Isabel Walcott Draves

Virtual World Consumer Behaviors

More notes from the conference yesterday.  Again, my notes, my mistakes, my opinion and not those of my employer - who has sent me to this conference (Thanks Linden Lab!).

Moderator: Ren Reynolds, Terranova
Jeska Dzwigalski- community products for Linden Lab.
Betsy Book- Makena Technologies and There.com.
Linda Zimmer from MarCom Interactive

Teemu Huuhtanen. Habbo communities for teenagers.  Doing vw for 7 years, started 2000.  Sizable company, 500 people in 19 countries,51 million in revenues from endusers, expecting hig growth, we've doubled or tribpled each year and expect the same.

Online community, moderated nonviolent for teens, key is self-expression and interaction with others, all happens in a cartoony virtual world.  Being who you want to be, getting attention, meeting friends.

4 areas: virtual world client, habbo hotel.  mimics hotel life, setting for fun activities. homepage is the persistent presence of users on the web.  Multiplayer games, and then front pages that allow users their 15 minutes of fame. Here's a video.

(they look like those little fisher price people, or legos.  very pixelated graphics.)  click their habbo (avatar) to see their profile, ask them to be their friend for IM and SMS messaging.  Room of your own, with room o matic.  So far everything is free. 

Then you want furniture.  You buy credits.  (IWH - this is a great instructional video).  Join a beauty contest, or just chat with your friends.  Trade items with other Habbos.  Take a hundred foot highdive.

For the past 7 years, 50/50 male female.  audience is homogeneous.  avg. age is 15, 13-16 yearold depending on market.  Millions of monthly users.  Habbo is extremely easy to use, the ease of use is the most important thing in VW.  We are talking about minors, we take it very seriously.  Our ad sales, we can deliver good numbers, 10's or 100's of thousands of users who will be exposed to brand messages.  We've made a virtual magic kingdom for Disney, we made one for Coke.

74 million player characters created, but that doesn't reall tell you anything.  what's more important, 7.5 monthly uniques, just under 22 million in US and Canada.  Advertisers include ipod, nokia, nike, puma, coke, disney, playstation.  all the major record labels with band visits.

Jeska.  7 billion linden dollars.  5.6 million in $L-$USD.  5 million plus residents from all over the world.  Easy to use 3d modeling.  script it, you own the ip, you can license it back into the real world. 45% US, 55% international.  American Apparel recreated their store inside SL.  when you bought something inworld, you got a coupon for a real-life purchase of the same item.

Pontiac bought a bunch of islands, 8 or 9 f them, and gave the land to people who were already buying cars, and said do something. 

They have a racetrack, they have a driving community built around their brand.  Starwood hotels, BBC, Nissan, Toyota, Sears.

Book.  there is a social virtual world.  We don't have a structured game narrative, it's a social experience based around comunity activty.  And immersive 3d environment.  Our mission at Makena as a company is to give our users and experience they can use to extend their real social lives into their virtual environment.  We're more about user's first lives than their second.

We have a casual friendly laid back community, we have an economy where you can purchase there bucks.  we don't allow people to cash out.  you can't exchange them for real money.  We have a dveloper program which allows users to create their own branded items, they can fund their social experience through sellling stuff.  We do review all items before they are allowed in world.  We're geared towards those 13 and up to be sure everything is appropriate for that audience.  We also screen copyright violations.  You don't see an official looking logo unless it's from that actual brand.  Our community runs a series of monthly events, this introduces the audience to our sponsors.

Who visits there? 50/50 male/female, we've seen greater interest from female audience over past year, skewing more female, 69% of users age 13-26, average age 22, unlike SL (adult) and (habbo) mostly kids.  Number one activity is shopping.  First thing people do is customize their avatar, you have to purchase therebucks.

Until now we've focused on building out custom branded worlds for our partners.  what we found was that our users loved having the branded item, there's a cachet that comes with having the brand.  We didn't advertise heavily ,just made them available in the catalogs.  Users were so excited, we still see people trading these items.  There was a levi's jacket going for $83 USD.  I couldn't find a real Levi's jacket selling for that much money.  If you make them rare they have higher value.

In 2007 we'll be selectively introducing brands to the environment, we say slectively - how do your consumers interact with what's in world?  Who are you marketing to in a virtual world?  The avatar or the real person?  In There, people do tend to represent their real selves as opposed to creating a fantasy character. This is great news for a marketer: I am marketing to a real person behind the avatar.

Without having official brand presence, users bring brands in by themselves.  I found groups: the BabyPhat homepage.  The Abercrombie club.  Their avatars look like the Abercrombie ads.  It's not necessarily just about here's what I would like to wear. 

But I've seen users with the brand names in their own screen names.  My final point is that virtual world consumers identity more with an experience.  The person this morning who said MySpace is just like a virtual world, was incorrect.  This is much more meaningful personal experience. A deeper engagement with the consumer.

Zimmer: I don't have a world to introduce you to.  I'm going to talk about the virtual consumer.  We keep hearing the point that these words are seriously engaging.  It's a fact, but advice.  If you're going in, you must seriously engage as well.  don't be halfhearted.  Our social networks are evolving from the flat to the 3d web.  There's evidence that we are retribalizing around them, because they are so immersive and engaging.  Our brains process them as a real environment.  We use them to grow out social networks.

Google "Where everybody knows your screenname".  Virtual worlds are "third places".  Starbucks popularized this by making a place away from home, away from work, to socialize.

Virtual worlds bring up unique marketing issues.  Is it the real world, the real person?  How do we pull the virtual space into the real space? 

