Second Rant Podcast #1 - Linden Axes Casinos

great podcast.. so many well put observations. really echoes what i feel about the recent shift in direction of secondlife. i think its all positive though and dealing with all these issues is going to be a critical "coming of age / coming into reality" point for SL.

Great podcast. I like the old theme music better though. It goes a lot better with coffee.

Thanks Prokofy and Nick, you are really great, I HOPE LL will hear your words and will listen carefully! today I heard some very bright thoughts and very informative chat you two.

Looking forward for SL staying on it's FOOT and not becoming next "There"...

Btw - with the new policy - metaRaffle is done :) but I don't regret that a bit, but what I feel pity about - is the poor business owners that did well and now LL are literally axing their heads of! Hope one day SL reaches maturity level - that would allow "self-regulation" to take care of everything!

Robbie Kiama, Meta Mart www.MetaverseMart.com

Excellent podcast, good insight.

If land prices crash and there's firesales on islands, I might be accelerating my own kibbultz-cult plans with sell, scrape, and settle.

Great Debut Podcast Prokofy and Nick!

It was only just a matter of time before this happened. Linden's been getting some heat from the FBI. Regardless of what anyone may think of the move to shut down gambling, it's better than having the Feds confiscate Linden's servers. Imagine what kind of story THAT would be.

Regarding escorts and prostitution: I can't see Linden making an effort to shut down that sort of activity (aside from ageplay). If for no other reason because virtual sex is not real sex (anyone who thinks it is really should get out more). Gambling in SL, however, is the real deal and people lose real money.

The demise of gambling (and possible consequent devaluation of land, possibly leading to a demise of land barony, although query whether that will be a long-term demise, given the likely future rise of non-LL hosted servers) does not inevitably mean that all SecondLife business will be driven to sex, building, texturing or scripting. Although that is what the economy is mostly composed of now, that will not necessarily be so for ever: there is a potential for serious services (education, for example: just think what people could earn teaching people from developing countries to speak English, especially using the new voice feature) to develop in SecondLife.

Indeed, if a services economy does not develop (it could be aid that the sex and gambling are serious services in one sense: there is, after all, a substantial demand for both otherwise than for the existence of SecondLife, unlike, for example, virtual clothing), the SecondLife economy seems to be most precarious and bubble-like.

Very insightful discussion...I'm particularly impressed with the provision of a much broader LL contextual history that serves to illustrate the issues with the current policy decision. I think the points regarding potential crackdowns on other areas of SL are spot on and eloquently expressed.

More, please!

Great stuff! Thoughtful, interesting commentary. I'm tuning in every week. This is absolutely the right medium and forum for Prokofy.

The one point I disagree with both Nick and Prokofy on here is the idea that Linden Lab is going to crack down on escorts in SL. I don't really think Linden Lab is trying to be "squeaky clean" -- I think they're just trying to comply with the laws of the state and country they've got their servers in. There's nothing illegal (in the U.S.) about providing sexual chat via phone, camera, chatroom, or whatever -- and fundamentally, that's all that's going on here. (All bets are off, so to speak, if they put a server farm in Riyadh.)

I know there's legitimate philosophical disagreement on this point, but from a legal perspective, Second Life is going to be viewed by the courts and the government as a fancy communications client and not a "place" for a while; since "sex in second life" isn't *actual* sex for money (which is what's prohibited in most of the U.S.) I'd be pretty surprised if there's any crackdown on sex work any time soon.

As Nick observed (I think Prokofy agreed) both Linden Lab itself and people who use the client are seeing this more and more as a communications client and less like a "place" -- the very existence of my blog, which would have seemed (even more) absurd three years ago -- points that out. Maybe that's sad, maybe not, but it's a reality.

What could be deemed illegal is *paying for* sex chat, web cam, and animations. As I noted, it's very widespread now to have actual money-pay objects with the stark message of the escort for hire, or prostitute available, by merely right-clicking and paying and being teleported to that person's sky palace with sex anims. What will be a gray area is that a lot of these arrangements are like mistresses, with an escort receiving clothing, rentals, gifts, etc. and even cash, but not necessarily tied to a strictly sex-for-hire arrangement. So it will be hard to police, and I don't think LL has the stomach to police it, but once they move to age verification and require that people with adult establishments have "mature" checked off on the parcel menu, then they can zoom in and see whether they sell sex, as well. That's precisely why many will avoid checking off the box.

