Linden Lab, Xstreet SL and OnRez: designing the future economy

Friday, January 30, 2009 / by

Linden Lab announced their acquisition of Xstreet SL and OnRez (and plans of consolidating them under Xstreet SL brand), and immediately a wave of criticism swept through the SL blogosphere. I've read a few positive opinions about this move but they vanished in the sea of accusations, gloomy predictions and conspiration theories. The announcement came a bit sudden, which may explain the negative response, but I'm sure many residents will change their tune over time. People, especially when surprised with something, tend to look at things from one perspective, and that is from their own perception of the situation. I think you should look at things from three perspectives: your own perception (what effect the situation has on you), the opposite side of the argument (why they have a different opinion and what effect the situation has on them) and the perspective of a person who is not involved in the situation at all (a passive observer). Only then you have a full picture of the situation and your judgement is more fair and balanced. So, if you look at this acquisition objectively, it perfectly makes sense. It brings good to each company involved and to the residents of Second Life as well. How is that?

Linden Lab, Xstreet SL and OnRez

First: OnRez would be shutdown anyway. It's not a big secret that the Electric Sheep Company (who ran OnRez) is slowly pulling out of SL. This was a perfect opportunity to say 'bye' gracefully and to make some extra money on it. Second: It seems Jay Geeseman (more known by his avatar name, Apotheus Silverman), the founder of Xstreet SL, was looking for some capital to expand the company. So Xstreet SL gets the needed capital, and since Apotheus and key members of his team will continue to work on Xstreet SL at Linden Lab, and will be integrating the platfrom into SL, I don't think the quality of service will change, except for better. Third: Linden Lab is a company, and a company should make profit off their business activity. Remember that proft for Linden Lab is your assurance that tomorrow you'll be able to log in to SL - perhaps with faster and more reliable asset servers or improved graphics. But you need money to invest, non? It's only natural they wanted to involve into web-based Second Life e-commerce. They could have decided to create a new web solution for SL merchants, but instead they chose a better way - not uncommon in business world - acquire a trusted and successful company in the field they want to expand to. It's better, because a company that already operates in certain field has got experience and know-how, which otherwise would need to be gained in more difficult and much more time-consuming way.

But what are the benefits for the residents?
  • Less work to do
    Once things are integrated, there will be no need to do the same work three times when releasing a product (set up in-world, set up on OnRez, set up on Xstreet SL). Doing the listings is boring and time consuming. I'm sure many of you would agree it's the most tedious task of a designer. In fact, I know people who don't list their products on SL e-commerce websites because they find it too tiresome. They just prefer to have smaller sales than dedicate their time and energy to putting up merchandise on these platforms. I own three brands in-world and I still don't have all my products listed - it's just too much to do. I don't know how deep and broad the integration will be, but I'd love to see deliveries straight from avatars' inventories and listings done by right-clicking the product and choosing 'Send to marketplace' option, or perhaps by moving the product to a special inventory folder. I'm so tired of Dropboxes and Magic Boxes. But even if they stay, there will be just one! Until a new marketplace opens, that is ;)

  • More customers
    Currently a lot of people are not aware they can shop for SL items through web (T Linden says this number is around 80% for residents who are economically active, and around 97-99% for other residents). As the integration process advances, more people will use the service, which means better visibility of products to SL community and higher sales.

  • More fair and equitable competition environment
    Thanks to web-based shopping little businesses (especially those who don't have an in-world store at all) will be able to compete with big brands on same level. It's true they can list their products on e-commerce sites now, but only after the integration these products will get similar exposure as big brand products in-world. It won't matter that much whether you own a full region or a small store - if your products are of same quality, you'll compete on equal terms. I think competition in general will become more intense but I consider this positive, since it can drive development and lead further into more vibrant SL economy.

  • Bigger choice of products
    At the moment there are a lot of brands who operate in-world only. If the web shopping service gains popularity, and perhaps have some kind of impact on in-world search results, these businesses will most probably enter shopping sites to compete more effectively and to gain a new stream of profit. Also, when people become more aware of web-based shopping and realize they can sell their creations without the need of finding money to open an in-world store, a lot of talented residents might decide to try their hand at running a business. This might also mean a flood of 'beginner products', but hey, we all had to learn at one time, and you can always sort your search results by popularity or rating.

  • Better shopping experience
    Believe it or not, there are still a lot of residents who don't have new fast computers. Possibility to browse items on a website let them avoid lag and enhances their shopping experience. People with slow computers will naturally choose to shop on a website (as Gwyneth Llewelyn nicely puts it, lagfree shopping), which means less people in a sim and less lag for those who like to buy items in-world. Take Armidi for example. Their sim was always extremely laggy due to a high number of avatars shopping. It took an awful lot of time to load and moving from one place to another was really slow, even on fast computers. As a solution they introduced, an online shop for their creations. Now residents can conveniently shop online or go to a lag free sim (still full of avatars but not packed with them to the extreme). And all of them get a nice experience. I think something similar is going to happen after integrating Xstreet into SL, but this time it will be a grid-wide process.

  • Easier gifting
    Currently you can't send gifts to people who are not registered with Xstreet SL and OnRez. With web shopping integrated into SL you'll be able to send gifts to any avatar you want. And with easy gifting process, I guess more people are going to buy gifts on impulse, which means higher revenue for merchants.

  • Linked Linden balance
    Hopefully the in-world Linden balance will be integrated with web shopping platform and there will be no need anymore for additional money operations. This means no more depositing money, no more withdrawing, no more searching for terminals or wallets. Just sell and buy.

  • Easier searching within Second Life
    I'd say the majority of people who shop at SL's online marketplaces use them because of powerful search engines. It's much easier and faster to look up something you need on the web, and then, if needed, follow the SLURL to the shop (to see the item in person) than to try to find that item through in-world search engine. Acquired websites, especially Xstreet SL, allow for more convenient browsing and comparison of products (sorting by price, by rating, by popularity etc.), not to mention descriptions, presented in more readable form than a notecard. If this search engine was integrated into Second Life, I'm sure in-world search experience would significantly improve.

  • Other
    Sharable wish lists, gifting to non-residents, scheduled deliveries - these few were mentioned by T Linden.
It all doesn't look all that negative now, does it? Personally I'm hoping Linden Lab will do their best to integrate all the top features of each acquired site into one comprehensive, effective, user-friendly platform. We'll see over time how all the integration goes, but I'm guessing in the long term it will have a positive effect on SL economy and on SL in general.

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  1. I like Orenz more than xstreet.
    Orenz is simple and pretty, xstreet sux....

  2. I guess it's not really whether one is better than another, but more of a personal preference. I like Xstreet SL more, because it has better functionality to me and is more intuitive (not to mention higher sales). I like the way it looks now, but perhaps it could use some layout tweaking - seems like it is already happening and I like the effect so far. OnRez has some unique features like displaying storefronts, in-world vendors or possibility to link several avatars to one account, and I'm hoping these will be merged into Xstreet SL. The feature I miss in both websites is the 'see also' feature: a drop-down list that would allow me (as a designer) to display similar items in given listing (for example to place links to the same item in different colours). But I guess we'll be seeing a lot of new features soon, and I can't wait for them :)

  3. Just discovered your blog accidentally, hence this late post. Excellent article! I'm certainly hoping that Linden Labs implements some of your proposed improvements!

    Inkygirl Omizu

  4. Thank you! I'm hoping it is already happening. Recently I got an email saying that starting May 11 the Xstreet purchases will automatically appear in SL inventory. Also, from now on we log in to Xstreet with SL username and password, which means it is all getting integrated, and soon perhaps we won't need a separate Xstreet account at all.