I have some virtual world market research from Market Truths.  Brand perceptions: 49% positive, 17% negative.  Apple, Coke, Nike and Microsoft don't have an official presence, but their brand is being impacted by their perceived involvement within the community.

Impact on real life brand - American Apparel has apparently been damaged by their presence.  The only one.

What should Co-create real world products, giving away the real life products. Advertising is the least popular.

First Opinions panel, 300 respondents, the vast majority of these people are over 30, there's an over 50 age group.  Stunning amount of hours spent in second life.  The majority makes over $50K/year and their spending varies.  Primary interests vary. 

Designing education is popular, lots of librarians.  What kind of events?  Arts and culture, discussion, music, nightlife. 

Available for free.

Advice: connect people to each other, not just the brand.  Integrate, Integrate, Integrate.  Tools for measurement are very immature.  But on the web we have mature tools, we need to integrate your presence strategically so we can create a feedback loop until we have better measurement factors in these spaces.

Your success team: marketing and PR staff, your Social Media consultant, your Virtual world developer, and your RL and VW Customer.

They want to be able to co-create with you in these spaces.  This is a rich environment to co-create with them.

Moderator: Does it matter how you market to me, whether I am the gender my avatar says or not?

Jeska: No.

Habbo: a lot of our users tell us, please don't descend into advertising hell.  IT has to be done cleverly to add value to the environment.  Then you're seen as a benefactor and your brand gets a halo.  You can't do traditional marketing activities.  We have taken existing campaigns, Nike for example, and we've tweaked them so they are appropriate.

Book: It matters.

Habbo: Our users stick to being a boy or a girl.  But ultimately it's the individual we're after, they might have a couple characters for different moods,  our focus groups tell us they stick to their real identities.  This is a place for self-exploration.

Moderator: If I want a broad thing, and I want a teen thing, do I have to invest that much time?  Figuring out the campaign?

Book: that would be our job, to recommend to our brands how to work best with us.  It should not be the brand's job to figure out how to do it.

Moderator: should I create my own world?  Or go in someone else's?

Habbo: work with us, with SL, look at MTV's concepts.  Long-term, you need to have a consumer concept.  Some people think you give users a tool and let them figure it out.  No.  This is a long-term consumer content commitment.

Book.  Entertainment and user brands sustain and create community around them, for them it makes sense to build their own world.

Moderator: is there any "kind" of person who does these worlds?

Zimmer: We're going to evolve into something more rich than a flat 2D web.  PEople moving in this direction are innovatore, more tech savvy, the heavier net users.

Habbo - if you look at teenagers, everyone is online and everyone is in these worlds.  it's part of their lives arleady.  They're multitasking with lots of different things online.

Zimmer: Our demographics show that the 3d virtual worlds are skewed toward higher income levels.  That's not true of cell phones. 

They're more ubiquitous than you might think, especially if you think of them as social networks as opposed to 3d separate worlds. 

They're not really separate.  The notion of a social network is intimately tied to a 3d vw concept.

Habbo: They are ultimately different concepts, whether they will be linked is debatable whetehr the audience really wants that or not.  In the end, cool things will come up, and the age of the dinosaurs will be over, some of the big things will still exist.

Book : It's an important part of this conference to realize that there are brands across the spectrum.

Jeska: They want to play with your brand.  This is the land of Mashup. 
Moderator: Is the risk greater than the reward?

Zimmer: we've spent millions of dollars to make these brands part of their identity.  If the brands allow this usage to become broadbased, they could lose the right to their trademarks.  so there's huge tension between the mashup world and the intellectual property world.  We're seeing a movement toward the creative commons type licensing for brands that want users to mashup their brands.

Habbo - for a free adult world, where adult-oriented things happen, when you demonstrate what is happening with brands, some brands are uncomfortable.

Book.  We made a conscious decision to be PG13.  In Second Life you can do what you want, it's more open.  We don't do that.  Our people don't want it.

Jeska.  Just like the internet, everyone has a website, even though there's playboy.com and less upscale adult content.  Just because there's adult content doesn't mean that's all there is, or that there's nothing else there.

Audience: Are you talking about brand or product?

Habbo: both.

Zimmer: The platform can't offer the high quality driving experience BMW wanted so we didn't do that.  In that case it's not about product.

Audience: How does a small company with limited budget get a presence?

Book: do a product placement, buy a plot of land, as a small business you may not want a larger custom world.

Same Audience: But as a small business how do you justify that time?

Jeska: I've had this question from nonprofits.  What is your goal?  To sell something?  Maybe two people is too many.

Moderator: you'll find consultants who know these worlds, hire them to help you.

Zimmer: I have a group of 265 people, a marketing group.  Don't overlook the very simple community aspects here, even a small business can do that.

Virtual Worlds Conference Notes

I caught a couple lines of the Sundance blog about the Four-Eyed Monsters screening in SL.  Basically they said it was a very successful experience for them, the filmmaker was interested in hearing from the audience, this was the only venue possible for many people to see the movies, and apparently it gave bigger exposure and held more audience in some cases than even the sundance venues.

Audience: There were 30,00 people in SL while you were doing this. Any idea why you only got 300?

Sundance: You would have to be knowledgable of our schedule.  It's like a real-world event.  It's marketing, it's awareness, it's getting the word out.  SL is the size of Tokyo.  On those 10 sims, the maximum capacity would have been 500, so 300 is good capacity.

Virtual Worlds Platforms

More notes from the Virtual World Conference, please pardon my mistakes, and although I am employed by Linden Lab my opinions are my own.  Click here for a list of speakers with correctly spelled names and titles.

