Second Life Herald

IRS Says Virtual Greeters Are Real Employees

Electric Sheep Company VP Giff Constable confirms IRS ruling

by Pixeleen Mistral, National Affairs desk

Misty and Maia are employees - not contractors

This weekend, the Second Life Herald learned that the Internal Revenue Serivce has ruled the greeters employed by the Electric Sheep Company for the CSI:NY metaverse/television cross promotional event are ESC employees rather than contractors. The ruling is significant - it suggests a number of Second Life players-turned workers had their employment status misclassified over the last 6 months. By treating workers as contractors, ESC minimized its paperwork and avoided responsibility for federal tax withholding - as well as sidestepping the employer’s social security withholding contribution.

The CSI:NY hypervent was met with mixed success, but continues on a reduced scale providing work for a number of metaverse residents. I spoke with two greeters in-world sunday evening who confirmed that they were still treated as contractors between assisting confused new players:

Pixeleen Mistral: so... are you an employee of the Electric Sheep Company? or a contractor?
Misty Durant: Pixeleen, we are all contractors
Misty Durant: and that's about all we are free to share with you
Pixeleen Mistral: the ESC says so, right? but what if the IRS says otherwise?

Minnu Model Skins PhotoSourced from Renderosity???

Metaverse shocker -- pirated skins being sold in SL!!!

by Tenshi Vielle, fabulous fashionista - courtesy of shoppingcartdisco

Do you remember a while back, when we were talking about "what ifs" regarding stolen content across virtual worlds?

I think the best case has to be Renderosity.com artists' work being bought then redistributed without their permission (and against their own TOS) within Second Life. And of course, the general community in Second Life is mostly ignorant about what goes on at art sites like Renderosity - or, at least, doesn't think to check there first to see if the content they just purchased in SL is stolen.

One sharp-eyed Second Life community member did notice that a skin she purchased recently appeared to be stolen from Renderosity.com - and emailed the creator, which in turn caused the creator to email me to ask for help and find out how stolen things were handled in Second Life. I guided her towards a DCMA, but I would like to share her email and accompanying screenshots with all of you.

Do you recognize this skin? It's actually from Renderosity.com, Danae's Manhattan collection. It's been warped to fit the templates in Second Life… by none other than Minnu Pallen, the "great" skin creator.

More info below the cut, including Danae's original email to me:

Slexchange ATM Script Cracked?

Secret requested when Secret is unknown

by Pixeleen Mistral, National Affairs desk

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UPDATE: According to über-scripter Day Oh, the bytecode/scripting exploit described in this story is real, but was fixed a month ago. Mr. Oh told the Herald that when crossing between regions, sometimes sims would randomly send sim-to-sim packets to clients. If scripts need to be handed between regions this makes a certain amount of sense - particularly if there were bugs in the server code that resulted in mis-directed messages going to clients -- a plausible explanation for how the server-side bytecode could leak. While it is comforting to hear that the problem has been fixed, the Herald suggests Linden Lab might want to clarify how long this exploit was active and why they have been less than forthcoming with news about this problem and its solution. Meanwhile, those with sensitive scripts might want to update them, on the chance that they have been a victim of server bytecode leakage.

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Friday, IntLibber Brautigan posted a warning of an exploit allowing technically savvy residents to “capture ATM scripts in bytecode format”. This is a significant development given the number of successful Second Life businesses that use LSL scripts to transfer goods and money -- an un-patched exploit could be a significant blow to the in-world economy.

Because the real wold dollar value of typical SL transactions is low, it is common to automate these transactions. However, automation generally means the scripted transactions are run with minimal human supervision and depend on secrecy for security. This may present a problem. As Mr. Brautigan told the Herald, “with the code obtained, one can make an SLX terminal give you ANY product listed on SLX for free in any quantity or clean out the avatar owning the ATM - all their money - these capabilities have been tested I am told”.

Some observers are concerned that this sort of exploit could destabilize the in-world economy, and Mr. Brautigan reports that his source “has already notified Soft Linden about this vulnerability - he also tried to notify SLX but they said ‘our system is uncrackable’". There we no Linden Lab staff online friday evening willing to speak with the Herald on the record.

While the game gods remained silent, the Herald was able to interview Second Life resident Uildiar Kuhn to learn more about the exploit.

SL Fashion - Copying or Inspiration?

by Tenshi Vielle

I've noticed a lot of confusion about copying and inspiration from other designers, whether it be in real life or in a virtual world. Let’s look at the subject and "where the line is" -- it might help all of everyone clarify where they stand.

Maximilian Milos had an experience last year with Herman Miller. Maximilian really enjoyed the HM designs, and wished to bring them in world. He did what few other designers do - he contacted Herman Miller for permission. HM granted Max permission to replicate their designs.

"Bulletproof Babyphat 2" on sale at SLExchange

However, after a bit, HM began looking into Second Life and around the time that Armani was moving in, HM contracted Rivers Run Red to replicate their products for Second Life. Max was a little concerned, so he contacted HM again and was assured that he was fine, and not to worry.

Max did stop selling his HM recreations after finding out that Rivers Run Red would be doing direct work with the company. He exercised caution - something other people might not have time to do.

