Who Wants to Be a Virtual World Millionaire?

November 29, 2006
  • Notes
  • ok ok this has nothing to do with chips … but this is just way too much fun :-)

  • Long live the “open net”…. Read on.

Who Wants to Be a Virtual World Millionaire?: ”

So, it’s semi-official: the Second Life avatar known as Anshe Chung, featured in a recent BusinessWeek profile of SL, is now worth over $1 million dollars. The news has already stormed through the blogosphere (as here, here, and first scooped here), but judging by most of the commentary, it’s provoking more confusion than understanding.

Did she become a millionaire through hacking, a pyramid scheme, or virtual gold farming (as most Internet commentators seem to think)? And does she really have more than a million dollars in Second Life-based assets (as Ailin and Guntram Graef, the German couple who own the Anshe character, claim)?

No, no, no, and finally, yes and no.

After the break, some clarification that hopefully cuts through both the hysteria and the hype.

How the Virtual World Works

To understand how the Graefs can make the claim, you have to understand both the revenue model of Linden Lab, the company that owns SL, and the revenue model of Anshe Chung, virtual real estate developer. Briefly:

Unlike other online worlds, Second Life has no monthly subscriptions- instead, if you want to own virtual land for a home, a business, or other project, you pay Linden a monthly land use fee, based on the amount of acreage in your account (from $5/month up). For the most ambitious subscribers, Linden also sells private islands of 16 acres each, which they can buy outright from the company for about $1600, while paying a monthly land use ‘maintenence’ fee of several hundred dollars. (Each island is actually a single server; in fact, think of Second Life land as analogous to renting out server space for a website or file storage or whatever- it’s just that in SL, the data is represented in 3D.)

Over the last few years, Anshe Chung and her growing staff have been buying up Second Life land, acquiring private islands, and after rezoning and beautifying it, subletting it out to other SL players. (Often this involves sharp elbows, imposing strict building codes, or sudden evictions of long-standing communities* [see Update below], which is why Anshe is, like most real world land developers, a controversial figure in Second Life.) Anshe’s tenants pay her in Linden Dollars, the official currency in SL, which can then be bought and sold for real money over the LindeX, the company’s web-based commodity exchange market.

All of this is done with the explicit approval of Linden Lab, part of their business plan to foster a self-sustaining, user-created world where the top content creators and service providers like Anshe profit from their efforts. And while there are other successful SL real estate developers, Anshe’s enterprise is by far the largest; most of her private islands are linked together to form an entire continent which makes up, by recent estimates, 10% of the world’s total landmass.

Breaking Down a Million

All that in mind, you can now guess the hidden and semi-hidden caveats around the million dollar claim. To begin with, only part of it is based in actual Linden Dollars. ‘Anshe has ‘cash’ holdings of several million Linden Dollars’, her company announcement reads. If ‘several’ meant L$3,000,000, that would be around $12,000, at market rates, which are now around L$250/US$1; still, even converting this currency to US dollars would mean selling it on the open market, and to have such a large bloc of cash hitting the LindeX currency exchange would surely devalue it.

The ‘millionaire’ claim is primarily based on the stated value of Anshe Chung’s 550 islands, with a baseline price (when it’s first sold by Linden Lab) of $1675, meaning $921,250 total. But again, to sell all of those regions to other SL subscribers at that rate or higher, without devaluation setting in, would be a monumental task.

To make things even more complicated, CNN’s legal affairs blogger (and isn’t it surreal to cite that source for a story on a virtual world?) reports that ‘[a] spokesperson for Linden Lab told me she could not immediately verify Chung’s claim, because Chung’s property is held in many different names’- in other words, a single avatar is not, in fact, a millionaire. (Anshe’s SL real estate operation has numerous employees on staff.)

So all that established, a more accurate statement would be this:

If Anshe Chung gradually sold all her Second Life assets over a long span of time (to prevent market devaluation), and if all the assets actually owned by various avatars working for Anshe were successfully transferred back to her, and if the internal economy remained stable, and if Second Life had no serious interruptions of service through hacking, scalability failures, sale of the company, or other unforeseen incidents, then after a long and arduous process, Ailin Graef and her husband would have well over $1,000,000.