Platform Technologies Panel.

Jerry Paffendorf, resident futurist at ESC. The aim of this panel is to look at a few different virtual world (VW) platforms.  what are policies for partnering, doing branded and sponsored content, etc.  There are lots of different virtual worlds, vws have a long history, its the element of sticking lots of people in a shared space.  Social networks may be included, but there's never anyone there when you go there, to myspace, it's ice cube trays of pretty pictures.

corey Bridges, cofounder of multiverse
joe miller of linden, vp of platform and tech development
Rick Giolito - President of Trilogy Studios
John Bates - Entropia

Corey - it's great to see virtual worlds as a medium get this kind of attention.  Multiverse was founded by a group of pre-ipo netscape guys, internet enabled platforms our whole career.  We're platform makers, that's what we do.  CEO Bill Turpin is a serial entrepreneur, first company acquired by netscape, came up with the idea of javascript.  I was early at Netflix, I like to jump into new spaces.  We're committed to virtual worlds as a medium. 

WOW has 8 million subscribers, it's a billion a year in recurring revenue for this one video game.

You can use virtual worlds for education, socializing, business collaboration... just like you can use any medium.  It can be used for multiple purposes.  We make our technology available for anyone, we'd like to anable the independent developers to get in.  Anyone can download our tech, build a world-class enterprise virtual world, with as many users as they want, they don't pay us a dime until they charge, and then we do a revenue share of 10%.

I've talked with people who don't want to do revenue sharing - yes, you can do an enterprise deal with us.

This is a blank canvas.  People say, "I just want a nightclub."  or - you can have an entire world where you create and set all the parameters.Make a standalone world or integrate.  Whatever the range of individual - use blender, google sketchup to create models - our servers are written in java, we base our technology on existing standards.

Trilogy - Let me show a couple slides.  A group of 20+ developers formerly of Electronic Arts, very experienced in games business.  Specialize in bringing game-play sensibilities to traditionally community and social interaction-based worlds.  Working on virtual worlds for Hollywod media companies.  We currently are building on There.  Client is Raj Modi (sp?) of MTV, and Michael Wilson at Makena, utilizing There technology to build a virtual Pimp My Ride and marrying it with the existing world.

I'm going to step back and be objective about tools and technologies.  When we looked at There we were blown away by the depth and complexity.  an economy with physics, ai, the ability to build things quickly.  I am used to working on stuff that takes 2-3 years.  We started in dec. and we're launching in April.

We look for: pipelines that are about ease of workflow and content  insertion, tools supported by teams of developers by discipline, pipleines that are "art centric" and allow for realtime debugging.  I've looked at all the technologies, we're having a terrific experince for There.  These pipelines are developed by engineers for engineers.  that's a nono in terms of getting stuff done quickly.  There's a lack of easy to use GUI's.  Pipelines that have more developer based testing and debugging.

We need toolsets designed for quick prototyping and rapid iteration, one-to-one workflow that minimizes recompiling, end-user based world creation for development teams and easy-to-use tools for consumers to create good content.  The result will be higher quality across the board.

This feels like pre-PS1 where everyone was saying "oh! 3d!" and it really wasn't,  but we will see more and better stuff, because of companies like MTV that want deep experiences, long-term, professional quality. My opinion - you want a good experience over time, so if the consumer has to wade through it all to find the nuggets of goodness, it won't be as good (IWH comments: you prefer AOL to the web, then?)

John Bates from Entropia.

This is user-crerated video coverage shot in fracts (sp?) which is a way to shoot in world.  Entropia - the basic point is you are a colonist going to Entropia, you are colonizing a new world, that's the storyline.  This video will give you an entree.

(cool video. ) "Humans are not safe here."  The animals make dinosaurs look tame.  opportunities to profit everywhere, which means suvival of the fittest.  Fights and wars.  There is an advanced base of robots here trying to kill us all.  "You can transfer real life currency to your real-life bank account".

10 Peds equal $1, it's backed by mindarc (sp?), we have a real cash economy, the platform has been built from day one to enable real commerce with real money. Last year we ran $360M USD through the universe.

A lot of the things you've heard are "coming" from other panelists already exist in entropia.  Galleries where you can buy real art.  Real commerce.  We're more locked down than Second Life, nothing's going to disappear.

MC: you can get a debit card and do direct bank transfers?

John: it's easy to put your money in and easy to get it back out, like a bank.  We had someone buy a virtual asteroid a year ago for $100,000 USD, he made his money back by renting out space on it, and he's been cash flow positive ever since.  When some folks opened a virtual store they sold $20,000 worth of real products within the first two hours, far better than their real-life store.

Joe from Second Life:  I'm going to atually talk about technology and platforms.  We are about community - we're about the people that live in it, not the technology we use to present it.  Everything you see in world is created by the people who come there, and it's a marketplace.

The notion of creating a permanent presence in the 3d internet deserves a deeper look.  Let's look at the value prop that's emerged from web to web 2.0 (democratization of collaboration or participation) to 3di (the modernization of co-creation).

Platforms have changed as we've made each of these transitions.  Initially purley an access platform, commerce.  access, find, share, participate, collaborate, now it is co-create.  True alternate currencies may emerge.

The relationships between the employee and the employer.  a focus on the endeavor, not the employee.  employees asked to work as entrepreneurs.

How has the SL plaform grown?  210 square miles equivalent. Over 520 unique items sold or traded per month, 15 million concurrent scripts.

Who's using SL?  43% female, avg. age 33, 60% of user base are from outside the US.  What do you do?  you make your own stuff, you make your own software.  People who come in take the time to personalize their avatar.