Two weeks later, Max logged in to discover that all of his HM creations were missing from his sim - the Lindens had deleted them. Whether this was action from Herman Miller or Rivers Run Red, Maximilian isn't positive. He never received a cease and desist letter -- his items were simply gone. Maximilian wasn't trying to pass the items off as his own designs; he takes care to always clearly credit the original designer. HM wanted it gone, and thus it was so - the Lindens made sure of it. You can read Maximilian's reaction at SLNN

New, Improved Copybot Demonstrated

Remote-controlled bot copies prims, linksets, textures, clones avatar profiles and outfits & saves copies to the user's hard drive

by Proper Prim

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[UPDATE: Apparently a similar (or perhaps identical) copybot is being sold on slexchange here. Should slexchange remove this user-created content? Might the Lindens decide to have a word with bot creator Marki Young? As we watch this story unfold, I'd like to thank Herald reader Miki for pointing us to the slexchange page. Perhaps Herald reader Robin Linden will will have something to say about this at some point? - the Editrix]

click to enlarge slexchange sreenshot

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In partnership with d3adlyc0d3c, last week I began conducting an investigation into reports of rampant content theft across Second Life. Some of these claims included allegations that Copybot was being used- allegations that many of us did not believe initially.

Unfortunately for content creators in Second Life, Copybot DOES still exist and is more advanced than ever. Several sources have told the Herald that Copybot had never left SL in the first place as many had hoped - instead, copybot engineers concentrated on a series of improvements to the original model.

'Not only did Copybot continue to function and evolve in SL over the course of the past year, but trying to break it is a futile excercise as it is entirely impossible for Linden Labs to ever prevent individuals from being able to use this or similar functionality' our source told us Thursday afternoon.

After the initial interviews, d3adlyc0d3c was able to acquire a copybot from certain SL 'underground' contacts - he then used the bot to create a youtube video demonstrating some of the capabilities of this software. In the video, we copy one of Apotheus Silverman's large complex builds. After the video was done, we threw the copy away, Apotheus - honest.

Fighting the SL Way - Copy & Resell For Free

Content theft in Second Life on the rise
Don't like someone? destroy their business

by Tenshi Vielle, fabulous fashionista

Resident content theft runs wild while Philip and Robin Linden have gone missing

Content theft has been absolutely rampant in Second Life lately. It's like scabies - once you think it's gone, a whole new bunch of the little jerks pop up.

First we had Nicky Ree's dresses stolen by ADiva, shoes by Enkythings primjacked, then there were a bunch more smaller ...ALLEGED... thefts - a Brasilian user ripped RaC, Redgrave, and a host of other skins, cackling the whole way that no one could stop him. Designers chased him around the grid in a desperate attempt to squash him down, protesting and contacting sim owners to get him shut down. The problem was, he moved around faster than the designers could count and tended to be hard to track.

Ad Farmers Face Game-God Induced Drought!

Resident urged to conserve ads as abuse reports fly!!!
Visual Spam cleanup - or ban on unreasonably land value increases?

by Jessica Holyoke

fewer roadside attractions?

Jack Linden announced a new ban on Ad Farms this past week. While advertising is still allowed, it will be an abuse reportable offense when "it crosses the line into harassing behavior or visual spam, where the intent is purely to compel another resident to pay an unreasonable price to restore their view - then this will be covered under Harassment in our Community Standards." After studying Jack Linden's dispatch, the consensus in the newsroom is the Lindens will now use their highly developed aesthetic sense to improve the state of the metaverse. This new program seems to be off to a fast start, as Patch Linden reported receiving 500 abuse reports regarding Ad Spam as of 9am the morning after the policy was announced. Let us hope the game gods are up to the challenge now that the fallout and possible motivations of the new policy are becoming more visible.

After studying the report formerly known as the Police Blotter, I went to Sallow to try to deduce which Ad Farms were being warned regarding being spam. None of them were the Umnik Hax scheme, but rather a combination of ad towers, some of which had advertisements, some of which did not. Some of the plots were for sale at approximately L$46 per sq. m. and some as high as L$520 per sq.m.

The following day, both Tyrian Camilo and ROBO Marx were warned against violating the Ad Farm policy via e-mail from Harry Linden. The alleged ad farmers were given until Monday to remove any visual spam/land sale notices, lest their accounts be suspended. The location of specific plots where the advertisement network would be considered spam was not provided, perhaps so that residents would not be tempted into second-guessing the Linden game gods' infallible judgment.

Bankplay Banned - High Interest L$ ATMs Must Go !

Linden Lab reacts to Ginko Financial by declaring permanent spacebuck bank holiday?

by Jessica Holyoke

take the money and run

Tensions mounted at the SL Capital Exchange/JT Financial as Linden Lab reacts to the Ginko Financial Collapse.  Ken D Linden posted on the Second Life Blog today a new policy in regards to the in-world banks.

"As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter."

While it is clear bankplay is now on the list of banned activities in the metaverse, alongside gambling, ageplay, and other sorts of broadly offensive behavior, the fallout from this decree remains to be seen.

