purely because it's not a game, without considering it carefully first. Where does the 'intrinsic "value of accomplishment"' come from in games, and can we immediately discount it as different, or is that premature?

Posted Nov 26, 2006 5:40:26 PM | link

Daniel Speed says:

Oops. My name disappeared from the post. That was me.

Posted Nov 26, 2006 5:41:31 PM | link

Matt Mihaly says:

Ahh, thanks for the clarification, Ren and Mark. If there's a resale market, then it certainly counts towards net worth.

Posted Nov 26, 2006 6:52:08 PM | link

Thomas Malaby says:

@Daniel: I share your view that the forms of value that accumulate in both SL and places like WoW are not essentially different. [Warning! Shameless promotion alert!] My article in this April's Games & Culture explores this point extensively, and also includes reference to my work on the euro, another virtual currency ;-).

Posted Nov 26, 2006 8:57:24 PM | link

Thomas Malaby says:

(Sorry for the double post.)

The key difference, of course, is the issue of scarcity in a place like WoW vs. SL. In WoW, that scarcity is largely imposed (although we all know how hard it is to find a truly great tank!).

Posted Nov 26, 2006 9:01:19 PM | link

Steven "PlayNoEvil" Davis says:

Which is bigger news, Ashe has a net worth of $1 million or a Chinese student in Japan has remitted over $1 million to China (his family?) and has earned over $1.2 milliion in real money?

http://www.playnoevil.com/serendipity/index.php?/archives/978-Chinese-Student-earns-1.29-Million-in-RMT-Gets-Arrested.html

http://mdn.mainichi-msn.co.jp/national/news/20061123p2a00m0na023000c.html

Cash beats "net worth" in my book.

Is Wang Yue Si going to get a Business Week cover?

Posted Nov 26, 2006 10:57:37 PM | link

Endie says:

Steve is, of course, right. Not least since that student actually realised the proceeds of his activities. Anshe's book worth is never worth a million, since, as she sold it, the marginal value would plummet.

Saying "I have 1000 units of land. I could sell one for 1000 dollars, therefore I am a millionaire" is nonsense if you could only sell a dozen at that price. After a certain point, the market is becoming flooded, demand is beginning to be satisfied, and the remaining would-be purchasers only hav limited amount of cash. Pretty soon you're down to the "well, at 30 bucks I might as well" buyers.

Typical SL: terribly fun story that gullible journalists will parrot ad nauseam, but all puff and hot air from someone playing the true SL meta-game: PR.

Posted Nov 27, 2006 3:56:46 AM | link

Ren Reynolds says:


Thomas @Daniel: I share your view that the forms of value that accumulate in both SL and places like WoW are not essentially different

I wonder if there is any 'essential' difference between an attribution of human value to any two things. Scoring a goal, getting a round under par, making a mint on the stock exchange, essentially they are achievements we value. But essential difference does not seem that interesting.

I agree that the Million Dollar mark is arbitrary, thus in that respect there is no difference between a Million Dollars and lvl 60. But that’s not the same as saying that we should treat them the same, unless that is you would say that if I win a game of checkers with the person sat next to me right now I should get the same adulation as the winner of the Olympic gold medal for the marathon. The fact of the contingency of the goal does not equalise the social value we attribute to these things, there is no essentialist argument about this is more a matter of established social practice.


Daniel > or will we admit that engaging in RMT reduces the value of accomplishments in a virtual world setting?

Still don’t see how this argument operates over all virtual worlds. I agree with you in respect of MMOs where we are talking about the value of having a lvl60 character – though we might argue about whether that does have any value to be reduced, but that’s another argument. But the other case is the one of Anshe. What is the argument here? How would RMT diminish the achievement, without it the achievement would not exist. We might argue that if she had a larger start up capital then the profit would be less of an achievement, and I’d agree there we don’t treat a billionaire making another million the same as we do someone that starts off with meagre funds, as Anshe did, but again that seems to be a different argument.

Daniel > If we look at much of the press about Second Life, one of the most talked about things is the ability of players to make money in it as a virtual world. Making "real" money has pretty much been enshrined as the official meta-game of Second Life.

