- virtual real estate tycoon Anshi Chung made it to the cover of Businessweek Magazine
- the land market was booming with mainland parcels rising towards L$12 per square meter
- steep user growth propelled the population past the million avatar mark in October
- Linden Lab laid off 30% of its staff in June 2008
- private estates were contracting for the first time ever
- mainland real estate lost about 80% of its value, tumbling to $L0.62 per square meter
After putting together a time line of events, my take is that Second Life’s decline was set in motion by a concerted effort by Linden Lab between 2008 and 2010 to transform Second Life from an anarchic virtual frontier settlement into a business-friendly company town. An ongoing series of policy decisions over the next two years ended up alienating their existing user base, squandering human, technical and financial resources, and failing to advance the platform into the business or mass consumer market.
My contention isn’t that any particular decision was wrong. As a matter of fact, some of them were positive and necessary. Others though, were doomed to failure. In aggregate, along with incomprehensibly poor communication with the Second Life community along the way, Linden Lab managed to throw out the virtual baby with the bathwater.
Here are some of the key elements of the story:
- The first overt sign of a sea change was the announcement on March 2008 that Second Life cofounder Philip Rosedale would be stepping down as CEO. Curiously, this was only three months after "irreconcilable differences” with Rosedale pushed CTO Cory Ondrejka out of the company. In retrospect, Ondreika’s advocacy for open sourcing the Second Life client and server was at complete odds with the forthcoming direction of Linden Lab.
- On March 25, Linden Lab began reclaiming their brand from the Second Life community with tight new guidelines for the use of their trademark. This angered many core users who had named blogs and businesses with protected terms such as "Second Life" and “SL," with either tacit or active encouragement by Linden Lab employees. Looking back, this was the start of a shift to an “us vs. them” dynamic between Linden Lab and the Second Life community that continues to this day.
- A partnership between IBM and Second Life was announced at the beginning of April. This sparked the release of a Second Life Enterprise product in November and a shift in corporate focus to the Enterprise and commercial markets.
- In April, Mark Kingdon was hired as the new Linden Lab CEO, who began leading the “Lindens” in a much more traditional corporate approach to its customers. By August the Second Life blog would be transformed from a fairly transparent vehicle for communication with users to a more traditional platform for corporate communication.
- In October, a significant increase in pricing on “void” simulators was the first in a series of policy shifts on pricing that negatively impacted significant user groups, including an end to education and non-profit discounts in 2010 that would double the cost of Second Life for school and charity groups.
- In January 2009, Linden Lab took control of web-based storefront commerce through the acquisition and merger of OnRez and XStreet SL. Ten months later, after establishing what amounted to a monopoly, vendor fees and minimum commissions were raised. January also marked the peak of the Private Region growth curve, growing ever-more slowly until June 2010 when it began a continuing decline that has still not been abated.
- In June 2009, adult content was banned from all areas of the mainland, exempt for Zindra, a newly established continent. This created a significant burden for customers with established adult mainland businesses.
- In November, the Second Life Mentor Group, a bastion of community-led support for new Second Life users was disbanded.
- In December, Linden Homes were introduced as a new incentive for premium account members. This was a curious initiative that created themed suburbs of tract homes, flying in the face of a culture of individuality that had been a hallmark of Second Life culture. This move was a clear indication that Linden Lab decision makers no longer had any sense for their customers.
- Linden Lab must have had some sense of their growing disconnection from the Second Life community because a new Conversation Manager position was introduced in January 2010. Unfortunately, he ended up creating more problems than he solved.
- In February 2010, Linden Lab begin asserting tighter control over third party client access to Second Life with a restrictive new policy.
- Second Life Viewer 2.0 was released in March. The viewer was almost universally panned, ironically pushing even more users to third-party clients.
- Linden Lab laid off 30% of its workforce on June 9. CEO Kindgon’s spin was amazing, saying, "Today's announcement about our reorganization will help us make Second Life even simpler, more enjoyable, relevant and engaging for consumers starting with their first experience. It will also enable us to invest in bringing 3D to the web and will strengthen our profitability." Unfortunately, he was not destined to be a part of this bright new future because he resigned a few weeks later, with Philip Rosedale taking over as interim CEO.
- Second Life Enterprise was canceled in July 2010.
- Rosedale stepped down as interim CEO in October before a permanent replacement was recruited. Bob Konin, COO, served as the new interim CEO until Rod Humble was hired in January.
That's my tale of the ghost of Second Life past. Next time, I'll weigh in on the ghost of Second Life future.