I'll give you a little info on the tech, we have clients that run on your desktop, it talks to a simulator process that talks to an asset database.  The client is opensource.  Want to fix that bug?  Please do.  The simulator grid today, all machines are hosted by LL and trusted, all the sims have to be updated at the same time. future: we'll support multiple copies of the same simulator, we'll deliver assets through a different method, we'l be oepn-sourcing the back end of the sims, we'l be using open protocols, we'll have multiple link grids.   It can't succeed as long as only one company controls the grid and we recognize that.  We're only just getting started.

Trilogy: With There techonology, the user-generated content is vetted.  So we can help them to create great content.(IWH thinks this positioning sounds paternalistic - admit that the "vetting" is for your business, your clients and your other customers, but not to "help" the creator, who likely doesn't appreciate it when their work does not pass muster.)

Entropia - we're interested in our experience being not part of your first life, quote me on this.  if content is king, then context is emporer. We want a hollywood style, let users create their own content within that beautiful context.

Joe: I'm not sure you can go halfway with a user-created world.  Our users have their own context.  companies want to speak to employee base, residents want to find entertainment.  IT would be inappropriate for us to define them, the tapestry is so broad.  The content finds its own audience whether or not it's created by someone who has made something they want to share with just one other person.  Over 100 companies exist that create this content for SL on a daily basis.

Giolito - There vets it, Second Life has decided not to do this. You can go either way, because there is content that will offend someof your consumers, so you have to be willing to bear that cross.

MC: which platform is the superset of all other possibilities?  Can you have a system that is capable of doing things in 3d, but can also do things in 2D?  The company that creates the superset, you can create that locked world inside if you want to.

Bridges: the opportunity here is bigger than user generated content, that's a buzz thing.  The opportunity is to open up this medium.  not just you go into this world and build interesting stuff.  There's going to be a bunch of metaverses... a Multiverse... it's not just indies making content and functionality.  companies like AOl, compuserv, nobody can compete.  It's so expensive to build what we made.  Netscape came along with the browser and changed the entire economy.  This enabled the indies to get inand start building interesting stuff.  the indies were Jeff Bezos.  Who couldn't afford to come here this year?  They are the Sergei and Larry ten years from now.  It's changing the economics so the indies can get in. That's what I think is the real opportunity here.

Audience:  Whyville staff, 3 of them are programmers, the rest invent process, not content.  The platforms you described are platforms to create content.  If you give people the tools they'll build something interesting.  When you give developers the opportunity to run amok, they do.  Virtual worlds are not real worlds, it's a new kind of design that's necessary.  Some people are just punting thiss responsibility off to the indies.  A major telecommunications company just hired a bunch of developers in India.  Here, you guys make it.  When will your tools make it easy.

Bridges.  We have over 9,000 teams using the multiverse technology creating a wide range.  a group of students made an underwater 3d mermaind game about reforesting the sea floor.  A gesture -based interface. They repidly developed a radical new idea in one month.  I've seen interesting stuff in second life.

Joe: you're right, the tools are not there, this is early days.  It's frustrating if you're interested in getting in and creating a place.  There are 8300 separate simulators running completely separate experiences.  We are at the silent movie stage of this industry, our seams are showing, we need to become much more accessible to the creative users that want to build.

audience: is this b2C, b2b, business to employee?  And context is the kingdom if content is king, you're creating kingdoms.
audience: you didn't talk about infrastructure and huge bandwidth that's needed.  Won't your competitor be google plus avatar?  MASN plus terrain?  All they need is to add the tools, you're all struggling to do it, it's hardest to build the infrastructure.

Joe: The challenges are not technical.  We're working to significanly scale SL to webscale, 2 orders of magnitude for concurrency is on the near horizon.  How do people get what they want out of the community they join?  The answers are not found in some of the existing large search players that are out there today.

Audience:  You mention and gloss over ecommerce.  I watch the SL blog, everyone complains my transaction disappeared, the object I bought is now gone.  6 months ago the US killed online poker.  How long until they kill you because I can move millions of dollars through an unregulated system?

Entropia: we have safeguards, we're a public company in Sweden, they are difficult to convince and have ruled that we aren't gambling.  We have made from day 1 this is a stable and a secure platform. For our users, we have banking licneses on auction right now.  Our focus has been stable, secure.

Giolito.  You're talking about companies that are trying to skirt existing laws, as opposed to there are no laws.  Nobody will come in and say these people are "playing poker".  The US does not want to inhibit revenue generation.  They may shut down poker parlors in SL.

Bridges: we have companies building casinos on our technology.  The government will regulate it, it's gonna suck.  This is small potatoes, but there is money changing hands, they will try to tax it.

More... Notes from Virtual World Conference

The next speaker set was the "keynote", a group of 3 people from MTV announcing their work in Virtual Worlds.  Again, do I have to say it?  My own opinion, my mistakes, just my notes.

Announcer: our Keynote speaker is Jeffrey Yapp - MTV is announcing a platform that goes beyond virtual worlds and beyond TV. 

Jef: Actually 3 of us in the keynote.  The other folks are matt bostwick and steve edwards. We've made Virtual Hills, Virtual Laguna Beach and Nicktropolis.  With the launch of VLB last fall MTV was the first media company to meld 3d tech with programming. 

Now viewers can actively engage with and become part of programming they see on TV.  Our motto: watch Tv, live tv.  (Jeff sounds like he is reading from a script.  Sounds like a press release: MTV defined popular culture.  MTV is one of the most recognized brands in the world.  We are the only ones who understand teens, that hard-to-reach demographic.)