I don’t partially want to get into a magic circle argument here as I largely agree with Thomas’s notion of games as practices with related contingencies. But I think that the use of game is still useful to distinguish some activities from others in some circumstances. So in the above, I would suggest that making money is not a meta-game of Second Life it and economic use, ‘meta’ or ‘game’ don’t come into it, there is no game there. Meta-games in SL include things like collecting Linden note cards. I’m not sure how I’d describe Copybot.

I agree that these are interesting issues to discuss but it seems to me that a lot of things are being conflated and I’m not sure what it is people are getting at.

Posted Nov 27, 2006 6:23:18 AM | link

Flatboy says:

Anshe is worth 1M dollars in just the same way Donald Trump is worth xM dollars.
Yes, if she would sell all her assets at once she would never get full price for all of them but then again neither would mr. Trump.
In fact I belive it was mr. Trump himself that once said "It's not just about the money but it's a good way to keep score".
As far as I'm concerned there is no difference between Anshe's achievement and that of others worth a million bucks.

Posted Nov 27, 2006 6:43:51 AM | link

Thomas Malaby says:

Agreed, Ren. The fact that these accumulated values are ontologically on a par with each other is not cause enough to elide other differences we may be interested in (and it certainly doesn't make any two difficult achievements across virtual worlds equivalent in other ways!). I would say that WoW (and similar) is a game because it has foundational game objectives. In this sense it is contrived (not in the dismissive sense!). SL, by contrast, is importantly game-like, in the ways it leverages the same game-derived sources of contingency, but without the contrivance of a set of foundational metrics.

Posted Nov 27, 2006 8:48:44 AM | link

Ren Reynolds says:

@ Thomas - 99% agreed.

Which 'gamed-derived sources of contingency' are you thinking of? The technical affordances that SL has certainly come from game tech (amongst other sources) but the business models I would suggest come from capitalist economics. Or were you thinking of something else?

Posted Nov 27, 2006 10:59:33 AM | link

Thomas Malaby says:

I was thinking of the technical affordances, including most obviously the avatar-based interface (movement and camera control in particular -- this would be performative contingency), but also the contingent environmental features, such as water effects, weather, and day/night (this would be stochastic contingency -- we would also want to include lag :-)). Additionally, the avatar-to-avatar interaction incorporates not only the performative contingencies of acting, but also the social contingencies generated just by having others around. This part is not unique to games, of course, but still draws heavily on previous game iterations of interaction. There's more to say, too, about the nature of objects (content in general) in SL as owing quite a bit to game development assumptions, but I've written about that (elsewhere ;-). Yes, the economics is quite a bit different, necessarily (not the same kind of imposed scarcity), and all goes back to a conception of property rights.

Posted Nov 27, 2006 11:20:46 AM | link

Andrew Burton, aka Jarod Godel says:

Anshe> At least until one strong competitor arrives,
Anshe> which I think is not likely soon.

I really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really hope she's wrong.

That's like saying, "AOL is a great way to get online, so long as there's no alternative, and I don't think there are any."

Posted Nov 27, 2006 2:52:08 PM | link

Ren Reynolds says:

Andrew Burton > That's like saying, "AOL is a great way to get online, so long as there's no alternative, and I don't think there are any."

Tried There.com lately?

Posted Nov 27, 2006 3:16:21 PM | link

Jerry Paffendorf says:

Just saw the CNNMoney.com story on this (posted to the Legal Pad blog).

There are a lot of comments there that range from:

"it is a bit of a stretch .. you (or CNN) must have some vested finanical interest in this company with the dirth[sic] of articles that you print about them."

to

"I think that Second Life is destined to become part of the Google Empire..."

to

"Just FYI, the title of your blog or whatever "Anshe Chung: First Virtual Millionaire" is misleading. She isnt the FIRST per se. Companies like IGE and its founder would be the "first virtual millionaire"."

to

"you guys are all crazy"

to

"I am amused at the negative comments above - "ridiculous", "waste of time", etc. Clearly these folks don't have a clue about SecondLife.

Personally, I find it fascinating that someone had the vision to create such a place and attract over 1 million subscribers.

Who knows what new technologies and opportunities will be spawned from such creative thinking."

