Second Life Business Magazine

SL Business 6.0 JAN

The Premiere Virtual Branding Magazine

Behind the Scenes with Tateru Nino You’re on the Air

Second Life’s Economic Enigma

SL Busi Magazine

About The Cover Photography by: Dalian Hansen SLBM Photo Studio @ Egremont

Featuring: Tateru Nino

SL Business Magazine is

published

in

a

variety

of

formats. Please visit our web site for details on where to get your Virtual

(Prim-based)

Edition,

PDF (Web-based) Edition, or

Published (Paper-based) edition.

26 Featured Success Stories

Behind the Scenes with Tateru Nino Ute Hicks

iness Contents for 6.0 JAN Issue

08

16

46

50

Have a Seat Perfect North

You’re On The Air Ecocandle Riel

In a Jam Ludo Merit

Comic Relief Macaria Wind

Getting Started

The Toolbox

Music

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70

76

Second Life’s Economic Enigma Ludo Merit

Law of the Land Deeeep Witte

Lifetime Value of a Customer Kito Itoku

Investment

Law

Comic

Fashion

From The Publisher

Reaching.

Hunter Glass As we begin the New Year, I think this is a fitting opportunity to inform all of our readers of the changes that are going to be taking place with SL Business Magazine as news and information medium. We listen intently for quality feedback from our readers as we seek to give you the best possible experience we can deliver. One of the most common questions we get from readers is if we are ever going to have HTML or blog style delivery of our content. The second question most often asked is if we will have RSS feeds. It is my pleasure to announce that we will be offering these delivery systems starting January 15th at

www.slbusiness.com. This comes as a shock

to some but a great pleasure to many as they are most often times in a hurry and seek up to the minute business information in an environment that is changing by the minute. From day one we had readers who supported a PDF format and supporters who dreaded the download. Now we will be offering not only a monthly PDF, but also a daily blog and a forum for all residents to post freely to. I also want to take this opportunity to thank Dalian Hansen and Ute Hicks for their incredible work thus far on making SL Business Magazine one of the most well liked publications known in SL. If you ever get some time, send either one of them an IM and thank them for the fantastic work they do. They will appreciate it incredibly. I wish a very productive and happy new year to you all! ■

www.slbusinessmag.com ISSUE # 6.0 - JAN Publisher

Hunter Glass (USA) Creative Director

Dalian Hansen (China) Editor-In-Chief

Ute Hicks (USA) Managing Editor

Deeeep Witte (Belgium) Proofreader

Tiuri Thiebaud (Holland)

Connecting. P ost y o u r o p i n i o n o n o u r F o r u m

Staff Writers

From The Editor

Ute Hicks 2006 saw Second Life fly into a new dimension. The world population increased from less than 100,000 residents to more than two million. In the January issue of SLBM, we visit a resident born during the heady days of 2005, where team spirit and

Kito Itoku (Belgium) Ludo Merit (USA) Ecocandle Riel (USA)

volunteerism were the themes of the year. Tateru Nino and a dedicated core of volunteers are always at the helm when new residents find themselves flailing their arms in this virtual environment. The SLBM cover story studies the personality

Contributors Berenguer Halberd (USA)

behind the prodigy. In toolbox, we take a look at a couple of inventions that guide listerners through a maze of podcasts and radio stations available in

Perfect North (USA)

Second Life. In fashion, we meet Kaia Ennui, a

Macaria Wind (USA)

designer who branded a comic and t-shirt in SL, and is successfully marketing them in real life. The staff at SL Business Magazine want to wish you

Copyright © 2007 Highly Focused LLC

a prosperous new year. Please join us at our new blog at www.slbusiness.com. ■

GETTING STARTED

Have a 08

The furniture

Seat P e r f e c t

business not only brings people together, but it’s a top moneymaker

N o r t h

09

PEOPLE TODAY ARE REACHING for their keyboards with the intention of making connections. Google’s list for the top searches for 2006 include Bebo and MySpace, Web sites where you can meet, chat and enhance real life with a heavy infusion of two-dimensional life. Second Life offers a step beyond seeing words on a screen – in SL, avatars meet at welcome areas, go for a walk near the waterfall, then invite each other to their homes for further development of the relationship. Instead of staring for hours at “Perfect North is typing,” the avatars can sit on comfy couches, warm up their coffee in a microwave, gaze at the décor of the homeowner or watch the fish in the aquarium. Every possible home décor style is available, from zen-induced simple lines to Early American rockers to dark castles with coffins abounding. Large rooms with soaring ceilings require large sofas, pool tables, magnificent artwork and plants that never need watering. In real life, the avatar occupies a modest

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ranch style suburban Midwest home decorated in what was on sale at the town’s furniture store; in SL there is a mansion with eleven rooms, artfully landscaped, technologically protected from all comers except those invited and screened. Each piece of furniture is selected after careful consideration and Linden money is no object. The market for home furnishings in SL is booming, but it is impossible to tell exactly how much money is being spent. Furniture manufacturers have offered estimates that place the financial impact at 25 percent of SL’s economy. A search for “Furniture Stores” on the Linden Lab Search engine

within SL reveals more than 100 listings. There are new stores, long standing establishments, and used items available at garage sales. Or avatars can build their own furniture. Interior designers are available to assist those who are too overwhelmed by the choices and just want a nice sanctuary from real life. Deciding to go into the furniture business can be a surprisingly successful way to finance one’s SL adventures, challenge creativity boundaries and to perhaps find a SL job that replaces the RL one. Mash Mandala and his partner Baccara Rhodes, currently have two sims of furniture stores and, at press time, were planning an expansion to accommodate the increasing demand for home décor. The store (previously known as Home Depoz), is Depoz W and Depoz E. When questioned as to whether the name change had anything to do with the Big Orange Box in RL, Mandala responded, “No, we wanted our own brand, our own style.” In business since 2004, Mandala’s multi-leveled store provides a shopping cart that customers sit in while whisked to the various showrooms. His advice to newcomers who want to start their own furniture store in SL is to be persistent and ask lots of questions. “I failed the first class I took in building,” he confesses with a chuckle. “My instructor told me I was hopeless, but we laugh about that now.”

