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Philip Rosedale. (Photo by James Duncan Davidson/O'Reilly Media, Inc., CC Generic 2.0 license)

We’ve had about a day to mull over the news that Mark Kingdon has been given the axe as CEO of Linden Lab, and that Philip Rosedale has resumed the direct control of his brainchild, at least for the interim.  (New World Notes article; Rosedale statement)  As of publishing time, a New World Notes open poll suggests strongly that Residents are in favor of this move — even if we will have to put up with Philip’s spiky hair, Rocky Horror T-shirt and codpiece again:

Poll results as of 6:15 SLT, June 25, 2010. Poll courtesy of New World Notes

I’m one of the more optimistic, for the record.  I’m uncertain how much acceptance Mark has had from the Resident community over his tenure; and many of the Lab’s moves during that time have been controversial, to say the least.  Of course, for all we know, things could have smoothed out at the Lab with his continued presence.  Only the future knows this, and the future has just been rewritten.

The thing that Rosedale has going for him, besides a (presumably) intimate nuts-and-bolts knowledge of how Second Life works, is that his is the vision that created this real incarnation of a concept only in books for the most part, until his company was formed.  Anyone who was brought in from outside to take over would not be part of the Linden Lab culture — an admittedly kooky one at times, but they would not have the same “heart” for it that Philip has.  Many of us felt that way when Kingdon was named CEO in May 2008.  Philip was the creator; Mark was a businessman first and foremost, and I wonder if he tended to see Second Life mainly in that model, as a place for facilitating business.  There were speculations, of course, that Kingdon was brought in to help pave the way for an initial public offering of stock in Linden Lab; a more business-0riented CEO would be considered essential for such a move, and Mark’s tenure as CEO of Organic, a digital-advertising agency.

But a virtual-world business is a hairier operation to run.  You not only have the business aspect to manage; you must also deal with the client base that is the raison d’être for the business’s existence.  Second Life had business presences before, though more of an attempt to advertise their Real Life products in world.  Many of these left during the Great Hype Meltdown of 2008-09, and Kingdon attempted to bring in more business for meeting-type situations with his Second Life Enterprise initiative over the past six months.  Many feel that focus was given to this move, at the expense of Grid stability and Resident satisfaction, as well as other decisions that, according to Gwyneth Llewelyn, intended to pave the way for increased business activity.  (Read her thorough analysis of the situation from June 10.)  The failure of many of these business moves are what led to Kingdon’s dismissal.

The thing is that Mark was right in his broad vision, if not necessarily in his execution.  Second Life — and Linden Lab — cannot survive forever on Residential accounts alone, and definitely not on free accounts.  While some may disagree with the Linden Homes move (Gwyneth believes that this put the Guvnah in direct competition with existing landowners), Linden Lab should encourage conversion of free to Premium accounts.  Additionally, business needs wooing, focusing on the core advantages that Second Life has already offered to huge corporations such as IBM — the hosting and abetment of meetings without the expense and waste of travel for substantial numbers of people.  As much as many of us may not like it, Big Business must be courted in, and must become part of the Grid.

The key will be to find a new CEO that can balance both sides, and deliver continued and improved performance of the virtual platforms.  Rosedale possesses the vision, but he doesn’t seem to possess the business chops, which is why he handed off to Kingdon two years ago.  Philip’s return (dare we call it a resurrection? [grin]) will help restore the balance.  Now we need someone to push the dream forward — on all fronts.  Second Life cannot survive, let alone thrive, without both the yin and yang of the equation.

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This discussion is based upon reports from Hamlet Au at New World Notes.

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I haven’t touched the recent news from Linden Lab until now, mainly because I haven’t been sure what to think about the entire thing.  I’m still not sure yet, even after the passage of a week of time.  But it’s part of the mission of this blog to report on the news affecting the Grid, and offer my own opinions on it, and it’s time I weighed in.  We’ll see which way my thoughts move as I write….

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How is Linden Lab actually doing right now?  That is the very thing that is hard to determine unless — perhaps — you’re one of the 30% of Lab employees that were laid off last week.  That group includes many long-term veterans and beloved Lindens, such as T (Tom Hale).  Concern for these folks has been so high among residents that SLeleb CodeBastard Redgrave built a “graveyard” of headstones for the now avocationally-challenged, which has been frequented by Residents leaving flowers, occasionally dancing on the “graves” (a tasteless thing, even for the terminally dissatisfied among the SL population), or simply contemplating whether this event is an omen auguring the future of the Lab.