Sounds just like here :). It's in the air.

Posted Nov 27, 2006 5:35:33 PM | link

Andy Havens says:

I think there are a couple fundamentals that are either not being fully addressed here, or at least glossed over.

1. As far as the magic circle is concerned, in SL, there is no "RMT." Real economics are explicit in the rules, even though they are mitigated through a game-based currency. You can't go into SL and complain that "Hey! These $LD are really worth something!" It's in the drinking water. Compared to most MMOs, that's a different fish entirely. So when you compare what Anshe has done to the work of RMTers like Wang Yue Si (the Chinese student who made $1million), you first have to acknowledge that she is earning money from *within* the game, not from without; it is not a "criminal" enterprise, or at least one that bends various rules and confuses various contingencies (with a nod and a wink to Thomas).

I think this is an incredibly important distinction. Of course we talk about "The Great Game" of business in the real world, and there are all kinds of game-like analogies (sports and war are big metaphors in biz) in real life marketing. But when you have a VW where part of the system itself allows for explicit, engaged commerce... that has to be acknowledged as one of the inherent reasons why people will play... up front. Not a side thing; "Sure, I'll throw a couple-a-bucks at IGE to buy some kit." That's $$$ noise in the system. Maybe big noise, maybe bad noise. We can argue about it. In SL, the dollars are part of the system. Call making $US 1 million "hitting level 60" if you want... that's not a bad analogy. But it's a mark of a VW getting somewhere, ain't it?

2. Anshe has done this *in character.* Just look at this post! Regardless of anything else, she's all about the roleplay! I have no idea what her RL personna is like, but I "know" Anshe from all the reading I've done on her. I assume her... I've read one or two articles about the "woman behind the avie." But "she" might just be cleverly throwing us off the scent of a woman, eh? God bless her/him, Anshe is doing it all in-game. And in ONE GAME. That Wang Yue Si kid is, I assume, selling all kinds of RPG crap from all the major titles.

3. Speaking of re-selling RMT crap from all the major titles... You don't even need to play or be "in" the games to do that, do you? I mean, if you're good at really playing the boards and trade areas and eBay and what not, you don't need to know the games, the stories, the characters, etc. Again... this is standing outside the magic circle and hawking bottled water to the players. NOT THE SAME, SAYS I!

4. Also... Anshe has, as it talks about in this brief interview, provided some various "value added" service on top of "simply" buying and reselling virtual land. She has begun a kind of virtual civic overlay. The hodge-podge of architecture that crops up naturally in SL has an appeal to some folks at certain times... but it's also nice to see neighborhoods that don't look like they were designed by 5th grade acid freaks. Her monetary (level?) achievement is not just an economic and time-based one, but is based on a social and artistic understanding and playing of the game, and a commitment to same. It was not just a grind, and not just a buy-low/sell-high thing based on timing.

I'm not an unadulterated fanboy. I've never bought land from Anshe nor done any biz with her at all. I just think that when you stack up what it takes to start with almost nothing and work your way up to $1 million in an entirely new country... that's impressive.

SL is a world that many folks have poo-poohed. Many have said it wouldn't work at all. Many have lambasted the economic model. Many think it's a glorified chat room still. It's not the multiverse, no. And it's not the big, shiny ding-dong that so many in the MSM like to point at and go "Oooh" over without understanding the details.

But jeez... Can't we just give an avie some major props for being one of the first in a truly nova terra to brave the dragons, fight the nay-sayers and bring home some serious long-green?

My prim-hat (no bling) is off to you, Anshe. Rock on to $1 billion.

Posted Nov 27, 2006 6:44:24 PM | link

Matt Mihaly says:

Jerry Pappendorf wrote:

Personally, I find it fascinating that someone had the vision to create such a place and attract over 1 million subscribers.

Wait, are you talking about Second Life? Second Life doesn't even approach a million subscribers.

--matt

Posted Nov 27, 2006 9:12:25 PM | link

Urizenus says:

My educated guess is that Anshe's in game business is worth much more than the 1 million in assets that she holds. As her press release indicates, she is positioning herself as a development company, and if you think about it she has been doing development work all along -- her Dreamland continent, which covers about a tenth of Second Life is zoned into consistent architecturally themed regions, ranging from arctic to France and Germany.