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Scomac Hicks and his partner Ayla Holt were furnishing their own home when they found that most of what SL offered was overpriced and not built to scale. Hicks had a flair for building, and Holt was excellent at textures. Hicks Furniture was born, and now the two avatars spend hours online developing their business as well as their personal relationship. The furniture builders and designers lean heavily on real life magazines and home décor television shows for ideas, but the ability to add texture and colors and scripts to pieces are options not available to real life coffee tables and lamps. Emily Lang of Emily’s, has real life fashion design experience, and when entering SL wanted a reason to work with prims. Her furniture is unique, with touch change fabrics that require a custom script. Some entrepreneurs saved all that building time by copying a real life furniture store’s catalog exactly, piece by piece into their SL furniture store. IKEA’s catalog, turned into prims, is selling quite well. IKEA’s USA public relations director declined to comment on this fact, but soon the company’s eyes may turn to SL, as Dell, Adidas, and Sony have. StyleHive visitors can purchase virtual versions of the RL home furnishings on display, click on the same object and be sent directly to the StyleHive page to order the RL version for their RL home.

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Xylo Hasp has been in the SL home furnishings industry for some time, and fantasizes that the real life furniture stores will come to SL and choose one of his unique designs to translate into real life furniture, blending his virtual world with the real one. Side by side with the booming home furnishings industry is the business of interior design. Paige Raven has a flair for decorating in RL that has blossomed in SL. Her clients are quite happy to just give her their Lindens and “set her loose” to decorate and even build their home in SL. Raven is currently working on a manor that requires filling ten huge rooms with all the comforts for entertaining. “Even in SL, we love our homes,” Paige said. “We want them to reflect who we are.” She has been in business for two months and has completed over fifteen projects. The owner of a dance studio in RL, she is contemplating turning her studio duties over to a manager and devoting more time to her SL business. How important is a well furnished home in a virtual world? What price can be placed on the ability to IM friends and ask them over to share a bong, sit in the hot tub, discuss books in front of a crackling fire, or crawl under the virtual covers with that special someone…all while in the privacy of one’s own home?

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The answer may be found in the words of an end-user and furniture enthusiast. Malcolm Lewellen, whose modern glass enclosure is perched 447 meters above Second Life’s earth, finds peace in his SL home. The house features a large screen television and a waterfall wall surrounding comfortable, inviting couches. Soft music fills the air, and all around are examples of Malcolm’s personality: art, flowers, and the view. “My SL home gives me tranquility and a sense of accomplishment,” Malcolm explained. “It is an expression of self that I enjoy being in and sharing with others. I feel safe here.” ■

Cozy Cottage Interior Design Makkeolli 101, 72, 62 Depoz W Depoz W 253, 92, 26 + Depoz E 129, 133, 26 Emily’s - da Vinci 62, 248, 537 Hicks Home Furnishings - MIA 144, 96, 30 StyleHive Rivulet 76, 52, 0 + Dublin 134, 65, 26 Xylo’s Furniture - Hagen 68, 205, 21

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THE

TOOLBOX

You’re on the Air Pockets of

enthusiastic podcasters

bring the medium into Second Life

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E c o c a n d l e

R i e l

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A pretty gal is sitting alone on a park bench. All of a sudden she bursts out in laughter. She’s not wearing headphones, so what could she be listening to? She turns, and the sun bounces off her source of her entertainment -- an Mp3 player attached to her shirt sleeve. Alas, she’s one of many Podcast listeners in Second Life. The MP3, available from Podcast Island, lets listeners pull up a directory of podcasts to listen to. Podcasting is a cottage industry in the real world, but is finding a growing audience in Second Life. While most podcasts are purely a source of entertainment, they can be a source of advertising revenue too, and several Second Life residents are creating business models to make money from Podcasting. Peter Newell and Adri Saarinen of the virtual content creation firm, Metaversatility, created the podcasting kiosks that are found on Podcast Island. The podcast kiosks were a contract job undertaken for the avatar, Pickle Radio. Methods to generate revenue for SL podcasts include getting a podcast sponsor, putting audio ads on a podcast’s Web site, or requiring listeners to pay per download, Saarinen says. Newell added that podcasts can serves as marketing for a name, or brand. “I would say doing any number of those things could generate sustainable income if you have a popular podcast,” Saarinen says. “Using Podcast Island’s advertising system could certainly help bring listeners in, and therefore generate revenue.” The avatar, Pickle Radio has been running Podcast Island for six months. The island lures visitors with a performance stage, an automated tour around the island, and other incentives. Radio’s sim gets a weekly visit from Scott Sigler, the voice who reads “The Rookie,” a podcast about a fictional football player.

