2L's Virtual Land Sales Attract Investors, Controversy

Second Life began auctioning its virtual land for $US in December. (View player to player auctions here.) "Buying land" really means buying the right to build things on the land, and on top of that you still have to pay a maintenance rent on what you buy. Buy an entire server's worth of land, and the rent becomes $200 a month.

In January, reports embedded journalist Wagner James Au, a certain 'Fizik' won a hotly-contested auction for an entire server. The price was $1200. That's right, Fizik was willing to pay 2L $1200 plus $200 monthly in perpetuity, in order to make software objects that would live only in the virtual world.

It turns out that 'Fizik' is a marketing agency with clientele in the fashion industry. Not everyone was happy at their arrival. Read more in Au's Notes From a New World. Pick up some general discussion here.

Comments

[Richard Bartle]

1.

Looks to me like Fizik got a good deal.

I'm not sure what Linden get out of it. If $200 a month covers their costs, I guess they could open as many "islands" as people want - kinda like those companies who rent server space for textual virtual words to run on.

Oh well, it's all publicity..!

Richard

[Nick Douglas]

2.

The article's headline, "The first warning sign of encroaching capitalism and corporate influence," worries me. The laws of scale do not always apply in VW, because of the nature of online space (no distribution costs; different rules for production costs). This should keep businesses small.

As for game capitalism in general: In a Western society with limited resources, unless members form an amazingly loyal group (e.g. the Amish), they will naturally form a capitalist system.

In other words, a system of limited resources naturally tends toward capitalism. This should be expected in VWs with limited resources.

[David Stephens]

3.

If you read down further into the threads. You will see that the company in question is called:

Rivers Run Red

www.riversrunred.com

They seem to be a Innovation Marketing company based in London and Chicago

[Hamlet Linden]

4.

Thanks for the link, Ed! We just moved my
journal to an actual blogging format, so now
residents and non-residents can converse in
the forum. I'll create an entry where Terra
Nova folks and SL residents can do so now...

[Paul "Phinehas" Schwanz]

5.

Sorry for posting Off-topic, but I just wanted to send a note to the admins letting them know that the Game Dev and MUD Dev conferences are in March, not April.

Now back to our regularly scheduled programming...

--Phin

[Hunter]

6.

Richard > I'm not sure what Linden get out of it. If $200 a month covers their costs, I guess they could open as many "islands" as people want - kinda like those companies who rent server space for textual virtual words to run on.

Ah, but in this case the island is not a separate world but a piece of land within a larger shared world. What Linden gets out of this is more content/experience creators populating the world without subjecting themselves to some of the lower level frictions (earn enough linden dollars to buy space, wait for enough space to come online, win the land rush, etc). Linden isn't auctioning server space, they're auctioning storefronts and performance stages.

[greglas]

7.

Thanks Phin. My bad.

[magicback]

8.

This development in tangent to the development noted in treads on Avatar: Use and corporate sponsorship of guilds, indicates that cyber-advertising is developing fast.

I’m waiting for the next VW rock band. Wait, I’m going to start the next VW rock band. I don’t play guitar in RL, but I sure can in VWs. This is a serious experimental inquiry. Please e-mail me if you are interested.

Personally, as VW develops and as more professionals enter, I feel the lost ‘wow’, wonder and esprit de corp. The silver cord between my RL and VW self is stronger and my visualization and association in astral space is closer to physical space, such that astral space was a figment of my imagination.

Frank

[Edward Castronova]

9.

magicback> Personally, as VW develops and as more professionals enter, I feel the lost ‘wow’, wonder and esprit de corp. The silver cord between my RL and VW self is stronger and my visualization and association in astral space is closer to physical space, such that astral space was a figment of my imagination.

I agree. Something is being lost. I worry that it is irresistable and irreversible. My State of Play paper was really just the lament of a game player who sees that the playground will be replaced by a Wal-Mart eventually.

[magicback]

10.

Edward,

Your paper introduced me to prior academic papers on "play" and the concept of irrelevance as the perimeter for “play”. I never really thought of games in this manner prior to this. Your paper cemented my thought process on this area.