Expensive SL Classified Ads Ineffective - Save Your Money

Scientific Metamorph Sky Shop experiment shows increased traffic without matching sales

by Michelle Morphett

THE QUESTION:

As the proprietor of the successful Metamorph Sky Shop retail store, I've always been curious about how Second Life's search engine affects my business. Does paying for an expensive classified ad increase teleports from it, and does it increase my in-world shop and SL Exchange sales?

THE METHODOLOGY:

In addition to my regular $L76 Metamorph Sky Shop ad ($.28 US), I placed a duplicate ad for $L1002 ($3.71 US) to run at the same time, from Friday 12/28/07 at 9 pm PST to Friday 1/4/07 at 9 pm PST. This timeframe should be a fairly busy period, since people are still on holiday break but generally back home from visiting family, and have Christmas money in their pockets.

The $L1002 figure was chosen because it places the expensive ad a little above halfway up the first page in a search for "skybox" in the old classifieds search under the "Shopping" category, with "include Mature content" unchecked. Search engine studies have shown that "about 90 percent of searchers looking to shop rarely venture past the first page" (http://www.wired.com/culture/lifestyle/news/2005/03/66893). The same search brings the cheap ad up on the second page, about 2/3 of the way down. The new search in the "Classifieds" category doesn't show either ad in the first five pages, which is the most results possible currently.

Motorati Closes: Second Lifers Just Crash Test Dummies?

by Urizenus Sklar, Michigan Business Desk

SLNN has reported that Pontiac's Motorati Island is closing less than one year after its grand opening. It is kaput. No more. Expired. Pushing up daisies. Finished. Naturally no one is saying why, but it is a sad day on the SL business scene, since (as I argued in an interview on Michigan Radio last year) Motorati was one of the few corporate builds that seemed to get SL right -- offering not a ghost island, but regular events and races and offering free land for people who were making contributions to Second Life car culture. While SLNN reports that Pontiac may have something else in the works, informed sources contacted by the Herald doubt that this is the case (and Pontiac isn't saying).

One quote in the SLNN article summed up the situation perfectly:

Shiryu Musashi, owner of the Musashi-Do Fashion Shop and Musashi Motorsports housed on Motorati Island, commented about Pontiac’s decision to leave SL. “It’s pretty normal; I don’t think it means much – just that another advertisement campaign ended."

Sad but probably true. Until corporations stop thinking of SL as an advertising billboard and start actually building something of lasting value the metaverse is is going to be in Neutral and the gauges are going to read Fail.

Microfinance Business Kiva Announces Grand Opening for New SL HQ

by Urizenus Sklar (cross posted from The Microfinance Report)

Via Fleep Tuque via Linda Zimmer of the Business Communicators of Second Life comes the very interesting news that well known microfinance business Kiva is opening a new office in the virtual world Second Life. Kiva has had a presence in Second Life for some time, but it is obviously looking to make an impact with this January 5 opening party. But why exactly?

 

Scrooge McSheep Cans 22 ESC Employees One Week Before Christmas

Tiny Tim despondent - lumps of coal and company restructuring for the holidays

by Pixeleen Mistral, National Affairs desk

Jeremy Vaught reports on the Second Life Podcast blog that 22 employees of the Electric Sheep Company will have a permanent holiday this Christmas - leaving them plenty of time to select and wrap presents and visit their families, now that they have been sacked by the metaverse development company.

Reportedly, ESC cited financial problems and is "refocusing the business". The group working on MTV projects is apparently still intact, but speculation is that they may be discarded at a later date now that the company is focusing on "technology like onRez". OnRez is a shopping site for purchasing virtual clothing and accessorizing SL lifestyles with possible holiday gifts such as latex school girl outfits, and whip marks and everhard prim genitalia.

OnRez sells milk and cookies, too

Joel Greenberg's Virtual World Ad Network has also been shutdown as part of the ESC company restructuring. According to an e-mail send by Mr. Greenburg to those who had signed up for updates on the project the ad network was about a month away from going into beta test. Tiny Tim was unavailable for comment at press time, but the ghosts of Christmas past, present, and future were reportedly planning a midnight visit to the ESC headquarters.

Stronger Protection for Virtual Sex Toys in SL

Stimulating prospects for fapping-based economy?

by Pixeleen Mistral, National Affairs desk

Benjamin Duranske reports at the Virtually Blind site that a judgement by consent has been filed, settling the copyright and trademark lawsuit brought by several SL content creators against SL resident Rase Kenzo’s real life typist Thomas Simon.

The content creators - including part time nude model Stroker Serpentine - will take away $525 USD in damages from Rase Kenzo - and priceless publicity for their products - having established a what Virtually Blind refers to as “the first formal, if tentative, recognition of virtual property by a U.S. court”. Stroker Serpentine’s SexGen bed is generally acknowledged to be a valued addition to many resident’s virtual McMansions and starter castles/dungeons - and unauthorized copies of the SexGen bed helped spark the lawsuit.

SL Crime Wave! - L$3 Million Bank Heist!!!