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His main business is the podcast kiosk rental stations where one can rent a podcast kiosk for $L50 per week. Users can put their own advertising on the player , and configure the player so that the user can click on the player, load the user’s Web site and listen to that user’s custom content. Radio’s new strategy is giving residents a free podcast player to set up on their own land. With these podcast players, residents are directed to Radio’s Web site www.podcastpickle.com, where they can pick from a directory of podcast shows. Radio employs several people to help run his island. He doesn’t depend on his podcast business for his sole support, but envisions a day when it will provide a stable income. “Podcasting is still a baby,” he says. The Goddess and Banana show (www.gbaffair.com), with about 1000 listeners, follows a couple and their mishaps in Second Life. The Goddess, Yxes Delacroix, says their business model is selling sponsorships for the show. A Second Life business can sponsor four episodes for $L6,000. Real Life firms are charged $200 USD for four shows. The package includes a 30-second spot created by their team. The show comes out three times per week, and usually lasts between 45 - 60 minutes. Banana Stein handles the production of the show, the recording and editing. The two stars, from Arizona and California, met in-world and created a fantasy island built in Los Arboles that showcases their show, and their work as virtual content creators. John Swords created SecondCast more than a year ago. He describes the SecondCast podcast as a lighthearted, off-the-wall conversation. “Sometimes it’s clear subject

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matter, sometimes it’s not.” The show now attracts 10,000 listeners per episode. Swords says podcasting has “huge market potential” but he originally was not interested in the monetary aspect.”I haven’t actively gone after (the money) because (creating the show) wasn’t a capitalistic decision. I wanted to evangelize what SL is about.” He said he started thinking about advertising revenue at about the 1000 to 2000 download point. “I set rates and quickly found it was taking more time to sell the ads than it was to collect the fees and make a profit. When we got up to 10,000 listeners, we got requests again.” He has had offers for $400-sponsorships for one show, which he turned down because it was only a one-time commitment. Swords says his server fees, which average $400 to $500 USD a month depending on how many people download his podcasts each week, are his biggest expense.

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“To charge $L50,000 to $L60,000 per episode is more than what advertisers want to pay.” Swords’ rate card offers $L20,000 for a basic sponsorship. HippieGeek Book is a veteran SL resident who shuns the idea of making podcasting into a big business. Book invented the Podbong, a radio that lets users see a directory of podcasts and radio stations available, and play it in their land. “If I wasn’t a hippe, I don’t think I would have called it a podbong.” He was the first to set up a mall of audiobooths, where SL residents could go in and listen to a different podcast in each booth. When an entrepreneur offered to go into business with him and suggested charging users to listen to the podcasts, Book shut down the booths. “Podcasters can take a prim and dress it up how they want, then put a code in it and turn it into a podbong. I gave it away and let them distribute it, with the caveat not to sell it.” Book says up to 100 of the free podbong radios are bought at SLExchange each day. Book suggests that dance clubs can use the Podbong as a branding tool, the same way that can be done with the Pickle player. Other podcast communities in SL include Stuart Warf’s Podmafia club in Dimidata, where he holds events for podcasters and encourages visitors to learn about podcasting. Inside the Podmafia club, is a “Wall of Fame” with posters of popular podcasts, both in Second Life and on the Internet. When SL residents are ready to try creating their own podcasts, Spin Martin (a.k.a. Eric Rice in Real Life) says he can offer some tips. Martin has been hosting a podcasttype show for about five years, His sites, www.audioblog. com and www.hipcast.com, serve users who want to try their hand at podcasting. The main focus of his studio has not been about making money, though he has had the opportunity. Spin has turned down ad revenue from Nikon, because he and his colleagues are Canon users, he says. Martin says the key to a successful SL podcast is having a well designed script, and the ability to “get over” the sound of hearing one’s own voice on playback. ■

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SUCCESS STORIES

Behind the

One of Second Life’s most infamous

U t e

26

H i c k s

Scenes

residents quietly takes care of business “I feel like the Paris Hilton of SL. Famous and well-known for being...well...famous and well-known.” - Tateru Nino

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SHE ARRIVES AT THE NEW CITIZENS PLAZA in a long, blue, crushed-velvet dress, horn rimmed glasses, looking like a librarian. With a few keystrokes, she has banned some notorious cage gunners and saved some grateful new residents who griefers had jailed and held hostage for ransom. Meet Tateru Nino. This one-yearold resident has had a hand in several of SL’s most important developments including developing Help Island and the mentors group, spearheading SL’s Third Birthday Bash, and enhancing the Linden broadcasting system, which allows attendees on other sims to listen to Town Hall meetings when the mainland parcel is full. “Tateru has been a dedicated volunteer since first joining up group in the fall of 2005, contributing to the Mentor group in particular as a leader and teacher,” Jeska Linden, a Linden Lab employee on the community development team, says. “She was an instrumental part of the success of

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the Help Island welcoming project, and led the creation of the volunteer headquarters in Tenera. We’re very grateful to Tateru.” Tateru Nino in real life is a Melbourne, Australia native in her 40s who works as an IT consultant rewriting, testing and debugging software. As the story goes, she has Asperger’s Syndrome, can’t look people in the eye when talking to them, runs the other way when she sees a crowd, and sees herself as a failure. The Second Life Tateru Nino is gregarious, friendly and helpful while performing her roles as mentor, scripter, idea generator, analyst, instigator, and coordinator.

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Nino is deputy director and board member of the volunteer-staffed New Citizens Inc. (NCI), a job she says focuses on administrative policy, general oversight and communications. “There’s daily chores in addressing griefing and cleaning up offensive materials,” she says of her work at NCI. “Often students neglect to clean up after a class. Some rather older people leave ‘spamvertisers’ at the landing point that hand out advertising to everyone who arrives,” Nino says with a look of disgust.

