Revenue Streams for an Open-Source Virtual Worlds

 It seems that in the recent C|net News.com article that announced the move of Linden Labs to open-source Second Life, questions were raised concerning the validity as a business model.

Not all are convinced that opening the server side of Second Life makes financial sense for Linden. “Server-based virtual worlds reliant on subscription fees aren’t a good match for a fully open-source business model,” said Raven Zachary, an analyst for the 451 Group. “The value to the vendor is in restricting access at some level to the worlds themselves.”

It is this writers opinion that Raven Zachary is a bit short sided by his comments. First off, how does moving the software to an open-source model exclude a vender’s ability to use the subscription model? Isn’t that a bit like saying that OSCommerce and Zen Cart are no longer ecommerce solutions, because they are open-source? Just because a software project is open-source does not mean that you cannot limit or exclude access to or charge for the functions and services that it provides. Is it not the content and features of Second Life that should determine the ability of Linden Labs to continue to operate a subscription-based model?

One thing that move to open-source will do for Linden Labs is to accelerate both the development and adoption of Second Life. Sure, there will be those that take the project off in their own direction to add functions and features that Linden Labs may not wish to allow to the Second Life code base, but this is not necessarily a bad thing. It will bring some healthy competition to the project and competition breeds excellence.

Just take a look at the shopping carts mentioned earlier, it is my understanding that Zen Cart was a fork of the OSCommerce project. The results: now we have two shopping carts that serve the needs of a much larger user base and far more people are now happy with their ecommerce solution. Plus I am sure their exist a number of smaller installations that were customizations of both carts.

Take a look at Multiverse for instance. They offers a platform that empowers independent developers to create high quality MMORPGs (Massively Multiplayer Online Games) and non-game virtual worlds at a fraction of the cost and time. This model allows developers to monetize their efforts using a subscription-based model. Perhaps the Linden Labs move to open-source was in direct competition to Multiverse, as it will also empower independent developers in a much different way.

I agree with the Linden Labs CTO (Chief Technical Officer), Cory Ondrejka, who was quoted as saying:

But Ondrejka said there’s a “long list” of revenue possibilities. “There are lots of ways to make money on the Web that have nothing to do with hosting–domain registration, search, services.”

Besides the obvious ways of generating revenue through an in-world advertising model or the sales of goods & services, there exists a number of possibilities. People just need to let go of the old mindset and begin to think outside the box. If you don’t, you will not make it in the approaching paradigm!