Celebrating Australia Day

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G’day – to all my Australia friends and colleagues and those of you with an affinity for anything Aussie…enjoy the day!

It’s going to be a long one for me – boarding a plane from Sydney and 14 hours later arriving in San Francisco….it will still be Australia Day – w00t!

Your Worth as a Facebook App User

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Adam Ostrow has an interesting analysis of the worth of a Facebook Application User in terms of advertising revenue and company valuation, which he has derived through the OTC filings of SNAP Interactive:

SNAP reported $388,000 in revenue for their fourth quarter, which was up from $35,383 in the third. They attribute the growth to their applications: “Are You Interested” finished December with 5.2 million users, while “Meet New People” claims 350,000. Thus, it can be determined that each user was worth about 7 cents in revenue to SNAP in the quarter, or about 28 cents per year (388,000/5,500,000 * 4).

As deals become more common in the Facebook application space, the question becomes how much is a user worth? As a publicly traded company, SNAP is sporting a market value of around $10 million. At its current pace, the company looks to pull in $1.5-$2 million in revenue this year, meaning its price-to-sales ratio is 5:1. If you assume a 5x price-to-sales ratio, that would mean each one of SNAP’s users is actually worth around $1.40 (each user pulls in $0.28/yr, if the company is valued at 5x sales, you arrive a $1.40 per user valuation).

Open Source Gains Legitimacy: Sun Snaps MySQL

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I’ve spent a good deal of time analysing the open source arena. First up I was instrumental in preparing an Australia-specific alternative open source license (the Trade Practices Act has some quirks that made this seem a prudent move), through to steering a spin out,  open source, virtualization company to fruition (Open Kernel Labs).

With OK Labs we delved deep into what works and what doesn’t in the open source arena, and much like with anything in life, the answer is that users don’t like surprises: if you intend them to pay for a version of your software at some stage be upfront about it.

We spoke with many of the key players in the open source arena and I have always been bullish that open source works as a business model. So it is especially satisfying to observe that MySQL, one of the shining lights of open source, has been acquired by Sun for $1 billion. Sun’s CEO, Jonathan Schwartz points out that Sun has been a big supporter of the open source model and that MySQL users will benefit from the support offerings they intend bringing to the MySQL marketplace.

In other open source news, London-based Openads has completed a $15.5 million Series B financing led by Accel Partners. The company has developed an open source ad server, which is currently used by more than 30,000 publishers, delivering billions of ads daily.

Commenting on the deal, Accel’s Andrew Braccia said, “The rapid growth of the global online advertising market requires the adoption of next generation infrastructure and services for publishers and advertisers alike.”

“Openads’ open source heritage and deep global publisher footprint make it uniquely positioned to play a pivotal role in the evolution of the digital media landscape.”

UPDATE: Facebook has released an animation library for its FBJS (a layer on top of Javascript that give the full power of Javascript in applications) under a modified BSD license. Neat stuff.

Empire of Sports Goes Giant for Greater China

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Empire of Sports, the sports-based MMORPG, is being spearheaded into China by Giant Interactive Group.

Developed in Switzerland, Empire of Sports is a virtual sports world. In it players assume the role of a single character throughout the game. They are able to compete in virtual international events as part of a team and currently they can play basketball and tennis, go skiing and participate in  a series of fitness and training games.

Wei Liu, Giant’s President believes that, “With the 2008 Beijing Olympic Games nearing, interest in sports-related games is poised to increase.”

Giant has signed an exclusive license that expires in September 2011.

Soulja Cranks Music Downloads To New Heights

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“Soulja Boy has set the bar for what’s possible in terms of breaking an artist online”, says Steve Berman from Interscope Geffen A&M Records.

Rap phenomenon Soulja Boy has racked up 3 million downloads of his Grammy nominated song “Crank That (Soulja Boy)”. But check our these other stats, simply awesome:

* More than 3 million ringtones sold

* YouTube video viewed 28 million times

* 22 million viewings of his instructional dance video

* 1 million website uniques a month.

What’s this 17 year old’s response? “Yuuuuaaaa!”

Second Life Self-Regulates Virtual Financial Services

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Benjamin Duranske, the founder of the Second Life Bar Association, has only one criticism of Linden Lab’s move to self-regulate financial services within their virtual world, “It has been too long in coming.”

Calls were made for regulation to be imposed on banks and other financial institutions within Second Life way back in August 2007. This was a reaction to the failure of Ginko Financial, which Wired comprehensively covered.

Benjamin is otherwise extremely positive about Linden Lab’s announcement that:

As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.

Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized.

Usually, we don’t step in the middle of Resident-to-Resident conduct – letting Residents decide how to act, live, or play in Second Life.

But these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse – leaving upset “depositors” with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy.

Benjamin’s view is that policies like this one not only acknowledge the obligations that should be imposed on all companies who choose to enable others to make real money in virtual worlds, but also serve to keep the collective virtual world grid healthy and free from externally imposed regulation.

He believes this will lead to the shutting down of “dozens of largely insolvent self-styled ‘banks’ in Second Life.” He does, however, fear that some legitimate operations may be caught in the net.

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One such legitimate operation is First Meta, a Singapore-based start up, which offers a full range of financial services focusing on credit products such as the MetaCard. This credit card does not offer interest or a rate of return on L$ invested or deposited.

I spoke with First Meta’s CEO, Douglas Abrams, and he fully supports the regulation of financial services activity in the virtual economy.

Douglas says, “We agree with the statement by Linden Lab that in-world banks…offering unsustainably high interest rates…are in most cases doomed to collapse – leaving upset ‘depositors’ with nothing to show for their investments.

“We believe that the removal of non-credible players from the financial services sector of Second Life’s economy will benefit all of its participants.”