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Upon her arrival in Second Life,

Hence, the creation of New

Nino found the original Help Island

Citizens Plaza and the resort-like

unwelcoming. “It was a bare dirt

welcome centers that new residents

island, with a house and a sandbox in

can find today.

one corner,” She explains. “I thought

Blueman Steele, an SL mentor,

it should be pretty and be something

remembers the early days. “Tat and

that...you know...helped and was

I were there for the groundbreaking

educational and inspiring.”

on the first help island.” He said they

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helped new residents pry boxes off their heads. “The first guy who showed up had named himself ‘Greefer’ and found himself on an island with 20 mentors,” Steele laughs. Steele says Nino was one of the most inspiring people he has met. Seven days into her Second Life, Nino opened up a store called Spark of Genius, in Achlya (197,183,89) which still generates sales, although she hasn’t visited the store recently. The biggest project Tateru spearheaded in 2006 was Second Life’s Third Birthday

party

bash,

which

featured

speeches, a parade, live music, machinima, and art exhibits. “(The birthday) was coming up and nobody was doing it,” Nino explains. Torley (Linden) and I knocked a couple ideas back and forth and it just sort of happened. Within a day, I had Mera (Pixel) building models, and I was drafting the announcements.” Nino is already planning out Second Life’s 4th anniversary.

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Nino retired from the Live Helpers and volunteers in the autumn of 2006 to focus on project development and journalism, but she is still summoned by the mentors, and she doesn’t mind. “I don’t know better than anyone else. All I can do is help people to help themselves and to help each other. It’s the gift that keeps on giving.” Tateru’s latest endeavor is blogging for Second Life Insider and New World Notes. She says journalism is “another way of teaching and being thought-provoking.” She understands now what reporters do. Tateru said she used to give a minimum of six interviews a week. “They were getting too time-consuming. I love journalism students and reporters and all, but if I spend my time doing interviews, I’m not really benefiting others.” Aimee Weber

told

SL Business

Magazine that whatever Nino does, she does with passion. Just a few weeks into her writing job on SL Insider, Nino was surpassing the quota and submitting five stories per day.

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“So o peopl like the nothi contri but the thems Justthey bei Nino’s low self confidence emerges

every once in a while during a typical conversation.

“I’m homogeneous and bland,” she

says one moment, and the next moment she

delivers a humorous anecdote about how her friend, designer Hyasynth Tiramisu, sent her a prototype dress when she was

dealing with new residents in Waterhead. “(The dress) didn’t fully rez, and it left

my..err..headlights sticking out.” Nino says

she didn’t notice immediately since she

sees herself from behind. “This new boy followed me around for about 3 hours. I was wondering why.”

Nino insists that she is blunt, math-

lame, and a turnoff. Yet she regales a story

about a favorite guitarist in Melbourne with

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often le feel ey have ing to ibute, ey do: selves. ing who are.” several glyphs flare to startling particleeffected life with Tateru appearing in the center of it.

“She’s clever and generous with her

time. She is fun to talk with, and I found

that one tends to meet interesting people

if you hang around her. I got into helping with the Mentors, NCI, and the SL Third

Birthday events in large part due to her influence. “

six fingers, and speaks fondly of British

punk band, Deathliner, who she longs to see in concert. “There’s something

about their music that I really like, not to mention the attraction of getting falling-down drunk with good friends who I’ve not yet met in the flesh.”

Shawk Pertwee, a resident who

took Nino’s building classes and

became a respectable builder herself, recalls her first impression of Nino. As

a newbie wandering around aimlessly

after Orientation Island, Pertwee said

Nino appeared to her like magic. “ I saw

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Ordinal Malaprop, Caledon resident, steampunk enthusiast and inventor of gadgets, is a recent friend of Nino’s. “I must say that she is one of the most perceptive observers of Second Life that I know, and is also possessed of a delightful and educated wit, and a charming character.” Malaprop adds, “That combined with her ability to actually get things done and inspire others to do the same makes a person well deserving of their place in the history wikis. So often one comes across the obnoxious but driven, or the charming but ineffectual.” Nino does have her detractors. One well known avatar-rights activist in SL has accused Nino of being a Pollyanna and “sugarcoating” the problems in SL. Nino willingly gave SL Business Magazine names of other critics, but when contacted, they chose not to comment.

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WHAT IS A TYPICAL DAY FOR NINO? “I do some SL development work, so there’s meetings on that, plus actual product demos of the finished work,” she says. “Some social time with the customers when I can - because the better you understand the customer the better you can help them. Then doing interviews and research for the articles I write - slicing numbers different ways looking for gold. Meeting new people - and getting caged, firebombed, hit-on and insulted.”

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“So often people feel like they have nothing to contribute, but they do: themselves. Just being who they are.” 44

Nino says that during her year in SL she has become a changed person. “SL’s certainly changed my life; changed my perspective on myself and everything else,” she says in a moment of contemplation. “So often people feel like they have nothing to contribute, but they do: themselves. Just being who they are.” “The big life-lesson RL has handed me over and over is that I’m a failure. Asocial - maybe anti-social. Not very likable. Unpopular. Often incomprehensible. I’d spent years and years coming to terms with that self-image. And then a few months in SL and I’m suddenly having to adjust to the fact that I was wrong about that. I’m still trying to figure out who I am, now that people are relating to me without the social impediments that my autism places on my RL interactions.” ■

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MUSIC

g the n i h s re pu mprove a s n a t to i usici p m ions m s e e t s f t e i a s m nd L they s er ja a t Seco t s e e b i dar y for g boun o l o echn the t

