Do You Need Real Estate to Make a World?

On the expo floor at Virtual Worlds 2007, I had a follow-up discussion with Beth Coleman on a tangent to a debate once started on the pages of her blog, with Henry Jenkins and Clay Shirky that also drew in extensive involvement from Terra Nova. In fact, this was such a watershed debate, that when TN introduced it and promoted it, and I questioned their failure to ensure a more fair playing field among these debaters -- precisely because they are part of the milieu providing a platform for Clay Shirky (he came to TN begging for help in the debate), Thomas Malaby accused me of deliberately and consciously misrepresenting the TN role in this debate obviously held on other people's websites, and even after a furious and many-thousand-word endless round in offline emails trying to establish my sincerity about this, he still didn't "get it" and not only declared me "an unworthy interlocutor" (presumably "I'm lying" because of the way I portrayed his milieu's integration with Shirky et. al.); he was also able to stand idly by while his co-author Dan Hunter arbitrarily permabanned me from TN. These academics are awful; they are part of the problem, not part of the solution; they're unable to have an open debate about Second Life, are hopelessly trapped in hate and hopelessly mired in WoW and other game worlds. I'm waiting for a new academic group to come along and more seriously study VWs without this horrid MMORPG bias.

In any even, as this post that apparently Beth flagged as not being clear as to why I disagreed with her (if there's a better link I haven't found it), let me elaborate. The issue is twofold: whether LL plans to dump land as a business model is what they will actually do (I would say they will do it in stages and probably hang on to some rump mainland); and whether dumping land as a basis for a free economy is a good idea (I would say it isn't).

The facts of the case are not disputed -- that Mitch Kapor in February 2007 in Davos explained to us that in his view, open-sourcing the server code will devalue land, and therefore land investment doesn't make sense. Not a very smart thing for someone to have said who expected to sell that land/server stuff for the next year or two, but yeah, thanks for the heads up, Mitch. I immediately reacted with a post called The Liquidity Event.

And now this needs to be parsed -- as a CEO's general comment -- to what the actual practice and policy of LL might be, and what is in fact desirable in general for worlds and the Metaverse.

Those hastening to applaud the idea of ruining the land economy tend to be critics of the left, who hate the idea that there isn't an endless supply of free land to sustain people's creativity as mere server shelf space, and loathe the concept of "land barons" whom they see as evil capitalists (even though many might only be part-time Walmart clerks making a condo rentals and kids from Brazil starting a mall). Or they are critics of the right, who think land shouldn't have independent value from content, and should just be bought up in large packets to distribute content on, which is king.

Well, sorry, no, there isn't an endless supply of free server space to sustain people's creativity. Land ties to server space. Server space costs money. Perhaps servers can be purchased at a discount, but they still cost *something*. And when you buy that server from SL, you buy a hook-up to a world of content, and the very much discounted services of all the programmers and other staff who maintain it. So to correlate it one-to-one with just any server holding data in your office isn't rational.

And sorry, content needs land as a separate commodity to be displayed on, and there is nothing nonsensical or outmoded about making land a separate economic sector in and of itself that enables fluidity, and constant easy and effective entry and exit (or pausing) in the virtual economy.

There's a whole other philosophical discussion to be had about whether you need land/real estate/property to sustain a free economy or a whole world. I most certainly insist you do, as I've seen it lived out in spades. Just celebrating and privileging artistic design and the programming of code as the bastion itself of digitalized property and power isn't enough to make a *free* society *for everyone*. There really needs to be a hedge against the creator-fascist -- and the power of the game/world maker who owns the servers -- and property for everybody else *is* that hedge. The extremes of right and left of the real world are avoided in the virtual world by making a land economy.

And claiming that all that really sustains worlds/games is "me and my friends" and that is what is portable out of any world going bad really misses the point about *this* particular world where everything has *value and stake*. People *will not* just pull up stakes and leave if they have investments of thousands of dollars. Devaluing them and dumping them will be one of those insane extremist revolutionary actions like the Bolsheviks' hanging people from the lamp posts that will be sure to ruin the prospects for community and cooperation for a long time to come.

When I left The Sims Online to come to Second Life, it might have been to "follow a group of friends"; but what kept me in SL and enabled me to do business was the ability to sell my skill-up avatar and custom-built lot in TSO on E-bay for $158 US, and bankroll my first auction purchase on the SL land auction. Because like many people, I was hardly going to dip into my RL savings or income needed for RL to finance a second life online.

Many might think it fun to stick it to the land baron class, but as they've sustained more than 80 percent of the Lindens' revenue with their private island, mainland auction, and tier purchases, and enabled the average consumer to avoid LL's punishing costs and high tier jumps all these years, they should really soberly assess whether you can have a world without this important middle class. Frankly, I don't see how you can -- unless you expect to do massive social engineering of the Orwellian kind (and in fact, that *is* what is on the menu in some worlds). Please do the math -- whether you use the figure of $195 for mainland and old island tier, and get 14,000 x 195 equals $2.73 million, or use the figure of $295 of new island tier and get $4.13 million, the point is, between $3-4 million per month, or $36-48 million per year in tier maintenance fees along is totally vital to LL's bottom line.

