Further Report on Symbolic Economies and Second Life

My course, Y19.0312 Political Economy of Digital Media, with 21 students, participated in the Interdisciplinary Study in the Virtual Environment of Second Life at New York University. This course addresses issues of creative work and productivity, industry organization and integration, electronic payments and monetary policy, international trade and outsourcing, and an examination of capital markets and their impact on technological innovation and social wealth.

While the course did not focus exclusively on Second Life, it provided an inquiry into economic processes designed to provide insights into the virtual as well as the real world. An initial understanding of markets and price systems for example was meant to help students appreciate the role of monetary currency in a virtual world, especially given that Second Life’s resident cash, the Linden dollar, plays a crucial role in the online community.

Most of the coursework on Second Life examined the dynamics of user-created content. Cory Ondrejka, a Second Life co-founder and until recently, the Chief Technical Officer for Linden Labs, the developer of Second Life identified four problems with creating content in virtual worlds like Second Life and even in creating video games. They were the difficulties in: 1) creating first-class art; 2) the lengthy development cycles needed; 2) the hours of gameplay that had to be produced; 3) the many players that needed to be accommodated, and 4) the large teams that had to be hired and managed effectively to create digital content. Creating virtual worlds by the traditional model of a single group producing it is highly unlikely. He suggested that online virtual worlds are really only possible if: 1) Its users are given the power to collaboratively create the content within it; 2) each of those users receives broad rights to their creations. These would be primarily property rights over virtual land, in-world games, avatar clothes, etc.; and 3) they also need to convert those creations into real world capital and wealth.

Online virtual worlds, like real world economies, need a system of incentives and symbolic currencies to propel them.