That’s a long way off from being a virtual world millionaire.

In fairness, the Graefs’ reasoning is not all that different from real world millionaires, whose own assets depend on the stability of the global economy. But ultimately, the Graefs’ claim is most analagous to the boasts made by stock option millionaires of the dot com boom. In effect, they own ‘shares’ of a user-created world which are valuable only as long as current market conditions hold up. As we know from painful experience, those conditions often change, and drastically.

But for their sake- and frankly, mine- I hope Second Life’s boom times never end.

*Update, 1:58am: At Ailin Graef’s request, a clarification: the eviction mentioned in the linked article was not conducted by Anshe Chung or her associates, but by the previous owner of an island, who disbanded the existing community there in preparation to sell it to Anshe.

(Via GigaOM.)

The Hype Around WiFi Phones

November 29, 2006

The Hype Around WiFi Phones: ”

This morning there is a lot of talk over The New York Times story, The Air Is Free, about the coming onslaught of WiFi handsets and how people can make calls piggy backing on open wireless connections. The WiFi phones sound so cool, but many forget that what is cool, is not always that functional.

The consumer experience on these devices remains horrible, and logging onto a WiFi network remains as much a mystery as the Chicago Cub’s decision to give a $136 million contract to Alfonso Soriono. We have tried most of the new WiFi phones, and despite being ten feet away from the access point, have run into serious problems. Similar challenges crop up when using dual mode cellular phones such as the E61.

WiFi, is a bit of a black magic really, and even on laptops, one is challenged constantly to stay connected. It is good to see that there are others who are equally concerned about the consumer experience, though others are happy with the prospect of disruption. Of course, no one doubts the potential and the disruptive nature of these devices, but the hype needs to be tempered with reality. Other wise you are merely setting up phone buyers to be disappointed.

Additional reading: #1 Earthlink , #2 DLink, #3 VOIP silos.

(Via GigaOM.)

Battle of the RSS Newreaders – My Experience So Far

November 28, 2006

I’ve been using My.Yahoo for over a decade. It’s very familiar and I often get lazy trying out alternatives. Yahoo was one of the first to incorporate RSS and I liked it. But in the past year, I’ve been really digging into the web for news and blogs. About 6 months ago I decided to investigate the other options because so many “net workers” were mentioning that there were significantly better alternatives.

Here are my rankings of tools that I’ve tried.

1. Newsgator products – http://www.newsgator.com/Home.aspx

  • if you spend 1+ hours a day reading news on the net — this is the best option I’ve found
  • Newgator has desktop and online tools.
    • for PC (FeedDemon) & Mac ( I use the mac versions NetNewsWire and MarsEdit).
  • Q. Why do you need desktop & online? — A. The analogy is e-mail
    • if you read a little, then the online tools are fine.
    • if you read a lot, then a desktop application that synchronizes with the online version is soooo much better.
  • As with anything really good… this actually cost $$( ~$30)
  • The online tool is free and there is a feature reduced free desktop
    that I haven’t tried.

2. Google Reader – http://www.google.com/reader/

  • Google has done a great job of getting their online tool to have all
    the good features of Bloglines and Newsgator

3. Netvibes www.netvibes.com

  • This is fun! It’s got “Joie de vivre!”
  • It is different ( based in France … don’t worry targeted audience is English speaking).
  • If you use Newsgator or Google Newsreader you’ll probably want to use this as well.
  • the open API ecosystem makes this a —– beautiful time waster :-)

4. Bloglines — http://www.bloglines.com/

  • I was a satisfied Bloglines user for about 6 months and then I
    eventually tried Newsgator Products.

    • the desktop client was the clincher in my switch to NetNewsWire (Newsgator), I loaded the 30
      day demo and never looked back from day 1.
  • If you’re already a Bloglines user there is no reason to change to any of the above unless you want a desktop client as well.
  • If you’re not a bloglines user already, move on.
  • Overall, I feel sorry for Bloglines because it is a great product that Google has pretty much matched feature-for-feature over the past year.
    • there is little reason to stick with the little guy :-(
    • especially if you’re using Google’s homepage.

