The Future of Second Life in an Industry Transformed by VR (Comment of the Day)

Second Life proved there was a market for VR-type consumer products (at least as a successful niche), but as Facebook and other massive tech companies attempt to make virtual reality truly mass market, what's the fate of SL? Amid a very passionate discussion around that topic and Linden Lab's non-compatible follow-up, Project Sansar, Estelle Pinaar made this incisive comment:

I have to admit that I felt very uncomfortable with the Ashne Chung land hype. It was clear to me that many people would lose a lot of money. It already happened with the [SL] mainland a long time ago.

The problem with the mainland was that too many people had bought it and there was no demand, once people wanted to sell. Again, it was very obvious that this moment would come. But which company has ever told customers about a risk involved in their product? For me this is part of the market economy. If your business fails, you cannot blame anyone but yourself.

SL will not close. But SL will continue to lose customers as it has since 7 years. With the new VR technology cycle, the decline will grow rapidly, no matter what Linden Lab does. So at one point in the future the same thing that has happened to mainland owners will happen to SL land barons: There is more supply than demand. It will not be a big bang but one after another will give up, stabilizing the prizes for the remaining ones.

Again: This is the market economy. These risks were/are imminent to the product and they should be obvious to everyone, at least since the decline of mainland prizes.

Ms. Pinaar doesn't entirely blame Linden Lab for this likely fate, however:

I do believe that Rosedale and Linden Lab were convinced that SL would become such a big thing with so many hundred of millions of users that the upcoming graphic standards would be developed with SL and OpenGL in mind. Then and only then SL could have been developed with a backwards compatibility [with Sansar]. So they were not lying to investors about the opportunities. And without new VR technology and VR hype, SL could have stayed a successful niche product for many years to come...

Having worked at Linden Lab when the Anshe private land boom started, I can confirm she's right about the company's intentions: Back then, gaining hundreds of millions of users was very much part of the business plan.

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Comments

[Bert Visscher]

An interesting article. I don't know about the land prices, but the L$/USD exchange rate has certainly stabilized. There are sky high buy and sell walls at 248 and 258 L$ per USD. I wonder if they will ever come down.

While I was reading this, I found what looks to me like a typo. Shouldn't that name be Anshe Chung? There is someone by that name in SL.

[Annabelle Nichols]

The Linden mainland used to have a normal value and a healthy resale market. Minimum price for mainland was around 8 to 14 Linden Dollar per meter.

At that time Linden Lab put around 4 to 8 new sims per week on the auction to keep balance.
Suddenly demand did increase and Linden Lab started to flood the mainland auctions with 10 new sims per day. Linden Lab could see how resale value did decline, to keep the market in balance and let it absorb all the new land the normal thing for Linden Lab to do was put a hold on releasing more mainland.

Linden Lab did the opposite and deliberately kept putting more sims on the auction without caring about resale value or the resellers of mainland at the time.

Linden kept releasing mainland at the ratio of 10 sims per day for an entire year. The value for a mainland sim did plummet at the auction but Linden couldn't care because they wanted to accumulate as much tier fees as possible.

The mainland sellers dumped everything, land did have a value of 0.2 L$ per meter, not even a landbot bought it anymore.

This shows again how Linden Lab conducts business. Selling people land at 4000$ for a sim which is 15.6L$ per square meter. Then flooding the market rendering everything worthless.

Then Linden Lab: says Thanks for playing and your money.

Also worth to add is Linden Lab did let landbots run rapant on the mainland stealing people their land when they sold it by mistake. Linden knew but couldn't give a damn if their customers got their land stolen by bots. It has always been a big Fuck You towards their paying customers.

[A.J.]

"But which company has ever told customers about a risk involved in their product?"

Answer: Literally too many companies to name.

We have government agencies that are devoted to making sure companies inform consumers about risks involved with their product.

Good companies that care about doing good business and keeping customers take the time to educate their customers and design their products to work for their customers.

Please. Let's not pretend that all companies operate like LL.