Were weekend griefing attacks a cover for banks jobs?

by Jessica Holyoke

Possibly in conjunction with the many griefing attacks of this weekend, the SL banks have been hit by hackers.  L & L Bank and Trust reports that 3 million Lindens were stolen through a hack on an ATM by avatar Hamid Jewell.  This was following an exchange from avatar Betatester Allen that deposited $10 million in Lindens and then withdrew $20,500 L.  While L&L Bank and Trust is waiting for help from the Concierge and Governance teams in getting the money back, other banks are being vigilant regarding their balances. 

Second Life Investor's Bank reported suspicious activity with deposits of fraudulent Lindens, but no damage was done to their bank.  Second Life Business Bank was also hacked into today, but the owner, Anre Heron, was able to put their ATM's offline.  BCX Bank had an attempt on their ATM's today, but according to Travis Ristow, the Linden Risk API and their own security systems were able to recognize the avatar in question before a deposit was made.  Intlibber Brautigan reported no attacks on BNT Financial.  JT Financial and SL Capex also reported no incidents of attacks.

Shaun Altman To Liquidate Ginko "Perpetual" Bonds

Nicholas Portocarrero given 11 days to hand over the remains of $750,000.00 USD in deposits, 18,000 people still holding claims against failed bank.

by Pixeleen Mistral, National Affairs desk

Shaun Altman announced today that as majority bondholder of Ginko Perpetual Bonds, he will take possession of all Ginko assets so that they may be liquidated and a L$ cash distribution made to the approximately 18,000 current Ginko bondholders. Ginko Perpetual Bonds were the financial vehicle used to hold claims against Ginko Financial after the L$ spacebuck bank failed amid allegations that it was a ponzi scheme.

With chances of a Ginko recovery dim and the once popular virtual financial bank's web site shuttered, players may be happy to see something other than long term promises. Mr. Altman already has recovered some in-world assets of Ginko including 1 sim worth of land and some large blocks of virtual stocks and bonds, but liquidating these thinly traded stocks without depressing their value may be difficult.

Former Ginko honcho Nicholas Portocarrero presumably still holds some assets outside Second Life. According to Mr. Altman, Mr. Portocarrero has been given until the end of October to return whatever cash and assets he still retains from the $750,000.00 USD deposited in Ginko Financial. It remains to be seen if this request will be honored, and if the game gods at Linden Lab will take an interest in this situation.

Mr. Altman, a grey fox avatar with blue hair and eyes, took time from his busy schedule to answer a few questions, and shed some light on the Ginko liquidation situation in an exclusive interview.

Pixeleen Mistral: why are you doing this? what is in it for you?
Shaun Altman: I'm the majority bondholder. Like all bondholders, I have an interest in seeing Ginko's assets liquidated so we can recover what funds we can. As the largest bondholder, I guess it should fall on me to step up to the plate and do what I can to ensure that this happens.

Pixeleen Mistral: how many individuals hold bonds?
Shaun Altman: I'm not sure. LukeConnell Vandeverre would have those records. I THINK it's around 18,000 individuals.

Pixeleen Mistral: any feeling for how much in the way of assets you can liquidate?
Shaun Altman: Brautigan is turning over bondholder property in the form of 8,783,436 shares of BNT stock and one sim of land. Assuming that Connell also turns over the bondholders' property as requested, that would be another 8,800,000 HCL shares. These are all of the in-world assets that I presently know about, but I am searching to see if I can discover any more. I've also requested in my press release that Portocarrao turn over any cash or other assets that remain. It is unclear at the moment whether or not he will comply.

Surprise! European VAT Tax Surcharge in SL

Did LL really forget to collect tax until now - or is US$ exchange rate slide to blame?

by Jessica Holyoke

Linden Lab dares to be different - and forgets to include VAT tax in prices until now?

Tax day has arrived in Second Life, but with a surprise twist. Instead of game-related tax collections by the US Internal Revenue Service, Robin Linden announced that Value Added Tax or VAT is now being collected from European Union residents for all services obtained directly from Linden Labs. This raises the question of whether VAT was previously not being collected - or - is this simply a classic Linden Lab public relations disaster as they attempt to deflect blame for the need to raise prices to cover the US$'s slide against the Euro?

The custom in the European Union is to publish prices including the VAT tax, and the presumption is that VAT is added at each stage of a supply chain, manufacturer to retailer - unlike North American sales taxes. Traditionally VAT is also included in the advertised price - but the Lindens have chosen to treat the new VAT tax as a surcharge on their published prices. The Lab is now adding VAT to Premium account registration, land purchased at auction and all tier payments.

Some residents were unhappy to discover they had one day's notice before being slapped with a 20% surcharge. The head of Second Life Investor’s Bank, Tyrian Camilo, reports that the addition of VAT to his banking model, which includes the buying and selling of land to make the interest payments for depositors, will now have an additional 22% cost to his doing business. It seems unlikely that this economic shock will help the in-world economy in the near term.

Second Life's Slide vs. Everyone Else

9 months of losing ground against IMVU, TSO, World of Warcraft

by Pixeleen Mistral, National Affairs desk

SL web site rank falling since January - WoW, TSO & IMVU rankings rising

By at least one measure, Second Life’s growth since January has not kept pace with other 3D immersive environments - including World of Warcraft, The Sims Online, and IMVU. Comparing growth rates between virtual worlds is a notoriously difficult task. Game companies are infamous for inflating creatively defining subscriber numbers and use different methods for counting players. Even worse - independent, verifiable measures of popularity are simply not available - so PR-driven spin generally rules.