Television is at its highest level, as is time spent on the Internet.  And nobody leaves home with out their mobile phone.  A recent survey found that today's youth are cramming 35 hours (?) of activity into a 24 hour day.

As cool as Second Life and There.com is, it's just the tip of the spear.  Remember when AOL first had chatrooms?  That first gen technology gave way to social networking sites that define the current internet environment.  Our marketing partners want to get their messages into our environment.  Our audience is more than consumers of content, they are producers and creators.  Marketers can benefit.

Brands that come inworld must be compelling and interactive.  99% of the audience is exposed to the brands, and 85% choose to interact with the advertising partners.  It's an emotionally driven, multi-layered social experience.  Matt and I met working in product management at General Foods.

Matt: I realized a few things listening to this panel.  I need to take a smart pill! 

Maybe because I'm a marketer, I'm less equivocal and more bullish.  Yes it's uncertain.  It's like broadcast tv in 1950, or cable tv in 81, or internet in 94.  everyone was saying the same questions.  What are the measurements?  Have the courage to believe it and make it so, this separates the leaders from the also-rans.  We're the next people coming in and figuring out what do we do with this thing?

In 11/05 we formed our own little group within MTV.  We didn't start out virtual.  We started out with consumers, going for the holy grail of depth.  How you you take them deeper with our brand, our content?  I believe that passion, lifestyle and community separate great brands from the commoditized and forgettable.

20% of your users produce 80% of your revenue.  That's an old saw.  I remember googling the term virtual world in 11/05.  it's gone from 15 million hits to 250 million hits today.  But we saw a media where people were going so far down that rabbit hole that people were actually living separate lives.  You can't get any deeper than that.

We call it 4d TV. This will profoundly change the nature of how brands like MTV interact with their audience.

(Matt shows some videos.  When the cast went on the prom, they have a prom on There.com. Announcers go in to the virtual prom, then go on TV to talk about it and show it on TV.  Dreadlock DJ: "It feels like it's real, I'm actually kicking it with all these people." )

This gives them a place to go when they get there, gives them a starting point, motivates them to go.  You can't overemphasize the importance of it.  This is social networking on steroids, and the avatar is the next generation in social expression.  last week in virtual mtv, 200,000 chats, 320,000 invitations to talk privately, added people to buddy list 92,170 times, shot paintballs 380,000 times, used 6.3 million emoticons.

another video: The audience is the content.  (They did a voiceover of a machinima, with actors reading the chats, Cute!  A girl meets a guy for a date, but 10 other girls come up and say he was supposed to chat with them.)

MTV's virtual world has its own currency and auction system. $5.5 million MTV bucks and bought 75,000 items (sorry IWH missed time period for these stats). 

We're doing guilds where customers can master skill ladders and become virtual djs', etc.  Buy the real-world item if you see you like it in Virtual Hills.

MTV virtual cribs. the concept is simple.  Ask friends over to watch premiers of MTV content on your bigscreen TV.  This has to be a place where we would feel comfortable bringing our own kids, a world that respects intellectual property, an interface that's simple to use.  We chose the Makena technologies platform because they gave us avatars with emotional resonance, they gave us the intellectual property we want.

Results to date:
600,000 registered in 6 months from two shows
median age: 20 yo
gender: 85% female, the same demographics of our show
64% of users come back multiple times
1.4 times/week for 37 minutes a visit
daily visits up 300% from january and 600% over 2006

I'm assuming most of the audience is Fortune 500 and Ad buyers (IWH is not sure this is true)

Our ad model is to say how do you take people from the current exposure model, to get them to go from seeing an ad to interacting with your brand? Not as advertising, but as content that adds value to their inworld expeience.  this is the 4th direction.  Get people talking about your brand, it's the holy grail, as world of mouth has the highest credibility. And get people to buy your brand virtually.  We call this 4d branding, it copies the 4dTV model we created.

The Pepsi master skill ladder drives audience discovery and mastery of new skills.

Cingular- users' chat shows up in cingular-shaped window instead of chat window, avatars carry cinngular phones.

Pepsi - banded scooters, skateboards, clothing, and carrying pepsi.  pepsi machines available in world.

Secret deodorant - teen girl "confessions" - avatars watching them in a virtual cinema and voting for the best one.

Steve - our world must be user-driven, but without professionally-created content, it's not fun enough. And it must be easy to use.

We don't think it must be 3d.It must be a safe environment, something our brands trust.  our business models are: brand promotion and engagement, great way to build a new brand - subscription fees - item-based sales - advertising - sponsorships.  We're working closely with these partners. 

We want the dual revenue stream.  We bought Neopets in 1999, it's an incredibly strong virtual world.  (IWH says the Neopets logo looks like Second Life logo!)

Neopets: the virst online virtual world.  Incredible engagement.  The knowledge we have from them has helped educate us.  It's a studio for us. 

(Neopets video: girl saw her friends had cards, and she got some cards, and then got online.  Another girl - it became a daily habit, you can personlize your pets with paintbrushes.  Kids like to play the games, they get points.  It's a communication mechanism)

Neopets - 5 billion page view a month, 11 million uniques.  the largest vw on the web.  global with a family audience.50% under 14-15, 50% older. single player and multiplayer games.  user-generated aspect.   virtual commerce community with a bank, shops.  Has a revenue stream that started as advertising, now we show movie trailers, we're annoucing item-based action (buy the object you see in RL).15% growth over february. Daily 7 million items claimed.  We have 6-7 years of immersive knowledge, we're going to expand the user-generated content and of course we need more games.