L u d o 46

M e r i t

N A JA

CAN A BAND FROM ALL OVER the real world jam in a Second Life garage? SL musicians are eager to do just that, but it’s not easy. SL Business Magazine interviewed four musicians who are doing it four different ways. Lag is usually the culprit that throws a wrench in the system. We’ve all seen conversations get shuffled because different computers receive sentences in different orders. Many of us have heard live musicians say hi to someone who left the room seconds ago. With random transmission delays that are different for each musician, something has to be done to keep the music in synch. Composer and instrument designer Robbie Dingo makes hyperinstruments that are designed to jam together, but are played very slowly. It feels like playing a carillon. You hit a key and hear the bell ring later as you’re hitting another key. Despite Dingo’s genius with sounds it doesn’t sound all that good. The user is playing on an SL keyboard that generates .wav file notes. If more than 20 people are on the sim, lag makes it impossible to play at all. Musicians want to play their own instruments live. Musicians Amber Habsburg and Christine Montgomery recently jammed with a group of nine and streamed it to a friend’s sim in SL. The two are working with midi, which shortens the delay to half a second. They use ChatConsole to send midi data to a chat channel and scripts to convert that to .wav data and play it. Musicians can either play on their own midi keyboards or click on inworld keyboards. Habsburg and Montgomery are working on removing the bugs out and hoping to convert to .NET code. The delay is still a problem. Half a second delay is enough to interfere with “any kind of fast stuff,” Habsburg said. “We could play dirges.”

Guitarist and singer Juel Resistance uses Simplecast software and streams audio in a chain. When she and five other musicians performed a jam session in December, she explained, “I was first person on stream, so they had to follow me. I could not hear them, but the second person could hear me, the third person could hear us both and so on, and the sixth person on stream could hear us all. At the end, someone usually is recording it. They play it back so we can all hear. “It sounded wonderful but takes practice for us all to be on same page with volume, adjustments and things like that.” The sixth person in the chain streamed to SL, and the audience heard it up to a minute and a half later, before five of the musicians did. Using the Simplecast method, if the singer is the first person streamed, and the percussionist is the sixth person, but the singer can’t hear him, what happens if the singer starts singing off beat? “[the percussionist] types STOP and we all goof up,” Resistance said. “[That] makes it fun, it makes us better musicians to be our best best.” To the musicians, it isn’t like jamming in a garage, but Resistance is still enthusiastic. “It’s one of the most amazing things about Second Life, being able to perform with people globally, right from home, and actually do live performances in real time.” Another solution feels a lot more like real time, because it isn’t. Concept designer i7o Zhu uses software called Ninjam, at www.nimjam.com. “You’re not jamming in real time, but an understood fake time,” i7o Zhu said. Zhu, who has a collaborative audio studio in SL in Zeuzera, says Ninjam is client and server software that eliminates apparent delay by lengthening real delay. Each

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musician is playing with the previous measure sent by the other musicians. Just one of the musicians sends the acoustic stream to Zhu’s Ninjam server and quicktime encoder to be streamed into SL. The musicians hear each other as they jam using Ninjam. Each can set the mix of instruments to his own preference and each can record the performance. The musician that streams to SL is the one who controls the mix that is heard in SL. Zhu has tested his interface between Ninjam and SL with two musicians jamming to an audience of four. Of the three solutions described so far, Ninjam would seem to be the one that’s most like RL jamming. However, even fake time has its limitations, especially for faster types of music, according to Zhu. Musician Plum Hartnell said, “Whatever you hear is very weirdly out of synch. I couldn’t get on with it. Give it another five years and the technology will catch up with the idea.” Waveplant Irvine, the designer of the CMI software music synthesizer, has read about Ninjam. “Nice idea,” he said, “but you have to be pretty good and I think it would really interfere with musical subtleties. It could work well for dance music. Your timing would have to be dead on. One mistake and it would become a shambles.” The Ninjam client has a metronome to help the musicians stay on the beat. Irvine is just beginning to work on an audio solution that will use markers and “some sort of adaptive delay” to get the music in synch, but not in as rigid a fashion as Ninjam. Just as our avatars can’t move as well as we can, jamming just isn’t the same in SL as it is in RL. For the sake of playing with others from all over the globe, musicians will live with the limitations and seek ways around them. We may have to wait five years for high quality technology, but we won’t wait that long to jam. ■

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FA S H I O N

Comic M a c a r i a

50

W i n d

Relief

Designer’s Second Life brand takes off in Real Life

MIX EVIL GINGERBREAD COOKIES, a branded comic, virtual and real life t-shirts, and what do you get? A marketing recipe brewed in Second Life by kaia Ennui. When asked about the Gothic influence of designs found at in-world store Nocturnal Threads in Pimushe, designer and shopowner Ennui says, “I was a NYC crazy girl back in the eighties. I grew up with a mixture of goth and punk influences and have always loved fashion.”

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As a teen, Ennui painted t-shirts and sold them at Second Coming Records in New York. She was also into destructive clothing which she explains as the art of taking clothes apart, ripping them up and re-sewing them roughly together. “I used spray paint, safety pins and scissors like other artists use oils or watercolors,” says Ennui. Though her degree is in psychology, Ennui quickly burned out of that field and pursued a career in makeup artistry. As a freelancer, she worked for Christian Dior, but after September 11th, as she so eloquently puts it, “we all got canned.” Ennui then turned to helping friends with their Web company. It was there she taught herself graphic design. So it was with great interest she read an article in Jane Magazine about fashion designers earning real money selling virtual designs to virtual residents here in Second Life. The concept, she says, “blew me away.” She signed up, chose the name kaia (pronounced ki-uh, long I) Ennui (“bored” in French) and within three days was designing in-world. Not long after beginning her new career as an SL Designer, Ennui opened her Cafepress print-on-demand store in RL selling t-shirts she designed based on SL humor. Since opening Nocturnal Threads in spring, 2005, Ennui has made remarkable progress with the store’s unique and varied line of male, female and unisex clothing and accessories, adding new selections weekly. Her RL Cafepress site is picking up speed thanks to SL fans.