However, at the Herald we have access to an elite team of metaverse researchers who suggested that there IS a way to measure (indirectly) the relative growth rates of the media-darling 3D worlds without the game companies gaming the numbers.

How? Look at the trends in the alexa.com rankings of the various worlds' web sites. Alexa.com is an independent web site traffic measurement service that charts trends in web site traffic in terms of unique visitors, page views, and a composite “rank”. Of course traffic to web sites is not an absolute measure of 3D world popularity - but assuming a relatively constant number of players visit the web sites for each world, the web traffic trends should be indicative of population trends in-world. In light of this, Linden Lab's recent de-emphasis of population and dollars spent in-world on their web site's front page makes sense - no point in advertising trouble.

Auctioning Off My Illegitimate Spawn At BidSL

Love for sale to highest bidder

by Onder Skall, former Unicorn daddy

Yesterday at the First Friday technology expo we saw some incredible inventions, but one in particular had the power to change the way we buy and sell things in Second Life. Through BidSL you can put things up for auction quickly and easily, and bidding is fast and fun! For Second Life society at large this is big deal, and could change the way we think about selling things in-world.

For me, I saw it as an opportunity to dump find a loving home for the rape spawn sweet little things that were the product of me stupidly following the latest fad some unfortunate incidents I'd rather not discuss. Let's just say that mating with unicorns isn't everybody's cup of tea, and I thought perhaps people would like baby unicorns without having to do the deed.

The BidSL Auction House (SLurl) is laid out into sections for various types of items, and a handy elevator lets you go upstairs for the adult stuff. Lucky for me I was there early on opening day and got to grab the prime Featured item spot right near the door.

Setting up an auction is easy. Click on the board, say in chat the number of days you want the auction open for, make a payment to the board for L$1 for every day, and ctrl-drag-drop a texture, notecard, and the item in question. Naming conventions make everything work, so check the instructions. You can click the board and hit "clear" to reset, or hit "ready" to start your auction.

Banking in Second Life Is Not Totally Ginko'ed

L$ space buck banking in the post-Ginko Financial era

by Jessica Holyoke

The recent upheaval over Ginko Financial's failure overshadowed other reports of the SL financial sector, so after the bank run and bond conversion, I decided to investigate the other banks in SL. What I found was surprising.


serious L$ investors ponder metaverse banking options

I have used three banks in SL. JT Financial, Second Life Investor’s Bank - not to be confused with Second Life Investment Bank - and Ginko. When I went to look into other banks, I discovered that “bank” returned 55 entries that did not mention the banks of a Gorean river. And the banks need to be sub-classified by investment banks and exchange banks.

Exchange banks are banks that allow for direct currency exchange. Ibizia Bank and Easy Lindens both sell Euros for Linden Dollars. BRMB sells Reals for Linden Dollars. The cost effectiveness is hard to judge because you have to realize that for a Europa citizen to use the Lindex you either have to use your credit card, and use the card company’s currency conversions into dollars, or use PayPal’s currency conversions.

But looking at Ibizia Bank’s conversions, there is still a problem with the rates. Ibizia Bank uses a 315L to €1 conversion. $1 equals €0.730. If $1 equals 270L, then €1 should equal 369L. This means that their profit comes from an unfavorable exchange rate. PayPal exchanges $1 with €0.713. But with PayPal used on the LindeX you have to tack on a $0.30 per transaction fee. Which is 22 eurocents or 81L, so on a small transaction it makes sense to use the exchange bank. When you start to exchange over €2, you lose 54L per euro exchanged so it slowly eats away at what you could be bringing in. The time advantage may make it worthwhile to use the exchange banks over the LindeX.

Our Heros Are Dead

Content creators feel the pain -- Electric Sheep Cory Edo's SL lockouts & Enktan Gully's 2+ months without DMCA satisfaction

by Tenshi Vielle, Fabulous Fashionista

As many of you know, I tend to ride the fence on issues regarding Linden Labs. Recent events between residents and Lindens have begun to change my mind; I am definitely pro-content creator and less pro-Linden.

The most recent content creator vs. Linden Labs cases involve the Electric Sheep Company (whose footwork makes Second Life what it is today in the corporate world) and, in smaller but no less important cases, Enktan Gully of Enkythings.

Cory Edo of the ESC was banned once again last week for distributing several payouts of Lindens among different avatars. This occurred once two weeks ago, while she was stress-testing a project. Cory found herself facing lock-out over the weekend, killing any progress she had hoped to achieve on the project. Both instances included over-the-weekend lockup. What exactly is going on here?

In Enktan Gully's case, her interaction with Linden Labs was to be greatly ignored regarding stolen content and a DCMA she filed because of the lack of action. Enktan has kept me updated through the entire process, and rather than interject my own thoughts into her case, I will simply re-paste what she has told me. Formulate your own opinions. (Those of you may also take note that Enktan runs one of the best, well-organized freebie places in Second Life on her sim - she gets a lot of traffic and spends a lot of time assisting newbies.)

