Wednesday, January 21, 2009

If you can´t do it yourself ... go buy something that does

It seems like we didn´t have much time to get used to the new Xstreet logo since they have just been bought by Linden Labs. As you can read in their official statement they not only bought SL Exchange (I will stick with the old name since I liked it more) but also Onrez Shop.

While I am an SLX user not much will change for me in the near future (as long as LL sticks to their promise) while Onrez users will see their favorite market place shut down on February the 11th. This move is very sudden and no rumours reached the outside (at least I didn´t hear them) though it is not unlogical. One of the major problems that SL has is, that there is no well working in-world search for items on sale. This helped plattforms like Onrez and SLX a lot since they offered a quick overview through the chaos and some powerful searches that directly guided you to your goal (well sometimes not to be honest).

Such an approach is not new really. Companies like Symantec and Microsoft regularly buy other companies to save developing time and costs and simply sell well known products under their brand. A second reason why they follow such policies is to acquire direct rivals to add the user-base to the own product and that might also be (at least in my eyes) the true reason for the acquisition of the two platforms. Both Onrez and SLX move quite large sums of L$ every month and at least in the case of SLX their own estate trade platform and currency trade platform posed to be an independent competitor that has noteworthy volume. Linden Labs now controls the major part of the virtual trade outside its platform and the probably biggest L$ Exchange platform outside their own Lindex which always offered better conditions then Lindex. While they say that they do not plan any changes to the current procedure of the exchange on SLX I think that it is only a matter of time that they will bring it back to their own Lindex platform. A small passage in the FAQ already hints in that direction and call me paranoid but how would some emphasize something like that when one not intends to use it?

In my eyes Linden Lab showed a quite ugly face here which is only comparable to once underground star Google that bullied its way into almost every field of webtechnology and is now seen as a possible threat to data privacy. Don´t get me wrong I can understand the owners of SLX and onrez shop selling their platforms for such a sum and I cannot blame them for it but Linden Labs constantly advocates the openness of their service and buying possible competitors (I use possible since I don´t know the current metrics to judge whether they are a real competitor or not) isn´t really what I define as openness, its rather the will to execute a far tighter control of it. As Iggy advocates that the success of a platform like SL very much depends on creators that fill the world with their ideas, I think that another important requirement is that the provider of such a platform has to be a reliable partner for the users and once again LL didn´t really show that reliability once more.

Iggy's Take:

I agree with Tenchi, for the most part. I found Onrez, in particular, easy to search. I don't tend to buy much from either service, since I prefer in-world shopping with all of its awkward searching. But I also like brick-and-mortar stores in real life, too.

Essentially, Onrez is being shuttered, but I think LL is being a typical corporation...devouring what they can to capture a competitor's revenue stream. Some possibilities here:
  • The time was ripe and the price good: I can only imagine that smaller companies associated with virtual worlds are suffering more than the "big boys" like Blizzard or Linden Lab. They might weather this storm. Start-ups will have a harder time; dorm-room efforts like HippiePay (which closed some time ago) already have folded.
  • I think LL was not after OnRez's market as much as the technology that went into their SL client, which I often found works better than Linden Lab's standard client. Electric Sheep Co. has been scaling back its SL presence for a while, so it's not surprising that Onrez went. They don't make any money from the market or the client.
  • Linden Lab needs new revenue streams. The Lindens who attend our weekly SL Education Roundtable have said as much when speaking of "sinks" and "sources" for the company. Perhaps they'll charge a nominal listing or "sales tax" fee for the marketplace online that emerges from these acquisitions.
  • A new Web-based vendor will emerge to challenge LL's Xstreet. Pehaps Hippo or another company that makes in-world vendors will ramp up a Web interface. The creative chaos that has characterized this virtual world all along will continue.

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