Add to that the base line of at least $17.5 if 14,000 x $1250 (opening mainland auction bid) or $23.3 if $1695 (new island cost), and you can grasp why I call the tier-payers of Second Life the venture capitalist that never gets recognized. The individuals and mainly small businesses now paying the bills should not be stepped on -- yet LL itself and its eager industry partners are likely to do some very heavy stomping. The new land barons of Second Life won't be somebody like Anshe Chung, lovingly landscaping 500 sims and doing intensive customer service of a few thousand customers, but CBS and ESC, laying out thousands of sims for tens of thousands of customers who "won't need land to have fun" (as the geekie oldbies used to grouse about land sales on the old forums) because they will have a prefabricated world to fly around in and socialize in without housing.

How, if at all, will they make the crossover from being walk-ons on a TV detective show, to becoming part of the middle class and civil society of Second Life -- such as it is -- by becoming landed immigrants and property owners?

There's also the issue that any content needs land for displaying it, it's like a web page in that regard. No one denies the ecology of the Internet that consists of large and small providers and hosting services; they don't think that there should be one generic roll-out of web pages in cookie-cutter format for everyone. Yet when you overlay this analogy to a virtual world and say "we need small and large land barons and rental agents" they want to string these people up on the lamp posts.

There's an extensive debate to be had about Linden Lab's business model, and whether it can sustain both small business land barons -- and 500 islands owned by the very large millionairess Anshe Chung is small when you begin to think of the power of IBM or CBS -- or whether it must dump them, open source the platform, but license special bulk purchases such as occurred with the Electric Sheep for CSI.

Comments

[Stephen Zenith]

Was "milieu" on your Word of the Day calendar, perchance?

[Prokofy Neva]

No, but "asshole" is.

[Stephen Zenith]

Touché.

[Maklin Deckard]

Not all of what you are seeing of the dislike for 'land barons' is a dislike of the system. The system works quite well for the most part.

Unfortunately, thanks to Anshe Chung being the first well-known baron, and the HORROR stories of dealing with her and her agents (one I was tangentially part of so have first hand experience), many folks equate land baron with 'rapacious, scheming, borderline evil' person. They are not all that bad, not even the majority are, but a few bad apples....and one big one...have tarnished the reputation.

Personally, I rent from a 'land baron' (Desmond Shang) whom I trust IMPLICITLY. Man delivers on time, stays to his word, promptly pays for what he has commissioned. From the way you describe your Ravenglass business, you deal with folks much the same way.

I see a lot of the push against barons as misinformation or lack of information. Without land, SL would well and truly suck as a 3D chatroom. With unlimited land, it would be the hodgepodge of crap like most the mainland.

The barons do a service in providing well-maintained areas (mainland or private island) and giving people what they want. If they didn't give them waht they want, they'd be buying from other barons or mainland.

The ESC / CSI build is indeed frightening. It, to me, ushers in the possibility of premade, homogenized, soulless areas....but cheap....that drive the established rental areas out of business. And the loss of rental areas, from Dreamland, to Caledon, to Ravenglass...to be replaced by a marketer's utopia...might be pleasing to Giff, the ESC crew and their masters, but not to me. Sounds more and more like a Sony 'Home' than a virtual world.

Yes, there are the Left and Right as you say....but those are merely vocal minorities, or so it appears from my travels ingame.

[Prokofy Neva]

Maklin, Anshe Chung isn't anywhere near the evil thing you imagine. Whatever her sharp business practices -- and there sure have been some -- the sustaining of the economy and the world far outweights whatever was "taken" from it. The Lindens could never have had a world without Anshe being able to liquidate land for people and resell it -- holding it sometimes months before it resold.

Anshe can also be credited for creating telehub malls that made entry to the marketplace a level, if somewhat expensive, playing field, so that people didn't have to suck up to divas in boutiques and get FIC apprenticeships to get seen and get their wares sold.

My complaint about the Sheep isn't about the rentals sector. It's not that I howl because I am driven out of business. People are driven out of business all the time. It's that land represents something *because there is stuff on it, duh*.

People have either their own individual end-use socializing or non-profit lots, or they have businesses. If the land market goes, so does everything *on it*.

There are businesses like scripts and widgets that don't depend on land as such -- but who will bother to have these things if they have no land to deploy them on?!

There are 14,000 servers. Who owns them? Individuals, small businesses -- and some big corporations. They are in the minority. The Lindens want to make them the majority. The soulless corporate company towns they will create may be perfectly fine for some casual users. They have just as much chance of being covered with tumbleweeds, however.

People want a world, a world with ownership, a world where even their amateur user content matters. They will not get this from TV land.