[irihapeti]

@Annabelle

LL only put 4 to 8 new sims a week on auction bc that was all the server setup could handle at the time, additional capacity-wise week over week, without the whole thing falling over, completely and forever

then they got a new server farm setup and filled it up

filling it up is what happens, pretty much everywhere

+

example

if I got a server setup that can handle 100,000 simulations then thats what I will do. Fill it up. I dont put only 1,000 on it to make 1,000 of my customers happy, and then drip feed 5 a week to keep the 1,000 happy. And tell 59,000 other customers: Sorry. get in the 5 a week wait queue

if the 1,000 sim owners happy to pay me for 100,000 sims worth of capacity then ok for sure I will drip feed 5 a week. bc I already getting 100,000 sims worth of tiers from them each week

But if I arent (and I am not) and I am only getting 1000, 1005, 1010, 1015, etc then will take me 1,919 years to fill my server farm capacity. As a business this is not a plan

+

i agree with your thoughts tho on the land snapbots and the adfarm landcutters. LL where absolutely terrible in how they didnt handle that

10 a day new sims I thought could be handled pretty well (market absorption wise). 20 a day even. With robust governance regime

the mainland governance regime was non-existent. So as well was the islands "rental" business governance regime. Was a shambles from LL as well that

+

my main point is that it wasnt so much the printing that killed it I dont think. It was the lack of governance. Is the perfect nightmare tho when they both come to together

[joe]

Translation: You can't sue us. Also this was a scam all along and we do suck.

nuff said

[Resident]

Many do not know Ashne Chung was a prostitute in the very early days before private islands came to be , it was not easy this was before private animations could be brought in , She had to work with the lame default animations .

She is no different then any other residents and had it been you instead of her that got the Oppertunitys are you saying you would have turned them down ?

[irihapeti]

@joe

stuff is typically labelled a scam after the fact

the fact being that people chuck their savings and pensions into bottomless pits without doing any due diligence

due diligence: can you see the bottom of this pit ?? if not then dont chuck your money into it

[Estelle.Pienaar]

@a.j.: name me one example, please. I have not had the opportunity to invest much in my life but every single encounter with bank clerks and insurance brokers was an encounter with people who tried to trick and betray me (with the usual exception or two). You are either naive and therefore the "perfect" customer for your bank or you never had any concrete real life encounter with financial business.

[Reality Check]

If Linden Research was a legit company they would offer money back guarantees while providing refunds to unhappy customers.

[metacam oh]

SL Land economy was a giant pyramid scheme with the Lab at the top

[sweet valentine]

Change is Inevitable......enjoy what it is ...and create good memories of it...change is coming

[Linden Scam]

If Linden Research was a legit company they would now transfer all the inventory of their customers to their new platform, the stores of their customers, the scripts of their customers and the real estate businesses of their customers and provide their customers with equal value.

No instead they let a platform in which people did invest hundreds of millions of real dollars just burn to the ground hoping to get away with it.

People know this so it doesn't bode well for Linden Lab their future.

[Resident]

@ Linden Scam

Project Sansar is another project from linden lab
& it will not be the last one as they explore market potential.its not planned to replace 2ndlife but grow beside it.

So your point is mote at best & one that's been beat on for 13 yrs now but still over 26,000 regions & 50,000 longed in average. so they must be doing something right.

[Prunella]

When Linden Lab will open Sansar Beta they will not have users or content, perhaps very limited content made by their staff and some of their alphe creators.

There will not be much to see or explore. Linden Lab will need people to go in there to build everything again for them from scratch.

Linden Lab will now try to lure people with cheap land and tell people there is opportunity to do business just like they did 15 years back.

Come and build, start a store in Sansar, create content and cash our for real money. Buy land (euh make that lease land) look how much we dropped tier. Now it is only 30 Dollar per month for a sim because sims are now only WEBGL webpages that cost us 40 cent per month to host so we can charge you 30$ for them now.

When Sansar would fail Linden Lab will say to people, it was just a beta, we cancelled the product and are looking into other projects. That is why it was called Project Sansar.

