One of the most notorious companies in the virtual world of Second Life is Rezzable. They have 35 sims now, several of which are shockingly gorgeous. From the wild interactive AI of the Toxic Garden to the gigantic apartment beset by aliens called Greenies, these are places that Second Life residents love and return to again and again.
Getting basic information about Rezzable as a company, however, hasn't been easy. Few know anything about them. There's no corporate website with a staff page (which, at present, would only have to list two people), and all inquiries about where the angel investment came from in the first place are met with: "that's confidential". The company's CEO, Jon Himoff (known in-world as "RightAsRain Rimbaud"), isn't exactly free with information. For instance: when I asked Himoff who was behind the avatar "Vega03 Straylight", the avatar that owns all of their sims and most of their groups, he wouldn't tell me at first. In our first conversation I asked twice and he simply stopped talking. Subsequent emails were ignored. This of course didn't stop him from passing on the latest promotional videos about Rezzable.
Eventually we came to some kind of understanding and it was revealed that the avatar is a company figurehead. It's controlled and owned by the company, and used to a large extent because of the limitations in the Second Life system. Part of the difficulty in reaching this point is that Himoff attempts to respect the immersionist way of thinking. "We think of Vega03 as an AI...he helps us manage the sims," he told me.
For the typical resident of Second Life, this may not be a terribly important point. Immersionists like the idea that an avatar is a person and should be taken at face value, without further analysis. It also gives us a hint at the creative mindset required to build something that impresses people.
For business owners, however, understanding how Rezzable came to be and why they do what they do may change the way many do business. They've built many incredible sims, but what has baffled many in virtual world circles is one simple question: why? None of these sims seem to have a visible, pre-defined revenue model. They all seem to be built purely for the love of art and creativity. Why would someone sponsor all of this?
Obviously that meant answering the Vega03 question, but to really understand what's happening we need to go much further than that. I asked Himoff about Rezzable's business plan, and he kept saying things that didn't seem to make sense at first. The plan was to create a series of intriguing destinations and add value to Second Life, and then discover revenue opportunities once regular traffic was established. I struggled with this at first: spend tens (hundreds?) of thousands USD to create high-traffic sims without basing any of it around any revenue model?
After awhile, though, the method to his madness became apparent. Rezzable has partnered with several companies who already have communities outside of Second Life. The Surfline and Stratos builds (opening soon) are attractions for those communities, aimed at people who aren't necessarily in the virtual world yet. When those people enter the sim and continue to come back, at that point brands can look at adding even more value to the experiences and slowly working in the brand as well with a fully engaged user base.
These are looked at more as partnerships than clients for Rezzable. While a basic setup fee is charged to cover expenses, for the most part Rezzable plans to earn revenue based on a multiple-sim distributed ad network. They've just released a promotional video covering the details in that regard. All they have to do to grow the network is create more fascinating places to visit. "Web fundamentals still make sense in virtual world," said Himoff, "content = traffic = sales, just that the ways to do this are totally different."
Create a valuable experience for the users, keep them coming back for more, and work out the details of the revenue model as you go along. It worked for Web 2.0, and it was independent startups like Rezzable that made it happen.
Caleb,
I guess when I hear about this kind of expenditure without an immediately visible way to make a profit, I think "Trustifarian". Or likely there is a very big media company involved for whom an SL budget, while it may seem dramatic to some, is chump change.
I have seen now published concerns in the Second Life Herald about defaulting on payments to builders. And that fuels the concern around the mystery.
I also think that as intriguing as the builds are, there's no need to be breathless. Some of them are truly awesome, like Toxic Garden. Others are bland and derivative, like the Cannery, or static push, like Greenies, making you feel you are inside a Disney set. It's fun...and then what? What are you going to *do* there?
I hope you will persist on this story and just keep asking questions. And I do have to wonder how ads can be integrated into some of these fabulous builds without disrupting them.
UPDATE: Rumor has it that there's a full, detailed 3-year plan for Rezzable. I didn't hear that from Himoff...