Love and Love Seats

What do you do when you come home and find a couple humping in your bed?

by Wendell Holmer, metaverse home and garden reporter

Prim Perfect publisher Saffia Widdershins and a pet

In one day, Prim Perfect’s blog got as many hits as the number of magazines sold in the previous month—and three new advertisers to boot. What caused this surge was a New York Times story comparing the magazine to Architectural Digest and noting that it showcases some of the highest-end residences in the virtual world.

Reporter Seth Kugel observed that, once SL residents have exhausted their sexual appetites, they are still hungry for home furnishings. “After a few months of … sowing their virtual seed … they are settling down: building virtual houses, planting gardens, shopping for furniture and electronics and decorating,” he wrote.

But sexual appetites are never exhausted for long, and the choices residents make reflect that fact. “Since you don’t sleep, do you need a bedroom?” Kugel asked with a wink. “Most opt for at least a bedroom (although not for sleeping).”

Then what are bedrooms for, for gosh sakes? In the view of Prim Perfect publisher Saffia Widdershins, they are for decorating. The current issue has Jeannie Moonflower of Bygone Days Antiques designing a medieval castle. “What of the dungeon, deep below the ground?” Widdershins asks. “Jeanie eschewed the chance to run riot with all sorts of items that would be somewhat out of place in a family magazine. Instead she made [it] a combination of a wine cellar and a library.” We learn that Qabalah Quintus, who builds the castles, offers three lines: gothic, gorean, and medieval. His buyers may be surprised to know their dungeons can double as wine cellars.

Linden Lab’s Metaverse Maths: 1 + 1 = 10

SL must grow constantly to be profitable - a sophisticated Ponzi scheme?
3000 servers for 50k simultaneous users - 1/3 of LL's income from selling new servers each month

by Gwyneth Llewelyn, mostly harmless meta-resident

We believe Linden Lab is a profitable company, at least since April 2007, because Jeska Linden blundered that out in a SciFi e-zine interview. Speculation on the costs of running a grid and providing the Second Life software have somewhat settled down — except, of course, in the minds of the clueless residents who swamp the Official Linden Blog with whining. For these, Linden Lab "makes millions a month" (or, who knows, a day), is about the size of Microsoft, and should be able to fix any bugs in a few days by hiring a couple of thousand programmers. In fact, the whiners make the usual mistake of mixing up income with profit — for them, earning millions is just what they see, but they have no clue on what the costs are.

On the more thoughtful blogs, however, people analyze the real statistics (at least, the ones that LL is willing to share with us!) and are quite skeptic at LL's claims of "being profitable". In fact, they add the little numbers up from what is LL's income, and see that it's impossible to run the Second Life Grid with so little money.

Between the two extremes — just looking at the income, or just adding up values for the costs — lies the very thin line of Second Life's profitability. So, how much money is Linden Lab really making?

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cHex your math is wrong because a land baron typically maintains a trading tier. He pays a flat $195 a month per sim. He buys and sells land, and tries to never let that trading tier sit there idle or be unsold before tier day. So he doesn't pay $195 five times if he manages to buy and sell five sims that month; he buys monthly tier for $195 once, then keeps it filled and selling constantly as his trading tier. To be sure, the end users who pick up from him then open up a tier, but that parcel is now off the land baron's tier bill and he goes to buy another piece, removing it from that person's tier bill, etc.

That’s Cold. Have the SL Haters Gone Too Far?

First it was Forbes, declaring the meatspace corporate invasion of SL to be a bust. Then it was the LA times, which reported the departure of several feted meatspace projects (like American Apparel and Starwood -- "there wasn't a compelling reason to stay"). Now the Wall Street Journal Online and c|net are piling on as well, with special attention to how being associated with yiffing furries and whatnot can really mess up your brand. But in the unkindest cut of all, the BFG blog, picking up on these stories, concludes with the observation that if you are interested in reaching “the elusive flying-half-butterfly-half-goth-nymph demographic, Second Life is a no-brainer!”, followed by this picture:

Now we all know that no SL avi has looked like that since 2003, and any such avi would be laughed off the grid today.

Honestly, people can be so mean.

New York Times, Dream Houses, and SL

by Espresso Saarinen

Shopping in SL is not quite like RL

Yesterday's New York Times had a very positive article about Second Life, http://www.nytimes.com/2007/08/09/garden/09second.html that helps explain the appeal of the metaverse to an audience unfamiliar with the concept. Instead of sex and gambling, or the mega-corporate flopping while trying to duplicate RL marketing in SL, this piece was about realizing your dreams of suburban luxury and comfort. Yes, it was about real residents, albeit the upper middle class. I had to wonder if the unexpected had occurred and Linden Labs had suddenly realized who is paying the bills, and actually grasped the idea of 'customer'.

The story told of houses, private sims, furniture and interior design stores, and the glories of upper class suburbia. On a whim, I decided to visit one of the stores. I cut the name of the store from the article and pasted it into in-world search, and miracle of miracles, in-world search actually worked! Fearing a reversion to normal SL behavior, I immediately teleported to the destination. Well, not immediately; it actually took two tries, but what the heck, it sure beats walking.