On the other end, my business sense thinks this may be a good initial sale, but bad long-term sale for Linden. Value of real estate is premised on permanence. What is the embedded value on the perceived permanence on VW land? Does the deed for the land required permanence of server in support of the VW land?

It’s a good initial sale because it sets the base price for the land. But I think a lease would be better than a sale. I wouldn’t want someone to sue me to keep the server up so they can maintain the permanence of their VW land.

Frank

[Unggi Yoon]

11.

In Korea, similar virtual-land Sale was launched 4 years ago by Dadaworlds.com. (While,up to now, the business model did not succeed)

http://www.dadaworlds.com/homepage/press/outer/20000828.htm#

[Richard Bartle]

12.

Hunter>Linden isn't auctioning server space, they're auctioning storefronts and performance stages.

It's not server space in the technical sense, but it seems to me that it amounts to the same thing. What are Second Life storefronts if not (in the end) server space?

Richard

[Hunter]

13.

I think the shared, contiguous nature of the world is the major difference. I believe the land parcels being auctioned are just lots, not separate shards. Maybe I misunderstood your original post but it seemed based on the assumption that Linden was auctioning separate, remote “islands,” the equivalent of selling its software as middleware.

[ren]

14.

The auction itself (see here) states:

Category: Land
Item: Island (128,128) - Parcel 001 - 65536 m2
Seller: Realestate Linden

“This auction is for a 65526 m2 parcel of land in the region Island. Auction winner will be able to re-name the island. This parcel can be viewed at Island (128,128).

Bid carefully! Please review Your Account before bidding to determine the possible effect on your monthly charge. If the additional land puts you in a higher land tier, you must be willing to pay a higher monthly charge or release other land.”

Wagner James Au / Hamlet Linden over at Notes from a New World refers to it, in his post of 19 January 2004, as an “island simulator”.

Perhaps Hamlet or Cory could clarify what _exactly_ it is that Rivers Run Red have bought?

Ren

[Hamlet Linden]

15.

> what _exactly_ it is that Rivers Run Red have
> bought?

Fizik says it was his own money he spent
in the auction, and RRR will only use part
of it for certain events/projects. Far
as what he bought-- and Cory can correct/
clarify this, if need be-- the $1200+ in
the auction secured the right to rent on a
monthly basis the server that houses the
island. But really, it's the server space
they're paying for, and not an island per
se. (I believe Fizik has the rights to
terraform the region, and could therefore,
if he wanted, get rid of the surrounding
shoreline and turn the island into a forest,
or a mountain valley, or whatever.)

Another resident just bought through
auction the rental rights to a whole region
(called a simulator) named Indigo. Unlike
Fizik's isle (now called Avalon), Indigo is
contiguous with the continent, so it's not
an island-- rather, a discrete 65K square
region that exists on a single server.

More info at:

http://secondlife.blogs.com/nwn/2004/02/mood_indigo.html

(To be continued Monday!)

[bbc]

16.

Fizik bought the right to "rent" one server worth of land in the world of Second Life. Currently, the pricing and resource allocation revolves around the idea of how much land a user "owns". To hold on to 512 m2 of land costs $5/month - and it comes with an alocation of 117 primitives (the building blocks in SL) enough to make a modest house. From there, you can own more land, and you will pay more money for it. For a full simulator, Fizik will pay $195/month (some discounts for volume) for 65536 m2 worth of land which allows 15,000 primitives.

The servers in secondlife are all connected together to form one "world" - similar to what the folks working on Wish seem to be doing to create the "ultra-massive" multi-player game. This is what Hunter is getting at - you can traverse the world, over right now some 60 servers, and never know that you have changed servers - so the idea of the server as a singular breaks down a bit - there is no seperating your server from the rest of the game world. However, as it has been pointed out - Fizik bought an island, which is kind of a middle ground - it is still part of the single world, but you can not travel there via normal means (walking, flying, vehicles) you need to teleport there. Fizik COULD limit accses to his island pretty easily, and treat it as though it was a seperate shard, but he is not - anyone can go to the island, and due to the teleport system design - its easier to get there than most places in the world. This is only the second user-owned island in SL, so it is more the exception than the rule.

