Market incentives vs. volunteering in Second Life

In a previous blog post, on Abundance and Scarcity in Second Life, we asked whether the success of Second Life was based on its openness which alllows volunteering, or on the internal market incentives.

We are upgrading a very valuable comment from Gwyneth Llewelyn, which answers clearly: it’s the market incentives.

Gwyneth Llewelyn:

“IMHO, a bit of both of your first two questions. Second Life’s very open attitude to allowing almost any type of content, without supervision or pre-approval, has given the message to the content creators that they would be allowed to do pretty much anything without constraints — and, unlike other tools/platforms, Second Life has always included the required tools to create content (and program it!) inside the free and open source SL viewer, available for Windows, Mac, and Linux. So this openness definitely attracted content creators — many of which never dreamed to be a 3D content creator anyway (the tools for that are way too expensive and require a lot of experience and courses to be familiar with them — e.g. Maya, Blender, 3DS).

The market approach is naturally vital. Allowing content creators to retain their intellectual property rights, and being able to license it to other users of SL (this is, for all purposes, what happens when someone “sells” content in SL: you get a license to use content produced by someone else, for a small fee. A tiny fee in most cases: fractions of cents!), was the ultimate discovery to create and manage a successful and thriving digital content creation economy, which, even though each transaction is so little in value, sums up nicely to about a million US$ per day. No other company designing virtual worlds has embraced this route (although a few have come close). Most feel they would completely lose control over what kind of content is sold, and would be kept away from getting a share of the proceedings. They would be quite right! Linden Lab (LL) does not produce content neither charges any fee for selling licenses to use that content. They use a completely different business model — content has to be displayed somewhere, both at the seller’s location (”in-world shop”) and on the buyer’s location (their home or group). Both will require server space to display that content, so LL is in the business of hosting 3D content persistently, for a small monthly fee. Again, this is completely innovative, and even after a decade since Linden Lab was founded, the model is so novel that “nobody understands it yet”, as Philip Rosedale, Linden Lab’s founder, put it so nicely on a recent interview.

As for “volunteering” vs. “self-interest”… I’d say that volunteering might have given a huge help on the very beginning of Second Life and during the early beta stages. One year after Second Life opened, however, it was the economy of digital content that made it attractive — specially because you could make real money out of it. These days, SL’s economy has gone way beyond merely buying and selling digital content (the services are is probably outgrowing pure digital content production) and has complexified to a degree coming closer to real life with every day that passes, but it was definitely the “economy” that jump-started Second Life, and not “volunteering”.

There are still volunteers in Second Life. Thousands and thousands of them. All of them very helpful and doing it all for the pleasure of it. But 3D content creators that regularly offer their products for sale, as well as service providers of all kinds (from live musicians and DJs to their agents…), are perhaps a hundred thousand… “self-interest”, in the sense that people can earn real money from this, even if it’s just a little, is a far greater incentive for those hundred thousands.”

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