Riz's Second Life Blog

Whither the Virtual Currency?

2008-10-06T22:23:00.001-07:00

I haven't posted to this blog in a while; I took a bit of a hiatus from Second Life when the SL client suddenly stopped working on my laptop. No manner of installs fixed the problem.

Luckily, I was involved with Gnomiverse (www.gnomiverse.com) which has an IM client - so I used that for a while to stay in touch with virutal friends while I was out of world - shouldn't there be an acronym for that? like afk, but specifically for 3d virtual world users who aren't around - oow? Maybe there already is one.

Now that i'm back, I'd like to write about virtual currency.

In many ways the idea of virtual currency has been around for a while, dating back to earlier games like Ultima Online, EverQuest, etc. But with Second Life, the idea of having a fully legit virtual currency which could be exchanged (again legitimately) for US dollars was kind of a new innovation. How much virtual currency is in use today?

It's hard to say since there are so many different games (both 3d games like World of Warcraft and non-3d games, such as social applications built on top of myspace and facebook, which now also increasingly have virtual currency).

It's also difficult to say because it's not just a matter of finding out how many virtual units were exchanged for so-called "real" money - you have to look at how people are using virtual currency and exchanging it.

There have been many estimates for the amount spent on virtual goods. A virtual good can be any digital items ranging from images, flash objects, to in-game 3d objects like virtual clothes within Second Life or a weapon within other games.

Korea has been an innovator in the market for virtual goods: "The size of the market was estimated at 1 trillion won, or about $1 billion, last year, according to the Korea Game Development and Promotion Institute. About 60 percent of such item trading company's profit comes from the cyber money trade." (src: http://www.playnoevil.com/serendipity/index.php?/archives/1045-When-is-a-Virtual-Currency-not-a-Virtual-Currency-When-you-cant-trade-it-in-Korea.html )

The hottest virtual currency in China last year was the QQ, so much so that people were wondering if it might not have an influence on US/China trade relations:
"Xinhua News has reported that the volume of virtual currency has reached several hundred million USD a year in China. My firm estimates the size to grow 30% in 2007. " (src: http://seekingalpha.com/article/24227-china-s-virtual-e-commerce-currency)

The rise of virtual currencies in Facebook and other Social Applications is interesting. I know a little about this one - I was an angel investor (and interim CTO) in OfferPal Media last year - which is one of the leading monetization platforms for Facebook apps which have or use a Virtual currency. For Facebook alone, here's a recent VC-oriented statistic: "With even a fraction of this expected growth, it’s almost certain that the Facebook virtual economy will be worth more than $100 million in the next 12 months." (src: http://venturebeat.com/2008/09/09/facebooks-virtual-economy-may-be-making-up-to-100-million-this-year/). This sounds inline to me.

In Second Life alone, there were an estimated 8,417,000,000 Linden Dollars changed hands in September 2008. At the last closing exchange rate of L$264 lindens per USD 1, that makes for $32 million worth of transactions per month being traded.

Of course, not all virtual currency can be estimated in real world dollars, since there is no established exchange rate. For example, Blizzard does not encourage buying and selling of World of Warcraft Gold, nor does Gaia Gold, but a number of black market sites specialize in selling and buying this

The expansion of Virtual Currency over the last few years brings up some interesting questions for economies of scale. It seems to me (and I'm currently at Stanford Business School) that it's an area being overlooked by economists. They're still trying to come up with good models to rationalize the economics of internet-based businesses like eBay and Amazon, let alone Social Networks and Virtual Worlds. In the book, Exodus to the Virtual World, the author brings up the issue of income earned within virtual worlds - should it be taxed? There are after all a number of people now who earn money only through virtual worlds.

Those are issues to debate another time. So how much is each virtual currency worth?
Here are some latest estimates (some of these are published and some had to come from the black market):

Linden Dollars: 265 Linden Dollars per One USD (src: www.secondlife.com)
World of Warcraft Gold: This can be gotten through the black market only. There seem to be advertisements for 1000G for $5, but when you actually go to the sites, the prices seem to be 1000G for between $17 and $23 USD, so let's say an average of 55 Gold pieces per One USD. Another site has it even higher, between $23 and $42 per 1000 Gold pieces. On the high end this would be 23 Gold per One USD. One site has it for $.019 to $.021 per piece of WOW Gold (src: various sites across the internet, aka the Gold Black Market)
Gaia Gold. From the black market, it seems to be in the range of $8 or $9 per 1000 Gold, or 112 Gaia Gold for One USD. (src: various sites across the internet, aka the Gold Black Market)
Q: The Q currency used in China. The best price I could find was .82 Yuan for a single Q coin (src: http://virtual-economy.org/blog/the_q_coin_secondary_market_in ). Since One USD is worth 6.84 Yuan, that means that you could get 8.34 Q for one USD.