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About a year ago, during an IM with a friend who was describing a recent nightmare, Ennui found herself thinking of voodoo dolls. This led to the idea that gingerbread men are like evil little voodoo cookies and she started doodling. She drew an evil gingerbread cookie and made it her MSN avatar. This led to a few more of what she calls “dreadful little doodles” which her friend loved. She thought it might be fun to make them nicer and the name GingerDead came to mind. Since Ennui already had tshirts in SL and RL she decided to add the GingerDead line to both stores and in SL, says Ennui, “they took off.” “Nocturnal Threads customers loved GingerDead,” Ennui says. She started receiving IMs from people who wanted more so she created a free doll and pajamas. When she started running into folks in SL with the dolls she realized just how popular GingerDead and friends had become. The reaction from Nocturnal Threads customers was so encouraging, Ennui began to wonder what else could be done with these characters and thought “webcomic.” She developed a few strips and in October launched her webcomic site and a new fashion line in SL, taking the GingerDead collection beyond t-shirts. “The GingerDead stuff sort of happened all together - here and RL simultaneously,” Ennui says, “and in SL I could make a real fashion line based on the comic. Without SL, it never would have been made into a webcomic.” Though Ennui still works on projects in RL updating Web sites and designing for certain clients, most of her time now is spent on her own designs for her stores. She wants to see the newer parts of the collection make it to RL.

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When asked what advice she has for others considering “crossing over,” she responds, “I would say to treat SL with all of its potential in mind. It really is what you put into it. In SL the potential to reach so many thousands is here - people from all around the world, so if you were to take something you do in SL to RL you first should build up your SL exposure. Get your work known and then announce the branch into RL. If people in SL like what you do here, they will be interested in what you do in

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RL. And people tend to be very supportive and encouraging. there is a sense of community here, you know?” Nocturnal Threads is the SL store, and the GingerDead Collection is one line and features original artwork from the comic which can be found at www.GingerDead.com. Several of the t-shirts seen at Nocturnal Threads can be purchased in RL at www.cafepress.com/nocturnalthread.

Without SL, it never would have been made into a webcomic.

This designer’s heart and soul is in her store and her creations. Nocturnal Threads is very real to its owner. Visitors should be sure to try the gingerbread cookie outside the store. When this reporter mentioned the twisted humor, Ennui nearly jumped for joy. What’s the future for the GingerDead friends and their creator? There are new avatars in the works and Ennui asked for clay for Christmas.

“One day I want to put together some books using the GingerDead characters and Haiku,” Ennui says. “The greeting cards I did for the holidays sold really well. One day I would like to see all this stuff in RL.” ■

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OUTLOOK & INVESTING

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second life’s economic enigma The economic statistics provided by Linden Labs are confusing. Nonetheless, they suggest that land could be losing its hold on the imagination of Second Life gamers—if so, bad news for Linden Research itself, as it needs land sales to make its revenue targets. In addition, the statistics fail to confirm the much-vaunted 40 percent growth rate. It is a commonplace that Second Life presents a blank slate upon which participants draw their own world. Unfortunately, the slate is a tad more blank than it should be. Several transactions, activities and events in SL are recorded—after all everything on the grid is recorded or capable of being recorded—but unavailable for serious examination. This is not the time to beat up on Linden Lab; in mid-December the company piloted the grid through an unusually trying upgrade. In addition, they must contend with SL gamers’ natural inclination for joyful anarchy to shade into dysfunction, whether personal griefing, mercantile copyboting, or grid-wide grey-glooping.

Outside economic analyst says figures are muddled, land revenues are uncertain, and the 40 percent growth statistic is a chimera

Berenguer

Halberd

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SL Business Magazine’s mission this month is to seek out good-quality data about the economic activity of SL, and to play such part as we may in creating it. Let’s start with what we have. Linden Labs provides what it recognizes as rudimentary data on membership. But we know nothing about churn, a standard measure of defection from companies supplying a service. The test of churn varies from company to company. Why not provide figures based on the test used by Linden Labs themselves, those failing to qualify for stipend? We would also welcome figures for log-ins by class and SL age.

If we turn to the SL economy, we rapidly find ourselves in deep water. Just how important is land to SL gamers? The evidence is confusing. Linden Lab provides figures on land sales and the like, but an examination of the classifieds of December 9 (table on next page) shows that land weighs far less with advertisers than does attire. 60

TABLE 1 Sector

Proportion

Attire

55.1%

Entertainment

15.2%

Improvement

14.1%

Real estate All other Total

5.5% 10.1% 100.0%

Note 1) “Attire” includes clothes, skins etc; plus malls specializing in attire 2) “Entertainment” includes bars, casinos and sanctuaries. 3) “Improvement” includes home and land improvements, but excludes houses. 4) “Real estate” includes land, rentals and houses without land 5) “All other” includes role-play, Xmas, software and other tools, cash offers, employment and the SL Exchange.

This analysis excludes the “long tail” of advertisers paying less than L$2,500 to put their ads up for a week. We have to bulk up “real estate” with “improvements” to get ahead of “entertainment.” We know that fortunes have been made in land development, but wouldn’t it be nice to find out what happened to mall values and rentals after teleporting was introduced. And wouldn’t it be nice to know how residential values vary with location by comparison (say) with restrictive covenants and density of settlement. So how about land-use fees and sales, as levied from inception, broken down by parcel size, not to say new land sold and recovered, from inception, broken down by parcel size, islands and so on? The business activity of SL is conducted by individuals and groups. Linden Labs evidently feels that they have something of a handle on this: they offer figures for the “profits” of merchants. We gross these up in Table 2.

