New World Notes

Analysis: What Went Wrong With Linden Lab? UPDATE: Linden CEO Mark Kingdon Responds

For the longest time, Linden Lab's health as a company seemed certain. Even after the hype wave of 2006-2007 had passed, Linden executives claimed the company was profitable, and said so as recently as last October, doing well at the height of the recession, earning it a spot among Silicon Valley's top 25 start-ups. "We're reinvesting our profits to further enhance the Second Life experience," Linden CEO Mark Kingdon told Computerworld then. "We currently have 330 employees and are actively recruiting for 70 positions over the next 4-6 months."

Eight months later, however, after some ominous hints, 30% of Linden Lab's labor force was suddenly gone.

What went wrong, and where's the company going now? I've talked to a number of inside sources on background, done a lot of research on my own, and a general picture has emerged. Perhaps ironically, no one I've talked to has pointed any blame at Second Life's internal economy, or the state of user-generated content in SL. Second Life's dedicated community of users remains strong, and the best, perhaps last hope for the company that serves it. If Linden Lab is to regain its luster, it will only be through the talent and dedication of the Residents who have made Second Life among the most remarkable and inspiring user-generated content platforms on the entire Internet.

So what brought Linden Lab to this point? I see five key factors, which are actually symptoms of a much larger, overarching problem:

How to Make Second Life Mass Market: A Destination Guide to Others Online (Not Pretty Places Probably Unpopulated)

Every day, thousands of people try Second Life, but only a fraction of them become regular returning users. There's probably a number of reasons that 95% or so of those newbies leave, but what's the main factor that keeps those few retained? In an important study from two academics from the University of Michigan, which Grace McDunnough brilliantly blogs about here, chat is the primary predictive factor. Not making money, not creating content, not exploring the world per se, but active chat -- the number of fellow Residents a new user talked with, over a longer period of time. This is probably the simplest form of user-to-user interaction in Second Life, but as it turns out, it generates the best retention rates.

The problem, as Grace goes on to point out, is the Second Life interface as it currently exists makes finding people online to chat with extremely difficult and time-consuming. (This is likely why searching the dynamic map for the green dots of online users has become the preferred workaround solution, but not an ideal one for numerous reasons.) The viewer's "Destination Guide" will take new users to beautifully created places in Second Life, but owing to the world's architecture, it's likely they will meet few if anyone there.

How to encourage new users to chat? Fortunately, there's an easy and already proven solution, and it looks like this:

Should SL Fashion Developers Follow the Real World Fashion Industry & Stop Worrying About "Content Theft"?

Second Life fashion designers and fashionistas, please put aside 15 minutes of your time, and watch this amazing TED talk by Johanna Blakley, who's Deputy Director of a media-focused think tank at the University of Southern California:

In it, Ms. Blakley notes that the real world fashion industry has little legal protection of its intellectual property. Designs can't be copyrighted, only trademarks can be enforced, and consequently, knockoffs abound. Despite -- or rather, as she suggests, because of this -- the fashion industry is on the whole extremely profitable. In fact, to judge by her chart at 12:30, the fashion industry grosses roughly twice more revenue than books, film, and music combined. (All three of which do enjoy copyright protection.) Blakley argues that the very lack of copyright and patents in fashion pushes designers to be even more innovative, creating products that are hard to duplicate, and continual new looks that keep them ahead of the curve.

This video comes to me courtesy of a Second Life fashionista named TheShadow Oh, who sent the link with an observation you've probably guessed at by now:

New World Editorial: Second Life Has a Culture the Same Way the United States Has a Culture

Does the world of Second Life have a culture? That's the question lately asked by Grace McDunnough, who notes that in a recent interview, Linden Chief Product Officer Tom Hale (T Linden in-world) said he doesn't believe there is, at least not in the singular sense:

[T]o say that there is "a" culture of Second Life is... specious. And that's because there are as many cultures in Second Life as there are groups, and there are many hundreds of thousands of groups in Second Life. There are as many cultures as there are groups of people. You can, even at a high level, say something like there is a culture around architecture. There's a culture around fashion. There's a culture around dancing and music. And there's a culture around role-play.

In the comments of a post by Dusan Writer (who was the one doing the interview), T expands on this observation to say he prefers calling Second Life an ecosystem: "We all have an important role to play in the ecosystem. Culture is far too limiting a concept."

And while I get what he's saying, I do actually think Second Life has a unifying culture. But how could that be, when as T says, there's so many disparate groups?