In effect, she has way more experience in development work than in any of the big SL development companies and has a clearer sense of how to do it in a way that integrates the builds with the rest of SL.

The real question is this: If she were to sell out how much would the business be worth? Assuming that she stayed on to manage the operations, the business would be worth a hell of a lot more than the value of the servers that she holds. here is my guess: She could sell out today for over two million. A year from now, assuming SL does not tank, it would not surprise me in the least if someone offered her five million or more.

Posted Nov 27, 2006 9:14:10 PM | link

Urizenus says:

Matt slipped with the observation that SL doesn't have close to a million users which I agree with. I just wanted to highlight that Anshe in the interview above endorsed Raph's guestimate of 100K+ active users. The fact that Raph and Anshe converge on this number is all I need to be convinced that that is the accurate figure.

Posted Nov 27, 2006 9:18:18 PM | link

Matt Mihaly says:

Actually, it may have 100k+ active users, but my guess is that it doesn't even approach 100k subscribers (ie people subscribing to something within their service such as land 'ownership').

Posted Nov 27, 2006 9:23:44 PM | link

Urizenus says:

You would want to include renters too.

We can probably calculate the number of servers online (if that isn't published information). Anshe figures she has 10% of the servers, so that means there are around 5000 servers on the grid. If that figure still holds and if you figure a minimum rental of $200 per month on each of those, then you have a revenue flow of one million a month from server rental (not counting the initial "purchase price of somewhere between 1K and 2K each, so there is another 5 to 10 million, that has been acquired over the years). The next thing you would want to add in would be the sales of Linden Dollars.

Posted Nov 27, 2006 11:20:56 PM | link

Compi says:

Actually, Anshe worth nada, a big zero. LL owns all the assets and avatars, and SL reserves the right to simply perm ban and delete everything including your alt , at any time , without prior notice or explanation or reson whatsoever.Ofcourse, if that player manages to find buyers willing to pay real $ for the " virtual assets " , that's fine;those real $ are what Anshe worth. Go see Brag's case.

Posted Nov 28, 2006 6:56:59 PM | link

Prokofy Neva says:

I concur with the figure of 100,000-120,000 per Raph's/Anshe's/the actual website log-ons per 4 hour period. At any given moment, the actual people logged in are 10,000-15,000 or so.

I had figured that Anshe owned 15 percent of the servers 10 percent maybe only counts island and not mainland for sale; perhaps I didn't have a figure to use that accounted for secret, hidden islands.

But the most important thing about Anshe to understand is that she owns a good, solid chunk of the constant, regular log-ons -- they go to their rentals in Dreamland, and they stay for long hours, buying, creating, etc.

I think it's safe to say that more than 10 percent of the log-ons at any given moment are in Ansheland in some capacity and that's a more important figure to watch than even the servers, some of which lie fallow. She has doubled her customer list in less than 3 months.

The revenue from islands can very -- she commands top dollar, of course by getting tier fee up front. When Lindens sell land, they bill you after 30 days. They also give you 4608 m2 for $25, and give you $400 stipend in your inbox weekly; Anshe provides 4096 for $25. And she can do this because it is zoned, protected, watched, cared for, unlike Linden land.

Having carefully studied Anshe's work since I first signed on as a rank newbie realtor myself, I can say she has honestly grown by hard, hard slog work, personally watching auctions, buying and parceling and developing land, homes, malls. It's a HUGE amount of labour that few appreciate when they imagine land barons as people who just flip pancake islands and play WoW all day while their automated rentomatics kaching.

I've written more detail about *how* Anshe got to her first million here:
http://secondthoughts.typepad.com/second_thoughts/2006/11/the_anshe_chung.html

As for the cashout, my own sense right now is that the world is growing so fast, that even if Anshe were to start unloading her properties for sale now to others, probably in a week or two she could realize a goodly sum on them, the demand is there.

Posted Nov 29, 2006 1:53:44 PM | link

Allen Sligar says:

Everyone loves SL:
http://www.valleywag.com/tech/overhype/the-marketers-take-over-second-life-218177.php

Or maybe not

Especially its well connected (to the press) venture capitalists.