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TABLE 2 November 2006 < US$10 US$10-50 US$50-100 US$100-200 US$200-$500 US$500-1,000 US$1,000-2,000 > US$2,000

“Profits” made by number of merchants Assumed avg “profit” (US$) Est total “profit” (US$) 7,098 3,592 1,010 797 671 289 179 152

5 30 75 150 400 750 1,500 3,000 Total (US$) Total (L$)

35,490 107,760 75,750 119,550 268,400 216,750 268,500 456,000 1,548,200 418,014,000

For these to be “profits,” Linden Labs would need to have recognized the multiplicity of accounting polices of 13,788 merchants and successfully consolidated their off-grid activity, noncash expenses and working capital finance. We can test this by comparing the gross totals in column four to the figures below for the SL economy. The purported “profits” for November gross up to an estimated L$400 million. This is incommensurate with anything but revenues, possibly after deduction of Linden Lab’s occupancy charges and other fees. Linden Lab evidently recognizes the appetite for reliable figures on the topic. A quick and dirty sense of SL business activity would come from stats on groups formed, disbanded (or allowed to atrophy, as defined), from inception, broken down by character, showing number of groups and number of members.

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TABLE 3 LL Sources Classified Charges Group Creation Fees Land Parcel Directory Fees Stipends Upload Charges Other LL Sinks Land Linden Lab Sales on LindeX Referral Bonus Stipends Other

September 06

October 06

November 06

5,029,221 816,300 2,120,485 969,180 37,000 7,543,973 17,851,670

5,555,639 914,000 4,442,043 1,322,100 56,500 8,421,850 15,689,579

7,039,201 1,071,600 4,414,041 1,161,330 53,250 9,060,010 67,238,625

September 06

October 06

November 06

89,092 20,117,994 146,500 64,650,550 7,058,261

18,180 49,728,404 99,000 96,144,850 11,647,366

51 77,327,855 972,500 91,259,100 12,163,922

This is well before we come to the big issue: the extent and character of the SL economy as a whole. For the last three months, Linden Lab has published “Sources and Sinks,” as follows (Table 3). “Sources and Sinks” is an engineering concept. It may sound something like the accountants’ “sources and applications” on a cash-flow statement, but this only makes sense with an accompanying income statement and balance sheet. As presented, “Sources and Sinks” has the effect of combining several economic

concepts generally kept separate. To simplify matters, SL can be thought of as a selfcontained island, with its own government, economy, banking and trade. Fees, land sales, bonuses, stipends and the like are best thought of as part of the economic activity of the government. Sales of Linden dollars should appear in the balance of payments figures, though in principle they also contribute to the equivalent of the tierone capital of the “central bank.” “Sources and Sinks” is silent about private-sector economic activity and banking.

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We made our estimate of the former above: L$400m plus of revenues, based on the figures shown by Linden Labs as “merchants’ profits.” Banking is just as important, as all premium accounts have savings in Linden dollars, either in their accounts with Linden Labs, where they notably earn no interest; or on deposit with one of the SL banks, with their more sporting approach to interest payments. Everything is made harder by the fact that each month “Sources and Sinks” contains two large and increasing entries for “Other”; and that no attempt has been made to balance the “Sources” with the “Sinks”, or account for the imbalance. We will explore this in later articles. For the time being, let us restate the figures as a scratch “General Government” account for Linden Labs, combined with the sale of L$, conceptually a source of capital to the “central bank.” (A discussion on money supply will have to wait.)

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TABLE 4 Account of Linden Labs Sales of L$ on LindeX Land sales Less recoveries Net land revenues Groups Parcel direction Classified Uploads All fees Total revenues Expended as Gross stipends Less recoveries Net stipends Referral bonuses Total expenses Gross surplus attrib LL Add other income Less other expenses Net other Surplus (deficit) attrib LL

September 06 L$

October 06 L$

November 06 L$

20,117,994 2,120,485 (89,092) 2,031,393 816,300 969,180 5,029,221 7,543,973 14,358,674 36,508,061

49,728,404 4,442,043 (18,180) 4,423,863 914,000 1,322,100 5,555,639 8,421,850 16,213,589 70,365,856

77,327,855 4,414,041 (51) 4,413,990 1,071,600 1,161,330 7,039,201 9,060,010 18,332,141 100,073,986

64,650,550 (37,000) 64,613,550 146,500 64,760,050 (28,251,989) 17,851,670 (7,058,261) 10,793,409 (17,458,580)

96,144,850 (56,500) 96,088,350 99,000 96,187,350 (25,821,494) 15,689,579 (11,647,366) 4,042,213 (21,779,281)

91,259,100 (53,250) 91,205,850 972,500 92,178,350 7,895,636 67,238,625 (12,163,922) 55,074,703 62,970,339

These figures (Table 4) fail to bear out the recently much-advertised statistic of 40 percent growth per month. Net land sales were down from October to November. If the figures are normalized for November’s 30 days, they are up by only 3.1 percent. Should we believe that this is wholly accounted for by Thanksgiving? In fact, land sales remain a more or less constant fraction of SL gamers’ personal net income, that is purchases of Linden dollars, plus stipends and referral bonuses. This fraction was 2.4 percent in September, 3.0 percent in October and 2.6 percent in November. Our figures for net income exclude trade internal to SL (the more than L$400 million estimated for November), but this must more or less net out between SL gamers.