Well, consider the country where Second Life was conceived: The United States.

In Survey, Over 70% Mostly Run Second Life in Windowed Mode -- Does This Suggest an Augmentationist Preference?

Last week I asked New World Notes readers whether they ran their Second Life viewer in full screen mode, or windowed, so other applications can be accessed while still in SL. Here's the results from the first 360 who responded:

With 62% responding "Windowed" and 10% responding 'Mostly Windowed", we have nearly three-fourths of respondents who generally run SL in a mode where windowed multi-tasking is feasible. By contrast, only 16% responded "Fullscreen". This is of course a non-scientific sampling, but considering New World Notes' readership, it's still a pretty good cross-section of hardcore, dedicated SL users. That in mind, what do these numbers say about Second Life usage patterns?

Interpretation is bound to be contentious, but to me, this is a very interesting data point on the question of Immersionist versus Augmentationist, Henrik Bennetsen's way of describing people who prefer to enjoy SL as a fully experienced alternate reality, versus those who'd rather integrate it with other data channels and media. Almost by definition, I think it's fair to say someone who runs Second Life in windowed mode is an Augmentationist, or leaning heavily in that direction. And by that logic, only those who always run SL in fullscreen mode can be called Immersionists -- and in this survey, only represent a small percentage.

Linden Lab Launches New First Hour Experience: Feels Like Being in an Apple Store Selling Microsoft Products

After a couple years of development, Linden Lab is unveiling its revamped "first hour" user experience today. Now after new Residents create an account, they'll get an updated suite of base avatars to choose from, then get sent to two new isles accessible only to noobs and Lindens: Welcome Island and Discovery Island. The Lindens were nice enough to give me an advance look last night.

My quick take: It's a definite improvement to the existing on-ramp experience, and should improve user retention rates to some degree. As you would expect from a Linden executive team counting veterans of design-centric companies like Adobe, TiVo, and Pixar, it's a sleek and streamlined presentation. At the same time, I think it still doesn't address many of the fundamental frictions noobs have with Second Life, and the overall result is a beautiful frame added around those more vexing UI issues. Or to put it another way: It feels like walking into an Apple Store that's selling Microsoft products.

Maybe I'm being overly skeptical. Let me show some highlights from the experience, and you can judge the results for yourself:

Jesse Schell, Get Real: Accessibility, Not Reality, Is the Big Force Driving Games and Virtual Worlds Today

In a widely-discussed DICE talk last month, Carnegie Mellon University professor Jesse Schell argued that reality and gaming (including virtual worlds) are converging to a point where MMO-type game systems will shape our everyday lives. (As I told Jane McGonigal, the dystopian future he envisions is best described as "Brave New World of Warcraft".) If you haven't seen it yet, make the time this week: It's a fascinating and provocative talk. However, I believe Schell's analysis is ultimately wrong. And because he's wrong in a way that connects to where Second Life is in relation to the rest of the interactive digital market, and where it needs to go in the near future, I want to explain my thinking here.

Anyway, here's the video:

PS3 Games - E3 2010 - Guitar Hero 5

To make the case that our modern lives are becoming more game-like, Schell cites the unexpected phenomenal popularity of several recent game products, chief among them the Nintendo Wii, music games like Rock Band and Guitar Hero, and social games like FarmVille and Mafia Wars. Their success surprised the interactive industry, but Schell sees them as part of a broader trend: an overwhelming desire for real experiences. "We live in a bubble of fake bullshit," as he puts it, "and we'll do anything to get to what is real." Social games, music games, and Wii games are designed to be played with our real friends, and often incorporate real physical activity into the gaming experience. Which is what makes Schell think everyday real world activities like practicing the piano and eating will soon come embedded with game-like leveling systems.

But while that might be the case, there's a small problem with this prognostication. There's not much evidence consumers are moving in the direction Schell thinks they are.

Second Life 2.0 Analysis: Epic Win for Userbase, Competition Killer... But Not Mass Market Game Changer (Yet)

When Linden Lab CEO Mark Kingdon first shared with me his vision for what would ultimately become the Second Life 2.0 viewer nearly two years later, he said he wanted it to be "delightfully usable". For established Second Life users, it is definitely that -- sleek, intuitive, and glistening with widgets that make the user experience more inherently enjoyable. (One personal favorite shown above: your friends and groups are now displayed with their profile picture.) From my perspective, here's how it will shift the market over the year:

Winners: The existing and casual userbase of Second Life

For the 800K or so active Second Life users, 2.0 is a giant win, sure to re-energize and extend their in-world activity, while drawing in light users who log-in only occasionally. As word of the revamp spreads, a significant percent of the 12 million or so people who've tried Second Life before but left for one reason or another will return -- and a fraction of them will stay. All told, this probably means peak concurrency growing from 80,000 to 150,000 over the next twelve months, and an active user base swelling toward 1.5 million.