Launched on 1/30, the first kid-targeted multiple media virtual world.  Nicktropolis.  Create your own avatar, decorate your own room, play games, earn points, watch videos, chat rooms with stars.  "The playground that kids rule".  Talk to SpongeBob.

We're the fastest-growing virtual world today.  Launched less than 2 months ago.  Now have 2.4 million registered users.  1.3 million user-created rooms.  7.5 million visits, 27 min. average visits, 50 m gameplays.

Notes from Virtual Worlds Conference

The next session was a panel of interesting folks.  Again, this is my interpretation of their comments, my notes, my opinions, my mistakes.

cnet reporter is moderator, he's writing a book on virtual worlds (vw).

Joe Lazlo from Jupiter Research.  We help companies understand new technologies.  How to take advantage of them and separate the hype from the reality.  covers Massively Multiplayer Games and is paying close attention to vw.

Sibley Verbeck from Electric Sheep.  Software for virtual worlds, help the industry become used by the mass market.

Chris Collins, data analyst at Second Life.

Justin Bovington from Rivers Run Red.  Helps clients - adidas, reebok - get into virtual worlds.

Steve Prentiss - research at Gartner.  Loosely allied with security and business management space, and looking at long-term directions for corporate activities inside virtual worlds.

cnet: where is this industry?

Sibley: still undefined.  the metrics on where we are today  - there's interest in the potential, the value is exploratory... virtual worlds might not be right yet for your business. The trend is that the interest level is very high, we have lots of questions and not answers necessarily.

Justin - vws - own medium or own channel?  As part of a media mix, they are important.

Chris - we're just scratching the surface with interactions in SL and new registrations, and where they are coming from.  Incredible growth - international - popping up as they being to hear the message of the virtual world.

Gartner: we're where the internet industry was in the mid 90's.  You don't expose second life at Davos without people starting to take note.  Describing it as a media channel is one of the most accurate ways of doing it.  This is a channel that needs to be able to be used with other medium.  In SL, a constraint to growth, that you can't move your avatar from one world to another.  There's only one internet, there are multiple virtual worlds (IWH notes this isn't really true -- remember AOL?).  They need to merge or become a standard. 

Jupiter - we're not even in the bubble stage yet, we need bubble then bust then boom.

cnet: so here we are today, what's the pitch to companies that are interested?

Sibley - the pitch is the same, now companies are finally interested.  PR, marketing and advertising,f course, but longer term sales of products, or turning your entertainment audience into a community also.  Let's design a project that isn't just a PR flash in the pan, but has some staying power.

Justin - SL is good at understanding trends, and then the idea behind co-collaboration and co-design. 

Chris - how companies have been working with second life, lately, they are building on their own community on their website, they want to be able to take that community off their website and send them directly to their own island using our registration API.  So you can interact more with your community, and they can interact with each other.

Justin - they also see SL as a great way to create their own content.  Podcasts will come from there, videocasts being made in-world.

Sibley - lots of examples of successful businesses, outside the contexts we've been talking about here.  VWs are fundamentally a communication medium.  the first natural ecosystem is entertainment.  If it's there to aggregate audience, businesses will feed around that.  The most successful virtual worlds are club penguin, webkins.  While they haven't gone 3d and businesses can't go and create something, they have shown the way of how do you build an audience, entertain them, have them participate in an internal economy, sell things to them.  Have a look at those other examples we haven't really touched on.

Gartner - enterprises are going virtual, we see vws as a powerful communications tool, with aspects of crossing cultural divides.  It's not polite to interupt someone, but you can start typing and be more involved, for example.  This has to do with oiling the wheels of businesses, helping them be successful in their real-world businesses.

cnet: General Motors is considering going in, or spending millions of dollars - what is the return?

Sibley: Well, we did something with MLB.  Makes sense, they have lots of fans, everything you can do online you can do in VW.  Show video from game, add community elements, feel like you're there.

Jupiter: you can't have more than 20 people online at once.  Like the Victoria's Secret webcast and it breaks.  We're a long way from a good experience.

Sibley: - I disagree. We have run events at a 1,000-1,500 scale.

Justin - if you think linear - from 0-90 minutes - then I agree.  But the BBC event had over 6,000 people over a week.  We had to think of events in a very new way.  We sat down with Adidas and saw that in traditional media, they get 6 minutes exposure time with their target audience and on ours they got 11. We sold 27,000 pairs of virtual tennis shoes.  People were participating in brands.  You can't buy that.  They were Linden $50 - they were $2.75.

(Justin wonders if Chris is a copy of Philip.)

Panelist complaint that $2.75 is not ROI. 

Jupiter: it's more R&D than ROI.  In the future we need a firm set of business metrics.  It's important to spend money just to be there now.

chris:  people spend an incredible amount of time.  The learning curve is very steep, but they get so immersed, it's very sticky.  Interacting with other individuals is huge.

cnet: how do you choose the right platform?  Obviously Second Life is the first choice.

Gartner: first you tell them there are other worlds.  Trying to work out ROI is like trying to work out how many users LL actually has, the numbers don't add up. You have to experiment and put it down to R&D.  Think of it as community building, think about it as an investment, but don't think of it as building another media channel.

Justin: this is a potent part of the media mix.  It displays ownership.  I disagree that metrics are hermetically sealed in the v. world.  Taking words and creating pictures, that is potent, it has a much larger effect outside the world.  This is not a trickle up - it's not being created by the techonlogy like the web in the beginning.  It's the ad agencies that are driving alot of it - this speaks their language. And they have lost a lot of TV budget. It's not being driven by web companies. Some web companies are openly hostile to virtual worlds.

