Shifting the paradigm?

Yesterday, a rumour started that Linden Lab were making moves on XStreet SL (formerly SLexchange) – the successful web-based “out-world” shopping facility created by Apotheus Silverman.

Some dismissed it as nothing more than a disgruntled employee from XStreet stirring the waters. However, Linden Leb themselves have confirmed the situation – and the fact that they are taking over / shutting down OnRez.

This is nothing short of a major paradigm shift in Linden Lab’s business, and now fully explains why the Alphabet Lindens (M (Kingdon), Z(danowski), T (Hale) et al) have been going on about the importance of content. Simply put: content generates continuous commerce far more than land sales, which rise and fall (albeit with bigger profit margins) depending on such vagaries as rl market conditions, user ebb and flow, the level of trust people have in LL and the most recent farago spawned by LL.

Content, on the other hand, is a steady-state exchange, and while Linden Lab makes money through the LindeX each time we purchase our Linden Dollars, they are missing out on a revenue stream represented by XStreet, where the company takes a percentage of every transaction made – and the transaction figures are pretty impressive. Thus, at a stroke, LL get this percentage – and are free to raise it as “market conditions” demand.

But really, this matter cuts deeper than a simple “money grab”.

• “out world” sales hs been a booming market, particularly on XStreet, which is approachable, well-laid out, and has three important elements: user feedback, its independent forums and – most critically perhaps from LL’s perspective: a search engine that works. Shopping on XStreet is popular because it is easy. Whatever you want is relatively easy to find. The current tool provided by LL is not user friendly. Shopping using it can be a frustrating mix of keyword experiments and pot-luck Tps. Thus, people use XStreet straight from the comfort of their own (SL) homes. And even if they do visit a store in-world, chances are the SURL came from XStreet more readily than LL’s search tool.
• XStreet provides LL to “showcase” content. Shopping in SL is very granular. It’s about objects. It’s easy to get individual items – lounge furniture, garden furniture, individual chairs, tables, etc. But what about coalescing products into related groups. For eample: want to buy a house right now, and furnish it? You need multiple searches with the LL search tool, and pot-luck on shop visits to assess item quality. Now, with the XStreet tool comes the ability for them to provide a search tool that lets you readily find houses and all associated content (furnishings, beds, kitchens, etc.), all from a single “high-level” search. In many respects, this is no bad thing – so long as LL don’t start showing favouritism as to which content creators get to be flagged for these “high level”, one-stop searches
• Xstreet is a “trusted” brand. While nascent opensim grids have a way to go before they are in any way “trusted” or “viable” (although some show promise and could well mature into 2010). Hence, a good choice for content creators from elsewhere to use to sell their wares in the future – thus LL have squarely staked out a claim to potential Opensim “emerging markets” and income they may generate. There’s even a case, as Dusan Writer points out, for the Xstreet acquisition to re-open the doors to LL’s “interoperability” with Opensim grids in terms of service provisioning.

All of the above could spell positive notes for all; so what if LL are taking a piece of the action: a new, properly-granular search engine that delivers results based on criteria / keywords can only help improve our search experience. Similarly – and with certain caveats – the “one stop” searches for related items could go a long way to rerducing user frustration. And having a trusted, viable “out-world” sales channel could well help the more viable Opensim grids get their acts together fiscally and “corporately”.

But there are downsides.

For a start, XStreet is perhaps the last large-scale bastion of free (forum) speech on SL. We’ve already seen how LL have coralled freedom of expression on their blog and their own forums. Expect the same in XStreet – assuming the forum survives. Which I doubt.

Also…content sales provisioning is not an awfully big step from control of content for sale. Zdanowski talks about “exciting times” for merchants, and the opportunities for “partnerships” with LL. And herein sounds a note of danger. We’ve already seen one behind-closed-doors partnership deal suddenly pop-up in terms of the USS sailing deal.

One could argue that that situation was somewhat different – true. But the precedent it set applies nevertheless. It demonstrates that LL will align themselves with whoever they feel is of the most use to them, and the heck with anyone else in the same game. Thus the worry here is that in moving into content sales, SL will seek to leverage the larger, more established (and “acceptable”) businesses to further the attraction of XStreet to SL users – at the cost of the smaller merchants and businesses, who are left struggling to gain visiablity against ill-defined “acceptance criteria”.

Prokofy Neva – in one of her more lucid posts – also raises some valid concerns on the acquisition – and some very interesting points (particularly Zdanowski’s real estate background and LL moving into the “real estate” business). Again, they’ve dabbled in the past with “prefab sims” on a small scale (Mos Ainsley of OpenSpace imfamy and its cousins spring to mind), so one does wonder what is coming next: a move towards prefab sims to compete against private island sims?

“Yes, ladies and gentlemen, LL announces the prefab Homestead! Buy your sim through our online store, and simply choose your preferred house from Column A, lounge furnishings from column B, bedroom furnishings from column C (etc)- and remember! all the merchants listed in this offer are LINDEN APPROVED!”

Sounds fanicful right now…and may remain that way….but the thought is worrying.

Prad Prathivi, writing in Metaversally Speaking puts it most succinctly:

“By acquiring both XStreetSL and OnRez, Linden Lab have essentially wrapped up the monopoly on marketplaces, and have once again showed us who Daddy is. As a company which can already use our content as they please in world (as per the ToS), and now demonstrating that they can acquire such resources as these popular marketplaces, does this mean that the Lab are looking to clamp down on the innovate market, and enforce their control in the name of profit?”

Indeed.

And what of more adult content? We’ve had the age verification farago once….but now even Phil Rosedale is tacitly admitting Teen Grid is a bust and hinting that it may be “merged” with the main grid (his comments that the main grid will be “for all ages” made at the recent Metanomics event). One cannot help wonder whether a darker side of content control is in the offing: who’s to say offerings made to whatever XStreet morphs into under LL’s management will not have to be vetted for “grid suitability”….. and if it fails to pass muster, it doesn’t get to be listed…?

And whither then?