Virtual World Business And Development Information

Second Life is a Signpost for the Future

Posted by SIM on January 2, 2007

Part 3: Prosumers
‘Second Life’ is a signpost for the future: Fabricated online environment an exciting, long-term engine of change, innovation

Globe and Mail Update

Forget everything you know about the way we do business. Mass collaboration is revolutionizing the corporation, the economy, and nearly every aspect of management. In this seven-part series, co-authors of Wikinomics: How Mass Collaboration Changes Everything, due out Jan. 2, explain new business models that will empower the prepared firm and destroy those that fail to adjust

In 1999, Philip Rosedale invented a business that most of us would only dream of. The peculiar part is that in Rosedale’s business, customers do 99 per cent of the work.

His “product” is a massively multiplayer online game (MMOG, for short) called Second Life, a fascinating world where more than 400,000 participants socialize, entertain and transact in a virtual environment fabricated almost entirely by its users.

In fact, Second Life residents are far more than just “users.” They assume virtual identities, act out fictitious roles and activities and even create virtual businesses that earn some 3,100 residents an average net profit of $20,000 a year.

One player, who goes by the pseudonym Anshe Chung, runs a virtual real estate development company. Residents pay Linden dollars, the in-game currency, to buy or rent the ornate homesteads her firm designs. Even at 300 Linden dollars to the dollar, she does some brisk business. Her holdings of Linden currency and virtual real estate surpass the equivalent of $1-million (U.S.), making her the first Second Life millionaire.

Some analysts have written about Second Life — but all have missed the most important point. Players like Anshe Chung and indeed all players in Second Life, are not just consumers of game content; they are at once developers, community members and entrepreneurs.

This means Second Life is no typical “product,” and it’s not even a typical video game. It’s created almost entirely by its customers — you could say the consumers are also the producers, or the “prosumers.”

After all, they participate in the design, creation, and production of the product, while Linden Labs is content to manage the community and make sure the infrastructure is running.

Second Life is a signpost for the future.

And yet, most companies still equate prosumption with customer centricity where companies decide the basics and customers modify certain elements — like customizing your vehicle on the showroom floor.

Even TiVo, which makes you the programmer (i.e., the person who sets the TV schedule), is not as exciting as producing your own homegrown content. In our view, all this talk about customer centricity is pretty much business as usual.

In the new model, customers participate in the creation of products in an active and ongoing way. In other words, customers do more than customize or personalize, they add value throughout the product lifecycle, starting with design and extending to aftermarket opportunities for customer-driven commerce and innovation.

As products — everything from software and games to cameras and cars — become smart and enriched with knowledge and services, there are endless opportunities to turn consumers into prosumers.

If anyone embodies this new prosumer culture, it’s the Net Generation, the first generation of youngsters to be socialized in an age of digital technologies. Above all, N-Geners are not content to be passive consumers.

We first got a taste of this as Napster (and later Kazaa and BitTorrent) revolutionized the distribution of music, television shows, software and movies.

But a recent Pew Internet Project survey of U.S. teenagers suggests the prosumer trend is growing. In fact, more than half (some 57 per cent) of online teens surveyed are what the project calls “content creators.” That amounts to half of all teens aged 12-17, or about 12 million youth in the United States, alone.

These content creators report having engaged in myriad activities, including creating blog or personal Web pages and sharing content–including artwork, photos, stories, and videos on sites such as MySpace, flickr, and YouTube.

The opportunity to bring N-Geners (and other customers) into the enterprise as co-creators of value is huge. It possibly presents one of the most exciting, long-term engines of change and innovation that the business world has ever seen.

But innovation processes will need to be fundamentally reconfigured if businesses are to seize this opportunity. Just as you can twist and scramble a Rubik’s Cube, prosumers will reconfigure products for their own ends.

Static, immovable, non-editable items will be anathema, ripe for the dustbins of 20th century history.

Don Tapscott is CEO of New Paradigm, a technology and business think tank, and the author of 10 books about information technology in business and society, including Paradigm Shift, Growing Up Digital.

Anthony D. Williams is an author and researcher with experience in the impact of new technologies on social and economic life. He is vice- president and executive editor at New Paradigm.

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