Wednesday, January 9, 2008

The unbearable lightness of banning: Linden Lab's lack of strategy

The demise of banking * analysis of Linden VPs * Linden Lab's problem solving algorithm explained * a friendly advice to Phillip * it's a brave old world * patronizing advice

By now, you are sure to know about the Linden Lab's ban on in-world banking. At a glance, it seems like a reasonable decision: the banking activity in Second Life was often suspicious, and it has had its fair share of scandals. But what might it mean for the long-term future?

A rush on banks on Tuesday (source)

On Monday, I attended the Metanomics event featuring Robin Linden. The Metanomics events are often boring, especially the ones featuring Linden VP's. Last year, we had Ginsu Linden, whose answer to the questions ranging from in-world monetary policy to the laws of supply and demand was the mantra "Second Life is a product". This one was no exception, except that Robin's mantra reply to the questions ranging from land zoning to JIRA and reputation systems was "It's very hard, so we are focusing our efforts elsewhere", peppered with an occasional "Well, if the community implements something, we might use it".


(hint to surviving Metanomics events without falling asleep: watch it at Muse Isle, where the atmosphere is fun and joking constant)

Boring as Linden VPs may be, they do provide an insight into the workings of Linden Lab and the future of Second Life. Briefly stated, their problem-solving algorithm is:

  1. A problem arises in Second Life
  2. Problem grows worse; L$ are lost, blog posts on the topic abound, possible solutions are put forward
  3. The JIRA is mobbed
  4. Time passes
  5. Some more time passes
  6. Linden Lab implements a quick fix by either:
    1. banning the activity in question
    2. extending RL governance to the SL activity in question
While this may seem to work (hey, gambling is not a problem anymore, right?), it proves that Linden Lab has no long-term strategy for Second Life. This is a bit shocking: all Phillip's speeches and LL's mission ('To advance the human condition') sure make it seem like they know where Second Life is headed. There seems to be a disconnect at the middle management layer - you have visionaries and enthusiasts on the top and bottom, but the VP layer is made out of old-school businessmen. We all remember how it went when Apple tried a Coca-cola executive, so my advice to Phillip would be "Watch your back!".

Oh, Phillip?

The essential premise of Second Life and its biggest competitive advantage is freedom - freedom of creation, freedom of communication, freedom of interaction. Of course there must be some limits to freedom; but instead of giving us the mechanisms to evolve these limits, Linden Lab simply stamps the real-world solution on the troubled area. Problem with the banks in Second Life because there is no regulatory body with authority and tools to regulate banking? No problem - let's allow only real-world banks which conform to real-world restrictions. Bit by bit, they are making Second Life a carbon copy of First Life - just with wings and furry avatars.

An aside: Linden Lab states that Linden dollars are "fictional currency". So why must you have a real currency bank certificate to open a bank in Second Life? Wouldn't a certificate of fictionality be more appropriate? I fear that LL has opened a Pandora's box with this decision - it will be interesting to see how the future develops.

Am I concerned about my Second Life? Yes and no. I love Second Life, but what exactly do I love about it? The crashing viewer and an abundance of Ruths? No - I love the way it enables me to communicate with others, by creation or by interaction. Exactly who provides that service is unimportant in the long term. Once something has been done, it's easy for another to copy and improve it. If Second Life fails, I have no doubts that a Third Life will await me down the road.

Ruth army (source)

I offer no concrete suggestions to Linden Lab; other posters have done that better than I could have. I do have one advice for Robin Linden, the "VP for community", though: make deciding about the "hard" issues your priority. They (and not viewer stability, GRID architecture or banking regulation) are key to Linden Lab's and Second Life's future.


dyerbrookME said...

Iyan, did you have any money in the banks? I didn't, just a token amount for a test. I don't think a significant number of people used them. I think the ban mainly was aimed at cleaning up a few dozen people who regularly defraud others and Linden Lab through a variety of means, without accountability.

You advance the notion of having unlimited freedoms on the Internet. Can you name another place on the Internet where you get this?

So the idea is that by making proprietary private virtual worlds, we can try out this experiment of freedom.

So...why isn't it working. You say "we" should be left alone to make the necessary institutions to regulate ourselves. But who is "we"? And, as they often say, "what do you mean, we, white man?"

Aside from your literalizing the finessing of lawsuits by the Linden device of "fictional currency," you don't have a plan.

What is YOUR plan? I would prefer to educate users about banks, and have a few people prosecute the fraudsters they can, and leave the door open to make community lending services. But too many people are weak and unable to care for themselves, and fall prey to banks, and a company unwilling to suffer more bad press from go-nowhere lawsuits that don't even establish precedents and don't even given their filers any real monetary satsifaction, finally says "enough".

You speak from a place called "we" that posits a functional, intelligent, educated "we" that has capacity. But the people who use banks don't have that capacity.

You may have a plan for a society on your sim. You don't have one for a very diverse and chaotic set of aspirations and abilities such as one finds in SL.

Prokofy Neva

IYan Writer said...

Hi Prokofy,

thanks for your comment.

No, I did not have any money in SL banks. I'm firmly in the "spending money in SL" group - the only money I made was from a few surveys, including the one you tweeted about yesterday :)

I agree that the bank system we had was far from optimal (to say the least!) and that the "stock market" is the same. But there were several SL users who proposed measures that would enable the SL community to raise the trust level (Nobody Fugazi for one, although I know that will not persuade you :) ) So there were ideas for social and business mechanisms (which should appeal to a company that likes to "solve social problems by changing the code"), but they were never heeded by LL. I believe they are similarly oblivious to SL users' feedback on several other areas, including real estate management and zoning.

I do not advance the notion of having unlimited freedom on the internet. I believe that in RL and on the net (and in SL), our freedoms are limited by other people's freedom. But I do advance the notion that the boundaries in SL do not have to be the same as in RL (laws, institutions, policies). Many aspects of RL do not exist in SL and vice versa; why equate it?

My plan is simple: use the experimentalist aspect of Second Life. Create 15 sims with different rule sets and see what works. Get feedback from land owners, renters, business owners, users, shoppers, campers and everybody else. Use the feedback to improve the community. *Engage* us - and not leave us hanging with the abuse report and JIRA as the only recourse.

Yes, this is far from trivial to implement; but it is what I believe the "VP for community" should do - instead of spout platitudes, like she did on the interview.

And regarding user education: why not use the evolutionary approach? Cap bank investments to 10,000 lindens per person, so if they get burned, they get burned for a trivial amount. I once bought a 90 minute rental Flying Tako boat, only to discover it for free a few days later. I chalked it up to experience and now I know better. Isn't that the way we should learn - by trial and error?

IYan Writer