Ginko Financial’s End-Game

L$200,000,000 in obligations, no liquid assets -- queue up and wait

by Pixeleen Mistral, National Affairs desk

get in the Ginko queue

Sunday afternoon, GinkoTec and Ginko Financial honcho Hinoserm Rebus sent a notecard to customers who have deposited Linden space bucks in the role-play bank known as Ginko Financial. The notecard and announcement at the fictional bank’s web site inform customers that they have two options for withdrawing their funds - get in the queue, or if they prefer not to wait “the seemingly indefinate period of time it could take to refill the reserves”, accept space buck “perpetual bonds” which someone might possibly want to buy on the open market at some point. Maybe.

According to Mr. Rebus, there is now a L$1,000,000/day limit on withdrawls. But Ginko Financial president Nicholas Portocarrero informed the Herald this evening that Ginko has approximately L$200,000,000 in obligations (about $740,000 USD), so this suggests it could be be the better part of a year before some depositors see their money - if they ever do. As of this writing, the savings deposits claimed at Ginko Financial's web site were L$118,429,950 - so perhaps paying 60% interest is catching up with the "bank"? According to Mr. Rebus, there is L$30,000,000 in pending withdrawls at this point - so the L$1,000,000/day limit seems ineffective at stopping capital flight from the "bank".

Given suggestions of ponzi scheme-like scams in play, and enough money at risk to make some sort of class action lawsuit a possibility, the situation at Ginko looks bleak. With sources suggesting that Hinoserm Rebus and Nicholas Portocarrero may be alternate accounts run by the same RL typist - a suggestion which both avatars strenuously deny - the lack of transparency in Ginko’s governance presents problems to those who would like to believe in the bank. The clouded Ginko situation is not helped by Mr. Portocarrero complete refusal to explain where he has invested his customers money - but this is how Ginko Financial has always run its business.

Ginko Financial’s AVIX Buyout Blocked

Cash crunch and opaque accounting limits Ginko's appeal

by Jessica Holyoke

The SL financial market was roiled today by news that the Ginko Financial Group, owned by Nicholas Portocarrero was attempting to buy a controlling interest in AVIX financials, owned by Investor Allen. After previous reports of Ginko’s inability to cover withdrawals from the “bank”, the issues with in-world financial transactions and all the troubles at the World Stock Exchange (WSE), this meeting came as a surprise announcement. It was also shocking because some felt that Ginko had a preferred partner in Hope Capital/WSE, although Ginko Financial will still remain shareholders in WSE.

What happened after the meeting only added to the drama and confusion - AVIX announced that the Ginko Financial Group merger and its IPO is being rolled back. In a terse announcement, Investor Allen stated that “[w]e will no longer look to merge with other institutions without a solid knowledge of their ability to cover their accounts and will never again even glance at exposing our accounts to such a risk.”

Benjamin Duranske, who originally broke the story of Ginko’s liquidity problems, has extensive coverage of the meeting at his Virtually Blind site including an eye-opening transcript of the meeting.

Boxed In: A Nation of Landlords

By Prokofy Neva, Dept. of Virtual Estate

The other night I attended an off-the-record meeting of inworld business people who, for some reason I couldn't fathom decided to use the new outworld Crowne Plaza meeting space (claiming to be the first such private meeting facility in SL!) under the theory that this was "safer" or "more elegant". What it really was, was a box, with some kind of security system that kept knocking away even everybody who had joined the group. You couldn't have picked a more apt metaphor for the sad tale unfolding in Second Life: outworld businesses, mainly metaversal developers, are able to make a whopping $33,000 a year per employee average revenue, mainly through servicing companies like Crowne seeking a presence in SL; even $9000 median income. Inworld land businesses, if they can show a profit on the Positive Monthly Linden Flow chart maintained by Meta Linden, are more likely to be making at best about $3000 a year *after tier* (far more research and better math is needed on both categories of businesses).

The Crowne furniture and setting was uninspired, unlike some of the really spectacular rental sims out there these days, like this new mountain waterfall development. I'm a big fan of Lilith trees, but seeing the flat palms one too many times arranged in exactly the same way begins to wear on you. Still, sitting in a box with Trumanville surroundings -- what better way to contemplate the fool's errand called "mainland rentals" which to one extent or another, form the bedrock of most SL businesses?

Many people have a misplaced notion of "land barons" based on the myths perpetrated by the media (including the inky tabloid you're clutching in your hand) as fat, blinged-out money-grubbing, greedy capitalists bent on rapacious destruction of innocent newbies in threadbare rags. The fact is, all of us in SL are owners or accessors of high-end graphic cards and DSL lines here, people. If we're going to weep, it should be for a couple of hard working gals who charge only $280/200 prims a week, who, when you do the math, make only...$50 US a month which they usually have to blow on houses, or buying out ad farms or grief parcels on the riotous lands outside their manicured Damani prefabbed sims.

Have you done the math?