As I often say to people who tell me again and again that sex in Second Life is virtual: do you think all the orgasms are faked, too? Internet sites that provide webcams and sell stills and videos of pornography are regulated and monitored to see if they have underage models and such. SL is no different.

Second Life is still "a world, a place" as Philip Linden once called it. It has merely been driven deeper underground. Those who use SL as a kind of platform or 3-D utility eventually become drawn in, too, and the aggregate of their usage makes it a "world, a place" too -- perhaps just a different one than the Lindenor of yore.

This is INSANE. The woman in this audio is stating and talking like virtual sex or bumping pixels is REAL SEX. How lame. You cannot justify claiming virtual prostitution an illegal act. There is NO REAL SEX. For money or otherwise. I find the audio interview to be incredibly far fetched. People are talking as if something is really happening when indeed it's nothing more than playing a game.

The gambling is understandable and legal argument based on the Internet law for not allowing gambling. Not that I agree with it, but it is the law. However, to lump sex pose balls and virtual sex into this is... well... again, you are acting as if virtual sex is real sex and it most certainly is not. No bodily fluids are exchanged, no contact is made between two consenting adults. None. For intercourse to take place, you have to have intercourse. No?

So please explain to me exactly how using pose balls and 3D avatars to simulate sex for money is illegal? Please do. This is just nutty.

I've looked into this a little bit because I keep meaning to write a "is it legal?" post on virtual escort services. What I've found is that there's very little regulation of non-contact commercial sex work (e.g. via text chat and phone) and, of course, there's nothing at all specific to avatar-based or even "internet" one-to-one interaction. A few states do have regulations on commercial phone sex, but the laws are pretty targeted toward the telephone, and there's really not much else that could apply.

I'm not ready to call it *for sure* yet, but initially at least, it just doesn't look like it's illegal to sell dirty talk via phone, text chat client, or 3D chat client ("virtual world") in California or most other states.

Of course, anyone selling RL adult material in SL does need to comply with the laws that require them to maintain proof of model age, but I suspect they are, for the most part, if for no other reason than because they're typically just making video and material they were already selling elsewhere available in SL.

SL isn't a telephone. It's the Internet. Look at the regulations governing porn sites with web cams before you declare this legal. And just because it's legal today doesn't mean that some states or countries will decide that it really bothers them and they find a way to call it solicitation across state borders on common carriers or whatever lingo they cook up to find something somewhere.

Cool!
Prokofy and Nick, congrats. Your diction is perfect and a gift for Non-English speakers. Great insights too, of course.
About the gambling banning, I feel it is almost impossible to determine the economic unfolding at this time. I was at the Daniel Linden’s Office Hour, just now, at 11am, and there was a crowd of protesting avatars. Daniel was absent, but Benjamin Linden was there although he didn’t say much other than Robin Linden was the person to speak with and she would be available only in August…

That's odd - Robin Linden was online just now.

From: http://wiki.secondlife.com/wiki/Office_Hours#Robin_Linden

Robin's office

Tuesdays @ 11AM PDT
Discussion focus for July 31: I won't be available (will be traveling), so guest-host Catherine Linden will be there to talk with you about marketing in Second Life.

Hey everyone, just wanted to say thanks for listening to the new podcast, Im really glad you like it, it was a LOT of fun to do!

You MUST make Prok a regular and not just a guest, this was a great podcast, I don't always agree with her, rarely as a matter of fact. But she is much more fun to listen to than to try and read, the podcast was articulate and moved at a good pace and did not get bogged down at all (unlike her writings sometimes).

From me i have to say two thumbs up and look forward to #2 and beyond.

A few points about laws and means...

Lindex:

Supply Linden only sells up to a number of L$ equal to that absorbed by LL in fees - Where do you think the L$ spent in land, tier, and uploads goes, anyhow?

They have printed new L$ when the L$ gets 'too high' - but they say when. The last time I can recall was last October. This is important because LL has to report it differently for their taxes.

About Gambling:

Gambling is illegal via Federal Law. So is paying for drugs using anything, be it a car, an L$ or an avatar texture. (Whereas you can totally give people things they can't resell away in games. Casinos can have casino games, you just can't buy chips or cash out chips - that's the rub.)

