Virtual Real Estate Story Resonates

I would have let this go without posting on it, but the amount of pickup has been extraordinary. Reuters reported yesterday on Second Life's virtual real estate sales. It is a pretty good survey of the last few months as well good coverage of Gaming Open Market and comments from a SL land baron. It's been picked up by /., cnn.com, usatoday.com, msnbc.com and others. The concept of virtual real estate resonates with people in a really powerful way.

Comments

[greglas]

1.

We were kind of slow on the draw in blogging this -- several TN readers have written us about the story and I've got it forwarded to me by a number of friends.

I think the primary significance of all the publicity is just that -- all the publicity. But it's good publicity for Second Life, and I'm sure it's making quite a large number of people think about virtual property for the first time, which is good too.

[Alan Stern]

2.

Woot for (more) national coverage!

[Luca Girardo]

3.

I have a question (pardon my ignorance). In the Reuters article it is written:
"Property is taxed by "The Lindens," as the overseers of Second Life are known, and Rosedale says real estate tax revenue now exceeds subscriptions for the closely held Linden Labs"

The real estate tax has to be paid in dollars ( like the private virtual island that costs $195 to maintain)? Or the estate tax is paid in Linden Dollars?

[Andrew Burton]

4.

Real dollars. The "tax" comes off, ever since 1.2, as a subscription fee. You can own no land in SL and pay a one time fee to play forever. However, when you actually buy land, two things happen. First, you pay a monthly fee ($9.95 if memory serves). Second, you pay a "tierage" fee for the amount of land you own.

Way back when, before January 2004, we were taxed in Lindens for either the amount of land we owned or the prims we had on the land (it's been a while). That all changed when they release the 1.2 version of SL. Now it's all done with real dollars.

Of course, if you make enough Lindens in-world, you can convert them to real dollars on GOM to pay your "taxes."

[Cory Ondrejka]

5.

Land use fees -- which the story refers to as "taxes" -- are in US$, although we also support using L$ to offset them. However, since the third party currency sites have a much better exchange rate, we suspect that users who want to effectively use their L$, trade them for US$ first.

To Greg's point - what I find interesting is how much broader the pickup (and traffic and trials) for this story versus every previous press hit (and we've had some pretty broad press pickup before). Is it just that virtual real estate is a simpler concept or could it be the possibility that even if you aren't going to enter a digital world, you might want to be a real estate baron?

[Alan Stern]

6.

Thanks for the explanation, Andrew. The article's use of the word "tax" (vs. "subscription fee") really threw me off as I didn't recall paying an in-game "tax" recently.

One other notable difference in the subscription options. If you only pay the one-time fee (no land), your weekly allowance (automatic in-game currency gain) is either 0 or very, VERY low.

Also, if memory serves me, there's a way to convert Linden dollars to real dollars to pay the monthly fee. I don't recall any specifics, though.

[greglas]

7.

Cory> Is it just that virtual real estate is a simpler concept or could it be the possibility that even if you aren't going to enter a digital world, you might want to be a real estate baron?

It's the former -- but I don't think it's a simpler concept. Virtual reality is old news -- most people think of headsets and gloves and think "whatever" (I think of watching VR5 voiced-over in Russian on ORT!)

I think virtual *realty*, and the sale of virtual realty for real $$$, is a concept that most people still haven't encountered before, and generally think is either intriguing or disturbing.

[greglas]

8.

This is not necessary for most readers, but I just realized that some new TN readers might not get why Cory was semi-apologetic about noting all the press on this story and I was apologetic about not noting it -- Cory writes and speaks about virtual worlds (see his paper at right) but he's also the VP of Product Development at Linden Research.

[Raph]

9.

Not to be a downer, but I suspect that the reason why the article got broader pickup is simply that it originated from Reuters, as opposed to being something from a specific paper or website. I've seen it happen a few times before when an article on MMO topics goes into syndication, and it doesn't seem to be tied to the subject matter of the article. Past ones that I can recall include one on gender crossplay that got reprinted everywhere...

[Bruce Boston]

10.

Cory> The concept of virtual real estate resonates with people in a really powerful way.

I would have to agree with Cory here. As virtual as it may be, digital real estate does seem to be a concept that Netizens 'get'. In fact, to the extent that Digital Real Estate looks like a very good basis for variable pricing plans in most MMOWs.

