Applications and Tools, Business in Virtual Worlds, Second Life

Virtual Worlds and the Trend Towards Free: Second Life and the Object Economy

Prad Prathivi wants to nip freebies in the bud:

“Freebies can be a good way to get yourself recognised, but they’re far too often just abused. The Fashion Feed is packed full of freebie content, and if an avatar can get an entire wardrobe for free, then they will.

So in the interest of sustainable content design in Second Life, the freebie culture needs to be nipped in the bud and set up so it can’t be abused at the expense of designer’s generosity.”

And I believe that people should get paid for their work. But the reality is, that in a world where nothing wears out, stuff just becomes, well, more plentiful. The only way to reduce this bounty of goodness is to improve the tools for content creation so that there are new opportunities for innovation (think sculptys) or to hope that everyone’s inventory is as big a mess as my own.

But I’d also argue that just because objects trend towards free, that doesn’t mean that business needs to trend towards unprofitable. It’s just that it starts to work at a higher order. But for this to work, the Lab needs to spend as much time on tools for ‘business management’ for in world content creators as it did, say, on its partnership with Rivers Run Red or on Windlight.

I commented further on Prad’s blog, and will cross-post my full response here:

Interesting post, one that puts us at the middle of the wider debate about whether, over time, pretty much everything becomes “free”, and speaks I think to whether the Lindens properly support the idea of enhanced tools and technologies in recognition that over time “items” become commodities.

Now, this opens up a can of worms. And I’m going to start with a few fundamental beliefs of my own: first, people need to get paid for their work. The ideas of crowdsourcing, open source, and the “everything for free” mentality (evidenced in what’s happened to music, say) often seem to run on the premise that, in a networked world, everything will become easy to copy, everything will be easy to distribute, and the result of all this is that everything will become free.

What bothers me about this is that the value and economic drivers become obscured. Things like brand value and equity, the value of information and the lack of transparency on what information is stored, and the higher order services are obscured when all we do is talk about “free”.

Second Life is like a giant lab. What we see in SL is often mirrored or ahead of what happens in the real world. Freebies and the cost and price of goods are an example of this. In a world where the user base increases and the asset servers groan with so many thousands of pairs of jeans, the number of objects and the number of content creators means that basic ‘goods’ become commodities. So, I’d propose that jeans, to use one example, were once valued and something that you’d pay more for. Over time, they trend towards free because, well, they don’t wear out, they just get lost in inventory maybe.

So why do people pay for them? They pay for items which, really, by all rights, should be free (because there are so many of them, and there are fewer and fewer innovations) because of a “higher order” of content: accessibility, for example - you pay for them because someone has created a store and gathered together objects in one place which makes your shopping more efficient - one stop, one look, easy to find in search, whatever. The second reason might be branding: in SL fashion, the desire to wear the latest “styles”, be associated with brands, etc.

The base commodity: an item, is basically free. I mean seriously, how many jeans can there be? So what I’m paying for is access and intangibles.

So what does this mean for content creators? It means that the value that gets built into an enterprise, a store, a product line, etc gets built into stuff like location, search optimization, branding, community management, promotion, etc.

Think Nike: the shoes cost next to nothing to make. What you’re paying for is the brand association, access, and other intangibles.

Kevin Kelly is one of the proponents of the “free” trend. He said some time ago:

“As crackpot as it sounds, in the distant future nearly everything we make will (at least for a short while) be given away free—refrigerators, skis, laser projectors, clothes, you name it. This will only make sense when these items are pumped full of chips and network nodes, and thus capable of delivering network value. ”

I’d agree with that. One of the most transformative technologies, I believe, will be the 3D printer. This will represent the ultimate commodification of goods, and the ability to make and buy “stuff” for basically nothing.

So where does this leave content creators? I’d propose that freebies are like plugging a dam with a toothpick. It’s a response to a world in which the cost of goods, their commodification, has approached zero. What it points out is that SL has moved past being solely an ‘object economy’ and is now deriving value from the bundling and unbundling of objects with services, branding, promotion, network effects, promotion, community management, etc.

The content creator who gives out freebies as a way of trying to attract visitors is taking a short cut, really. A content creator giving out ‘appreciation freebies’ is working on network effects, branding, and customer relations.

What troubles me, however, is that if the object economy becomes (has become) commodified, and the way to survive is at a higher order, I’m not sure I see the support infrastructure from Linden Lab to facilitate this.

Put it this way: there is still room for innovation. You can still make something new and startling. But these options dwindle over time. The only way they open up is through new tools (sculptys, for example). But the tools for customer management, mailing lists, group notices, etc. are hacks at best, unreliable at worst. Linden Lab needs to spend more time, I think, on helping content creators manage the intangibles and higher order aspects of running an in world business: list management, commerce tracking, search optimization, whatever.

Freebies on their own are a symptom. What they say is that “Hey, I need to get visitors, I need attention, because it’s harder and harder to compete. What used to be really valuable (a hugger, say) is now ubiquitous, and the room for innovation has decreased. I SHOULD be getting attention through branding, community relations, and information management systems, but the tools to do that are so clunky, difficult and time consuming that, well, maybe if I throw some freebies out there I can grab some attention for a bit.”


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