Gartner: Businesses are hostile too, it's not network-secure, and people take it home.

cnet: why did MTV choose There instead of SL?

Sibley - there are a host of answers, we try to stay abreast of the growing platforms and help companies make that choice.  It depends who your audience is, what kind of experience they expect or enjoy, what is their techical expertise, the demographic.

Justin: we need to validate this space with competition. And there's a difference.  In SL The average age in SL is 33.

Jupiter: it's also about, do you want to build your own island and bring your own audience?  Or do you want to be in a virtual world that's shared with others?

Audeince:  I run one of these other worlds, from 1985 when it was in hypercard, called Whyville. The idea that you can't use virtual worlds with large numbers of people is not true.  We had a live event with 6K people.  This conference is extremely second life centric, I can understand why, but it's a disservice to the audience.

So Philip says he just figured out that it's about people, they're burdened with a platform based on a different conception of what mattered.  Are they thinking about changing their platform now?  I think social is the first step, it's really about serious interaction, education, kids spending hours with your product.

Sibley - yes, SL has opensourced the client, that's an interesting opportunity.

Chris - I can't speak about platform related issues, but the lowered barriers to entry, the way that SL lets you create whatever you want, means that it's evolving.  If there are no barriers to entry, you can create what you want to create.

Sibley - yes, a low barrier of entry to creating, but what the audience member is talking about is a low barrier to enjoying.  How do you find what you like on SL?

Jupiter - well, Myspace is the biggest virtual world.  It's not 3d.  But people are interacting with each other in there nonstop.

Audience: Hi, I work in interactive advertising, my clients are looking into this.  How do you measure traffic?  Do you use Omniture?

Justin: I suggest looking at the panel later.  It's a big issue, being addressed.

Audience: Are the only people making money here the people who sell pickaxes to goldminers? 

Justin: the Internet was the goldrush.  We think of vws as broadband's killer app.

Chris: we're seeing incredible growth in all areas, economic growth, new registration growth, the amount of information we release and publish is a huge set, especially in comparison to other vws here.  Our retention percentages have kept consistent.  No matter how many people we register, the underlying retention percentages are the same.

Audience: What are some of the different models?

Garnter: one of the issues is intellectual property. How do you get money in and out?  I agree that MySpace is an immersive virtual world, it doesn't have to be 3d.  Although the broadband penetration and server requirements are daunting, if you go back to old graphics -it depends on what you are trying to achieve.  I work with companies trying to cement together their internal communities, not their external communities.  Second Life is not the only place.

Justin - there are stealth products in development in virtual worlds, at the moment 99% of activity is in SL, the challenge is we need more platforms to validate the market.  I hope within the next couple of days someone will actually announce something.

Virtual Worlds Conference New York

Courtesy of Linden Lab, I am attending the Virtual Worlds conference in NYC.  Congratulations to the talented Tim Williams for handling an oversold crowd with grace under pressure.  My comments on my blog do not reflect the opinion of Linden Lab. 

Another disclaimer: I am taking notes, not quoting.  Much of the notes are my interpretation of what I heard said, and I could be wrong.  Please do not interpret any of my notes as quotes unless they are in quotes.

Here are some notes on the opening address by the Linden Lab CEO Philip Rosedale.  As he's my employer, I may be biased, but I found him appropriately humble about his role and awed by the potential of virtual worlds.  I don't think he used the words Second Life once by the way; he said Virtual Worlds.

Philip Rosedale, Linden Lab: Starts in by talking about sim crashes, gender pretenders.  Second Life is not perfect.  Tells a story. "Who would you be if you could be anyone?"  The best answer is "me".  2nd best, Richard Feynman.  You can have a whole world really small.  Or space exploration.  We have the power to simulate an infinite possibility. 

You can dream you become someone new.  Anything can happen there.  How exciting.  We can do that with virtual worlds.  Philip speaks of virtual worlds as a place of possibility, not a built out "finished" product.

At Linden Lab we have focused on the physics; we didn't focus on people at first.  But the most important thing about virtual worlds is people.  For me making a virtual world was just a playful place where I could make neat things, I didn't think about people. 

I used to think - what a dumb idea to put a book in a virtual world, when it's much simpler to buy it on Amazon.  What I see now is, this is a place with other people on it.  Amazon doesn't have this.  You can't talk to the 1,000 other people who are looking at that book right now.  What we really want is a technology enabled experience that includes us in it.  We're there, we can laugh at things together.  We can make things together.

That feature, which was not obvious to me in the beginning, tells us the most about the future of where this is going.  The virtual world we're immersing ourselves in together will change the nature of who we are.  It might make us demand change in the real world that is so easy to effect in the virtual world.  It's so easy in the virtual environment, to change one's haircolor or body shape.  We make a terrarium, a little thing, and the technology may end up fundamentally changing us.

It's still early, nothing is working perfectly yet, it's reminiscent of the early days of the internet.  Internet in 1993.  "Ooh, Hyperlinks, this is going to change everything."  Friend told me a story.  The young NY lawyer saw the Internet in 1993, and said "yeah I get it", but now he knows he didn't.  Because if he had really gotten it, he would have quit his day job and gotten right into it right then.

A Non-Visionary Move

I read in the Ad Age newsletter today (it's actually pretty good) that the Wall Street Journal has opted to put a big old ad right on their front page, highlighting the Internet's competitive pressure on traditional media.  I thought the reason the Journal charged people to access their website was so their business model wouldn't be undermined by the Internet?  Guess that didn't work too well.