What people need to understand is that these shemes by Linden involve high risk. High financial risk but also high risk of wasting time. In particular in a new tech boom market such as VR. So people should be warned about the high risks involved.

Look what Linden did do to the third party exchanges. Linden just announced, we will stop the project in August. Then all these third party providers which are run by real people that depend on these services as it is their way of making a living are put out of business just like that.

What if one of these third party currency providers has to pay his mortgage now Linden Lab destroyed his business?

So if history did show anything it is that Linden Lab cannot be trusted.

[Resident]

@ Prunella & others

Having concerns & confused feelings about linden lab and the choices it's making is natural. but guessing what they plan while ignoring what they have said shows no matter what they do you will never be happy goes to you and the rest of the billy clubbers pounding on Ebbe.

Let me give you some advice all of you with your skies fallen outlook.people can change and with the right guidance even a big company like linden lab can while exhibiting they have done just that.

think about tomorrow.wake up refreshed and forgive yourself while forgiving linden lab from past mistakes.

Tomorrow is the most important thing in life. Comes into us at midnight very clean. It's perfect when it arrives and it puts itself in our hands. It hopes we've learned something from yesterday.

[Prunella]

Resident dear, if you are a real resident instead of a Linden employee that is.

Why do you think this blog is week after week full with angry posts? Why do you think Linden Lab is getting all kinds of negative comments from people on twitter day after day?

People complaining about service, abuse reports not fixed, it rains complaints because people are not satisfied with Linden Lab period.

Resident when you do not pay your bills because you cannot afford to do that because sleazy Linden Lab fucked you over try to tell the judge in court he should think about tomorrow, wake up refreshed and forgive himself for bothering you.

You would be put in a mental institution.

Stop eating those magical mushrooms Resident they make your brain rot dear.

[irihapeti]

@metcam

or

is a online venue where we can create and mount what we create for others to see. To buy what we create from us even sometimes

or

can bid $US4,000 for a sim and then parcel it up and try sell all them parcels for $US8,000 to other people. Ya know them people who create and mount stuff for display

and then when they don't buy them parcels off us and we now out $US4,000 + $1,000 setup + $195 tiers then say: what a scam

[Prunella]

@Irihapeti

When you design an international media campaign around the fact that one of your users is making tons of cash doing this exact thing and hope to piggyback ride on this fact it is.

Also Irihapeti, it is not the ones who bought the sim at auction and parcel the sim right after to resell that got victim of this. Those people did resell with 10 to 20% profit margin. Those were land dealers who did legit business.

The Land dealers on the mainland did purchase a sim at the auction for 4000 US$ then parcel the sim in blocks and offered them for sale with a profit margin of around 15% nothing spectacular.

The victims were the actual residents who bought the parcels for 15L$ per meter or higher but when the point came those people wanted to resell their land Linden did devalue the market so much their land was worth nothing.

Land dealers or land barons as they are called did not abuse anyone, they bought and sold to make profit and that profit was a normal margin.

Very often such a dealer got an IM from a resident who wanted to sell fast, land dealers offered fair value and the person could sell instantly to free up tier.

There was a normal mainland market for land that used to be healthy. Linden Lab did flood for a year to grab as much tier as they could.

Since then mainland went south because the land dealers did hold a lot of mainland in their accounts. They had 20 sims of mainland parcels with a constant updated inventory. They only worked, the bots stole land from people and Linden Lab did allow them. The actual resellers just bought and sold to make some money.

The victims on the mainland were the normal residents who saw their money they paid go up into nothing or with a huge decline.

Mainland that is offered at very high prices is because of an interesting location and is waiting for a right buyer. Some land dealers sell cheap, other sell expensive because they sell better looking parcels which can take months to resell, then they need to cover the tier for months and include this in the sale price.

Some buy mainland parcels to rent them like Prokofy Neva has been doing for years. She did provide residents with housing for years, many residents got a decent location for a low rent. Did Prokofy do wrong to anyone all these years? No so the land dealers just trade, they only work. You can also trade land Irihapeti anyone can do this if they want.