-bruce

[Cory Ondrejka]

11.

Raph's point about the Reuters syndication is well taken, but it doesn't explain why the trial rate generated by all this traffic has stayed close to our usual trial rates. The State of Play hit, which was also huge, generated similar web traffic but we saw a drop in trial rate.

Oops, gotta run, Philip on CNN :-) w00t!

[greglas]

12.

Raph> Not to be a downer, but I suspect that the reason why the article got broader pickup is simply that it originated from Reuters...

That's right, of course. I'm not sure if Cory meant much more by "resonance" than "lots of publicity."

It's interesting that while the story has been picked up by some big names, it hasn't trickled down to any smaller regional papers yet (as of this comment at least). Does Reuters gives first dibs to CNN & MSNBC?

Link.

[Cory Ondrejka]

13.

Actually, I meant resonance -- see previous comment re trials as a percentage of unique site visitors. In addition, another point -- which I cut off to watch Philip -- is that the behavior of the new users generated by this press hit has been significantly better than the normal new users.

So, a story on real estate generates proportionally more trials than we would have expected and those trial users have more excited to learn about and to explore SL. It may only be resonating in the sense that we've found a better way to target out messaging, but I think resonance is an appropriate term.

Greg's comment re Reuters trickle down is interesting -- I wonder if we'll see this on Yahoo, Google, &c next week.

[greglas]

14.

I was thrown off by the term a bit -- I usually think about resonance acoustically -- when I pluck my guitar string, the body of the guitar resonates at the same frequency. Definition here. I guess you're shooting for 2) "evoking an association or strong emotion."

You could interpret the visit/trial ratio in a lot of ways -- obviously the readership demographics are different (USA Today & MSNBC readers are not Wired readers -- and you say the avatar behaviors are noticably different). The changes to the splash page also might have something to do with it.

But who knows -- maybe you're right that people are just amped up about owning some virtual real estate.

[Ren]

15.

Greg >You could interpret the visit/trial ratio in a lot of ways --

Well the There stuff just happened too, so I assume that we were expecting a sudden uplift in people trying 2L.

[Raph Koster]

16.

Ah, I may have misinterpreted the "amount of pickup" phrase to mean coverage, as opposed to actual trials. Very good news on the trial numbers, congrats. :)

[Luca Girardo]

17.

Cory wrote: what I find interesting is how much broader the pickup (and traffic and trials) for this story versus every previous press hit (and we've had some pretty broad press pickup before). Is it just that virtual real estate is a simpler concept or could it be the possibility that even if you aren't going to enter a digital world, you might want to be a real estate baron?

It could be that the concept of virtual real estate is something more connected to the business world and therefore attracting more interest of established mediums like Reuters, CNN, MSNBC ... . Since the 2000 internet gold rush there is still a high interest about e-business and what is better then a positive news about an e-business like virtual real estate?

[magicback]

18.

It's good see broader press on VWs.

I think there is a confluence of interest. Here are some examples of mainstream confluence:
1. CNN have profiled both There and SL.
2. Dedicated TV channels and shows.
3. Coverage by Wall Street analysts.
4. Most financial trading desks have Reuter news service. I'm interested to see if the demographics of the new users.
5. Land is the original 'real' property.
6. Land, homes, and mortgages are well understood.
7. Virtual land, homes, and capital appreciation shouldn't be too hard to understand.

Frank

[Betsy Book]

19.

Cory wrote: "the behavior of the new users generated by this press hit has been significantly better than the normal new users."

By this you mean less griefing? Or more disposed to sign up, spend $, etc.?

How are the regulars handling the sudden immigration of Therians and others? Any culture clashes? This is going to be an interesting time in 2L's history. Buckle your seatbelts.

[Cory Ondrejka]

20.

Betsy> By this you mean less griefing? Or more disposed to sign up, spend $, etc.?

Yes. Yes and yes.

Betsy> How are the regulars handling the sudden immigration of Therians and others? Any culture clashes?

Quite well, generally. For all the competition between the worlds, the people who really want to see them work tend to get along pretty well. Our users have actually helped us write the SL:There dictionary, have posted some really helpful articles on how to do things in SL, and have been working like crazy to meet and greet new users. Little were they expecting the Reuters hit :-)!