So, what better way than an ad on the front page, to  indicate to your readers that you care more about making money than about giving them the best content in your category?  I mean, come on, that's like putting an ad on the cover of the New Yorker.  Tacky! 

How about this: make it a habit to seek out the best conservative political and financial commentators writing today -- a lot of them will probably be bloggers not affiliated with other newspapers.  They probably have other jobs (which is good, they're not another mouth to feed).  Invite these people to write under the WSJ umbrella and start sending them traffic from wsj.com.

What does that mean?  A WSJ affiliate banner on their personal website, announcement that the opinions expressed are their own and not the WSJ's, and *hey presto* the journal has a ton more real estate for their online ads (of course they give their bloggers a cut of this revenue).  Stick a feedback box up there where blog readers can let the Journal know if a blogger is not writing appropriate material, have an editor look over the alerts, kick an affiliate out once in a while to maintain editorial control, and you're done.

I'm tired of hearing what a threat the Internet is to businesses.  The Internet is an opportunity, for the billionth time.  If you can't figure out how to take advantage of it, start hiring people who understand it.

Like a TV Network

Lots of folks still don't realize what the Barton Bill could do to the Internet, and refuse to believe the "doomsday" examples we bring up to back Net Neutrality principles (however they're enforced).

Those who need more convincing can turn to the latest post from Gawker's Nick Denton.  "We've never liked crowds, nor believed in their wisdom," says Denton, explaining some corporate shuffling.  "Like a TV network, we have to back our hits, and clear out our schedules of the less popular shows."

Those who don't insist on a common carrier provision for internet utility providers are condoning turning the Internet into TV.  A broadband infrastructure that charges content (or application) providers "Quality of Service" fees if they want speedy transmission rates means little bloggers will be forced to conduct their conversations at a frustratingly slow pace.  Banding together won't help them, as Gawker proves.

We were just starting to enjoy our access to the Long Tail.  Are we really willing to give it up so quickly?

What Net Neutrality is All About

The broadband infrastructure providers, cable and phone companies are another group that doesn't want to lie in their own bed.  They're watching Internet startups eat their lunch, both with interesting content and VOIP services like Skype.  They got themselves into this problem by relying on canned content, failing to innovate in time with society, and overcharging for phone calls.  Of course, entrepreneurs stepped into the void. 

Now, broadband providers are inventing new ways to charge content and application providers, because they're watching the innovators get rich. A new bill just passed in the House would allow "phone and cable providers [to charge other] Internet content providers a premium for carrying services like video offerings that could rival those of the telecom companies."  Get it?  If Google offers movies competitive to AT&T's movies, and they want those movies available over AT&T's broadband, they'll have to pay AT&T whatever AT&T wants just to be able to show them.  A toll for offering competitive content or applications.  Over and above the high prices they already pay to use the infrastructure. 

In the future, going online may well be just like ordering a cable channel.  You won't ever see the "whole internet" again; instead you'll see certain websites if you have one broadband provider and other websites if you have a different provider.  If you live in a place where one broadband provider has a monopoly (newsflash: most places in the US), that "other Internet" won't even be available to you over broadband.  Of course, many innovative Internet applications and content providers - like you perhaps, with your video of your gravity-defying tricks - will never even get started, because the costs of going into business will be too high.

Why do I consider this (information super)highway robbery and not just free market goodness?  The companies that manage the Internet infrastructure have already taken our money based on common carrier assumptions.  They've been paid to provide something that they never provided.  They made their bed; they should lie in it.  If they're not going to be common carriers, then we should get our money back.  But government officials will probably help them out of it, because our representatives know what gets them elected.  "The House bill reflected the considerable clout of the telephone industry in the House, and in particular its ties to the Republican leadership there", says the NYTimes.

Do you want General Motors to buy up America's roads, and prevent you from driving on them if you have a Honda?  Do you want Sony to own our power lines, and charge extra to power up non-Sony appliances?  Do you want Continental and United to own all the airports, and charge USAir and Jet Blue planes exorbitant prices to take off and land there?  It just doesn't make sense for the government to give the utility companies control over the content and applications that run on top of the network backbone.  Internet connectivity should remain a utility-like, common carrier infrastructure.  This "Barton bill" should be voted down, or the Markey Net Neutrality amendment to it supported, despite its flaws.  Or, give me my money back, AT&T.

You Made Your Bed

When I was a kid, my mom used to say, "You made your  bed, you lie in it."

I didn't actually make my bed very often, but I knew what she meant.  You're responsible for dealing with the situations you create.  And you're responsible for having created them.  Don't blame others for your problems, or expect them to help you out of it.

When I look at the situation with media today, I see large media, retail and telecom companies trying to blame others for the problems they got themselves into.  And they expect others to help them get out of it.  Take this article in AdAge: "Survey: 48.9% of Marketing Execs Have Paid for Placement in Content".

Traditional media companies wonder why ordinary Americans would see any value in a blog, written by an amateur?  Well, of course we would, if the published, edited, "professional" content we read is nothing but a big ad.  According to this article, 65% of "consumers" assume product mentions in editorial are bought and paid for.

I've mentioned here before that retailers spend millions trying to get customers to "switch" brands, and then complain that "there's no customer loyalty anymore".

Hey, you guys teach us stuff, we learn.  You made your bed, you lie in it.  And don't come crying to me if you need to figure out how to handle the fact that your traditional ad campaigns aren't working anymore, or you need to learn how to do user-generated content or build an online community.  Oh wait... do come running to me.  That's my job, after all.