New World Notes

Second Life Gachas' Huge Resale Market Makes Them Much More Likely to Be Regulated as Gambling, Says Legal Expert

Pictured: Gacha resale items listed on the official SL Marketplace at prices between USD $1037.50 and $5165 worth of Linden Dollars.

Reader "Gloom" makes an important point, commenting on last week's post about Second Life gachas being a type of gambling. Typically, it only costs the Linden Dollar equivalent of pocket change to play them -- but that's only part of the story:

Sure you can argue it's just pennies... but people easily drop hundreds of real life money into trying to get gacha sets. Then they turn around and take something that was a L$25 pull - to mark it up 100x the original cost on the Marketplace (I have seen multiple "rare" items going at L$2000 easily from a L$25 gacha). Then it becomes a cut-throat market. 

In fact, the SL Marketplace carries gacha resale items priced as high as thousands of US dollars. (See screencap in this post.)

Vaki, the longtime Second Life user and real life attorney that I cited in last week's post on gachas, tells me that this huge resale market for Gacha items will very much play into any legal determination of whether SL Gachas are defined as gambling by the many jurisdictions which outlaw or regulate the practice:

Expect a Real Life Crackdown on Second Life Gachas, Says Expert Lawyer

Loot boxes in videogames are considered gambling and therefore illegal in some countries, and regulated in many other jurisdictions. But does that have anything to do with user-created gachas in Second Life? Extremely popular within the SL community, they are a vending machine game of chance to win valuable virtual goods. Should we expect a crackdown on them at some point?

In a word, yes.

"Gacha games/loot boxes/etc. are gambling" says Vaki, a longtime Second Life user who is also a real life attorney specializing in privacy and internet issues; she's even represented SL users in this field. "And they're starting to slowly be regulated as such. Best way to see this is in Chinese games like Genshin Impact, where gacha functionalities are regulated and providers are required to display the actual percentage of likelihood to receive each reward."

While it remains an open question whether SL-based gachas in particular are considered gambling, Second Life creators of gachas, along with Linden Lab itself, should prepare for regulations around them:

Why Understanding Virtual World Economies Is Important For Crafting Real World Policies Today

Some social media readers were skeptical over last week's post highlighting Linden Lab veteran Gene Yoon's policy paper on virtual currency addressed to Secretary of the Treasury Janet Yellen. One reader snarkily suggested that that amounted to saying, "I was responsible for managing the currency used as commodity for pixel furries to use at strip clubs on a platform called Second Life".

While amusing, this snark misses some import history of Second Life, and virtual worlds in general -- especially now. 

As Gene puts it: 

"In a time where cryptocurrency has gone from zero value to almost a trillion dollars in the space of a dozen years, one would hope that people would understand that digital assets are real assets. Second Life was a truly remarkable window into the future, and the management of its economy was in fact a fantastic early look into the promise and perils of digital currency.

"Sometimes I think that the people who used SL the most are in some ways the least able to see just how remarkable it was. Perhaps familiarity breeds contempt. But as William Gibson said, the future is unevenly distributed, and if you were lucky enough to be using SL in the mid-aughts, you got a preview into many aspects of online life today. I'll always be proud of my work in SL and all that my colleagues and the community taught me. I learned at least as much if not more from Linden Lab than I did anywhere else, and I'm grateful for that."

All of that seems obviously true for me -- but then again, I'm thinking back to ancient history (by which I mean 2004):

Second Life Search & Shopping Has Been Broken for Years (Comments of the Week)

Great comment thread on Whiskey Monday's excellent and helpful rant last week, on all the frustrations customers take on when trying to shop in Second Life. Some of these, such as allowing content creators to use non-standard symbols in their store listings, even though that utterly frustrates SL's search function, could have been fixed years ago. 

"What's sad is that these problems have been an issue for YEARS, ever since I joined SL and probably from before too," as longtime reader CronoCloud Creeggan put it. "I generally give up at the 'item is a gacha' point."

Some of the problems with SL shopping could be addressed the store owners' themselves. Speaking of which, reader Mondy has a gripe around brand offers for their groups:

Second Life Brands: Here’s Why It’s So Hard to Give You Linden Dollars -- Plus Three Ways to Make it Much Easier (Guest Post)

Whiskey Monday is an acclaimed SL artist; follow her on Twitter @Whiskey_Day 

Dear Makers of Amazing Things in Second Life,

Let me start by saying: I LOVE YOU. I would not be in Second Life without you. I could not do what I do without your inventive, beautiful, well-crafted creations. Thank you for all that you do. I enjoy shopping for and collecting the imaginative items you sell. I want to support your work! 

When I can find you. And when I finally find your store, if I can find the item I’m searching for, even better. Because it’s not that simple, is it? Many of you make it tough to shop in your store. 

Please, please, please – I’m begging you – make it easier to give you my money. 

I keep a notebook of cool things I see, and who created them. If I’m wandering a sim and see a nice plant, I don’t want to leave right that moment to go buy it. So, I inspect it, note the creator (for our purposes here, let’s call the item maker SuperStore69), and then carry on exploring. 

Later, after I’ve been abused over the phone by yet another client who thinks the universe revolves around them (off you fuck, Chad), I want some retail therapy. I flip open my SL notebook and see my note about that plant at SuperStore69 and that’s just the ticket! What could make me feel better? Gimme plant.

Second Life Search is shitty, but it’s still where we start. I open Search in my viewer and look up SuperStore69. Nothing. Nada. Zip. But I want the plant. So I open SL Marketplace in my browser, and I type in SuperStore69. In this case, YAY, there they are! But no plant. 

So I click the link for the in-world Store...