Now the really important part of the whole thing is that Fizik bought the island, not Rivers Run Red. He bid on in in competition with other players. Now, if he wants to bring in some stuff from his company, thats cool - after all, they will retain IP rights (yay).

So Fizik gets a whole lot of virtual land which he can do whatever he wants on. LindenLab gets his money - and pure luck (or maybe this was the idea all along), LindenLabs also gets a pro brand/design firm to create content for them (for more than free), maybe picks up some cool press in the fashion industry.

bbc

[Hamlet Linden]

17.

Oh yeah, I created a forum on my blog for Terra Novites who wanted to talk together with Second Lifers about this topic, if they're so inclinded:

http://secondlife.blogs.com/nwn/2004/02/the_island_deba.html

[ren]

18.

Thx 4 the clarifications Hamlet & BBC.

Hamlet Linden> Fizik says it was his own money he spent in the auction, and RRR will only use part of it for certain events/projects

OK, sorry my misunderstanding – I read this (http://secondlife.com/notes/2004_01_19_archive.php?setcookie=true 19th January 2004 entry):

The next day, in Second Life's General Discussion forum, Fizik announced who he was. Or rather, "we":

"We are a London and Chicago based Innovation and Branding agency."

Occasionally using words like "revenue streams" and "real world anchor points", Fizik began describing the plans he and his colleagues had in mind. "We are commercial-based, but we are fans and active participants. We will be supporting a charity and promoting good causes. We will need help."

Help to do what, now?

And so Fizik described an island that would be divided into regions, some promoting culture, but one promoting commerce. (In-world, and out.) Second Life residents would be invited as collaborators into the project, but creators from the real world would be showing off their work on the island, too.

Like who?

"One of Europe's top fashion designers,"…

As meaning that the ‘we’ was saying that Fizik bought the ‘island’ on behalf of RRR.

ren

[Cory Ondrejka]

19.

magicback> I’m waiting for the next VW rock band.

LOL . . . we had a Linden band in Second Life for a while. Since the audio system allows you to sync up multiple audio streams on the client, it was easy to build instruments that played various different samples and then, through practice, get it so that we could play together. It helped that a few folks were actually pretty talented musicians in real life.

[Hamlet Linden]

20.

Ren, after that forum post (in Part IV of the story) Fizik tells me in interview that he spent his own income to buy the island:

"I have made the purchase with my own money, I am, though, using the companies resources in aiding me here-- I mean artists, filmmakers, sculptures, fashion designers, etc.-- I am talking about it to my creative team, as a great new place to express themselves."

[J.]

21.

I'm only going to say this a few thousand more times.

The primary value of games is escapism.
Escapism only works when there's something to escape -to-.
That means, though the line between the real and virtual world will always remain blurry, it must never entirely blur away.
The easiest way to blur the line is to use real-life money.

[Mark F]

22.

J>The primary value of games is escapism
>That means, though the line between the real
> and virtual world will always remain
>blurry, it must never entirely blur away.

>The easiest way to blur the line is to use
>real-life money.

I think there's money to be made and spent with any "game". In golf you have everyone from the clubhouse staff to the equipment makers to the grounds crew. You can choose how inconsequential your gameplay may be for yourself, but there's always going to be some level of commerce as more and more people are involved and more and more resources are required.

[J.]

23.

I realize it's the trend to put more and more money into the system, and in fact, it's the same for any sport or entertainment. But, ultimately, money corrupts. And in this case, we're talking about the very nature of an un-natural world.

Basically, I see this all as a slippery slope to real-life lawsuits over virtual property and virtual happenstance. We might be able to tolerate the money now, but it won't be much fun when the lawyers get involved.

[hunter]

24.

J>The primary value of games is escapism
>That means, though the line between the real
> and virtual world will always remain
>blurry, it must never entirely blur away.

>The easiest way to blur the line is to use
>real-life money.

