The Guardian: Virtual Commerce Will Change the World

If today’s
tech article
by England’s The
Guardian is any indication, a veritable virtual world earthquake is
rumbling across the pond. Correspondent Victor Keegan gets the impression all
of this virtual commerce may be more permanent than the Furby:

Unlike the industrial revolution, the virtual one is led by
the East, not the West. Market researcher Plus Eight Star puts the virtual
goods market in Asia at more than $5bn, or 25 times higher than recent estimates for the US, though
they may be a serious underestimate.

Keegan pulls from data harvested by virtual researcher par excellence Edward Castronova of
Indiana University, who took on the heart-pounding feat of reading hundreds
of pages of Everquest 2 player transactions
in an effort to map virtual economic

It’s refreshing to see the growing virtual-to-real currency
conversion market taken seriously. What’s great about Keegan’s Guardian article is that it brings in an
area of virtual commerce that is exploding while remaining under the radar of
the graphical worlds scholars: Facebook and social networking games.

For those unfamiliar, Facebook is rife with free-to-play
games like Mafia Wars, Farmville (of
which your author is a recent addict), and Roller Coaster Kingdom. While these
games are entirely free to play, any serious player will find themselves
quickly limited unless they opt to invest real money in purchasing in-game
upgrades and currency. Mafia wars pic

Zynga, developer of
Mafia Wars, Farmville, and nearly every other big-name social networking game
on Facebook, draws a pretty penny from these “microtransactions” of anywhere
from one to five dollars, all the way to $40. 

These games aren’t a joke, and Zynga was right to bank on
the spendthrift tendencies of teens driven by immediate gratification. Zynga
recently closed nearly $50 million in revenue
on the backs of these easy-to-produce
browser games, and hauled in nearly 30 million active players. That’s a rough
average of a little over a dollar spent per player.

So what is the future of these virtual transactions? The Guardian shows no lack of hope:

First, the technologies behind virtual spaces are powering
ahead. It is even possible, indeed likely, that products will be constructed in
a virtual world and then "printed" out in the real world as a
tangible product.

While we may not be printing things out on three-dimensional
printers any time soon, Keegan is right to point out that technology shows no
signs of slowing. As the iPhone has shown, engaging games can be produced with
little start-up capital, increasing competition and raising quality. People are
willing to pay for the experience.

The economic world is changing, a dollar at a time.

The Augmented Reality “Terminator” Love-Fest Continues

Earlier this morning we saw The Independent rolling out the Schwarzenegger nostalgia wagon to explain augmented reality to its readers. Now Telepresence Options, a technology-tracking service, pays out another royalty in their description of augmented reality contact lenses:

In the Terminator movies, Arnold Schwarzenegger's character sees the world with data superimposed on his visual field–virtual captions that enhance the cyborg's scan of a scene.

These visions (if I may) might seem far-fetched, but a contact lens with simple built-in electronics is already within reach;

I can understand The Independent needing to make its tech stories accessible to casual readers on train, but what is it about the allure of Terminator that has even an industry standby like Telepresence Options invoking Arnold?

With cybernetic contact lenses only capable of an 8×8 pixel array as of this writing, there is still a way to go before Terminator tech is standard in every human body. But at least the mentions put Arnold Schwarzenegger at the top of a search unrelated to destructive California wildfires.

Rita King’s “Digital Diplomacy” Wins Gov 2.0’s Top Presentation Award

Congratulations to Rita King and DIP's Dispatches from the Imagination Age for a resounding victory at the inaugural Gov 2.0 Expo here in Pixels and Policy's home base of Washington, D.C.!

The erudite Ms. King won "Top Presentation" in Gov 2.0's "Government as Peacekeeper" segment for her excellent research on the role of the digital world in fostering understanding of Islam. Rita's research was featured on Joshua Fouts's booming Dispatches, which also featured one of the first public mentions of Pixels and Policy.

We urge everyone to check out Rita's work over at Dancing Ink Productions, you'll certainly be glad you did.