Hello folk.
DISCLOSURE: I am one of the artists working for Rezzable so you can take what I say with a grain of salt if you wish.
As a contractor working for Rezzable I've often been as confused as anyone else about what exactly their business model is - the running joke between some of rezzables contractors is that it's actually a front for eccentric millionaires to play a high stakes roleplay game complete with real staff. What I can tell you is somewhat more down to earth: rezzable is a business.
From what I gather the venture capital to get rezzable up and running was gathered from several other successful startups the directors ran at some point. I have no idea what those companies were, but at least it proves these folk know how to run a successful business. Unlike many of the other companies I've looked at, they run their business very much in world, and have a strong relationship with their artists in that sense. In this way I guess they're immersionists - I knew and worked for rightasrain rimbaud for a while before I really got to know Jon Himoff. I think this way of working suits the SL medium.
They do have a plan, though even those working closely with them don't know the whole picture. From the outside it looks like they have no well defined revenue model because they have many projects that run on many different revenue models, from profit share with established communities to purely commercial in world presence for RL businesses. The more sims they open and the more clients they take on the more their approach starts to make sense.
As for Prok's assertions that they have defaulted on payment to artists.... that's not something that I'm aware of. I do know that some artists contract out based on deliverables, and there has been occasions when, either due to miscommunication or differences in expectation, artists have been unable to deliver projects which meet spec. This is a common issue that I remember from freelancing, often appearing when artists take on projects beyond their skill level without discussing pitfalls they may have in completion up front.
On the occasions when this has happened I've found usually rezzable pays out a percent of the agreed value for the incomplete work. Some artists may see this as defaulting on payment, but of course rezzable sees it as the artist defaulting on deliverables. These kind of things happen in business. Unfortunately in secondlife the pool of potential designers and artist is predominantly folk who've only ever worked in sl for themselves, and may be unaccustomed to the expectations usually demanded of freelancers. Folk who haven't got into trouble with delivery are often folk who've some experience in any kind of production environment previously - knowing how to assess a job up front, ensure they're on the same page as the company they're working for, and keep their employer in the loop with any changes they make to spec - well those folk usually get on just fine.
Anyway, I'm not getting in an argument with Prok about whatever it is she has heard about rezzable treating artists badly, except to say that it hasn't been something I've experienced in my time there. ...and I thought she liked greenies too. Oh well.
The important thing to remember here when discussing virtual worlds and business models is that we're in completely new territory where completely new business models are being created.
Sure, they have a business plan. If they choose not to fully disclose it, it doesn't matter. It'll be clear soon I'm sure.
Think back five 'ish years. Who would have predicted business models like blogging revenue? Or PPC? Or even music downloads. Not many people.
No, the issue is not "deliverables" and "miscommunications" and not somehow the "amateur status" of the people involved (they are definitely not amatuers!) but about sheer defaults on payments. But either those people will stick up for themselves or they won't, out of fear. I'm not going to get in the middle of that -- I cite it as a bitter comment that has been made on blogs by those in a position to know.
I find an enormous amount of indulgence going on here about people being kept in the dark, exposed to diverse and contradictory business models, etc. Sounds fake, sounds hype, sounds like an accident going somewhere to happen.
Got to agree with nicmitham,
I was also wondering -what might the business model be .. For example at greenies SIM they sell Greenie alien avatars, I would like to think of it as an experiment to see how people react and how it plays out.
looking forward to seeing some new and exciting business models coming from Rezzable.
Search & Share your metaLIFE www.meta-LIFE.net
develop IP in a HOT media getting attention by BIG media. Whats so new or confusing about that?
-)
Oh good grief.....why don't they just say who the "big cheese" is and get on with it....why does it have to be such a big secret? I think that it's beginning to miff people and unless they spill the beans soon this entire "secrecy" thing is going to "backfire" on them and their revenue will suffer when SL residents look for other places to go. Most people in SL don't like "mind games" - a little mystery is okay - but this is too much and has gone on for too long. I urge Rezzables to reveal who their CEO or wealthy "star" is that is financing all these sims.