[Maklin Deckard]

As far as Anshe, I don't think she is evil, I think she has been a bit TOO sharp and created the APPEARANCE of it, which has rubbed off on ALL barons. I will NEVER deny she kick-started the land market and offers nice areas in dreamland. (for the record though, I'd not deal with her, ever). I used that more as an illustration of a 3rd reason for disliking barons, located between the liberal and the conservative views on land ownership..remember, a LOT of our fellow citizens are NOT as savvy about political systems.

And you are quite correct, people go out of business all the time, its how the economy works. No dispute from me...what I was trying to say, abeit badly, was...the world would be a less interesting place without land. Without land, 99.99% of everything I build is useless... (yes, I sell what I build, but I build what I want first and foremost...the sale part is just gravy and if that went away I'd deal with it) For example, why would anyone buy and rez (or build their own) Edison Cylinder phonograph, or a steam engine without land to put them on long-term? Few would...

Without land, it'd be just what you called it. TV LAND...just with chat thrown in.

Case in point as to land making a difference, I've played a lot of the MMOG's out there at some point....and cancelled. One I have NEVER cancelled is Ultima Online....why? Land...having my little house near Britain, filled with things I made and my friends made and gave me, makes a difference. One that the preset apartments of Everquest 2 and Anarchy Online never equalled.

Land = Buying into the world itself for me and others.

[larryr]

no.

[Cocoanut Koala]

Wait wait - what do you mean, are the ESC providing housing?

coco

[Cocoanut Koala]

P.S. Yes! I have to have a house in a game, too! I never did figure out how to even get one of the lousy Anarchy Online apartments.

[Maklin Deckard]

"P.S. Yes! I have to have a house in a game, too! I never did figure out how to even get one of the lousy Anarchy Online apartments." - Coco

*snickers* It wasn't easy to get an apartment...in the base game, you have to go to the starter areas (no longer used, due to the new 'tutorial' start. Enter into an unmarked door...you get a key. Notthing you could do but drop a few furnishings. I preordered Shadowlands, So I got the deluxe one on Jobe...same hard to find deal, great view, nice to furnish, nothing to do there...since there is no socializing beyond 'group up, kill, move on'.

I am rather proud of my little victorian house Caledon Highlands in SL and the rather eclectic (sp?) mix of furnishings and curiousities, some bought, some of my own making. And my vanity build in Caledon (grand lodge of caledon)...its the sense of permanence that having a house and land that makes me feel invested in the game. Without that investment, the Lindens would have long ago driven me off with their chaotic decisions.

[Cocoanut Koala]

Me, too, proud of my house!

After living for two years in various houses of my own, furnished with things made by either me or my roommates, I finally decided to indulge in a Julia Hathor treehouse.

Which I then went out and BOUGHT furnishings for.

Not putting down my own stuff (or that of my roomies), but it is fun to go buy everything instead of building it!

coco

[Prokofy Neva]

Coco, the point isn't that they have land/houses literally; the point is that they don't make houses/land etc -- they have an urbanscape to fly around and search for clues, like an action game, and they don't need a house, like they wouldn't need one in World of Warcraft. If the Sheep have hundreds of sims rented, however, they may figure out to add staff and put in apartments or houses too, although that seems like a very labour intensive way to make their money. If anything, they could be like Pontiac and just GIVE AWAY the land to whomever wants to build in theme. Do you get the point? The point is that they will make prefabbed worlds that people will either get free land out of, or "won't need land to have fun".

[Prokofy Neva]

>its the sense of permanence that having a house and land that makes me feel invested in the game. Without that investment, the Lindens would have long ago driven me off with their chaotic decisions.

This sums it up. This is what is so hard to get across to all the "rootless cosmopolitans" lol. If anything, they bear an active hatred and malice to anyone who *does* make a house, because making a house and owning land is a hedge against their class of people who live solely for sandboxing or platforming.

[Economic Mip]

I cannot really rip on the idea of giving away land, after all I am first and foremost a freeloader, and when Millions of Us offered a free 4032 to me I jumped on it. CSI NY project fears will have to wait until Wednesday and I will give Prok a list of times soon where he or anyone else can IM me non-stop about it on that day (public invitation, though I don't have all of the answers).

[Prokofy Neva]

Economic, perhaps your "economy analysis" could zoom out beyond your own little freebie land, and your own little metaversal myrmidon gig here, and try to understand: you cannot make a vibrant and effective and growable inworld economy out of such things.

You can only make a bunch of corporate towns.

Corporate towns have become utterly extinct as a concept in America, and even the former Soviet Union. Where they continued on with one-industry dominated cities, they lead to depression and unemployment and mortgage defaults.

[Economic Mip]

Say whatever you want Prokofy, my offer still stands. You and your family are in my prayers, and I never said a corporate town was a good thing, but as someone who has been working hard on the NYC SL thing for a few weeks now, I am offering help with the browser and other issues as soon as I am no longer bound by the NDA. Again, I wish you only the best, and hope to talk to you again soon.