Reuters caught up with Philip Rosedale for an interview recently and got some new insights into the business end of Linden Lab.
First, let's talk money: they're just barely profitable, and they like it that way. There are no plans to go public in the future, and they aren't planning any big moves to grab more profits. According to Rosedale: "By far the largest source of income to Linden Lab is the sales and the tier fees. The core of our business is a hosting business."
This might seem confusing to some as the plan has always been to go completely open-source, thus making it so that anybody can put up a server and make a grid of their own. The plan is to charge an access fee to anyone who wants to link their server farms to the Second Life grid, which Rosedale is assuming will be the world's most popular.
Going forward he named two priorities for Linden Lab: grid stability, and encouraging quality content.
We’re at a place where we’ve demonstrated that the virtual world can exist. Now we need to make it high quality so it does continuously support the activities and desires of the people who are using it. That’s what we’ve learned by listening for the last couple of quarters. We’ve got to increase the quality.
How the quality of Second Life's user-created content will be increased by Linden Lab will, for now, have to remain a subject of speculation.
If I read this right:
... they are planning to open the code, but not to connect to other grids. That means, you and me can make our own grids, but those grids will not be connected in a way that an avatar can tp from one to another keeping name, inventory and money. Actually, what they are trying to do is to make other companies capable to make their own grids (and actually contribute to the code) but to be far behind Linden's SL in the terms of user base, amount of created content, etc...
And then, if I remember right, somewhere Philip said that opening of server code is expected in couple of years. By that time, OpenSim will, with a bit of luck, live happily. OpenSim also needs a solution for TP'ing from one grid to another with keeping name, inventory and money....
But, if OpenSim, or any similar project come out of development phase and start living, Linden Lab is in dead position. There will be Linden's grid and the rest of the metaverse. And Lindens won't survive in the isolation.
The way I see it is, LL DO plan to connect with the other server farms so that you can TP in. However they intend to charge for the privelege of having access to their (LL's) user base.
Quite a cunning plan IMHO.
That is much wiser option. After all, somebody will have to hold and manage all that data.
it sounds like AOL - a bland, safe bit of content, and access to the big mean nasty web. There will be plenty of folks interested in it.. but it will mean that the LL universe is all PG and G. The very thing many fear will happen. For the Lindens THAT, rather than being a liability, becomes a selling point.
There will be other worlds ....
And Linden will be charging peering fees for other worlds to attach their grids...which, gives access to NC-17 and XXX content to LL residents,* if * the account allows crossing boarders over to the red light districts.... this creates a natural "parental control" filter.
it is clever
Linden outsources the legal hassles of questionable content, and gets paid by those who want it (peering fees) and those who don't ("parental controls" for LL residents)
Unless I've read that wrong I think you have read that wrong caleb.
I think he's referring to LL's need to provide high QUALITY OF SERVICE [which includes grid stability] being the prime goal for near term, not quality of user generated - not to say the eyecandy and associated tools to enable import/export of high quality content are not welcome.
I have to agree with Komuso, I think Philip was referring to grid quality - not content quality..
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I think this new twist on the future business model of LL makes a lot os sense.
It is evident, I think, and of course evident to LL, that they will not be a monopoly for long. Give open source server clones the time to achieve a critical mass, and they will be as good as LL's SL or better. The open source development model has a slow takeoff time but an exponential growth after achieving critical mass and, when in the fast growth phase, just outperforms propietary development.
LL should take the lead of future OS development and be the leading (as opposed to the only) provider of SL hosting. And Philip is right that, from the point of view of a new provider of SL hosting (we will be a provider as soon as the server code is released) it will make a lot of sense to pay them a fee to be linked to and visible from the main grid.
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I had always thought that if LL open sourced the server that their main profit was then going to come from asset management and not really hosting. His latest comments have given me reason to pause, however, because it seems that they might still consider themselves a hosting company. I'm not sure how good a business plan that is once they've open sourced the server because even though they are the largest grid now, someone else may use their server code and become bigger. If that happens, will they suddenly change their position on licensing?
The other part I thought really odd, is when he mentioned that they don't plan to go public. I'm curious to know what their investors think of that??? Most investors don't want to stay with a company forever, especially start-up investors like VC. There are only 3 ways an investor can get his money out that I can think of.
1. The company goes public and they sell their shares.
2. The company is bought out and all the shares are bought or transferred to the new company (probably publicly traded).
3. They get some kind of dividend payment over a very long time that is determined by the company board.
I don't think they would want #3, and Phillip seems to have ruled out #1 so what does that mean?
They've always said they'd sell the hook-up. They keep telling us they will never retire the mainland, and imply that even private islands can stay with them as the hosting company.
You can't have a business model utterly dependent on hosting, and then switch to host-your-own and have any revenue left, unless you are selling the hook-up.
Some people won't mind having separate grids away from SL, others will want to buy that access to an integrated world. Or...they will integrate the worlds with bridges, but you'll have to pay to LL as you would a troll.
I don't see what's wrong with AOL. The scorn heaped on AOL by cooler-than-though tekkies is all out of proportion to the reality -- that AOL still goes on being used, and what it was -- a controlled world with a really easy user interface and pushed content -- is what SL needs to make it more widely useable. Lots of people use AIM -- way more than they admit. And they never left AOL.
A 3-D streaming AOL in which you can create your own content and make your own groups or access other people's content especially at first but have a huge array of choices isn't AOL anyway, so it merely means taking the features of AOL -- dead-simple buttons to use on the Interface, a closed, controlled circuit to separate it from the bad highways of the Internet -- and put them in -- because these are all things people *want*. Look at what the masses *want*, not what is culturally acceptable to a tiny niche of geeks.