Sunday, January 20, 2008

23|!23=?

("decompressed" version of the title for those 'normal' people out there: "To free or not to free, that's the question" :)

I've shamelessly borrowed (or stolen?:) the title from dandellion, who wrote an article about her ethical questions with giving away the content.

At first I thought to reply on the blog, but given that it would've been probably too long and make the discussion tedious to read, I'm going to pollute my own blog with some typing.

Action: giving away free high quality skins
Assumption: this damages the SL economy by forcing the prices down for the 'professional content creators'

There is an interesting comment from London Spengler, with which I'd like to start my musings:

"Negating that Open Source, good as it is, and I think it is, can also be damaging is blinding yourself; paraphrasing a most favorite blogger of mine…"

I'd paraphrase and put it broader. Negating that any action of yours that brings benefit to someone, also damages someone else, is blinding yourself.

The competition in business. Every worker who achieves the success of a company, which allows this company to tank the competitors, essentially ruins the life of the workers within these competitors - for obvious reasons that there's no money to pay their salary.

Now, of course, the obvious argument that I am expecting to hear is that those two companies are operating in a similar "domain" - they use similar tools, are subject to the similar regulations, etc. However, that's the whole reason why all the companies pursue the R&D - to gain something that allows to break out of that 'same domain' cage. This allows to either produce higher quality stuff - or - lower the prices, hence lure the customers, and get more money. Shortsighted companies sit back and relax, smart companies use this money to make more R&D and further break into a separate domain. In the meantime the competitors might have found some other advantage which is *their* differentiating factor.

Is the company that is winning the market doing harm ?
If yes - it means that the competition is evil, and we've been getting it wrong all the way with all these antitrust laws and such.

Now, let's take a look at the mentioned open source. It does have a head-start competetive advantage of having a low (or zero) price. And, from some studies - the code quality is comparable.

So what in the world are we paying for ? Well, my take is that the "for-money software" is merely the way to shift the responsibility if needed. If you take apache, it's *your* headache if there are bugs which cause you the problems, whereas with a vendor - you can simply give the boss the phone number where to shout at, and the problems will get fixed. And it is this predictability of the fact that if you have a problem someone will pay attention to it that is worth the buck. In opensource, unless your problem is also considered a problem by the community - or by someone in that community who is willing to spend the time attending it - it's *your* problem, period. This is why opensource and commercial software, and even commercial software based on opensource work so well, in my opinion - they are simply targeting different segments.

And if you are producing the software, and are afraid that someone making the opensource software that threatens your job - then either you are making perfect software which does not have the bugs (theoretically possible, but doubtful), or are forgetting to take care of the customers when they are in need .

Of course, this applies way much less to SL clothes, skins and hair, you either like them or not, they do not deteriorate and normally there are no bugs in the hair (hmm now *that* might be a killer feature to suggest in JIRA - anyone ready to vote ?:).

However, how would it look if everyone weared the same freebie skin and hair ? Dull. And this is worth paying the money for. Now, of course, overtime there are more and more freebie skins - so there is more and more variety.

Then the question of quality comes in - if you, as a professional creator, are unable to keep up with the quality of work by the "amateurs" - what is your competetive advantage ?

Of course, another thing is competing with other professionals who decided to "do it for fun". However, again - here I ask - what is your competetive advantage, something that can not be done "for fun" ? And preferrably, something that can not be replicated digitally. Think of it - and when you have the answer, you would not be afraid of any freebies out there.

If your only core competency is something that is a commodity - maybe it is time to reprofile. Before it becomes commodity in RL. The beauty of SL is that stuff happens so much faster in here, and you can really use it to *model* the situations that would occur in RL. And it does mimic to what RL would be if we were figuring out the proper nanotechnology.

In short - I do not think that giving away for free damages the SL economy. Yes, it probably damages those who think that they can do sell the same stuff over and over - it's an unfortunate fact of life. But on the other hand, it pushes to think about what *else* can be done beyond what is already there, how to be the first and how to offer something that can be uniquely yours. What *else* can you do to attract customers besides lowering the prices ?

If you can find something unique which you can offer, which is needed by the consumers, or, better yet - find something unique which you can offer, and which *may* be needed by the consumers but they do not know it - then you are in even a better position - you have just created a whole new market.

And giving away for free may be part of the strategy.

4 comments:

dandellion Kimban said...

I knew you will hook up on this one. And that title remix is great.
But before I start writing anything serious, I have to say what I will say on many pages tonight:

I have no ethical questions about giving content for free. Problem that made me write that post is about SL economy. If there is something wrong in giving freebies, then it is not giving itself, but economy that is a mother to land barons and step-mother to content creators. If principles of economy behind open source and free software movement are questioned by that, that is ok, but that doesn't mean that I said they are wrong. Far from that.

