Virtual Worlds Forum

Reuters has an interview with Linden Labs VP Joe Miller on the changing business model of Second Life. Second Life’s fundamental business model of selling land has been undermined by the development of OpenSim, an open source equivalent virtual world allowing anyone to host their own Second Life equivalent. However, rather than try to restrict the growth of OpenSim, Second Life is working to increase its adoption. Only this week, it announced that it had successfully effected a teleport from Second Life into an instance of OpenSim.

The motivation? Miller argues that Linden Labs’ first priority has to be to expand the virtual world market, and that the way to do that is to aggressively push for open standards. Second Life then hopes to be able to make money through ‘value added’ services, although the specific nature of those services is not given. It would appear that ultimately Linden Labs would seek to become the equivalent of Versign’s role on the internet in virtual worlds, acting as a guarantor of the basic infrastructure of metaverse interoperability.

It’s a bold plan, but it needs to be. Second Life’s paid user base is diminishing fast, and whether Linden likes it or not, the scarcity of land in virtual worlds will be eradicated as competitor worlds with alternate business models are developed. Miller is surely right, therefore, that Linden Labs’ best hope of a sustainable business model in the future is to drive these changes which are inevitable anyway, hoping to end up in a position to make money from tying all the infrastructure together, and perhaps through its established currency, the Linden Dollar.

The spanner in the works though may be other virtual worlds who don’t want to join in the open standards fest. How do Linden Labs respond if Google, for example, chooses to go its own way with Lively, creating its own standards but without any desire to interoperate with Second Life? Linden Labs is relying on its competitors doing things its way, which is always a risky situation for a business to be in.