I think Dharma just nailed it, perfectly.
Who would have predicted business models like blogging revenue? Or PPC? Or even music downloads. Not many people.
And these are viable? Proven?
Yes. Lots of people make money from blogging, music downloads and well, ask Google if it thinks PPC might be a viable model :)
Prokofy
Whilst I respect your seemingly broad knowledge of virtual worlds and tip my hat to your ability to present an argument, I'm gonna have to draw the line at your last comment and put it down to you not quite knowing when to accept that someone else other than you can make a point.
You say that blogging, PPC and music downloads are not viable music models?
Ummmm. Ok.
Ummm, yeah, Scaredy Cat, because quite frankly, music downloads aren't saving the record industry.
I don't see an awful lot of people quitting their day jobs to blog, or blogs that really make some humongous amount of money, except probably a very few at the top of the 10 percent creators' pyramid.
And so on.
Oh, and Nick, Google makes money. How many people do you know who REALLY make money from Adsense?
I don't mean models that make money for a few. After all, the whole point is to develop models that help people monetarize their time on line, and not just for professional big-media corporations and such but anybody with a good idea and the time and effort to pursue it.
Creating buzz and then getting people to ride that buzz after it is created can be successful approach for a new brand. Getting people to sponsor an idea on paper is very, very hard. Once there is demonstrable traffic to a site and a viable model for keeping that traffic, sponsorships are far easier to obtain, and at more favorable terms.
In fact, this site here launched on exactly that trajectory: it became a well known site that catered a specific audience and only added in sponsors (and tackled more far challenging to produce content such as Metanomics) after there was enough of an audience to make it viable.
My concern is that Rezzable has cast it's net too wide, and *not* created the type of content that causes me to want to go back. I love most of the sims that they have produced, but really have found little reason to return after a second visit with friends. In fact, I can say that about the vast majority of corporate builds in Second Life; the only places I keep coming back to are those that present new content over time; either through events, speakers or interesting "inhabitants".
As far a secrecy or possible payment of talent issues, those kinds of business problems may contribute to their downfall, but I think they are secondary to the problem they may encounter in keeping traffic high. One could argue that a continuous stream of new sim builds could be enough; I will be impressed if they can keep quality and number of new builds up high enough to keep the attention of a fickle audience, while keeping costs low enough to turn a profit on the sponsorships.
A site like this on the other hand has a ready made stream of content in terms of news and only has one web property and one sim to cause recurring costs while having a much larger potential audience to tap into. As an investor, I would put my money in Metaversed *long* before Rezzable.
Of course, Rezzable is that kind of audacious move that could make this comment look horribly short sighted. I hope they do so insomuch as I have enjoyed what they have done so far.
Hi All
DISCLOSURE: I'm an artist working for Rezzable.
I can't agree with Dharma in their complaint about what's going on at Rezzabe. I think it's perfectly reasonable for a new company in this area to just do their thing untill they're ready to hit the market with whatever their big thing might be. Rezzable's been in the public eye less than six months - a lot shorter than MOU or ESC or those other companies they may be compared to. As such I believe it's fine for them to work in diverse areas before painting themselves into a corner. Given the hit and miss ratio of even the big players in the SL content market it's probably wiser NOT to set about promoting your business model until you're damn sure you've worked the bugs out.
As a new player in the field they've made a pretty bold entrance. I'm sure they've got some tricks up their sleve in terms of how they plan to continue as well. Even so, I don't think there's any conspiracy here. The business buzz they're getting at the moment is more about the market that they're in being new than about any great mystery to their approach. If they were advertising themselves as the next big thing I could understand how folk would get angry about them playing their cards close, but they're not. Rezzable is just there doing business like the rest of the content creators in SL. In this stage of building their foundations I think they're doing rather well at it.