A land scam in the real world would be when a state would offer building grounds to young families to build their house. Then people would pay 50K US$ for their land to build their family home.

Then the state would remove the forest in the area to free op more space and start offering the same parcels for 45K. Then open more space clearing more trees in the area offering parcels of the same size for 40K. Then keep doing the same 35K 30K 25K 20K 15K all the way up to 5K.

Then when family 1 wants to relocate because their kids are grown up and want to resell their land they figure they can get 3K for the land they bought for 50K

Meanwhile at the state they are eating lobsters and caviar and driving a Bentley from all the cash they collected by cutting trees.

Now that Irihapeti is a land scam like Linden Lab has done.

[irihapeti]

@Prunella

how do you equate a non-scarce resource (server space) with a scarce resource like actual RL real estate ?

seems to me that those who cry scam the loudest, wanted LL to create a artifical market where a non-scarce resource became scarce by government (LL) decree

and are still miffed that LL didnt do this for them

+

ps

i played on SL 4 times now. 2 x Premium with mainland parcels. 2 x not. This time not. I rent. I got a mainland rental at the mo from a longtime baron and am pretty happy with it. Before this I had a island estate rental. Was ok the islands but in my heart I am a mainlander, so I came home

the rent I pay now is in line with the todays going rates. So all good

when I had premiums then I got the going rate also. A Linden Home last time. A First Land the time before, and then a 512m in Cavedweller. Cost me 10,000L that Cavedweller 512m did. 2007. Was the going rate in those days. And I paid it bc I wanted my own grass parcel for my home

i couldve got a cheaper parcel up the hill in Star Scythe for 7,000L but I never wanted a rock parcel to live on. So grass cost me 3,000L more. Which I was pretty ok with paying

that by 2009 was worth only 2,000L to my new neighbour who wanted it then I was ok with that as well

but then I was never into having a parcel bc somehow it might somehow be worth zillions in some alternative future. I just wanted somewhere to make a home and put my stuff

same like I do today and have

[Prunella]

The idea is not that your 10000 Linden parcel of 512 metres becomes 300K worth. The idea is you would be able to have resold that parcel for around 8000 to 12000 Linden so you would have kept the value of your land. You did pay tier all that time which is the maintenance on the land.

By flooding Linden took you for 8000 Linden and a tiny 512 metres parcel.

8000 Linden is about 40 Dollars on you and your tiny parcel.

How about your neighbour with his club on 1/4th of a sim.

Your neighbour got 32 times your land size so if the same happened to your neighbour the club owner he got taken for 32 times 40 Dollar or 1280 real Dollars

Now we are talking because that is one guy and about a month wages for many people.

Knowing there were about 6000 mainland regions, you get the idea.

And that is just mainland.

I know about one guy who lost 500K real dollars in Linden Lab their homestead debacle.

so you and your 512 metres mainland parcel are peanuts.

Do you think people are retarded? Hm I bought land in Second Life and the day I wanted to sell my land it was worth nothing, I paid several hundred Dollars to buy that land. Do you really think those people will buy land again?

Like it has been posted 28 million real dollars went up in thin air just on mainland land.

If Linden would have given a damn about their in world economy and people their investments they would have put a hard limit of 10 L$ per meter on mainland so that anyone would be sure their land investment would have kept value. Sure mainland could have had an upmark then but people would have been clearly informed about the actual base price per meter of mainland.

So when you would have bought mainland for 16 L$ per meter you would know you paid an upmark of 6 L$ and then you could decide if that particular parcel is worth that price.

That is how a land based economy should function. Not like what took place with Linden Lab.

Stop calling it server space, facebook is worth over 100 Billion dollars and it is server space, it is even more simplistic server space compared to Second Life land

Twitter is an idiotic chat program and has a value of 10 billion real dollars

[Prunella]

@Irihapeti

When Linden Lab suddenly came up with homestead sims there were certain individuals call them investors who wanted to get in. These people bought 200 or 300 homesteads or more even in some cases to get a foot in the land market.

