Second Life and the Post Scarcity World

‘Second Life’ faces threat to its virtual economy | CNET

The SL blog is down, but I’ll include a link to Cory’s post about CopyBot when I can. This is interesting.

There’s some open source software called LibSL that can effectively act like the Second Life PC client, but which also allows subtle changes to the data it handles, like removing the bits that say "you can’t copy this."

The result is that a LibSL client can effectively stream objects back into the shared virtual world that are perfect copies of anything, albeit without the original copy protection.

Why does this matter? It’s a microcosm of the coming post-scarcity world.

The problem for Linden right now is that a lot of the SL economy is built on people selling objects vs. simply copying what they see. It’s as if you could see a nice car on the street, click a button, and have one of your own. Wouldn’t that be nice? But a market economy would tend to break down, because supply becomes essentially infinite and the cost of production goes to zero. How on earth would producers and innovators get paid?

One of the arguments for having a closed or "walled garden" world like SL is that Linden has better control of the servers and world, so hacking the world like this is less likely. This situation (well anticipated by many of us) proves that this isn’t the case. Once people can run custom code on their PCs, in fact, once the data is sent at all, all bets are off. In other words, one way or another, this problem has to be solved.

Apple’s solution in the music realm is to use DRM, but to keep prices low enough (99 cents) such that it’s not worth our time to strip that DRM away. That may be fine for a system where everything is cheap. But as soon as there’s one big thing that costs $1000 bucks, people will start to bypass the DRM.

Microsoft’s contribution (Apple liked it too) was to add "Trusted Computing" modules to our motherboards, which essentially said that your PC isn’t quite yours, and no custom PC client code, like LibSL, would be allowed. It’s a hardware hack to an inherent problem with really free free markets — lose scarcity and prices become meaningless. The math breaks down.

Except the economy need not break down. This, I think, is where Linden missed the boat, or perhaps has an opportunity to blaze new ground.

The first instance of anything is hard to create. No pattern exists. Time and energy must be expended or nothing happens, and there is nothing to steal.

The second instance, however, is going to be essentially free, no matter how hard you try to protect it. That’s the fact of digital life, and that’s at the root of all our problems with the RIAA and such. Their business model is based on scarcity and control.

And so the solution seems to imply a new kind of Capitalism, information-based, where objects are not protected but patterns are. Copies become free and unlimited. But the infrastructure can still funnel rewards back to the original object creator(s), authors, musicians, based on use, or popularity, or utility, if you will. Various metrics are possible and all are worth testing out.

The key to such a system is having a trusted repository of patterns along with a fair way to gauge use. You could conceivably implement this as a server with object blueprints and a list of licensees–i.e., if you’re not licensed, you don’t get to make an instance. But that ultimately fails the same test as Linden’s system once someone figures out how to clone an instance without the patterns or plans.

So the solution is actually to let people clone away. Remove all copy protection. The only thing stored with an instance is a verifiable hash of the object’s configuration, it’s pattern ID, to quickly lookup any object’s full pattern from the database. Once found, this hash can be re-verified in a flash. And if it doesn’t match, a hack is detected.

When someone improves on or otherwise changes a pattern, now we have to be smart. The patterning tool must be able to compute how similar a new pattern is to any existing patterns and assign derivation or inspiration ratios as a result. Some significant percentage always goes for the novel design work we want to encourage. The rest is split among the existing designs that are most similar to it, accounting for which of those seem to have imitated or influenced the others. There is a cascade of royalty percentages, hopefully attributed to original work.

Simple designs, say The Basic White Sphere, are suitably penalized from profit because they’re so simple to create (i.e., many similar non-derivative spheres exist), though the first pattern of anything new is always worth more. Complex designs, like a Ferrari, would be worth quite a bit more because they’re so unique (of course, the actual monetary value depends on how popular they are).

Assuming you can assign ratios like this, the task becomes one of periodically monitoring the world and invoicing payments in a kind of "flow" model, where royalties always flow from the users to the creators of patterns (directly, or via general access fees). Patterns that are highly imitated will naturally be worth more. But it’s also worth experimenting to see if branding and distribution has any meaningful role in such a system. My guess is that we could try to preserve the tiered branding approaches that are oh-so popular today. But in the end, they’ll get squeezed out in favor of a flat model, which I personally favor too — meritocracy is my ideal and truly free markets are built on free information flow (esp. about product worthiness vs. branding claims).

We’re talking about Second Life, aren’t we? Well, actually not. At some point in the next century or so, we will have invented a real-world nano-assembler, or some similar device that can clone real world objects, just like in Second Life. At some point, we’ll be living in a real post-scarcity world, where objects are cheap, but those who control the patterns control the world (the pattern for the replicator would be the most protected, of course).

Second Life is just a great testbed for new ways of doing business and rewarding creators. And it’s the perfect place to try out some of these ideas.

2 thoughts on “Second Life and the Post Scarcity World

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