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“Fees, land sales, bonuses, stipends and the like are best thought of as part of the economic activity of the government.” 66

One indicator, group fees, is up by 17 percent from October to November and 15 percent per month from September to November. Such figures are broadly confirmed by classified advertising fees, up by 27 percent from October to November, and 18 percent per month from September to November. Pretty good, but well below the trumpeted 40 percent. We are unable to confirm these figures straightforwardly from the monthly stipend, as this was reduced at the beginning of November. From October to November, stipendiary payments fell by 5.1 percent nominally. If we normalize for the days in the month and make the goofy assumption that every stipend was paid at the reduced rate, then the number of recipients was up by 31 percent. A better guess would be that the number of recipients rose by around 15 percent between October and November. Also less than 40 percent. The sale of Linden dollars shows extraordinary increases, up 56 percent from October to November and 96 percent per month from September to November. As this excludes off-LindeX trading, such levels must reflect speculation. It would be impossible to separate this out (we can’t in the “real” economy), but it would be helpful to compare it to accurate figures for current and capital transactions, best captured in “balance of payments” accounts. We have no idea what the final figure, the balance between Linden Labs’

expenditures and income, really means. The reversal of November’s gross balance by the figure for “Other” (and the reversal of the generally commensurate figures for the two prior months) makes us particularly uneasy. We sense we are on shifting sands, dealing with incommensurate figures that should not be permitted to operate upon each other arithmetically. So what to conclude? We are entitled to question the quality of the figures presented by Linden Labs. We may also ask if land is keeping its hold on the imagination of SL gamers and if it remains salient to the SL economy. This matters, as virtual land-sales are crucial to the business model of Linden Research itself. Finally, we may ask why economic growth is failing to keep step with newbie registrations. We know less than we should—less than we could. We want to see more and better figures. Over the next few months, we will examine inflation, money supply, merchants and banking and the generality of the SL economy. The editors at SL Business Magazine welcome comments and feedback from readers. The magazine would also welcome industry data from SL businesses. SL Business magazine’s editors propose to launch a merchants’ economic forum, so that readers who contribute data anonymously can obtain full reports of indices of rents, consumer goods, economic activity, defaults, failures and the like. ■

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L AW

Law

of the Land

How to avoid getting scammed

D e e e e p 70

W i t t e

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AFTER LINDEN LAB ANNOUNCED a price increase on islands in late October, people flocked to the real estate business, buying up islands at the old prices. The practice of buying land and flipping it, or selling it for more a few hours later isn’t new. But with opportunity comes greed, and the search for loopholes that can be exploited, especially in a virtual world. With this lowered sense of ethics comes the virtual scammer. Serious businesspeople can protect themselves against these scammers. The simplest scams are directed at new residents, or “newbies.” Disreputable Second Life real-estate companies approach newly registered users on landing point and convince them that they need to buy land at an inflated price. The landowner changes names, transfers the profits and repeats the scam over and over again. To counter this scam, some serious real estate firms offer “free” land to newly registered users. This means new users do not pay for the land, but only pay the tier, a virtual form of property tax. Real estate magnate Anshe Chung and her company, Dreamland, have used this strategy. Scam artists tend to proliferate when the quest for affordable land becomes desperate. In October, some scam artists saw the impending rise in land prices and went to now-or-never practices to get their land pegged at the cheaper rates. One such scam was run by Dirk Newcomb, formerly of North Shores Real Estate. As partner of the North Shore Real Estate company, he rented two sims from Dreamland and sub-rented them out. One of the sims was North Shore, which was commercial property rented to several

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store owners, according to Master Quatro, an Anshe Chung employee. The scam was a combination of deceit and smooth-talk, but the normally talkative Newcomb remained mum when approached for an interview. Newcomb decided to stop paying tier to Dreamland. Due to lack of follow-up on Dreamland’s part and Newcomb’s “the-checkis-in-the-mail” attitude, he was able to pocket two months’ worth of rent from his renters instead of giving it to the landowners. Dreamland’s Master Quatro said Dreamland has instituted a new policy to prevent such scams. “We have put in place a weekly review of all full sim rentals and tier payments and our policy will not be as forgiving for those who don’t pay on time.” When asked whether the firm would sue Newcomb for not paying Dreamland, Master Quatro was more reluctant. “To try to prosecute people in the real world, especially when your company is based in China and the thieves live in United States can be a daunting task... we have reported it to Linden Lab.”

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Newcomb then turned on his partner, yeochris Bentham. According to Bentham, Newcomb took $800 USD and an undetermined amount of Lindens from Newcomb before he left. For these crimes, yeochris is considering going to court against Newcomb, but is uncertain on the feasibility. The problem in this scenario is the renters are hurt the most. They end up with nothing -- no land and no money and, worse, no faith in SL. They are dependent on the goodwill of the landowner or the real estate company. In this case, yeochris and Dreamland offered the renters an alternative location for their shops and some weeks of free rent.

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To avoid potential scams, business owners should make sure that all transactions are documented. Renters can ask their landlords for notecards or e-mail confirmations. Make payments using Paypal, which requires a verifiable e-mail address and other information from its customers. This way, businesses and customers have proof of payment. Payment in Linden Dollars is also recorded in residents’ account transactions, but these transactions are in a virtual currency between virtual avatars, and Linden Lab’s laissez-faire policy makes it difficult to resolve payment disputes. A second suggestion is to ask the landowner for proof of ownership of the sim. Do not hesitate to ask this every time you pay rent. A serious real-estate company will be happy to identify the owner. Rent-paying business owners need that bit of security. Third, paying a small premium to invest in land from a serious real-estate company can pay off in the long term. The more established real estate companies generally offer better service and more experience. Talk to some renters and get a feel of how the people behind the company treat their customers. As in the real world, caveat emptor. ■

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2006 © Kito Itoku

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JAPAN IN PINK

桜花の日本

JAPAN IN GRAY

灰色の日本

松里 a new photo exhibit by SONGLI