Linden sold homesteads at 275$ a piece.

275 x 300 = 82500 real Dollars

After two months Linden said, gee we feel we do not charge you guys enough, we feel like raising price on you from 75$ to 125$

The result was people dumped homestead sims by the thousands. The ones who has invested lost all their money just like that.

Investment does come with risk but in the case of Linden they have their ways to manipulate to exploit the risk in their advantage.

Like when you stand on the edge of a cliff and then a Linden comes to stand next to you. The Linden sneezes right in your face so you lose balance and fall from the cliff.

Then the Linden says: Whoops did I do that?

Let me write the definition of a scam for you:

A dishonest way to make money by deceiving people

[irihapeti]

for $75 we got a Openspace sim

for $125 we get a Homestead. Not the same thing

[irihapeti]

people who bought 100s of sims back in the day (2006 thru 2007) believed what LL also believed then also

that there would always be another buyer/renter

that millions and millions of people would come into the brave new world

+

by end of 2007 the parcel sale price on the islands had collapsed already

a whole lot of the early estate barons bailed out at that time

took another about 2 years for the mainland parcel price to collapse

and there wasn't another buyer to be found anywhere. Well not any that believed their virtual parcels were investments anyways

[irihapeti]

I just add also

Prokofy got mentioned earlier. Prokofy is one of the savviest people ever in SL

I read one time Prokofy's landlord philosophy. Which was: "I buy parcels that I believe I can rent. When they don't rent I get rid of them. The End"

+

is the same with the Red Hearts people. Their rentals business is flourishing. Why? same hard-headed philosophy. If it don't rent then let it go

for virtual landlords it isn't about investments returns. Is about rental receipts. Revenue

same with little black dress makers. If it don't sell then delete it. And make something that does sell. Is about receipts. Money in the till

[Estelle.Pienaar]

@Prunella

You are giving the best example about my point of people not being prudent enough.

1) Homestead prices where not consistent with other SL land product prices. They were to cheap. The market was distorted.
2) "Almost clever" people thinking: There is a market distortion. I can make a profit from it.
3) "Almost clever" people not making sure they sign a contract with LL that guarantees them the distorted prices in the future.
4) "Almost clever" people are surprised that LL realises the distortion and changes land prices.
5) "Almost clever" people screaming scam because their scam didn't work out.

[Prunella]

@Estelle

With homestead islands there were almost 10000 clever people who got rid of their sim then. This time large amounts of almost clever people will notice they got fleeced.

People talk with their wallets.

You should also not refer to the ones who did invest in homesteads back then as it was like they were trying to profit from a distortion. Pricing did seem normal.

A full sim 15000 prims 1000 US$ Buy price and 300 US$ tier

A homestead 3750 prims 250 US$ Buy price and 75 US$ tier

Where is the distortion, where is the unfair value? On top of this there is also the fact residents did have to own a full sim before they can even purchase a homestead island so again, where is the distortion to profit from with this pricing model?

So those 10000 people who dumped their homestead back then are loons who tried to profit from little poor Linden Lab and abuse distortion in the pricing model?

I did view homestead as an option Linden did provide because residents did feel to packed together on a full sim so residents received some extra space with the same prims. These new homesteads did prove to be a success, certain people did want to build new businesses based on this offer.

Land businesses provide the average person who cannot afford a sim a service and they make money by doing that. Can you blame them, is that a reason for Linden Lab to fuck them over like they did?

Do not make it sound like people were fools to believe what Linden Lab the company sold them.

It was consumer deception and fraud period.

[Estelle.Pienaar]

Ok, maybe you are right and I am too simplyfing here. You won't convince me however that it wasn't stupid to buy dozens and hundreds of Homestead sims in order to get in a virtual landmarket.

Even if the pricing looks "innocent", it was distorting the market, because people prefered the Homesteads to the regular sims for several reasons and the prize difference wasn't enough. So Linden Lab reacted.