5. Yahoo. Rss

  • Is okay for casual use.
  • for work purposes
    • there is no point bad mouthing this….. just switch to any of the above immediately.

What A Return :-(

November 28, 2006

I got back from last week’s awesome meditation retreat to a snow storm hell zone :-(

Today I woke up to trees down all over our yard. Snow bending everything in bizarre directions, of course this cool landscape included ripped out cable and phone lines. Luckily the power was on. Then oops it went out and now we’re entrenced at a friends house.

From Bliss to hell.

I should be back sometime this week.

Away for a Week

November 17, 2006

Will be back posting Nov 28.

Yahoo goes on a startup shopping binge

November 17, 2006

Yahoo goes on a startup shopping binge: ”

First Yahoo says it acquired Bix, then news of MyBlogLog for $10 million, and now Yahoo confims it has acquired Swedish mobile company Kenet Works. A Yahoo spokesperson in London confirmed the purchase of Kenet Works and wrote in an email:

The acquisition of KenetWorks is part of Yahoo!’s focus on mobile, will help build on our leadership in mobile services and furthers our goal to connect consumers with the people and information they care about. . . KenetWorks’ technology complements our services and will enable us to continue to develop innovative experiences for mobile devices.

Yahoo won’t comment on a price of Kenet, but says the deal closed a few months ago. The Swedish newspaper Dagens Industri was the first to report the deal, according to a Carnegie Investment Bank report that translated the news. The paper says that the price of Kenet was at least SEK 150 million, (EUR 16.6 million or $21.28 million).

Hey startups, Yahoo is on a spending spree. Time to start visiting Sunnyvale!

On Mybloglog, our congrats to Scott Rafer, who finally has an exit… Om

(Via GigaOM.)

Weekend reading

November 17, 2006

Weekend reading: ”

UK mega-uber-hyper-sooper-dooper regulator OFCOM has published what looks like a very informative report on the UK consumer experience in communications. Lots of very granular demographic data, as well as interesting findings on consumer awareness and satisfaction levels. Check out the increase in awareness of alternative fixed line suppliers over time (p.53), and in particular look at the comparisons of satisfaction levels between bundled telecom customers and bundled energy customers (pages 65 and 66) – bundling telecom so far seems to show no improvement in satisfaction.

(Via EuroTelcoblog.)

FTTH in Japan Driven by Voice Quality and Prices

November 17, 2006

FTTH in Japan Driven by Voice Quality and Prices: ”

According to Hiro-Michi Shinohara was speaking for Japanese carrier NTT on FTTH uptake in Japan : ‘It’s not so much applications but prices that are driving growth,’ he said, ‘as well as high quality voice.’

NTT packages its FTTH data and voice package only marginally higher than its ADSL-based package — €43 per month for 100Mbps, which includes €3 for the ‘Hikari-denwa’ optical telephone service, which comprises two lines and five telephone numbers (geographically assigned). The ADSL package is €37 per month.

(Via FTTHblog.)

Dead VoIP Calling

November 17, 2006

Dead VoIP Calling: ”

Any VoIP company that is trying to be a voice replacement, is living on borrowed time (and money.) Folks over at My VoIP Provider did a historical study from August 2005 through October 2006, and found that 85 VoIP providers were kicked to the curb.

This is global data, but the issues facing these companies are pretty much the same… how to stay in business when all you can do is fight on price, and have no distinguishing features! Even AOL had to shutter its Total Talk. Vonage is no where close to being profitable, and Skype has to give away its money making services (in North America) to get some traction. And the incumbents are flexing their muscle, and taking market share by the month.

(Via GigaOM.)

Taking Out The Trash

November 16, 2006

A little comic relief here for us “vpn linked workers”

There are many benefits to working from home. The biggest downside so far is agreeing to take out the trash ( I’ve always agreed to do it) and then actually being around to do it :-(


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