Watch: This Bento-Based Hoverboard With Sick Maneuvers is Seriously The Coolest Item I've Seen in Second Life for Some Time

Maybe I'm jaded or more recently out of the loop, but this hoverboard by Val'More using the latest Bento-based avatar skeleton tech is among the most eye-popping pieces of Second Life content I've seen in some time. I reached out to Val'More about how they created it and its amazing flip tricks, and haven't heard back. But if you want to check it out first-hand now, it's on sale in the Engine Room, a steampunk-themed shopping bazaar that's about as impressive: Click here to teleport.

Catwa Head Mob Crush Perfectly Encapsulates Current State of Second Life (Comments of the Week)

Photo of Catwa sale mob crush by SL blogger Kirsten Corleone; large version is not worksafe.

The L$1 sale of Catwa avatar heads caused the Marketplace website to crash due to heavy demand, provoking Linden Lab to remove the item from the store, and instead, make it available in-world on several sims... which also overloaded with head-hungry shoppers (see pic at right). All this happened while Linden Lab advertised a search for an engineer who could help craft the virtual world's future -- and that irony was not lost on some New World Notes readers:

Crashing Marketplace over a L$1 Mesh head is cause to weep for all of the [SL users] who have taken over Your World, Your Imagination. Not having that mesh head is the first step in having a head of your own. Stop the madness.

-- Clara Seller 

I think Clara's arguing as others have, that mesh has made Second Life a consumer-focused world. To be sure, there have always been sim-crashing shopping crazes, but in older times, there would also be massively popular arts and culture events across the virtual world at the same time -- but now those are far and few.

The laggy in-world mob crash also shows the limits of the Amazon cloud migration's ability to improve performance (though it definitely has improved) and points to the fundamental problems with legacy code:

Linden Lab Bought the Web-Based Marketplace for Second Life Because Actually Shopping in SL is Such a Laggy Mess (Comment of the Week)

Good conversation on the SL Marketplace and the argument that it helped "kill" Second Life by becoming an Amazon-like web giant that crushed in-world stores -- including this comment from oldbie insider Flipper PA:

Disclaimer: I was the founder and coder of SLBoutique.com, one of the original web-based SL marketplaces. I eventually sold it to an in-world company, that in turn, sold it to Linden Lab to become part of the current SL Marketplace.

Some of the impetus behind the original marketplaces (SLExchange, SecondServer, and SLBoutique) was to counteract the "scourge" of in-world malls. There were many complaints in the early days of SL about in-world shopping areas (and clubs) creating massive lag, being eye sores, and generally not being aesthetically pleasing. Resources were especially precious back then, and malls with every box set to be a light source with scripts in them could bring a sim to a crawl. Someone with a 512 square meter plot could tank and entire sim - and not maliciously, just with a badly built shop.

I also wasn't aware that anything had "killed" SL. I haven't been an active resident in years, but it still seems to be quite a vibrant world to me, unlike Multiverse, Blue Mars, and Entropia. Second Life has succeeded where very few have: Second Life is coming up on being operational for TWO DECADES. That's pretty incredible.

To his last point, it is pretty incredible that Second Life has been operational for nearly 20 years, and "killed" is fairly hyperbolic. (Unless we more narrowly mean killed as in "killed any prospect at substantially growing the userbase".)

As for the in-world shopping experience being laggy and an eyesore (which is usually the case), I think that also points to serious design/community management failures on Linden Lab's part:

Second Life's Web-Based Marketplace Hurt Second Life's Community Like Amazon Hurt Small Town Stores (Comment of the Week)

What went wrong with Second Life? Bryan Ogden has an intriguing take in that post of the same name last week:

The thing that killed SL IMHO wasn't a specific technical feature... It was web-based shopping for stuff. And point-to-point teleportation. It was an attempt to make SL convenient and consumer friendly.

Why? When I first got to SL it was mostly new adopters and mall-based shopping - in order to find new content you had to move an avatar in the world.

I built a theme-based store and a community formed around the items I sold. For a time I was in the top sales categories. I advertised using the in-world ad system.

But then the entire ecosystem and economics changed from immersive in-world participation -- to buying stuff on the web devoid of community, or an engagement with creators.

Bryan relates what happened next to what's happened when small local businesses in the real world were forced to compete with Internet-based retail giants:

Top Second Life Creator is Importing His Avatars into VRChat -- And Successfully Selling Them for 10x the SL Price

What you’re looking at above may be the first sign of a larger trend: This furry avatar for VRChat is now selling on Gumroad for $40. That’s not surprising, given VRChat’s fast-growing userbase. 

What is perhaps surprising is that the very same avatar is selling in Second Life for a tenth of the price. That’s because “Krample”, who has been an SL creator for years (listed in the SL Marketplace as Orange Nova Avatars), is now finding far more success selling his avatar content to the VRChat market.

“I've been making content in Second Life for the past decade or so,” Krample told me last month, “but it's increasingly brutal to be working in an engine that's just so... old. Especially ever since I got a day job working in Unreal, because then I get to have a daily reminder about how much better things could be!”

He declines to discuss his specific day job for the record, but suffice it to say that if you've watched the Super Bowl recently, you've probably seen the visual effects he helped create. 

“So I've just started to port my avatars over to VRChat, as it's a much more modern engine,” he continued. “It helps a lot that people in VRC seem to be willing to pay far more reasonable amounts for the same product, the VRC version of the same avatar costs about ten times as much. Which may sound obscene, but I am just following market rates.”

As evidence of that, he shows me a recent screengrab of other VRChat avatars on Gumroad (below) priced roughly the same.

OK, but how are his VRChat sales doing?