It is the right of people to say that they are dissapointed and leave SL. But I really can't stand all these people in the forum writing long posts about LL being scammers. It's so 2007... ;)

[Prunella]

Estelle Pienaar you really need to follow an economic class before attempting to make such comments so you grasp the basics of how economy works.

Buying or selling goods and attempting to make a profit by doing that is what it is all about.

Buying a sim to subdevide or buying up fixer upper houses cheap in the real world, clean them up and resell them is about the same thing.

People have bought internet domain names to resell. Some people bought 15000 .com web domain names for 10 Dollar and sold some of these names for 4 million Dollars.

This is described as a lucrative business. Buying a mainland sim from Linden at auction for 4000 real $ and then subdeviding and reselling this sim for 4800$ is just normal business.

Linden Lab did encourage land sales and commerce, did you ever look at the Buy Land window, there is a RESELL LAND option in that window so Linden did encourage trade.

Linden did facilitate all kinds of tools to encourage trade.

Linden Dollar Currency
Land Auction System
Buy Land Window
Resell Land Option
The Covenant Aka Sales Agreement

These are all things you need to facilitate economic activity. Linden accepted the 28 million Dollar people did pay for their "game land"

You know what you can buy in the real world with 28 million Dollars?

And no it is not stupid to buy dozens and hundreds of homestead sims to get into a virtual land market, that is UNLESS LINDEN LAB GETS INVOLVED AND CHEATS.

Do some research on the internet about virtual property and you will see virtual economies are a real thing these days and a lot of money goes around in them.

In Second Life there are many companies active, these are RL companies that hold dozens, hundreds and in some cases thousands of sims to provide Second Life residents with places to live and make it affordable for them to participate in Second Life

Without these businesses the average resident would have to live on the garbage fields known as Linden mainland that is plagued by griefers and lag.

This is also not only about land, it is also about people who did invest time on the platform and put a lot of work in to build up stores or a reputation as a creator.

Why do you think Inworldz does exist? Inworldz only exists because there are so many angry Linden Lab customers. Go figure, so many pissed off clients enough to keep a competing platform running.

Did Linden Lab ever do anything in all these years trying to make these Inworldz visitors return to Second Life and get their business back?

You are dealing with adults here and not with 15 year old gamers who bought a 10$ minecraft game.

People are very well in their right to bring all this forward. Certain people will scream and make youtube videos because their 100$ phone arrived broken in the mail.

Second Life residents who paid huge amounts of real money to these Lindens should just accept their faith? We are talking about millions of real dollars here paid for land, thousands of hours invested in stores, content creation and so on.

Everybody should just keep their mouth shut so the Linden fan girls can pretend all is well in fantasy land right?

[Fanny Kardashian]

Mkay, so let me get this straight.

Anshe Chung started out as a cyber prostitute before getting famous and the Linden Lab boss was running a phonesex call center before becoming the Linden boss.

And now these two are running the show at Linden Lab.

Well I guess they have found each other.

(.)(.)

LOL

[irihapeti]

i wouldnt say fan myself exactly

as i already mention. Is my 4th time on SL. I have flounced 3 times out of SL before bc of stuff that LL did and didnt do

just went: this is not working for me right now. See you later. delete all and gone. flounce flounce !!!

bc I only got so much happiness in myself. If a situation is making me unhappy then I am gone

i love SL and the whole virtual world thing. Always have and always will. But when I am unhappy then see you later. And I maybe come back another time and see what is. Until then whatever is making me unhappy can go bite itself

+

so far this time I am pretty happy. More content I think

i think tho that is bc I am just older. I dont have such high expectations anymore of other people. Expectations about what they can do for me. Or what they should do for me according to what I want, if I am more honest with myself about how I used to be

am still pretty opinionated about most things tho

not all of my opinions are realistic or relevant even. They just seem like it to me. And I dont mind when others tell me that I am being unrealistic, or irrelevant even, in my opinions

which do change as I listen/read/learn more about other people, the stuff they do, and why they do it