Friday, January 23, 2009

Linden Lab Acquires Virtual Goods Marketplaces: Shop OnRex and XStreet in Second Life

I was working on a post about the most recent Linden Lab acquisition of virtual goods marketplaces Shop OnRez (an Electric Sheep Company property) and XStreet which has now had sufficient time to sink in (here is the FAQ), but this morning as I was doing a bit more research I read Ordinal Malaprop's post on the subject.

It's so well written I think for now I will link there, and simply say that I believe Linden Lab made the only decision it could to ensure the viability of it's business. The virtual goods market is exploding, explosive and we have yet to understand the magnitude or impacts to our existing economy.

I know there is community disdain for another perceived Lab flim-flam - say one thing and do another - but I think we have to accept that the Lab as we once knew it, with Philip at the helm of the Utopia and Corey bailing water feverishly below deck, is gone. Don't hold fast to the old "truths" and mantras, work hard to discover who is now behind the curtain. With that, let's look at the acquisition.

There are a couple of important points in Ordinal's post to note. First, XStreet (formerly known as SL Exchange before Linden Lab's trademark policy rouse) had far more users than OnRez, despite the fact that OnRez by most accounts "looked better" and was "easier to use". I don't know if more users simply means more merchants, vendors, site vistirs or both. If someone has that data, please share.

XStreet did not enforce any type of copright infringement policy and it will be interesting to see how the Lab manages this problem moving forward. As Ordinal puts it:

It is well known that SLXstreet contains items which are Copyright Infringing, either directly or via Businesses In A Box. However, the “piratebay defence” was available previously, in other words, “we are not hosting infringing content, we are just providing links to it, please contact the host of the content i.e. Linden Lab”.
Now, Linden Lab are both advertiser and host and can no longer say that. This is in many ways an improvement for those whose products are being improperly duplicated, but is an issue that I am not entirely sure that the Laboratory were fully aware of when acquiring SLXstreet.
There are other marketplace offerings, two of note include Hippo Technologies and
Prokofy Neva speculates that Hippo may be next on the list, but I suspect that the Lab has reached it's acquisition capacity for now, and will settle back into focusing on it's top priorities.

What are those top priorities? According to the January 20, 2009 Linden Lab press release about the acquisitions, they are thus (emphasis and numbering is mine):

"Linden Lab is expanding its footprint in the virtual world industry through four major initiatives – localizing the Second Life experience (1) in key markets around the world, simplifying the 'first hour experience'(2) to broaden consumer adoption, enhancing the platform for enterprise users (3) and building our virtual goods marketplace (4)," said Mark Kingdon, CEO of Linden Lab.

"Content creators and merchants are pillars of the strong Second Life economy. With these e-commerce acquisitions, we will now be able to offer content creators and merchants an opportunity to substantially improve their businesses, while enhancing the Second Life experience for all of our Residents."

These have moved slightly from the December 29th, 2008 post by M Linden (aka Mark Kingdon):

Moving ahead into 2009, we at Linden Lab are continuing to pursue our world-changing mission. We are working hard to create a virtual world that “…advances the capabilities of the many people that use it, and by doing so affects and transforms them in a positive way.”
To make real progress, we’re continuing to focus on a small set of strategic initiatives:
* Ensuring the platform is stable (1) and able to scale with the growth

* Improving the first-hour experience (2) (on the web, in the viewer and
inworld) for all Residents and especially for new users so that we
can continue to expand our active user base

* Making the mainland experience more attractive (3) and fulfilling for Residents
* Localizing our content and experience (4) in key international markets
* Developing new products (e.g., land products as well as new social and commerce tools) (5) that offer Residents more opportunities to
create, connect, socialize and transact

While the majority of our resources are focused on our core market (content creators and consumers), we are also focused on building the business and education markets. Second Life is a powerful platform for doing business, collaborating, teaching and learning and we want to ensure we remain a vital platform for businesses and educators worldwide.
A lot can change in a month. Did two priorities miss the bus to 2009?

  • Ensuring the platform is stable
  • Making the mainland experience more attractive
We all know Stability took January off to visit relatives for the month in the far away lands of Scalability, but I thought Mainland Beautification would attend the Inauguration ball.

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