Also, expect a full write up of our experience at the Gov 2.0 Conference soon.

Pixels and Policy Now Available on Alltop!

Alltop We're proud to announce that Pixels and Policy is now a member of, one of the premier news aggregators. Alltop allows you to assemble a wide mix of weblogs, news sites, and Twitter feeds all on one easy to navigate screen.

You can find Pixels and Policy under Alltop's Virtual Worlds category, alongside such big names as New World Notes and Dispatches from the Imagination Age.

We sincerely hope you'll consider adding Pixels and Policy to your list of daily Alltop reads!

NATO, Sweden, and the Problem of Security in Virtual Diplomacy

As Joshua Fouts over at Dispatches from the Imagination Age reports, NATO is stepping up plans for a commanding presence in Second Life. This comes on the heels of our report on the Department of Energy's supercollider-iffic island development, and while the Department of Energy will play a large role in U.S. politics over the next few years, NATO is, well, NATO.

Thank the pork-filled budget for this beauty of bureaucracy. NATO, in partnership with the U.S. government, released a thick project funding announcement titled "Development of Virtual Worlds" which promises to award a "large, fixed-value contract" to any company capable of filling out all of the attached paperwork without falling asleep. Best thing about it? Like all government funding opportunities, the project is entirely tax-free.

In case you were planning on submitting, this ain't your grandmother's virtual world. From the announcement:

  • must run fully behind or through firewalls using a single open port of choice

  • should be able to run SSL encryption if desired for increased security

That rules out Second Life, as Massively reported, which leads one to ask – who, exactly, is qualified to take on this project? Looking at the promising work done in Second Life by the brilliant minds who designed the Naval Undersea Warfare Center, it's hard to believe Second Life couldn't support possible sensitive operations.

Which brings up another question – why doesn't NATO merely produce its own virtual world, to its own specifications, where it can control access? This is going to be the big problem over the coming years. When Sweden opened a virtual embassy in Second Life, the Swedish government had no expectation of conducting sensitive business in-world. Apparently NATO desires this.


Sweden may have an elegant answer. By building a virtual embassy in Second Life (pictured, right), the Swedes improved their public relations and public awareness campaigns on the internet. The story made big news. But it was little more than a place for cultural exhibits and links to Swedish tourism websites. Unsurprisingly, the Swedes use a private government intranet for actual embassy communications.

Until technology increases and allows a currently unavailable (on a massive scale) level of selectivity and background screening, NATO will have a good deal of trouble finding someone to meet its standards.

“Youniverse World” Dogged by Content Ownership Problems

Chalk this one up as a new virtual world that gives me the heeby-jeebies. Youniverse World is the newest virtual world to hit the market in beta, and boy, does it raise questions. The fact that it's based in Europe and hawked by an internet army of Eastern Europeans with "trust me" schticks only makes it more disconcerting.

The concept is simple: Youniverse World expands on the successes of Second Life as a commercial world by developing an entire virtual community geared towards providing real world goods and services through an entirely virtual interface. Need a pair of Nikes? Go to Bob's Virtual Nike Store and see if you can catch a deal.

It's a virtual world with entrepreneurs – both small and large – as a primary target. I'll break it down:

Once you're signed up for Youniverse World, which is being billed as a persistent virtual world interpretation of places like MySpace and Facebook, you can become a "tutor." This is basically the same as a Referral I.D., and new users can enter your name in upon joining to be pulled into your community. There is a benefit to this: Youniverse World offers to kick 10% of everything your referrals spend in-world back to you.

According to a poorly-scripted Powerpoint presentation, membership in YW allows for virtual travel worldwide, digital conferencing via avatars, opportunities for "new profit streams" and "multi-level marketing," and a "3D social business network." This is sounding less like Facebook and more like LinkedIn:  the Game.

As mentioned, the game is based in the United Kingdom, with all currency using the Euro. Viral marketing has been taken over by a handful of forum-spamming power-users from Latvia and Russia. If you find a "tutor," their profile is likely going to be cyrillic.