About Sex:

Sex isn't illegal via federal law. Nor is anything defined as pornography - those are set by 'community standards' which are local laws. SL is governed by Federal and not Local law! So nothing is defined as pornographic in SL terms. As long as no Real Life travel, pictures, or whatnot occured, then SL sex is free from any RL local laws on the subject since there are only a few Federal ones - and they relate to abuse of minors or slave trafficing.

You worry too much, sometimes, Prok. But I guess someone has to!

Reg, as far as I'm concerned, this is Prokofy's show :)

I didn't get that across very well in the show and I'll do better next time (so used to just having guests i guess..) but this is Prokofy's gig!

I can't wait to do the next one either...

>Supply Linden only sells up to a number of L$ equal to that absorbed by LL in fees - Where do you think the L$ spent in land, tier, and uploads goes, anyhow?

>They have printed new L$ when the L$ gets 'too high' - but they say when. The last time I can recall was last October. This is important because LL has to report it differently for their taxes.

What you're saying here is entirely incorrect. There is absolutely no cap on this number of Lindens to be sold that LL has in fact established, and it has nothing whatsoever to do with "the number absorbed by fees" or the "upload charges" or "tier" whatsoever -- it's unrelated.

At first, a year ago, they said there would be caps that they estimated; they immediately broke their own ceiling. They print and sell Lindens every month, not when "the Linden gets too high" but in a recipe that keeps it stabilized at around 266 Lindens per $1 US dollar. Their taxes likely have nothing to do with it. By TOS definition, it's game currency or markers which they sell the license for, to use. And they can print those markers or licenses as many times as they wish. It has no intrinsic value.

And that's why we could well see the day, probably not before too long -- that the Lindens will simply close the Lindex and attempt to police their game just like WoW does and keep the currency internal to the world entirely, or dispense with it completely. It will either rise to the exact value of a dollar, or decrease to be so worthless as to be practical to go on attempting to equate it with the dollar. The Lindens don't need the Lindex to make a 3-d virtual streaming world with user creation. People can put regular US dollar prices on their creations and deal with PayPal. The inworld economy the Lindens run now is not objectively necessary for them to go on developing their software for their own ends, which are largely business and education related.

The fees that are called "sinks" for uploading texture or forming a group are supposedly destroyed, i.e. not recycled to be sold, not tied to Supply Linden. I believe the auction land buys denominated in Lindens are also sinks. You can't pay Lindens for tier anymore, now you must first cash them out on the Lindex and convert them to dollars.

Supply Linden is separate. All you have to do to see the facts of this matter are to go to the Economics Statistics page where you can see indeed he has sold currency since October and in increasing amounts -- then decreasing amounts.

http://secondlife.com/whatis/economy_stats.php
Supply Linden Sales 0 161,836,659 0 132,947,495
(June and July)

Upload charges are sinks:
Upload Charges 21,158,530 0 15,762,110
(June and July)

He is selling Lindens in order to stabilize the Linden, but it's arbitrary, as to what the Lindens themselves think is the "right" price, which is considerably lower than what it was back in the glorious days of the GOM ($4.25/1000 Lindens, not $3.70/1000 Lindens).

Re: Sex

>Sex isn't illegal via federal law.
I didn't say sex was "illegal," that would be silly. I said *charging and paying for it* may be, if unregulated. The porn movie and Internet porn sites are *regulated*. They are *subject to law*.

That's one of the major reasons the Lindens seek the age verification and "mature" check-off.

>Nor is anything defined as pornography - those are set by 'community standards' which are local laws.

I don't see how we can apply an SL notion of "community standards" in RL. And in a multinational game, there will be lots of different national standards; even in the U.S. there is the "Miller test".

>SL is governed by Federal and not Local law!

Says who? You? Are you a lawyer? In which state or country? This area of law is completely uncharted and while there are basic guidelines in existing "meat-space" law, we can't know, until there are cases and case law, how this will play out. People can have very, very strident and strenuous opinions on this, I realize, but you don't have case law to point to.