Losers: OpenSim, Blue Mars, other 3D virtual worlds

With new features such as interactive web on a prim and Flash support, developers are sure to pile into SL, and innovate like mad. Hardest hit by this emigration of coders will be OpenSim, the open source spinoff of Second Life, which largely remains a hacker's passion project in alpha stage with an extremely small user base. Going forward, OpenSim projects will probably be broadly appealing only inasmuch as they are architected to interoperate with Second Life. Other virtual worlds will also feel the blow: still in Beta, it's difficult to see how Blue Mars can gain momentum, and even the casual 3D chat world IMVU is likely to lose users lured into Second Life. (The same can be said of other enterprise-level virtual worlds.)

Remains to be seen: Mass market adoption

Here I must disagree with Robert Scoble and others who suggest 2.0 will help drive mass adoption of Second Life. Beta is beta, and many additions and fixes are surely coming, but the viewer as it is now, while much more intuitive than what's come before, will probably not foster viral growth anytime soon. In essence, the viewer is much more user friendly for existing users who've already adopted Second Life on one level or another. For new users who don't create content or plan to be part of the virtual economy, who aren't excited by the idea of Second Life, or who aren't creating an SL account for a specific purpose -- and that covers pretty much 99% of the world -- 2.0 still provides little.

For them, a Second Life experience must always provide immediate and obvious answers to the big six questions:

Lonely Beauty: Second Life's Crowded Empty Paradox Makes Rural Sites in SL Among the Most Popular

A couple weeks ago, I wrote about the Crowded Empty paradox, the unique aspects of Second Life which makes large swathes of the world seem abandoned, even when there are 75-80,000 concurrent users logged in. Looking over the reader commentary, I realized how the Crowded Empty phenomenon explains another strange quirk of Second Life culture: the popularity of virtual rural sites in Second Life, like Empress and Hierophant, the island depicted above, lovingly designed to look like a blasted heath in Ireland that's nearly bereft of human presence. In fact, reviewing the list of 2009's top 20 Second Life locations most popular with users of the virtual world social network Koinup (occasionally a sponsoring partner of this blog), roughly 15 of the top 20 depict rural countrysides, empty coastlines, or as in the case of Drowsy, a small village. Another site in the top twenty, Innsmouth, architecturally looks like a medium-sized town, but is consciously created to look like an abandoned one, crowded only with ghosts and the hint of tragic stories:

Forrester Analyst Suggests Second Life Stymied by "Iron Law of Oligarchy" - He's Half Right

At the last Second Life Community Convention, Chief Product Officer T. Linden gave a milestone presentation on the new SL viewer, aimed at making the Second Life experience more intuitive and user-friendly. Created by veterans of Adobe, TiVO, and other companies renowned for great UI design, it was an impressive and exciting unveiling.

And then T. opened his talk for audience questions. First one had nothing to do with the viewer. Instead, a gentleman demanded angrily, "When are you going to make it possible for us to belong to more than twenty groups in Second Life?" (Or words to that effect.) The rest of the questions for T. from SLCC attendees were largely in that vein, highly detailed concerns about outstanding bugs and features, which while important and valid, had little or nothing to do with the new Second Life viewer.

Tom Grant, analyst with the esteemed Forester Research firm, has a thought-provoking post which provides a name for this phenomenon, and suggests it's holding Second Life back:

[T]he Iron Law of Oligarchy, a small and often unrepresentative sample of users [who] wield disproportionate influence over the vendor's thinking about products and services... Second Life is an extreme case of how you can develop a very happy group of customers, and still fail miserably at reaching a wider audience. Some businesses are comfortable with that outcome, as long as the customer base stays loyal, and the business stays profitable. Most would be terrified to discover that their best customers are, in subtle ways, holding them back. I can't say for sure that the Second Life notables are the reason why the UI is still klunky, and the useful content is hard to find, but I definitely have my suspicions.

As the incident at SLCC suggests, there is some truth to that observation. I've seen a similar phenomena on this blog, in many of the responses to my editorial series on making Second Life more mass market: