WELL Users Buy Influential Virtual Community from Corporate Owner -- Could Second Life Users Do the Same?

After a lot of negotiation and planning which I've written much about before, a corporation founded by users of the pioneering virtual community The WELL (where I happen to host a couple conferences) have bought the conferencing system from its owner, Salon Media Group. (New York Times story here, official .pdf announcement here.) "The Well Group, Inc. consists entirely of long-time WELL users with an average tenure exceeding 20 years," as the report explains. "The purchase marks the first major online business taken private by users of the business itself."

But it's certainly not the only online community that might want to claim its ownership back from the company that owns the technical infrastructure. Specifically, Second Life and Linden Lab. A number of insiders and community members have openly voiced the idea, which roughly goes like this: Since revenue keeps slipping, and the company is adding new projects, wouldn't it be better if active Second Life users form a company of their own, and buy the world and its infrastructure from Linden Lab?

I'd say it's potentially feasible, but not right now. Here's why:

There's still a fairly good chance that Linden Lab can firm up SL's revenue base, especially if it earns a new following on Steam. And right now, the world is still earning $75 million or so a year, about $15-20 million of which (I'd estimate) is pure profit -- still quite a lot. But if gross earnings fall to $50 million a year, and all hope of growth is extinguished, I'd say Linden Lab's board would start looking for a buyer -- with an asking price of, say, $150 million. Then the second hypothetical question becomes, could the users form a corporation, WELL-style, and offer buy it? Well, for the sake of argument, let's assume there's 100,000 highly passionate SL users. That means if each invested an average of $1500 -- which is a lot less than many of them are paying Linden Lab per year in land tier -- that would be enough.

Just some very broad speculation at this point, but it's a nice scenario to think about. Add your own thoughts in Comments below.

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Comments

[Arcadia Codesmith]

At that price point, you could build a perfectly lovely virtual world from scratch with no baggage. For purpose of comparison, $150 million is over double what it cost to develop and launch World of Warcraft.

I'd be nice to preserve Second Life if and when Linden Lab abandons it, but it sounds extravagently impractical without a solid plan to turn it around and make it relevant again. And getting a coherent vision from a group of player investors may be even more extravagently impractical.

[Archangel Mortenwold]

There won't be any significant following on Steam. There's no reason to believe that Steam users, who are hardcore gamers, will flock to a non-gaming platform like Second Life.

As the revenue base dries up due to high prices, Linden Lab will eventually go bankrupt and will have to sell off its assets.

[Bucky Barkley]

Instead of putting $150 million into buying SL, one wonders what could be done with $15 million and the right OpenSim grid ...

[Ezra]

"Instead of putting $150 million into buying SL, one wonders what could be done with $15 million and the right OpenSim grid ..."

Or 1.5 million in something forward thinking and entirely new rather than OpenSim which is purposefully weighed down by feature parity with a near 10 year old mass of legacy issues.

When talking millions, especially a lot of millions, any company would be much better off building a virtual world of Second Life's DNA from scratch.

Even when talking open source and/or non-profit, I wonder if the OpenSim project was starting today, the devs behind it would go the route that they did or create something a lot more different than Second Life.

[Gaga]

Linden Labs wont bow out that easy. They are still profitable at the moment while mugs like us still meet the high charges because we have commitments in SL and LL knows it and depends on it. Steam is a red herring! LL can't even keep a small percentage of the 20,000 daily sign-up's they get now. Turning SL into a video game platform can only mean LL want out of social VW's and will happily see what we know and love die if they can make more money from WOW gamers and the like.

Rosedale said he was building a country so he could have given it a Senate of users and players (the people spending the money) to shape SL and tell LL what they want in stead of leaving such decisions to faceless mandarins in the back rooms that don't give a damn for anything but profitability. LL will probably cut it's work force to stay profitable for as long as they can while they develop there video game future so forget a buy out. Is SL even worth $50 million let alone $150 million?

[Shug Maitland]

I wonder what the governance structure of a resident owned SL would be like :) Fun to speculate but we are fundamentally a bunch of anarchists ---- "interesting"

[Gaga]

Actually, that is what I like about Opensim and the open Metaverse, it is an open source platform developed by the users so it is truly a users and players world built by them and for them. They get to decide what it will be at every level. It might not yet be ready for merchants but it sure is light years ahead of any other platform for user participation. And you can own a slide of it and shape it the way you want. No buyouts needed and it comes cheap!

[Gaga]

As for governance, the Jira kind of served as a senate where bugs and wishes got reported and voted on and ranted about (which was a good usage of user concern for an issue) but LL never took any notice of that either and now Rod has shut it down - don't want the Steam gamers to see all that, eh?

[Iggy]

User Senate? I'd have loved that. Philip could have/should have done it for his "new country."

But instead we get a CEO in a toga. No subtle message there!

[shockwave yareach]

Jira? A Senate?! It's only Senate-like feature was that nothing got accomplished there except a lot of yelling and screaming which rarely caused anything to change, minor or major.

If LL is losing business, it's LL's own fault. And they know what the cures are, even if they don't want them. They can choose -- slow death as is, or a painful fix that will keep the doors open and business going forever. Their choice. Of course we already know that LL will choose the stubborn worst-case solution though, since that is the only thing they have ever done.

Such a shame. A world of infinite possibilities, squelched by LL's greed, incompetence, and simple inability to leave people alone with their purchases.

[Arcadia Codesmith]

If I were a billionaire, I would buy Second Life and set it up with its own trust fund to cover operating expenses and future development indefinitely. That, I feel, would make it much more a world and much less a for-profit commercial enterprise with all the constraints and limitations that imposes.

[shockwave yareach]

Arcadia: You'll have to pay for replacement machines, replacement drives, electricity, AC, fibers to the backbone, small labor force to upgrade/replace gear, some Lindens to reset sims and act as the police, and a few bodies to work on improvements.

It could be done. But you'd have to charge something for the land, or like certain other places I've encountered people would take ownership of entire sims and never use them -- not an improvement.

[Remington Aries]

$75 million or so a year, about $15-20 million in profit sounds like a great deal of cash. But for a business attracting the level of publicity that second life has over the past 5 years, it really is not much to shout about. As a comparison, those amounts are about the same as a single large supermarket's turn-over in western europe. That is one store, not the company. The largest format stores take double that with ease. Also, any buyers will have to have some serious corporate level database handling skills and the infrastructure for customer support, ready to hit the ground running.