Kate: Bulkley, Media Analyst.

Philip Rosedale

For Media Guardian, May 17, 2007

By Kate Bulkley

Today Second Life, tomorrow the world

Philip Rosedale

OnThe founder of the virtual world Second Life believes that his company, Linden Lab, is at the forefront of the internet's next big revolution - the 3D web

Kate: So what was the motivation behind Second Life?

Philip Rosedale: My background is physics, a lot of math and computer programming and I am really interested in chaos, chaos systems, non-linearity and emergent behaviour. SL is one of those weird kind of phenomena where every new piece of content makes it marginally more appealing. People think that our growth has been aperiodic and discontinuous but if you look at the growth, it has been a perfect curve and it is organic and exponential because it is a network effect business. But it all has to be co-visible because if that were not true you wouldn't have the network effects. So what we don't want is little silos of marketing - nobody is interested in that.

Kate: But brands and broadcasters want to control the environment that their content or brand is in.

PR: I know, but it has never worked like that in the internet. What I think will happen is that a few advertisers and media companies will embrace this uncontrolled environment and they will have success and then everyone will jump in. It's another one of those discontinuous phenomena. You get a couple of people with a slight economic advantage and then everyone jumps in.

Kate: What you are doing with SL is such a different kind of experience. Most media has been passive, delivered to people as a finished product.

PR: Because that is all that the technology has allowed. But look at gaming. Those are non-passive experiences and they are much more engaging. And then look at video responses to YouTube videos; these are signs that people want to create. Perhaps a more nuanced point is that most of us are not creative because the world doesn't make it easy for us to be creative. In this next phase of the web we are going to use technology to make creativity easier and I think we are going to see everybody wanting to be creative. This means that people better rethink the nature of media.

Kate: In SL, through the avatar that you create, you can walk, fly, dance. You can buy real estate, open a store, make love. Can you commit suicide?

PR: Yeah. You can kill off an account. In fact I think someone is going to write a great dramatic book about that some day.

Kate: Talk about the technology. SL doesn't work with Vista ...

PR: Something is broken on Vista and we'll figure it out. The real technology challenge we have is rendering a world in 3D because historically only games have used 3D. What we are saying is SL is the next worldwide web and so every computer has to do 3D perfectly and we are not there yet. We are probably one PC development cycle - so 18 months - away from where every machine with Vista or Mac OS X should be able to run SL. I think we started a little bit early with SL but the sheer enthusiasm that people have had about co-creating the world has sustained it. What is amazing is that we are not even there yet. This is only the beginning of the 3D web and SL.

Kate: So what is the next big step for SL?

PR: I think the voice technology we are developing is very powerful and transformative. The big problem is that it takes a long time to figure out how to do things in SL. Once you get over that, I think SL is a smoother road than the web itself, so taking that average of the four hours it takes now for people to understand SL down to 40 minutes will move us from 10% retention of users to more than 50% and then the 3D web will rapidly be the dominant thing and everyone will have an avatar. Are we the company that can do it? I think we are but in all fairness I think we are creating what is the tip of a whole new category of experience and I think we can be the leaders of that.

Kate: How big an idea is SL? You say it is the next world wide web.

PR: If we recognise that SL is really a big idea, that means that there could be different orientation paths into it. Today there is only the one we provide, but we aren't going to do that long term. What I really want to see is companies developing branded-orientation experiences that are better then ours.

Kate: What does something like that do to your business plan? Right now the way you make money is selling the land in SL - in effect, a land tax. Basically it is a real estate play in cyberspace.

PR: It is a virtual real estate business but it is a little less abstract than a lot of people suggest. What we are really selling you is computation. We are selling you CPU core. If you buy a 16-acre piece of land, which is about four city blocks, what you are renting is one processor.

Kate: Since 2004 you have allowed people who have made money in SL, called Linden dollars, to convert it to real money. You have an exchange rate with real money and SL has even produced its first millionaire. How do the virtual and real worlds start to collide?

PR: The gross domestic product (GDP) of SL is now about $500m (250m) but it is growing rapidly. Having our own currency makes sense because it allows people to make micro-transactions.

Kate: Did you envision this? I mean SL is like running an independent country.

PR: We have learned a lot about monetary policy! I love it. We recognise that the GDP in SL is growing at a rate that is staggeringly fast, relative to real world economies. I call it light central bank functions. We would love to find a great economist to come and join us!

Kate: You are running a real economy but it is essentially a dictatorship, one headed by you, Philip Linden - as you are known in SL - the dictator.

PR: Yes, but it is a subtle question. If a country establishes a record of repossessing land for no real reason, then that colours the extent to which it's a dictatorship. We haven't done that. Could we shut the servers down if we get pissed off with somebody? Yes, we could do that but we haven't and I think it is very unlikely that we will because it would so risk everything we have built.

Kate: You have had to step up your policing in SL. There have been disruptions at some corporate events, so you are not completely hands-off.

PR: We do a bit of central policing in cases like fraud and extreme harassment or in cases where there has been the disclosure of somebody's real-life information. We don't allow that.

Kate: I understand that porn is the biggest part of the economy.

PR: I don't think it's the biggest, but it's hard to tell. Some of the transactions are person to person and some are transactions from vending machines. Sometimes the transactions have some text that allows us to tell what it is but people are so inventive that we don't always know. From what we can tell it's clothing, jewellery and furniture that are the biggest part of SL's economy.

Kate: How about money-laundering?

PR: This is not my expertise, but real money-laundering involves the passing of real paper bills so the big problem is real currency.

Kate: What do you think about the idea that an avatar built in SL could move off Second Life and wander the web?

PR: We are building the backend to support that. We believe the concept of identity through your avatar will span the web. We are going to seek to enable that. Technology-wise, it's only about 18 months away. I do think we will see some interconnected virtual worlds and I think we can lead by being as open as possible. If you are open and you are dominant, you win, forever.


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