Tuesday, February 12, 2008

Ginsu Yoon - Platforms, White Labels and the Growth of Virtual Worlds

My Turn is a new op-ed feature at VirtualWorldsNews.com, solicited and unsolicited, from industry professionals. If we haven't reached out to you already and you feel like you have an insightful, argumentative opinion to publish, please get in touch with me at joey [at] showinitative [dot] dom. Previously we heard from Corey Bridges, Multiverse Executive Producer and Co-Founder, about the diversity of the industry. This week's column comes from Ginsu Yoon, VP Business Affairs, Linden Lab.

Over the last year or so, social networking sites and other Web-based businesses have enjoyed a great conversation about what it means to be a true platform on the Internet today. When you view the virtual worlds industry as an extension or evolution of the World Wide Web, it’s clear that our industry can also offer up powerful lessons about what it really means to be a platform and about the broader context of competing products and services in our space. Facebook brought the conversation into the Internet mainstream when it introduced its developer platform in May 2007. Today Facebook lists almost 15,000 applications in its directory, which adds a great diversity of content to the Facebook user experience. The company does not publish an official directory of developers, nor any indication of how many successful businesses have been based on Facebook apps, but companies like Slide and RockYou are gaining mainstream awareness by producing apps and widgets across Facebook, MySpace, and other social networking services. Bebo, LinkedIn, Friendster and others quickly followed with their own platform announcements, some with site-specific platforms and some seeking to align with a cross-service platform concept, like Google Open Social. At the end of 2007, Facebook made its developer platform available for license by other social networking services. After this whirlwind of activity in less than a year, all social networking sites can benefit from a variety of content produced by a healthy ecosystem of developers, on both closed and open platforms. Virtual worlds provide a vision of the future of online communication - a connected space much like the World Wide Web, but with immersive participation that adds a new dimension to all interactions. But we know as well as anybody that many of these comparisons seem trivial: "Hey, it's like chat but in 3D!" It takes a real understanding of both Web history and virtual worlds to appreciate what platforms mean in our own space. Linden Lab has been pursuing a vision of user-created content since 1999. When we launched Second Life in June 2003, we provided tools and services for enterprising individuals to build and share their own creations across a contiguous virtual world . . . which is to say, it's a platform for creating and sharing content. Since the variety of content experiences in Second Life is not limited to widget-type applications, there isn't an easy way to count the number of platform uses. However, we can count over 100 million unique user-created objects in Second Life, over 100 terabytes of user-created content, and Second Life Residents have bought and sold over $100 million worth of Linden Dollars on the LindeX virtual exchange. There are over 300 professional service firms listed in our solutions provider directory, employing an estimated 3,000 people. Like Slide and RockYou, the major solutions providers have become independent companies, extending their Second Life competencies across several different virtual world experiences.

"White-label" products provide contrasting and complementary services to open platforms. Again, looking at social networking websites provides great context. Much lower profile than MySpace or Facebook, these white-label products give individuals and companies the ability to re-brand the social networking experience, according to their own specific needs and audiences. The most devoted Facebook users have probably never heard of Broadband Mechanics, Affinity Circles, or ONEsite - but these white-label products provide the tools, software and hosting for anyone to build a social networking website that has features comparable to Facebook, without the connection to the audience and content of Facebook. Many white labels have chosen to implement widget features that allow them to ride the waves of the developer ecosystem created by the large social networking platforms. The white labels don't really compete against the platform plays; they provide complementary services to market niches. A few companies are pursuing a vision of networked white labels - the best of example of this is Ning, which offers any user the ability to create a branded social network, while the common Ning platform is itself a social network that unites many communities of social networks. Similarly, the main attraction of some virtual worlds is the white label product. Multiverse, ActiveWorlds and Forterra actively market their ability to provide a closed virtual world that can be re-branded by enterprises and sponsors. Enterprise-specific solutions, both open source and proprietary, are similar to those of white label vendors, but with very specific IT security and other requirements. These are all virtual worlds, and like the white label social networks that thrive in the wake of Facebook and MySpace, these custom, closed experiences leverage the ecosystem of platforms that maintain massive amounts of content. In a market with the huge growth potential of virtual worlds, it is easy to see that a rising tide lifts all boats. Platform success leads to discrete opportunities for white label products and enterprise solutions. Of course, at Linden Lab we believe that the power of a platform lies in the enormous amount of content created by individual users, solutions providers and enterprises, thriving together in a connected experience that has the range and reach of the World Wide Web. Businesses and individual users now have the ability to create their own branded experiences on the Second Life Grid, a service platform that enables any organization to create a public or private space, using Linden Lab’s leading virtual world technology. This enables them to receive the benefits of a white-label solution, coupled with the undeniable power of the existing content and communities in Second Life. Confined experiences with limited content certainly still have their place with standalone white label products, and enterprise-specific IT requirements can also drive decisions to be disconnected from a networked platform. The continued growth of all of these segments - public, private, user-generated and brand-driven - should unite all of us in our passionate belief in the future of the virtual worlds industry. In a rapid growth industry like ours, outsiders may misinterpret the existence of multiple players and business models as competition for a piece of a pie that’s already been baked. That implies a belief that virtual worlds have already become a mature industry, ignoring the massive possibilities presented by this space. The winners will reject that impoverished vision of the future, and use real industry knowledge and expertise to execute effectively into this expanding growth opportunity.

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