If anything they've taken a very old fashioned entrepreneurial approach to content creation - basically taking folk who do good stuff and giving them a go at it. Of course there is always the question of how to make that pay for itself, but I'm sure they have some answers to that in their business model already. I think time will show that their approach is creating value in SL, and "value" whilst ephemeral and difficult to define, is nonetheless a marketable resource. It's easy to forget that, like the web circa 1997, SL is currently in it's sandbox stage for business and the general public. Before the IT bust any web designer worth their salt was waving their hands saying "it's not enough just to be here - it's all about the content". If SL's arc is anything like the web's, then Rezzable has their focus in the right area to do well down the track.
Well that's my two cents anyway.
Some of the Rezzable sims to get people coming back again and again; others may not. I think it depends on how much content they have to "burn through" and how much interactivity. Sims can develop "regulars" who like to hang at them and create an informal story line in their own SL.
I don't like that the tech press is supposed to be harnessed to creating buzz around mystery, though. There's something very utilitarian about that.
First, we do not default on payments to people. This is unfounded nonsense. People should not peddle gossip if they want to be considered seriously. We take our commitments seriously and make significant efforts to treat all our contractors with respect and as per the terms of our agreements.
I founded Rezzable as a business. We see a lot of potential in virtual worlds and in SL in particular. Second Life is an amazing platform not only in what it does today, but what it can become in the future.
Our main focus in this early stage of our business is to build and run exciting new sims and create new brands. We are very please so far with our progress. Greenies is an instant SL classic with a constant flow of new visitors and returning guests. People have told us that they spend anywhere from 15 minutes to hours exploring the area, marveling at what is possible in SL and also importantly making new friends. And by the way, this is without any pornography, gambling, real estate speculation or violent weapons.
I am not sure that retail in SL is so invisible or hard to comprehend. SL turnsover more than $1.2mm per day now. We have several brand in SL now that generate revenue by selling a range of high quality items at various price points. Retail is very interesting in the virtual world and we are learning new things every day. Check out our stores and see for yourself.
Rezzable will also be inviting sponsors to participate in some of our area. We are spending a lot of time now trying to add this to our mix without destroying the user experience. We think we have some way of doing this, but of course will be open to feedback and discussion.
In general, I personally find this article and many of the comments very cynical and even worse--boring. We prefer to invest our time and effort in creating new things that take advantage of SL and the web.
Jon Himoff / RightasRain Rimbaud
Hello, welcome to reality??!?? Do you know how much companies worldwide spend for CRM (Customer Relationship Management) a year? About 12.8 Billion US$/year.
A new playground for CRM are virtual 3D environments. And you are really discussing some 100K US$?
First question in CRM: How to collect, verify and classify leads of the potential target group?
Project groups like RHS, SIM 2.0, Alps....... are engaged in this question. Some of them already use robust solutions for data mining, regional allocation using IP-addresses, motion profiling, for usage time recording, up to identification of alt accounts. You need 5.000 avatar names, user from metropolitan area of Chicago, 10-15 hours/week online, preference for Irish bars in the virtual world, alt account has a weakness for soft bdsm sims? No worries! They can deliver. And it's just the beginning: Wait for OnRez, CRM specialist's dream. Unlimited observation.
Second question in CRM: How do i attract, educate these groups? Are there multiplicators?
Companies like Rezzable are able to answer these questions soon. These first movers create infrastructures to test and optimize models for these challenges. They will know what is working and what is not. Fundamental data for establishing corporate subsidiaries and brands in virtual worlds, however named. And they collaborate with the data-miners, Rezzable employs two scripters, which have realized for other teams extensive tools for lead generation and evaluation.
Conclusion: Every company working successful on such models, and their link-up to RL-CRM systems, will be a potential takeover-arget for the big players. They will not talk about some 100K US$ as well. ;))
stumbled onto knows his stuff....perhaps he works for large company - perhaps the same company that Vega (or as I refer to him the "Oz" is with? or what about Surfline? They are certainly a huge company. Is that you commenting? Har Har