So i'd agree that this view is most definitely held by a significant number of CURRENT MMO PLAYERS. However, the industry is struggling with how to grow the audience - let's be honest, no recent MMO game and no game on the immediate horizon has a chance of increasing the North American MMO audience by any meaningful factor. Why? Because there is still much work left to be done with game design and business model in order to attract anyone but current enthusiasts.

Someone needs to take risks and create a business model which doesn't revolve around a standard box sale + >$10 mthly subscription. Kudos to Linden (and others) for exploring these questions.

[J.]

25.

>However, the industry is struggling with how to grow the audience - let's be honest, no recent MMO game and no game on the immediate horizon has a chance of increasing the North American MMO audience by any meaningful factor. Why? Because there is still much work left to be done with game design and business model in order to attract anyone but current enthusiasts.

I'd wager that most of the on-deck MMOs are focused on design and feature improvement. But I doubt Microsoft, EA and Turbine would be developing new MMOGs if they didn't think there was growth potential. :)

No disagreement that the pool of users needs to grow. It's too in-bred for MMOGs right now. Milking the naive for cash to fund the latest cut-rate virtual chatroom isn't justifiable in my mind.

As always, though, I could be wrong. :)

[hunter]

26.

J -

not to get too far off topic but i think some of the MMO developers are hoping to steal share or encourage current subscribers to sign up for a second, third or fourth game, rather than truly grow the market.

seems like overall we agree though and have guarded hope for the industry

[Justin (Fizik) Bovington]

27.

I have kept out of the discussion on Terrnova, mainly due too, as you have all stated there are issues here of ‘Blurring’ the boundaries between one’s inworld experience and one’s Real life experiences.

Although, I would like to think, in this new era of Open Content Worlds, is this argument still valid?

Historically genre based worlds have made that distinction valid, and in real terms vital to its success: holding the ‘very fabric of that world in place’ to a set genre and a sense of ‘place’.

We are now entering a new era. By its very notion, we are moving out of ‘Closed’ content to ‘Open’ content:

Open is all about new opportunities and potential.
Closed is all about rigid parameters and subscriptions

New VW like Second Life are being under sold by being called a ‘game’. Philip Rosendale and his team have created an atmosphere of openness and have embraced some radical and exciting ideas: digital rights ownership, to name just one radical move.

At RiversRunRed we think SL is an important event for VW as Ebay was for the Internet.

Current commercial arguments are too easily linked to the incumbent genre. Also business models will not work and have no ‘real’ relevance to the likes of EQ and SW:G.

We now have three distinct genres:

Closed Content: Genre Driven Content

EQ, SW:G, Horizons, Quake, Ultima Online, Lineage, Asheron’s Call etc.

Core: escapism, a game, a story, a journey, competing
Business models: none as it is closed content, sponsorship of guilds, external business models via auction sites etc

Semi-Closed Content: Social Driven Content

There.com, SimsOnline etc.

Core: Socialising, exploration,
Business models: product licensing (McDonalds SimsOnline)

Open Content: digital self expressionists

SecondLife.com

Core: exploration, socialising, self expression, imagination
Business Models: digital rights, content creation, ... plus a lot more unexplored opportunites

The challenge at RiversRunRed is to develop new ideas and creative expression that builds on the very core of the Open World genre. We have bought an island, some would say for a lot of US$.

We are though active participants in Second Life.

Everything we are developing is based on adding tangible value to the community. We are listening to the community and making sure we develop ideas around ‘what they want’. We have included over 40+ of the regular Slers in developing the island. We have already created so far:

An apartment block
A museum: housing all the SL’s worlds interesting content.
A skyscraper that has become an inworld tourist attraction
A theatre, which will be used for upcoming inworld plays and events
Held parties and brainstorming sessions
Introduced royalty free content for people to develop their own products
Started to explore new business models for the community to make US$ from their endeavours.

And this is just the start!

The important thing here, is that we are generating new ideas from the core of the community.

We are also talking to our clients about Creative Commons. So far this has been met with enthusiasm.

We are also working with Filmmakers, Photographers, Fashion Designers, Sculptors about how they could add value to the community.

If you would like more information on all this please visit our website:

www,riversrunred.com

or for our view on Digital Rights

http://www.riversrunred.com/redpapers.php