The Linden Memorial at Rouge, http://slurl.com/secondlife/Rouge/165/72/22

That’s somewhere in the neighborhood of 90 people, based on employment figures mentioned elsewhere.  Not the same as, say, a plant closing somewhere; but to these folks it still means they’re learning the difference between “recession” and “depression.”

But is this an omen that Linden Lab is in financial trouble?  Mark Kingdon insists no, in the original press release, the Big Blog announcement, and in a talk with Hamlet Au.  According to M, the Lab’s in fine shape, and this isn’t a retrenchment dictated by falling revenues.  The problem with this:  especially as a Michigan girl, living in areas where plant layoffs were all too common in bad economic times, I find it hard to believe entirely.  Labor is always among the top 3 or 5 items in company costs, if not the prime item.  This makes it very easy to target employees when you need to balance the books in hard times.  What I would love is to see the actual balance sheet of Linden Research, Inc.  Being a privately-held company, of course, this won’t happen any time soon.

Hamlet’s (admittedly unscientific) poll suggests that readers of New World Notes are overwhelmingly pessimistic about Second Life’s future following the layoff announcement.  Part of this could be from actual fear of the company having revenue problems.  And, with a free-to-join customer base, this can be understood.  Actual revenue, as I understand the Lab’s business model, comes from Premium memberships (which they’ve been pushing on recently, as you’ll note from their frequent message encouraging upgrading to Premium as you log in); sales of land and regions (including tier payments); and, hypothetically, investment return from sales of Linden dollars purchased by Residents or spent as fees (such as upload fees) — in other words, they take the money paid to them and invest for collection of interest.

The following is speculation on my part, but consider it. Based on charts at Tateru Nino’s Dwell On It, user concurrency has been trending downward throughout 2010, although the decline may be leveling off based on early indications, which suggests to me that regular user numbers are going down due to the economy; in other words, a declining pool of potential or current Premium customers, and (extrapolating from this), fewer people interested in purchasing land or paying corresponding tier for it.  The in-world economy itself has proved resilient, suggested by the user-to-user transaction numbers; but how much of this is coming from existing bank accounts, and how much from purchased lindens, such as I normally do to buy my goodies?  Mark, if you’re reading this, how close am I to the mark, and would you be willing to share your actual financial statements to help back up your position?

Once again, these are speculations on my part.  Kingdon may be giving us the straight dope on Linden Lab’s financial conditions.  The thing that makes me wonder is that businessmen tend to paint the rosiest picture possible in their press statements and annual reports.  Warren Buffet, the master of Berkshire Hathaway, is one of the few people who will admit flat out to his investors when his company is stinking, instead of trying to put a positive spin on the numbers.  While I choose to reserve my worries for now, I would like more provable information as to how things are, and whether the largest and (still to me) the best virtual world offering will still be around in 2011.

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Thanks to Hamlet Au and New World Notes.

Down 9/10 of the way in his Big Blog meditation on Second Life’s place in the Internet culture over the past year and decade, Mark Kingdon gives a list of things planned for 2010.  Among these, possibly lesser in importance in business terms — but an earthquake in the social sense, as in one of the fundamental cornerstones of Second Life society — is the ability to choose your own RL name instead of a Linden-type surname.  The emphasis here, by the way, is on “choose”; nowhere does it say that people will be compelled to use their real name, as Facebook does currently to my last knowledge.  (One reason among several why “Harper Ganesvoort” will probably never appear on Facebook.)

In his closing paragraph to his summation of Mark’s article, Hamlet Au opines:

…(I)n my opinion, it’s about time. The need for real names as option is a key one, I think, and is partly why I believe deep integration of Second Life with Facebook is so important for mass growth. As the rapid adoption of social games (compared to the slow growth of Second Life) suggests, the majority of the market is not interested in having avatars that are totally separate from their real world identity. Rather, they want avatars that are more akin to Halloween costumes, a fun and temporary extension of their entire identity, with the fullness of their everyday self always peeking out behind the mask. And in any case, nothing about having real names in Second Life precludes fantasy avatars too — even used by the same person, depending on the context.  [1]

The established, 2-year-old avatar in me shudders at this.  I enjoy my avatar persona, and the small reputation I’ve created here.  I can’t imagine myself walking around using my real-world name (and no, I’m not going to reveal that here or anywhere else :).

From a more practical viewpoint, though, I think Ham is probably right.  Nothing floated so far says that a person who chooses to use their real name can’t put together another, fantasy-based avatar under a Linden name as well.  And frankly, there are some who might use this opportunity to create real-world pseudonyms for various (some possibly non-legitimate) reasons….  Remember the supposedly founding premise behind the Metaverse, as in Stephenson’s Snow Crash:  as a place where people could meet face to face from across the world and transact whatever business they had to do, be it entertainment or legit.  Remember Hiro having a business meeting with Uncle Enzo and the last fellow (can’t remember his name now) toward the end of the book, and they’re using their real names, not “avatar names.”

