broadstuff

You know something is happening when there are TWO events on Virtual Worlds in one night. I went to This One by Music Ally et al and missed out on That One at the Dana Centre.

The thing that I have been mulling over for the last few days is what the next phase is for virtual worlds. The reason for this stem partly from my own experience with these virtual worlds and gaming in general, and partly from a conversation I had afterwards with IBM metaverse evangelist Roo Reynolds.

Essentially, 2nd Life and Habbo Hotel are on two opposite ends of the "ease of use" spectrum for Virtual Worlds

Habbo is designed to be a "low usage threshold" environment. Your avatar looks like a little lego man and the clothing options are pretty basic, and the environment is pre-constructed. Your own options for self expression revolve around decking your hotel room out (ie a 3D profile) and buying furniture from Habbo (with real money of course). Bad behaviour is not part of the Habbo Way.

Second Life is the other extreme - you can build your land, your house, your chattels, yourself, and any darn thing your pixel-dusted mind can think of. You can stream video, audio, bloggio or whatever in from outside. Anything goes, from gory S&M bondage cultures through to joining the Second Life Liberation Army

However, the time taken to get used to operating a Second Life avatar and in getting connected in this huge virtual planet is not small - 20 to 30 hours I would estimate to be vaguely competent. I would compare that to 20 - 30 minutes with a Habbo Avatar.

This matters...the evidence from the Gaming World is that not many people have the time / inclination to immerse themselves in the increasingly complex gameworlds emerging. During the Virtual World talk, it was mentioned that Second Life was c 1.5 m users and growing rapidly, and that c 1m of these users were mainstream (I would put it much higher than that, personally).

This has changed usage - rather than being Creators, building Byzantine palaces and other New nirvanae as their profile signatures, these new arrivals' creative bent goes about as far as putting cyber-bling on their avatar - or buying new branded trainers and colouring them in. You hardly need a system as complex as Second Life to do that.

Habbo, though, is just too restricted - you can't configure the environment, and there is no easy ability to import media.

But at the end the day these sites are, in fact, (as the session panel convenor Toby Lewis of Music Ally heretically put it), just glorified chat rooms (or social media sites as we term them in 2006)

This is where the conversation with Roo comes in - IBM uses 2nd Life for virtual conferencing and more, and it has a number of benefits - its much easier to see mixed media in a 3D world (Powerpoint, video, text, avatars), and people react better to an avatar as there is simply a bigger bandwidth interaction - they even have water cooler conversations. Its not quite real world face to face but its better than 2D IM

But IM is easy to use for the mass market, its almost Habbo level of entry threshold - Second Life is decidedly not. And for the business / professional market, who has the time to learn to use a Second Life Avatar (and the self confidence to look a complete dummy in front of colleagues). However, getting 3D conferencing and services right will save companies and people large amounts of money in travelling and markerting costs alone.

For these reasons I think that the major growth area will be some form of mid-range Virtual World. As I already discussed in "You can't sell Soda on a Sword an Sorcery Site", the world will have to be modernistic to attract ad revenues.

Sort of like a Second Sims....

Last night at the Virtual Worlds session I was talking to two of the sponsoring consultants about DRM, when one mentioned SnoCap as the best system for music distribution today.

I said I thought it was worth waiting a few cycles to see how it pans out (knowing that Sean Fanning was already off to new fields, never a good sign). I then opined that iTunes, (a rival approach) was more than just a content delivery system and was actually a complete value chain, and that this was the real point to grasp, not the DRM free distribution solution component.

I'm no DRM fan (read this) but we need to look at things as they are, not as we would wish.

I was reminded about this little episode again after reading in the Wall Street Journal that EMI (one of the companies talking last night in fact) is trialling selling songs in unprotected MP3 format through Yahoo. Apparently online sales are stalling, so new models are being tried - about time, because the music industry (entirely via its own efforts) has allowed major competitors to disaggregate it..

With Yahoo in the frame it may just work - the thing that seems to elude everyone in this is that end to end Value Chain requirement and Yahoo gets that more than most.

