New economic analysis on Second Life draws wrong mobile phone analogy

Just in time for my seminar of Second Life next week at the University of Milan, there are new interesting analyses by Tristan Luis of the economy of the online world. Whether the more pessimistic or optimistic projections of user uptake are the valid ones at the end, and if really many or most users signing up as residents do not come back, it is less interesting in my opinion then the underlying reasons for this apparent behavior. The analogy is made with the churn that mobile phone providers experience. This is in my opinion is the wrond analogy.

Users change mobile phone providers because of lack of customer service, or more competitive contracts with other providers. Second Life residents do not take their avatars to competing MMO 3D worlds (yet). If they give up, they are gone for good, and will come back only after some radical change. A better analogy in my opinion is with the world of homebrew computing, or that of speech recognition applications. Potential users look around, dabble a little, but lacking a ‘killer app’ of the field, they go back to their usual way of doing their usual things. The revolution starts with the killer app, the spreadsheet for the PC, and… well, nothing really yet for speech recognition. There must be something that you can only do on the new platform in a novel way, which can’t be replicated elsewhere, and ends up being unresistably attractive. That is the point where the chasm is crossed, and from early adopters the platform can move into the mainstream.

Second Life today is certainly in the early adopter phase, and it still has to find its killer app. I just hope that it won’t be the novel playground of PR agencies of major corporations, and nothing more… One of the most important innovations that it needs in order to move to the masses is a more stripped down user interface, and a ready recognition that the percentage of creative residents contributing to the online object ecosystem is going to radically decrease as the number of active users grows. Today almost all residents create, which is an abnormally high number, with respect to other read/write interfaces on the web as blogs, podcasts, wikis, etc.