And don't be expecting Second Life's society of ownership. Per the Terms of Use:

4.1 – Member acknowledges that all intellectual
property rights comprised in the Products and Services (including
without limitation, any patent, registered design, copyright, design
right, trade mark, business name, application to register any of the
aforementioned rights…) (“Intellectual
Property Rights”) are…the

Now, according to a later portion of the Terms of Use, the user can buy and resell items for his or her own profit, so long as they understand that Youniverse World has ultimate ownership over all items. This is especially worrisome given the fact that users are buying and selling real-world, tangible items in an internet storefront.

Will commercial culture blossom in Youniverse World when the potential exists for game developers to close down the virtual representation of a brick-and-mortar shop? Would the shop owner have a legal claim for damage to reputation if Youniverse World mistakenly bans them?

Without addressing these problems, it's going to be an awfully small Youniverse.

Blue Mars Aims to Terraform Virtual Commerce

Blue Mars is pretty. I mean really pretty. It runs on the same engine that built Crysis for crying out loud. But what's so compelling about Blue Mars isn't its otherworldly beauty, but how the developers are making use of its virtual commerce engine. Ignoring the teleporting and role-playing Blue Mars offers, its true gem is its commerce system. In this, it owes much to Second Life.

The first time I swapped American dollars for their Linden equivalent, I wondered aloud about the potential of this system to upend the norms of commerce. At the time, Second Life was the only online world that not only encouraged trading in real currency for game currency, but also provided a system whereby players could legally turn their game currency back into real dollars.

What Second Life did to virtual commerce is stunning. Users now draw real-world incomes from the sale of virtual goods, goods which they own in every sense of the word. Now Blue Mars expands on the Second Life commercial system in a way that will become standard over the next few years: Blue Mars makes no illusion about its desire for corporate users.

Remember, for a long while Second Life frowned on letting the corporate establishment into the game world. Even today the corporate storefronts of Second Life sit mostly vacant, victims of the enforced apathy of Linden Lab. This will change with Blue Mars. Corporations finally have a bosom buddy in the online world.

           Blue Mars is a hottiecaust

It's no secret that Blue Mars has approached large corporations, but it is a shame. So much of Second Life's vibrance comes from the fierce competition of thousands of small producers vying for the best product.

If corporations are given equal footing, as they were in in Second Life, they are unable to compete. One need only look at corporate shops for evidence of this. My worry, however, is that corporations are given a leg-up by Blue Mars.

How, you ask? Because Blue Mars is a world filled with professional content licensed from third-party studios. It reduces the world to little more than a virtual shopping mall populated by well-known corporate names. Now, we received a comment on this blog from Glenn Sanders, Community Director of Avatar Reality – the papa corp of Blue Mars. He was insistent that everyone will be a creator, and urged that we not rush to judgment on a game that hasn't even seen open beta.

I yield this point, but argue that much of the information I've discussed above is already out in the wide-open world. Major third party studios are being brought in to provide an infrastructural base instead of allowing that base to emerge organically. This puts all but the largest mass-producing studios at a marked disadvantage.

Users earn currency by serving as "employees" of these virtual analogues to real-world corporations. The variety of jobs available is wider than mere retail clerk, but the path is the same – instead of a community venture where players have an equal chance to make a living based on skill, Blue Mars stacks the deck against individual entrepreneurship from the very outset.


   Do we really need a world filled with these?

Now I, like many, signed up to be considered for the Blue Mars beta. I'm just as anxious as everyone else to get my hands on the game and see what it can do, what its infrastructure will look like, and how its economy will function.

Blue Mars will doubtlessly be a prettier game than Second Life. It may well prove more intuitive in its design tools, and boast a more interactive world. But if what we've seen so far is evidence of the path Blue Mars is walking on the content development front, it may well create a definitive rift in the commercial virtual world community.

I don't want my words to be the only ones in this discussion. Post your opinions and comments to get the ball rolling. I'm sure our roving Blue Mars rep Glenn Sanders would be happy to engage in a spirited discussion about what makes Blue Mars tick.