This is an excellent description of free stuff and open source going in real economies. But you have skipped my question: what happens when all the prices are dropping except one: land price?

Dalien said...

Very simple. The LL needs to find the solution to lower down the low bound of the price for the land.

How ? Ah, that's another question, and something that will be *their* competetive advantage as opposed to other solutions :)

e.g.:

http://www.osgrid.org/opensim/map.php

Or, we all agree that the "land price" does not belong to SL economy and prohibit trading it in L$ :)

Or, realize that one does not really *need* land to be successful in SL - this should lower the demand and help with the prices.

Tons of possibilities - so I do not see a huge problem..

Kailie said...

Interesting. It certainly is indicative of the way different societies view competition.

There is also the concept that not everyone approaches open source the same way. Most everyone has a different view on it, some use an academic method, others use a progressive community involvement model, and others view it as a way to subversively institute a quasi-socialist methodology onto an industry, where everything is 'free and equal'.

So long as intellectual property is original, there is nothing in business ethics to say that giving it away is evil. Though if we recall the reason that microsoft was nailed with an antitrust suit in the first place was giving away internet explorer and a few other products, resulting in a ruling (later overturned) that it constituted 'anticompetitive actions.'

It's all perspective. I could show statistics that would relate open source to european culture in general, and closed source to american/taiwanese/japanese culture (all fairly similar in drive and business practices) and then draw correlations to unemployment rates and rampant taxation in the name of socialist programs. However, I won't, because statistics are highly irrelevant in most cases and skewed.

As far as SL land is concerned, it's priced at a rate that allows LL to pay for the services rendered. In general, you can justify a case saying that you will spend x amount on service per month, per server. Let's do some theoretical math here:

Say a server hosts 4 simulators. You have 195 USD per month for each to play with before you're losing money. The server costs x amount to run, power, datacenter usage, etc. Let's average out that to be about 300 a month, per server. So, 780-300 = 480 USD. Now, there are a number of people to pay in the service equation: Concierge, server administrators, various support staff, dev team hours. Let's say they're all making 25 USD an hour, fairly reasonable median. That leaves approx. 20 hours per month that the staff can work on an individual server before they lose money on it. Mainland servers, many of which consisting of people who pay at most 25 USD a month for the land, produce little more return.

Now, let's look at the terms of service for most people's internet in the US. It is almost always prohibited ot host a 'website or other bandwidth intensive service.' That means most people in the Us cannot legally host opensim servers on their connections, and if they could, they certainly don't have an OC12 or Decaman circuit laying around, so you can't expect even remotely the performance of the official SL servers (not that it's that great).

Regardless of open source ideas here, LL is a business, and they are in business to make money. They don't have to change anything currently as they have no reason to. Perhaps, rather than making demands, we could do a little footwork on our own and provide them with a better model, rather than build a subversive movement around unreasonable demands and fanatic dissatisfaction on points that may or may not even remotely be valid.

The SL economy is a farse in large part, as it's not controlled by forces of trade, but an overseeing entity that has stagnated the price of its own currency.

You see tons of possibilities, I'd love to hear them. It's always more effective to talk about the solution, rather than the problem. I don't like LL, but I have to make business arguments about business, and the ones I see in this conversation say that LL's policy should be charity/philanthropy, rather than the bottom line. They have employees to pay, and if they don't get paid, they don't eat.

To paraphrase a recent passage:

The competition in open source. Every worker who contributes to the success of undermining a company's primary technology, forces a company that has no competition to tank, essentially runining the lives of the workers at the company that is being opposed - for obvious reasons, no money to pay their salary.

Playing the devil's advocate a bit, but it should be poignant. Doing the same thing under a different name doesn't make a sow's ear into a silk purse. This comes down not to a minute procedural analysis, point by point, but an overall logical architecture wherein the how of the pieces don't really matter so much as the end result.

Dalien said...

The original question was about the land price being hardcoded within the economy. With the "free" sims one can run 100 slow and laggy sims at 1/100th price - there's a choice to have that as opposed to running 1 sim at the target price.

Could even run them on the elastic cloud in amazon, and dearchive upon the first connection/teleport into the target area.

Could rework the protocol to store the content in a P2P cloud (although this would be a painful and interesting area of a research, not 'quick')

At least three that came to my mind within 3 minutes.

No need to try to bash them - I did not even bother to test their validity. If I did - I'd be CEO of LL, not the random keyclicker as I am :)