Second Life Economic Statistics Analyzed

by Curious Rousselot, metaverse numerologist

As many of us are no doubt aware; Linden Lab publishes statistics about Second Life. Conveniently they also make the historical data available in Excell and OpenOffice, and Google Docs format. This gives us here at the Herald a chance to see how the economy of Second Life is doing and to comment on it. More importantly, it gives us the chance to make pretty graphs of the information too. So, I thought it might be nice to put some of my amazing spreadsheet skills to use and see what we could get.

Obtained by dividing the total L$ by the total US$ of LindeX transactions

As we can see, after a serious drop in value of the L$ in September of 2006 the L$ has been holding pretty steady between L$260 to L$270 per US$. Admittedly I'm no economist but considering the relative size of the economy this is pretty impressive stability over the last several months.

New Logo for SL? Or New Business Model?

By Prokofy Neva, Kremlindenologist

If you look closely at the new SL Brasil web page that will launch the Brazilian community in Second Life with official Linden support tomorrow, you'll see an interesting new logo: "Second Life Grid". It's a logo separate from the Kaizen Games: SL Global Provider" to the left of it, and appears to be a logo made by Linden Lab itself (although this could not be confirmed).

What is "Second Life Grid"? Well, if you paid attention to what Joe Linden said at Virtual Worlds 07, in his somewhat hastily flipped PowerPoint slides, there was this comment, which he reiterated, which went like this: "Second Life will not succeed if LL is the only company on the Grid."

Mark Wallace at 3pointd.com quoted it differently: "SL cannot truly succeed as long as one company controls the Grid."

I'll bow to Mark's superior gaming conference note-taking and blogging skills, but getting the doctrine coming out of the California cultists does matter (on the grid or own the grid?), because it points to their future business model of Linden Lab, and our fate, if we own or use land (server space) in SL.

Gambling on the Virtual World Trade Center

by Rhinestone Bling, business reporter

...coming soon to a metaverse near you

Friedman- SL Entrepreneur LukeConnell Vandeverre is gambling despite the recent Linden discouragement of the practice. His brand of gambling doesn’t involve cards or dice, however, it involves stocks and buildings; namely, it involves his holdings in the Second Life World Stock Exchange and SL’s version of the World Trade Center.

”I predict that within 2 months of completion [The World Trade Center] will be one of the most visited locations in Second Life with an average visit time of 15 minutes,” Vandeverre said. He is so certain of this, in fact, that he is betting 12% of his SL company, Hope Capital Ltd., as well as the good will of some of his investors on this prediction.

Tower 1 of the World Trade Center was reproduced in scale by Brautigan & Tuck Holdings and then purchased by Vandeverre’s Hope Capital Ltd. on April 7 for two million shares of HCL stock, estimated by Vandeverre to be roughly 12% of the company. The stock used to purchase the building did not come from existing stock, but was issued especially for the sale, significantly diluting the available HCL stock. The controversial part of this transaction is that Vandeverre made this move without consulting the HCL stockholders.

QQ - The Skyrocketing Virtual Currency

by Onder Skall

QQ finally made headlines in the Wall Street Journal. Largely ignored here in the west, the hottest virtual currency in China is the QQ. Created by Tencent Holdings Ltd, "QQ Coins" were originally invented as a means for trading virtual items in online worlds and through their popular instant messaging program. For awhile it was just like any other coupon-trading system, but then third parties started accepting QQ as payment for real world services. The value of QQ began to climb as demand rose, and currency traders began making some quick Yuan buying and selling the virtual currency. Small shops started springing up everywhere offering discount QQ Coins.

"State-run media reported that some online shoppers began using QQ coins to buy real-world items such as CDs and makeup. So-called QQ Girls started accepting the coins as payment for intimate private chats online. Gamblers caught wind, too, and started using the currency to get around China's anti-gambling laws, converting wins in online mahjong and card games back into cash. Dozens of third-party trading posts sprouted up to ease transactions, turning the QQ coin into a kind of parallel currency."

Obviously the Chinese government is concerned, not only because this unregulated currency is gaining in value, but also in popularity. Regulation of any kind could have drastic effects upon the value of the Yuan, and so whatever move is made next, there is an understanding that it must be cautious. Through some correspondence with Geoff Fowler of the Wall Street Journal I was able to shed a little light on exactly what is being done. While official government statements have requested that web sites not allow "real world" trade for "virtual currencies", no specific punishments have been itemized for doing so.

Sheep Warned After Violation of Dreamland Community Covenant

By Prokofy Neva, Corporate Watch

Anshe Chung, owner of Anshe Chung Studios (ACS), creators of Dreamland, a popular Second Life residential and commercial region with more than 500 islands, has written to the leadership of the Electric Sheep Company regarding violation of her company's covenant.

Anshe Chung announced to the Herald this evening that she is banning the avatar Grid Shepherd throughout the entire continent of Dreamland for covenant violations.

Casino Owners Unimpressed With Linden Crackdown

by Pixeleen Mistral, National Affairs desk

While Azno Simons seems particularly eager to comply with the Linden lab staffers attempt to clean up at least the gambling aspect of Second Life - other metaverse casino owners have a different perspective. Mr. Simons may be a unique case, since he more interested in advertising his web-based gambling empire than running a serious in-world operation. I visited a few more conventional SL casinos to get reactions to the Linden’s casino ad-word ban.