IMO I think SL is great, but lets be real for a moment, its monetized, and financed by a venture firm currently creating hype for the only reason VC's ever create hype.

The long term ramifacations for SL are that it'll have the same marketing/branding infux, if not more, since its not tied to a corporate parent, and same value proposition as MTV's Virtual Laguna Beach.

SL is virtual MySpace.

I like SL, I think SL could be better and could innovate and bring more people into VW's, but the reality is that SL was created for the same reasons MySpace was created. Marketing.

Posted Nov 30, 2006 12:50:57 PM | link

Andy Havens says:

@Allen:

Marketing what to whom?

Posted Nov 30, 2006 1:20:50 PM | link

Allen Sligar says:

@Andy

Thats a good question, and fair given my assertation.

If Reuters, Dell and NBC are setting up shop as early organizational adoptors. as are marketers
(http://biz.yahoo.com/prnews/061123/dcth500.html?.v=5)

One would ask why...

And the answer I would propose is that while SL currently appeals to longtail VW users, I posit that it will not be the case going forward.

Its unclear how much reach a VW will have with consumers of social networking sites, however hypothetically if an organization were given the opprotunity to lock in an early branding position in Myspace in retrospect who would have turned that down? 110m users is a very deep reach.

Organizations setting up shop in SL should be no suprise, and therefore it should be no suprise they get media hype, when media is setting up shop in your backyard you should expect a good deal of hype.

Users and people who join Myspace dont give a whit about academic discussions related to registered vs active users, they join because thats where thier friends are. And a persons social circles can and often do move from place to place on the web.

SL reaching 1m users is nice, wait until they hit 10m.....and have 1m concurrent, given the low system requirements I think thats possible

The differance between Myspace, and SL is that Myspace was developed by a marketing company, for the very specific purpose of aggregating web based consumers using the social networking mechanisim (and it took 50m user before it started getting horribly laggy and saturated with advertisements, even though its design and interface have the asthetic appeal of someone throwing oatmeal on a monitor screen) while SL was seeminly developed for different reasons (and is laggy at 90k active users).

Or was it?

Seems to me the same level of self promotion is present.

I'm not down on it, I think what those communities members do and profit from is thier own business, but if it walks, and talks and quacks like a duck, well its a duck. (or in the case of SL quite possibly a 45 year 4th grade teacher from NYC :)

There is no differance in Chung claiming to having made at least $1m in SL, through marketing "lifestyle" goods, and someone claiming to have made $1m on Myspace marketing "lifestyle" goods, except form and format.

In summary, marketing to whom, it would seem they are marketing to early adoptors, to get to ceritical mass where they can start pulling users (with that magical optimal number of 150 friends/contacts) from elsewhere.

I think a better question (at least for those organizations setting up shop and for ROI considerations) is: marketing to how many?

Allen


Posted Nov 30, 2006 3:14:01 PM | link

Andy Havens says:

@Allen: Well, we'll be disagreeing on any number of points on this one ;-)

Some folks believe that all media in which advertising plays a roll exist solely to generate advertising revenue; ie, they are all marketing media, and differ only in the senses that they assault. Radio = TV = Magazines = Newspapers = Web sites. If the model relies on ad or marketing revenue to support it (rather than direct purchase like, say, buying a book), then the content doesn't matter. If that's what you're saying, then we have disagreement number 1. Because even though I'm a marketing stud by day, it is one aspect of the media in which it is involved, but not the only flava in the salad.

Second, to start a medium or even a channel with the *desire* to build audience is fine and dandy. To do so with only that *purpose* however, is faulty marketing thinking. That is like having a product whose only attribute is "value" or "goodness" or "brand." There's no meat in the sandwich, nor bread. You can't say that MySpace was built to be a marketing matrix; it may have been built to be something that would do that as well... but you can't just say, "I'm going to have a marketing thing and let people buy it." That doesn't compute. There needs to be a product or service for people to be attracted to.