I think DRM is a dead end, but there is one thing Apple taught us that seems to be missed so often; its not the point technology, its how to structure the overal value chain:

- Search for music you want via a high context database
- Get what you want - and only what you want - no bundling
- Make it easy to use and get a "free ride" on existing infrastructure
- Make the price acceptable, so the hassle factor of obtaining free music is a higher cost than buying it off iTunes
- Have a great user experience that connects into the delivery system
- Analyse the data in your end to end chain to improve the service, economics, stickiness etc etc

If these exist, then so long as the DRM is not rapacious, most people will put probably up with it - as the WSJ notes, Apple's iTunes accounts for more than 90% of the tracks sold online some weeks (according to people who work in the music industry).

And if you are going to build a zero DRM system this value chain becomes even more critical, because its only by having superior services that people will be tempted to drop free musc (aka piracy). And this is important. As the Journal notes:

Eric Garland, chief executive of BigChampagne LLC, which tracks peer-to-peer traffic, says more than one billion songs are traded over those networks every month. "It took iTunes several years to reach that particular mile marker," he notes. "The pirate market -- if we considered that a market -- would command better than 90% of the online marketplace."

To compete with all this free music will probably require a combination of better quality end to end services, and a pretty low cost of track purchase to the end user - which probably implies advertising or some other form of subsidy.

And if that occurs, you have to ask "why DRM" - DRM is necessary for a high price subscription or PAYG service, but is irrelevant for a subsidy model.

Will the DRM'ers wake up I wonder?

Postcript.....while searching for similar articles after posting, came across this one by Nick Carr (the Does IT Matter author).

Yesterday The New York Times reported that the future of online advertising is in Britain

Last year at about this time we were working on predictions and business models for the Online Interactive Advertising industry for a client of ours, and we have been working on a review of those predictions, which will be ready next week.

If anyone wants a free copy of the Report Summary, just post a comment in the post right here to register interest.

Would also help if you noted what your main area of involvement is.

And if you fancy a bit of Adland alt-think, try this post from Dave Winer

Last week UK 3G Mobile operator 3 UK unveiled its new prices for 3G data to its phones. While the more excitable elements of Planet Mobile were given over to gasps of ecstatic delight, more sensible elements were somewhat more sanguine.

Kate Fehrenbacher over at GigaOm puts it very well:

Today 3 announced the pricing of their X-Series service with two choices, 5 pounds ($10) or 10 pounds ($20) per month. While the company seems to have mostly stayed true to their low, flat fee, Internet-inspired intentions, they also added “fair use” guidelines — like a tiger, a carrier can’t really change its stripes.

The X-Series fair use guidelines:

- 5,000 Skype to Skype minutes per month.

- Windows Live Messenger: 10,000 messages per month

- 1GB per month for browsing

- Orb and Slingbox: 80 hours a month with X-Series Gold

3 says “where unfair use is apparent, 3 will take the appropriate measures on a case-by-case basis.” It seems like carriers still feel that truly unlimited is just not in their best business interests.

This puts the 3 pricing for 3G mobile data at about the same price levels as the 3G data cards for laptops.

( A note to our non UK readers - WiFi access in the UK is expensive, fragmented and certainly not ubiquitous, so a 3G data card is a great option to be on line when on the move)

Quite why the Big 4 feel think that a mobile phone should have a near-order-of-magnitude higher price for 3G data to a mobile than to a laptop has been unclear to me for some time. It pretty much stopped their ability to own the mobile music track market in its tracks, for example.

In fact mobile music reseller MonsterMob did a deal at 30p / Mb in May/June 2006, which was then the rate for 3G data cards - see this report from Ovum here - but Voda has dropped that rate by c 2/3 now. Be interesting to see if Monstermob's prices have changed, can't tell as the MonsterMob website appears to have morphed from a RingTone to a Social Network site. That tells its own story I guess....

As well as pricing, the other issue Mobile Internet has still not faced up to is it's insistence on adhering to the Walled Garden concept. Although the new pricing from 3 has dropped the cost of going over the wall, this has really held up Mobile Internet's ability to move with the 'Net over the last few years.

So, will the UK's big 4 join in this orgy of data price reduction now, or will they let 3 to its own (X series) devices?

It will all depend on the rate at which we spurn our current 3G data deals and get it on down with 3...I wonder, is it any coincidence Voda rang me today with a seductive offer to extend my 3G contract?