The announcements were in reaction to yesterday’s Linden Lab decision that third-party exchanges would no longer be authorized by the platform. As a result, 11 exchanges have already announced that they are ending Linden dollar trading, including VirWoX, a major European exchange and backer of Open Metaverse Currency. The OMC is currently used on about 30 different OpenSim grids.
“Avination in cooperation with the various exchanges will continue to allow many different forms of payment and cash out options for those all around the world,” Avination said in its announcement.
AviWorlds – which is currently down for a major server migration — took this opportunity to invite third-party exchanges to take a look at their grid.
“Attention VirWoX and all currency exchange companies,” the grid said in a Tweet today. “You are welcome in AviWorlds!”
Second Life residents use third-party exchanges instead of the official LindeX exchange for a number of reasons. In particular, many foreign users can not easily transfer money to the LindeX.
“In my country, the ATM network operator (a consortium of all Portuguese banks) exchanges Euros for L$,” said virtual worlds blogger Gwyneth Llewelyn in a comment on Inara Pey’s Living in a Modemworld blog.
In addition, LindeX transactions can also be more expensive, and take longer to go through.
As a result, the Austria-based VirWoX exchange reported that it it traded 9.6 billion Linden Dollars last year, the equivalent of about US $38 million.
There’s enough money in the currency exchange business that Singapore-based First Meta Exchange received $466,000 in funding last year from Silicon Valley business accelerator Plug and Play Tech Center and Singapore’s National Research Foundation. (Read full Forbes article here.)
First Meta has already announced the suspension of trading of Lindens, but investors shouldn’t be too worried just yet — First Meta also trades IMVU Credits, Toricredits, Frenzoo Gold Coins, FriendsHangout Tokens, and NuVera Notes.
Plus, it might be adding AviWorlds’ currency to its list.
“We’d be interested in discussing adding your currency to our exchange,” First Meta CEO Autumn Radtke told AviWorlds in a comment on Hypergrid Business yesterday.
If third-party currency trading is a critical issue for some residents, then we might see people moving to Avination or AviWorlds or other OpenSim grids instead.
However, there might not be enough business on those grids to sustain exchanges that previously dealt only with Linden Dollars — the volumes just aren’t there.
VirWoX, in particular, is in a very precarious position. The amount of trading it sees in OMC and Avination C$ is a tiny fraction of the trades in Linden Dollars.
It’s the ecosystem, stupid
The days of individual companies failing or succeeding completely on their own are long gone — if they were ever here in the first place.
Today, it’s all about the ecosystems.
How many developers and accessory manufacturers are creating for the iPhone and iPad versus, say, the new Blackberry smartphone?
Twitter and Facebook are valuable not just because of the tools they offer, but because of all the third-party applications and services that access their platforms.
Where would Second Life be without its merchants, creators, performers and myriad of other businesses?
Changing a terms of service with no warning, in such a way that it destroys the business models of companies providing valuable and useful services not only shrinks the ecosystem but may make others think twice before joining the ecosystem in the future.
If my business was solely dependent on Second Life, I know that I myself would be making contingency plans right now if I haven’t yet, or accelerating the deployment of plans already in place.
The ironic thing is that Linden Lab still has the opportunity to go in the opposite direction, to expand instead of contracting.
Instead of shutting down third-party exchanges, the company could have instead went all-out with the currency, expanding the API to other grids. With the OMC getting little traction right now, there is still an opportunity for the Linden Dollar to become the defacto currency of the hypergrid, the PayPal of the metaverse.