Now... the cart can come before the horse in terms of marketing folks driving traffic, sure. You can see a medium that is absent of good advertising mojo. Google did it with search results and MySpace is doing it with cheap web page building and social networking. Ad agencies did that in the 1920's with soap operas, which were originally created, written, produced and (in some cases) even acted out by ad agencies. But that doesn't mean that radio was *invented* to be an advertising matrix, nor that soap operas are absent of cultural or artistic or content meaning because they were created with "good marketing" in mind. In fact, the requirements of good marketing often go hand-in-hand with good art and other social benefits.

So... while the "purpose" of MySpace, like any service of publicly held company, is to make money for its shareholders... that's not "what it does." Same for Kellog's, Ford or Disney. Yeah, they make money... but if Disney started making cereal, they'd need to go back to the drawing board. Similar results don't mean similar character or design. I can whomp you over the head and take $50 from you, or I can sing songs to you for an hour, call it a concert, and you can give me $50. The end state is meaningless compared to what made it happen. The same holds true for comparing what Anshe did to selling frozen waffles on eBay or MySpace. They are similar in effect, perhaps, but in character? I'd say no.

Which gets into calling SL a "virtual MySpace." There are similarities of action, sure. But you might as well call MySpace a "virtual bulletin board," in which case SL is a virtual virtual bulletin board. The differences in character are so vast that the similarities in activity -- both from a user and marketing standpoint -- become, I think, minimal.

Do I "make" anything using MySpace provided tools that I can sell to other users? Is there a sense of "place" on MySpace that is unique to a page there that is not to any other Web page? Is it real-time? Are the pages "share-able?" Is there direct, real-time and surprising actions between avatars/users?

I've heard this a couple times... that SL is very "Web 2.0" I don't see it. MySpace? Yes. Sure. They are both interactive, too. Yes. And they are both very social. But being similar isn't the same as being the same.

The differences are important. Which is, again, why I think that Anshe hitting $1 million is an important milestone. It is different. We probably sold $1 million worth of cell phone service in a month off our web site back in 1999 when I was working at AirTouch. So what? Amazon probably sells $1 million worth of "digial content" every 15 minutes. iTunes sells all kinds of digital content off the web every day.

I'm not saying "better" or "worse." But I am really, really saying "different."

And I also don't think SL was created specifically as a marketing platform. Billboards were. There's an example of a medium that exists only to advertise. Are there marketing opportunities in SL? Sure. Is it getting lots of PR these days, some of it waaaaay over the top hyper-hyped? Oh, yeah. But is that its purpose?

Nope.

Its purpose is to enable furry diaspora disco gorean madness.

Posted Nov 30, 2006 5:47:15 PM | link

Bluesapphire says:

actually, based on value I would put the contracts and scalability of the likes of Millions of US, Rivers Run Red and eSheep way beyond Anshe's value.

She is still 'licensing and renting' from Linden Lab. Her business model is solely based on her current value based on the L$, which is not a 'real currency', more a token valued against time.

The sad thing, is that the blogs/users in Second Life all think she's made and has banked a 'million dollars$'. When in truth, based on her statement, she actually owes and has investors waiting for their return on the $250,000 invested recently.

Also, 50 employees? She is turning over 2.3million and supporting 50 people?! The numbers are just not adding up here. Also, her entire business is based on the 'whims and political' situation in China. I know for a fact the Second Life stream has been cut off on numerous occasions.

Back to employees for a moment, I would love to actually see all these SL business submit photos and images of their 'studios'. I have a feeling there is still a lot of hype around these statements.

Posted Dec 3, 2006 12:47:47 PM | link

Alvis Brigis says:

General Comment about SL users/subscribers/surfers etc:

It is maddening, I say, to witness the repeated circle talk re: how many actual users, accounts, what constitutes an SL user, and so forth witnessed here at TN. So much work/thought being reaccomplished over and over again. How about somebody posts and regularly updates a dynamic running tally of 1) # of SL accounts, 2) # of actual humans using those accounts, 3) # of humans using SL a) once a month, b) once a week, c) once a day, d) once an hour, e) # of hours/minutes daily. Even if it's based on educated guesses, such a link would be very helpful to reducing animosity and fostering genuine communication between the SL diffusion worshippers (I fall into that category -- not because I believe such technology is good, just that its spread is mathematically inevitable based on cascading ICT curves) and the SL growth resenters. You know, somehting to rival SL's home page stats and clarify. Such a metric would be an awesome add-on to TN. ... I know that people have blogged about these stats, but is there a running easily digestible accounting of SL users out there? ... A complex 3D web needs complex 3D web usage stats.