Consider the gray-flannel mentality of conservative, normal businessmen, which still exists today.  Some business meetings are done now in SL, of course; think how much more businesses might embrace it if they did not have to use some funky stage name.  And, no matter how much we rail at the thought of another bastion of individuality getting corrupted by business, future growth of the metaverse concept will be dependent on its adoption and use by business on a large scale.   Business is what finances and drives the Internet now; it’s no longer the home of strictly intellectual or technical types, no longer the domain solely of “fanboy” celebrity appreciation pages, and that halcyon time of yore when it was will never return.

But the Internet has grown richer for it as well, at least in some ways, for it has also engendered the rise of the Blogosphere (with all its good as well as bad points) and other pathways for individual self-expression.  That richness will spread into the Metaverse as well, no matter what part of the Metaverse ends up as the dominant part of it.  (There are so many different metaverses now, including Open Sim, that I wouldn’t dare predict which will become the dominant paradigm, if any.)  So, as long as the ability to use a “mask” never departs from our choices here, I don’t think the Imminent Downfall of Second Life would be at hand if we are suddenly allowed to choose our real identities when we’re constructing an avatar.

After all, we already have that choice when creating our avatar, as well as when we are living in it; just not the same flexibility in choice of name….

Footnote:

[1] I’m not too sure about Ham’s belief that the greater market wants to use their legit name; I think the greater market wants an experience that is easier to use and navigate.  No matter what is done, Second Life’s learning curve will be initially steep, and I don’t think that will change.  But that’s not the point to this article, so let’s keep on track.

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flap (n:  sense 6a): a state of excitement or agitation.

Merriam-Webster’s Online Dictionary

Linden Lab recently updated the Second Life Web site; and, in a scrolling Flash window, we get this little piece:

“Looking for counterculture? Second Life is also full of furries, ninjas, steampunk balls and an enormous virtual recreation of Burning Man. Thousands of vampires seek victims alongside wandering elves, marauding cyberpunks and club-going Goths. Come join the party.“

Hamlet Au noticed this as he was reviewing the new site — which site is an impressive piece of work, I’ll say, though I have a peeve about one part myself that I’ll touch in another article — and wrote about it in New World Notes.  This has kicked off a discussion in the article’s Comments section about the appropriateness of the word counterculture to describe the many subgroups that inhabit a goodly chunk of the Grid.  (Please read the article before weighing in yourself!)

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Those who have been around the Grid since last October will remember the uproar generated when Linden Lab announced with no fanfare that they planned to raise the purchase price on so-called “Openspace” sims.  The price would increase from $250 to $375 — an raise of 1.5 times — and nearly double the monthly maintenance cost, from $75 to $125.  The rationale given at the Big Blog was that these new land areas, which were meant as light-traffic green zones, were being far overused in terms of both traffic and prims.  Protest erupted quickly, and I commented on it in several articles on 10/28, 10/30, 10/31, 10/31 (second article), 11/3, 11/4, 11/4 (second article), 11/5 and 11/8.  (You will find links in these articles to many more.)

When Linden announced it was changing the decision, many were pleased that the Lab seemed to be listening, at least in part, to the affected Residents’ fears and anger.  The planned compromise price restructuring, however, still chased away many who saw themselves as unable to afford the planned increases even on a stepping-stone basis.  Most analysts of the Grid map noted a large falloff in the number of islands.  Linden Lab denied that there was a massive selloff, as reported by New World Notes.

Still, in an announcement on Tuesday in the Big Blog, the Lab has stated that they will lock down the price increase scheduled for July 1 on owners of their new Homestead sims, as long as the land was purchased prior to July 1.  Landowners who abandoned their Openspace regions may have the land reactivated for no charge.  The grandfathering will last for one year, until July 2010.  Anyone purchasing a Homestead on July 1 or later will pay the full price as stated in the November 5, 2008 Big Blog announcement.

Ari Blackthorne in Common¦Sensible suggests that this is a potential move to avoid another land abandonment or selloff, although he also sees it as a potential olive branch.  The comments on the SL Discussions is the usual mixed reaction, a combination of appreciation and sour grapes for various reasons, with a leavening of unrelated posts.  Generally, though, judging by the lack of traffic on the matter, reaction is muted.  It could be early days in the debate, but very little, either of palms or screeds, has been published.  (If I’m wrong, please leave links in the comments below.)  I do wonder if any great notice has been taken of the announcement.