This is of course only a small snapshot of some "market" prices for virtual currency. If you have others you track, let me know in the comments section.

So, the question is, would it be possible to trade 1000 WoW Gold for an equivalent number of Linden Dollars? Or Q? Not directly. You'd have to go through a whole series of machinations before you could do that. Still it's an intriguing thought...

SecondLife Messenger to be part of Gnomiverse

2008-02-15T12:10:00.000-08:00

The download for SLMessenger has been moved to: www.gnomiverse.com/downloadslm.php

The FAQ has been moved to: www.gnomiverse.com/secondlife.php

Moving forward, SLMessenger will be part of the Gnomiverse (www.gnomiverse.com) suite of products for meta-versal chat.

This means that you will eventually be able to communicate with your friends in world for Second Life as well as other popular virtual worlds, along with your normal IM accounts, all from the same client. You will also be able to get information on you friends avatars, do transactions, and examine inventory of your avatar all from outside the world! Stay posted at www.gnomiverse.com

Second Life Messenger FAQ

2007-09-09T21:29:00.000-07:00

Here are some commonly asked questions about Second Life Messenger.

How do I download SL Messenger? You can download it from the download page at http://www.zenentrepreneur.com/slm_download.htm.

Why would I want to use SL Messenger? I wrote it because there were many times I wanted to talk to my friends on SL but didn't want to log into the full SL client. For example, if you're at work, you can't really stay logged into the SL client all day.

What platforms are supported? Currently it has been tested on windows only; this is because it uses the .NET framework and libsecondlife. There are versions of this for other platforms but I haven't tested or put together an installation package for these.

How long can I stay logged on? You should be able to use SL Messenger and stay logged into SL all day if you like.

What can I do with it? SL Messenger is a lightweight client that is used for sending Instant Messages to your Second Life friends. The client will show you who's online currently and allow you to send messages to your SL friends. You can see their status, just like you would in Yahoo Messenger or another IM client and send and receive messages.

If i have SL Messenger and my friend has SL Messenger, can we both talk to each other without logging into SL? Yes - you can both just use SL Messenger to talk to each other during the day without needing to bring up the SL client. You will both be logged into the SL server but just for the purpose of sending IM's back and forth to each other.

Where do I get the .NET framework?. You need version 2.0 of the .NET Framework to run SL Messenger. If you don't have it installed you'll get a warning message when you try to run it. It can be downloaded from microsoft at:
http://www.microsoft.com/downloads/details.aspx?FamilyID=0856EACB-4362-4B0D-8EDD-AAB15C5E04F5&displaylang=en

Why do I need to enter my password to run SL Messenger? SL Messenger logs you into the Linden Labs server using libsecondlife. There is no way for the program to log you into SL without you entering your password; this is true for all third party programs with SL functionality (and with the SL client itself when it communicates with the server). Unlike some other third party programs, SL Messenger only communicates from your macine to the Linden Labs server - it never sends any of your information to any third party servers - this makes it safer than other third party applications where you have to send your password to another server, and then it sends it to the Linden Labs server.

What is the current status of SL Messenger? When will it be GA? It is beta-1 software, which means it is being sent out to users who will try it out and test it to see if there are bugs. It is not considered generally released until it has been tested by an appropriate number of users for an appropriate number of times. There will be a beta-2 which will have some enhanced features.

Is it Free?
SLMessenger is free. You can help (and get free lindens) through our sponsor - www.yippielife.com Check it out if you want to help and want to get free lindens!

How was it written? SL Messenger was written in C# using the Microsoft .NET Framework and libsecondlife, an open source project which provides second-life specific API's.

How do I get support or report bugs? send questions, comments, support requests, etc. to the author of the software at riz@alum.mit.edu.

Second Life Messenger is ready for beta testing

2007-09-07T15:52:00.000-07:00

SL Messenger, a new stand-alone IM (instant messaging) client for Second Life users, is ready for beta testing. The application allows a SL resident to exchange IM's with their friends who are in-world without having to actually log into the Second Life fat client.

As the number of end users of virtual worlds like Second Life grow, I think that there will need to be more and more in-world / out-of-world communication tools.

I built this primarily because I didn't always want to log into second life, but often wanted to chat with my friends there. It's not really practical to keep the Second Life client running all the time (in the way that one might be running yahoo messenger or msn messenger all day) because of the bandwidth it takes and its tendency to crash.

To request an early copy of the beta, you can download it from http://www.zenentrepreneur.com/slm_download.htm. Or if you have trouble, please email riz@alum.mit.edu. The client is free and available to all users of second life. Once the beta testing is done, a general release will be available. It is currently available for Windows only, though other platforms may be released in the future.