Posted Dec 4, 2006 7:39:25 PM | link

Matt Mihaly says:

Alvis Brigis wrote:

How about somebody posts and regularly updates a dynamic running tally of 1) # of SL accounts, 2) # of actual humans using those accounts, 3) # of humans using SL a) once a month, b) once a week, c) once a day, d) once an hour, e) # of hours/minutes daily.

It'd be nice but those numbers have to come from Linden, and Linden clearly believes it is in their interest to report only numbers that put them in the best light possible.

If Linden starts reporting useful user metrics it'll be because they don't need to pull the wool over the eyes of clueless journalists any longer.

--matt

Posted Dec 5, 2006 12:57:48 AM | link

Mike Sellers says:

Linden Labs publishes most of those stats already. They don't publish anything as silly as "# of actual humans using those accounts" (what, are they going to go door to door to find out?), and they publish only indirect economic data, not all of it terribly flattering.

I've made my issues with SL's definition of a "user" pretty clear in the past -- though their 7/14/30/60 day reporting creates a nuanced view that's difficult to question (other than "how many of those are paying users?"). But it's worth pointing out that LL publishes much more data on their users and in-world economics than does any other major virtual world -- more than any I know of at any size. Matt, does your company put up a public page that auto-updates these kinds of stats for your games?

I honestly don't think LL is doing anything to pull the wool over the eyes of clueless journalists... it's more the case that we have too many clueless journalists who can't be bothered to look behind someone else's headine, and/or who have drunk the kool-aid and become a SL partisan, perhaps as their way of showing their tech cred to their even more clueless editors and compatriots. But in this regard SL is no different from anything else from the Iraq War to Britney Spears: reporters too often report on what else has been reported, having too little time or inclination to do more than regurgitate a variation on what's already been said, even if it's not altogether accurate.

Personally, I'd love to see stats on paying users, but it's easy to understand why LL might not want to post that kind of data -- they want to protect their financial status from potential competitors. And to be honest, the only real reasons I'd want this are for curiosity (okay, just being nosey) and to validate my own models of where the industry is going.

Posted Dec 5, 2006 7:59:13 AM | link

Cael says:

The reason companies like Dell and Nike open shopfronts in SL is twofold:

1. It costs them almost nothing

2. The Linden Labs publicity department will take the announcement, pimp it to every reporter with an email address in their usual style and generate a metric shitload of (almost) free publicity saying how hip and groovy that company must be.

I want to know how much money they spend on keeping these journalists out of the "furry" and "age play" enclaves.

Posted Dec 5, 2006 9:26:29 AM | link

Ace Albion says:

Paying users is difficult to pinpoint.
You have accounts that are "premium" subscribers with a monthly fee (or quarterly, or annual). I have two of those myself.

Then you have accounts with payment info used in some way - not monthly subscribers, but accounts that maybe buy their play-money from lindex etc- some may spend more than a premium sub in doing so.

Then accounts with just payment information on file- identified via card/paypal etc. I have one of these I made to test paypal (worked for registering, can't use paypal for any buy/sell, glad I didn't change my main account to paypal without checking).

And those unverified army-of-alts anonymous tourists/terrorists. Tourorists.

The last two sectors of the population may look economically uninvolved, but there will be people paying (to be on topic) Anshe in paypal for renting a beach house or whatever, nothing that directly hits Linden Lab's coffers, but Anshe is paying them because people are paying her. So those accounts are potentially "paying" accounts the same as any subscriber, albeit indirectly. That's another point- not all of Anshe's business is in monopoly money- she takes payment in actual virtual moneybucks via paypal.

So even unverified alts might be involved- maybe people are buying more playmoney to hand to their alts to buy skin and shoes or something. I'm no economist, I don't know whether it's trickling up or down, but it is trickling.

Posted Dec 5, 2006 10:58:09 AM | link