Others remain on the fence about Linden Labs decision. CNet’s Daniel Terdiman comments:

Whether the move will stabilize the economy, or at least perception of the economy remains to be seen. But it’s pretty clear Linden Lab had to do something to stave off criticism related to banks that have folded, taking residents’ money with them.

But only time will tell whether the decision will have any meaningful impact. And for those residents who have used the banks for various financial purposes, it will be very interesting to see what alternatives they have available in the months to come.

Mashable’s Kristen Nicole has an interesting social media take:

Just as Facebook’s open platform lent itself to a flurry of advertising networks specific to the application train, Second Life’s money-making opportunities have made it more attractive to a wider array of people. More people means more diverse behavior, and that’s not always good. Second Life’s parent company Linden Lab insists that it’s not acting as a banking regulator, but it is a very important step to take for the legal securities of Second Life itself.

Personally, I second the views put forward by Douglas and tip my hat to Linden Lab for a good move.

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Is Web Privacy A Naivete?

I’ve been following Chris Saad’s tilt at the privacy windmill on his attention data steed for some time now. And he finally seems to be getting some good traction with Dataportability.org.

I also suspected I’d see him comment on Alec Saunders’ contribution to GigaOM – the topic of Alec’s post being an attempt to crystallise a Privacy Manifesto for the Web 2.0 Era.

This all got me thinking. The web blogging community has been up in arms recently about the Scoble/Plaxo/Facebook affair – and you can read about that elsewhere – but is this all a storm in a teacup?

Over in the Homeland Security camp privacy rights have been and continue to be well and truly eroded. So what right do web pundits have puffing up a Privacy Manifesto. How can Chris Saad call for a codification of principals into a DataPortability Policy Reference Design, when his every move through Brisbane central is being monitored on CCTV.

Should we be requesting the spooks keep our data secure and not pass it on to other government departments?

Magnetism Used To Target Cells

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A new method to deliver cells and genes to repair diseased or injured organs in humans in one step closer to reality.

Scientists from the Children’s Hospital of Philadelphia have used magnetic fields and  iron-bearing nanoparticles to drive healthy cells to targeted sites in animal blood vessels.

This post marks the first real widening of our focus here at Metarand in 2008 to cover biotechnology and the life sciences. Along with our previous focus on social media, the Internet and virtual worlds we’re bundling them into a new category – “life media”.

The team leader of this study, Dr Robert J. Levy commented that others researchers have pursued less successful approaches to this novel strategy for delivering cells to targets in the body.

One goal of this cell therapy will be to introduce new cells to recoat the metal stents of heart patients. Many such stents fail over time as smooth muscle cells accumulate excessively on their surfaces and create new blockages.

Dr Levy believes, “This method could become a powerful medical tool.”

Social game mechanics and alternate reality gaming

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Anyone interested in the social aspects of game mechanics would do well to read this excellent piece on ZT Online, Giant Interactive’s flagship MMO.

This game has taken China by storm with huge user growth and real revenue generation. Thanks to Jeremy Liew for bringing it to my attention.

You might also want to take a read through Giant’s prospectus – the pic above is an extract from it. A key take away for me is this line:

We believe that our success is largely attributable to our ability to internally develop, operate and market a high quality MMO game tailored to China’s core game player audience.

While ZT Online may have a psychological and economic effect on its players, it is also fascinating to consider the effect of alternate reality game arena – where immersive games are played out in part online and in part in the real world.

Wired has a fun piece on some of the more well known arg protagonists.

At what point do these worlds cross over? At what point would a gamer be able to open a treasure box in game and win a real life luxury item – a Ferrari logo’d box that delivers a real  life 612 P4/5 to the player’s front door?

Game developers should start to consider such mechanisms for synchronicity – such actions would go a long way to making players feel less used by the ‘system’ as Lu Yang eventually felt in the ZT Online article.

Welcome to Virtu8!

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All things are pointing to 2008 being the year that virtual worlds really come into their own and hence I’ve named it Virtu8 (virtual world meets 2008 + rapid uptake = virtu8…pronounced “virtuate”).

The New York Times has a comprehensive article supporting my thesis, particularly with respect to the pre-teen kids demographic. In this piece Brooks Barnes points out that Disney is spending circa $100m to create a portfolio of virtual world plays. Following on from their successful proof of principle through the acquisition of Club Penguin in 2007, Paul Yanover and the team at Disney Online are set to create a suite of worlds tied to major entertainment titles this year – per example, Pixie Hollow which is tied to the movie Tinker Bell (screen shot above from the Disney site).

Time Warner’s Nickelodeon is targeting a similar quantum and portfolio approach and Lego and Mattel are hot on their heels.

The plethora of virtual worlds these companies will bring out in 2008 will expose a lot more people to the entertainment value they can deliver. In fact, entertainment will be a key driver for virtu8 – the rapid uptake of virtual worlds. This is a key point postulated by Ted Castranova in his new book, Exodus to the Virtual World. He says:

Virtual worlds are societies where fun matters. The designers of virtual worlds have made a grab for attention…and the weapon they have developed, the mechanism of play, is powerful and well-suited to the task.

I’m still reading it so will reserve comment until I’ve had time to ruminate on it, but so far it supports the point of this post.

While many new avatars will be created this year, it will also be most interesting to watch others mature. What awaits current Runescapers in 2008, for example.

Virtual worlds may themselves mature into an entertainment genre in their own right in 2008, but it is also important for them not to be viewed in isolation. In fact they will be an integral part of general Internet upside delivered this year. In this regard check out JP Morgan’s Nothing But Net report – which TechCrunch covers here.

All up, the scene is set for an interesting year of virtu8ing!