I have been hearing a lot about secondlife, and I finally decided to research some up. For beginners, the articles in Businessweek and Wired would provide a credible source of information.
Briefly, secondlife is a virtual world with a real economy. People can buy land, build houses, offer services and so on. And the currency in the virtual world can be used in real world. So there are people who are making real moolah by offering services or trading in secondlife. At first it sounded crazy to me, but people are spending there and thats the reality.
This obviously has interesting (and perhaps at this point, unfathomed) implications. There is a claim that there is $410m worth of creative effort happening inside secondlife every year — that can add up quickly. Where does the economic benefit that people can reap in a virtual world start overtaking that in the real world — in some sense, the virtual economy starts competing for talent with real economy — especially with all the low cost of labour we have in India! Go imagine.
Tactically, I think this is one good way for some social networking sites to offer something compelling — provide social networking in context of virtual worlds that to an extent, map real places and buildings and people — of course, much less heavy in terms of computing and bandwidth requirements.
Btw, I am on secondlife now, and I am called Alok Blackmountain there 🙂 They dont have Mittals!
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Am just thinking aloud how will the profits from such `virtual’ business be treated…
(a) When you buy a piece of virtual land and sell it later at a huge profit, would it be treated as capital gain….? There is no `transfer of property / physical asset’ here, which is a pre-requisite for such classification.
(b) Would it be recognised as a business activity so as to get treated as business income ( and hence eligible for deductions / allowances )…?
(c) Would it be treated as `speculative transactions’ and taxed accordingly…? If so, the activity could be invariably termed as `gambling’ and would be subject to strict controls ( Credit Cards can’t be allowed for this purpose…much to the chagrin of founders )
May be it has so far escaped the eye of the taxman. But once the numbers add up, it sure will get `unwanted’ attention…But till then, will it be allowed to go tax free for want of proper definition / classification under tax laws…Then I think there is a good case for early entry and neat exit…!
Thoughts…?
So much s happening in the virtual worlds. Looks like in a few years we will shopp, hangout and have gettogethers in virtual worlds . There is a detailed article on this on my blog[shamelesslly advertizing] on virtual worlds with some serious business ideas . http://chandanscorner.blogspot.com
At TiE ISB Connect, Clearstone guys spoke about it. They see this very much happenning in India, if done correctly. Couldn’t get the whole scoop as so much was packed in 3 days.
wallop.com (Spinoff of Microsoft’s sandbox intitiative) starts with a slightly similar model. While SecondLife has created an entire virtual world, wallop restricts itself to just trading virtual mods, widgets etc.
Anyone got an invite from wallop? Would be great to hear on what else is unique besides the flash based aesthetics.
cyworld (see us.cyworld.com for english version) seems to be leading the sns brigade with fantasy elements to it. of course, their model, interactions and graphics are much simpler than secondworld because they run in the browser, not a separate client. even so, they convert $100 million of real currency into their “dotori” in-game currency. while they have some following in china, japan and taiwan, most of that money comes from just korea! of course, the koreans are crazy for in-game merchandise, but it is not even much of a game.
very interesting phenomena. I showed cyworld to two schoolgoing cousins and they loved it. the problem (for india) seems to be that parents monitor (and ration!) internet usage too much to allow the sort of long play sessions that occur overseas.
Neopets is another addictive fantasy-world… they have the highest time-spent per user for any website. However, they are heavily dominated by girls – they had introduced fight arenas to hook the boys, but it didnt work too well.
As you point out, this whole phenomenon could also be used to map real cities. There’s an India SNS play hiding in all that information, of course – trying to figure it out 🙂