For those interested in owning land in Second Life, the move seems to me a generous one as far as it goes.  Those who stayed in world and were bracing themselves for an economic shock in a month will get at least a year’s relief on the matter, and in their bill.  Former Residents who left for OpenSpaces have the opportunity to rebuild their areas in Second Life at little penalty, other than paying the $20/month boost from what they started out with.  What would be nicer would be a continued freeze on prices if company revenues allow next year.  Hopefully Jack and Mark will consider this as the next year rolls around.

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Our intrepid spies have pulled off a major coup in the ongoing struggle to free all information necessary for full understanding of our relationship with Linden Lab.  Read this post, and see just what goes on behind the scenes of the Lab, as reflected in the contents of M Linden’s GMail account!  Read carefully and fully….

Our spy, of course, was Prad Pravithi, who also released to us the plans for a new computer keyboard designed exclusively for Second Life last summer….

Thanks to Hamlet Au and New World Notes

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As promised, Mark Kingdon released an article for the Big Blog today, announcing changes to the planned price increase on the Openspace sims. As you may recall from our last exciting episode, it was originally planned to do a blanket increase on setup and maintenance (“tier”) in January 2009, with the tier rising from $75 USD to $125. The result was quick (if not instantaneous) and substantially explosive. In addition to blog reactions, a substantial Forum thread was started by the Lindens that grew to at least 250 pages, filled with gripes — but also with calmer, thoughtful commentary and suggestions.

The Lindens read, and listened, and considered. Now they’ve answered:

1. We are going to retain the Openspaces product at its original price point and its original intended use (forest, water, etc.). We will have technical limitations to help regulate their use, initially avatar and prim limit restrictions, eventually event, classified and script limits. Those of you who chose to use the Openspaces as intended may stay at the US$75 rate, but will need to contact the concierge team to do so.

2. If you want more than an Openspace, we will offer you the choice of moving to a new product called Homesteads that is intended for light use such as low density rentals. For existing Openspace owners we will phase in the price increase for this new product over the next 6 months. Homesteads will also have technical limits for avatars and prims, and eventually script limits as well.

* January 5, 2009 – non-compliant Openspaces will transition to Homesteads and the maintenance fees will go from $75 to $95 per month. We will offer an educational discount to qualified educators on the new Homestead product. The discount amount will be the same as Private Regions, roughly 30%.

* July 2009 — the maintenance fees for Homesteads will go from $95 to $125 per month.

There is more detail in the FAQ posted at the Knowledge Base, and a new Forum thread for comment.

This has to be looked at carefully, but I’m not sure that it’s a better deal for the ones who will get burned most — the Residents who were obeying the rules. If I follow correctly, the original void sim had an 1875 prim allowance; now they’re planning to drop it to 750 prims, and with script restrictions in the future that may wash out some recreational vehicle use (this is uncertain as of writing). The people staying in the new Homestead sims will eventually still pay the $125; it’s just deferred until July 2009, instead of January. I won’t say this is a bait-and-switch routine, as some posters in the Forums are accusing the Lindens of doing; I’m not a network or other form of technical hardware specialist, and I’m willing to accept their explanations for now. What I do say is that the proposal is imperfect, and needs more consideration by Linden Lab. It sounds as if they are still willing to listen to calm and reasoned debate — the best kind — and something better could be thrashed out yet.

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Other reactions:

• Hypatia Callisto suggests that the solution is for Linden Lab to allow large communities to rent their own server and divvy up resources within that area.
• New World Notes is running a poll on the question. At writing, the “dissatisfied and worried” camp is leading, with about 38% of the total; but those satisfied are second at just under 30%. James also writes about the question for GigaOM, noting that a lot of the “contentment” is seasoned with a good bit of grumbling as well.
• In the category of “contented”: Common Sensible; Crap Mariner; Harper Beresford; Nexeus Fatale.  Not thrilled:  Hotspur Otoole.  Okay but critical:  Raul Crimson.

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Wagner James (Hamlet) Au of New World Notes got an opportunity to sit down with Mark Kingdon, a.k.a. M Linden, the CEO of Linden Lab, and questioned him about the Openspace controversy set off by last week’s announcement.  Read his article here!

The best comment I’ve seen on his article (to this point of writing) is by Hypatia Callisto, who headed her comment with one of the best “scientific laws” ever created, Hanlon’s Razor:  “Never ascribe to conspiracy what you can ascribe to mere stupidity.”  The comment is for those who are certain that Linden Lab is jacking rates to make money preparatory to an IPO, or just to fill company coffers.