I'm not a SL user, but it was fun listening to this anyway. :-)

I enjoyed the podcast, well done Nick! I am looking forward to more.
Personally, I am very disappointed - no, saddened - with the fact that little by little RL is invading SL. I suppose Prokofy was right when she said that once the $Linden was traded publicly, and residents could exchange a $Linden into a real $Dollar that sooner or later the feds would be knocking on the door. We did it to ourselves. I will miss the occasional side bet or turn of the wheel. But come to think of it, the best times in SL have not been at casinos, they have been in all the other areas. Looking at the glass half full side of things, this might have a positive affect on life in SL, as some residents will have to wake up and perhaps reinvestigate what's been going on all these months (years) while they have been inside pulling an arm, playing games.
Thanks for the podcast - Jaso Jatho

Not much different than the struggles Google and major SE's had to deal with- e.g. online pharmacies, gambling ads, etc. Of course they had the capital to absorb that missing revenue, and I am not sure how much of it is missing...maybe it just changed "deal structure".

On removal of term lolita- completely agree- common russian term for child pron- every malware site pushing that crap uses the term, and the child play, etc- has no business in Second Life.

On gambling- it is a market opportunity, not a setback- if they think creatively. I have methodically jammed "sploders" with lindens to see how many crooked club operators are out there- PLENTY. Happy to see that go.

As for 10% making it scripting/ making goods- that is even better than the traditional performance marketing metrics of about 95/5 and then look if you look at pareto distribution of 80/20...not bad.

The real value is in the people and interaction. There are a lot of shysters and tricksters who think short-term, but I continue to find a lot of creative talent...not just in the 2L terrain but other Net terrain- "social media". Linden Labs needs to find better revenue models for their creatives, and for themselves, and beef up the perks for accountability- oh boy 512k land ownership....how about ability to add more groups? or other perks? How about voting rights? I am a land owner-but Phillip wants it uncontrolled to the point of anarchy I think...let's see what people do.

Interesting cast. Won't touch the prostitution issue, not a lawyer- but if you dive into say IRC, or just about anywhere where people congregate- all the negative stuff is going on and has been for years. Just no "avatar" to see.

The casinos simply echo the larger question: to what extent will Linden Lab be forced to comply with the laws of various jurisdictions. This question is not yet fully settled in regards to the 2D web; most jurisdictions seem to want to approach the question from the point of view of "the person affected was in my jurisdiction, so I have jurisdiction". This of course creates an absurd situation in which everything posted anywhere on the globally accessible Internet becomes subject to every jurisdiction that can muster up a dial up line. The conflicting laws would effectively mean that you could shop for whatever outcome you wanted for any content imaginable.

A more sensible interpretation is that the entity is subject to the law where the entity that operates the service is located. For Linden Lab, that would be California and Texas if I recall correctly, with a UK branch in Brighton being opened. This choice of jurisdiction also aligns with the possibility of enforcement of judgment. Thankfully, I'm pretty immune to a judgment against me that is rendered in a court of some country that finds my online actions offensive; at most it limits my future travel opportunities. Likewise, although more exposed than I am, Linden Lab only needs *really* worry about US (and soon UK) law. At most, a country seriously angered by Linden Lab could sever the ability to reach Second Life for their residents (for those with Great Firewalls) or make such access illegal for their own citizens (for those without).

However, where the US Internet gambling law in question is concerned, there is a bit more "reach" than normally available. The law applies to those who "facilitate" online gambling, and allows seizure of accounts involved in the movement of online gambling funds. Linden Lab's exact role as a facilitator is arguable in the exact legal definition of the term, but I think they be suicidally naive to think that the LindenX wasn't a giant target painted on their bank book in terms of "facilitating".

http://www.ictsd.org/weekly/07-07-04/story3.htm makes for some interesting reading as to how big the gaming ban has become internationally. Personally, if my company was exposed to this kind of risk, mitigation would be paramount. The move to link the L$ to the US$ (or any other currency) turns out to be both a blessing and a curse.

Finally, I suspect that gamblers will quickly create their own "non-redeemable" gambling systems in Second Life, with internal chips that can be used for leader boards and tournament standings, but not for redemption back to "items of value". Well written systems would be re-targeted to such a back end quickly. The question is: what percentage of SL gamblers were there for the experience of playing the games, and how many viewed it as real gambling?

Unneeded podcast. Prokofy Neva has plenty of other outlets for her ideas. I'd do some research into her (sometimes acid barbed, bordering on hateful) rants on those other outlets before linking your lot in life with hers.