VSJ – September 2007 – Sounding Board

Robin Jones casts a jaundiced eye over the virtual world phenomenon and discovers, again, that there is nothing new under the sun.

Has the World gone stark staring mad? Well, no. It was always stark staring mad.

Let me explain. You can design yourself an avatar in a virtual world like Second Life for nothing more than the marginal cost of your broadband connection and a computer, both of which were there anyway. But if you fancy buying something for it (him? her?) like a virtual office or an island, or maybe some designer-label clothes, that’ll cost you. Real money. None of your virtual stuff, thank you. OK, the exchange rate is pretty good at the moment, although it’s now close to 100L$ (Linden dollars, the currency of Second Life) to the US dollar – up from about 250:1 a year ago. Anyway, Second Life’s Gross National Product last year was around $64M US, rather more than those of several real islands, like the Falklands. And, as of last November, there is a US dollar millionaire, Anshe Chung or Ailin Graef in the real world, whose income derives solely from Second Life real estate. Or should that be unreal estate?

Now as I have proudly averred in these columns before, I am a skinflint. While Tesco provides serviceable alternatives, I am unlikely to buy real Nike trainers for myself. So the likelihood of my shelling out on a virtual pair for my avatar, should I have one, is vanishingly small. But, clearly, people are doing just that, and in significant numbers.

Now, before we all agree that the time has come to incarcerate a fair proportion of the population in padded rooms, let me give you on a brief history lesson. Let’s talk about, oh, I don’t know, the tea trade, say. Tea made its way from China to Europe in the 16th century and was popular in Holland by 1610. As with most things associated with mainland Europe, the British took 60-odd years to overcome their suspicion. (Actually that’s quite quick – it took 150 years for us to accept the Gregorian calendar.) But once we did, as everyone knows, there was no stopping us. And the result was a massive tax take – because no government can countenance an inexpensive luxury – with a consequential huge crime wave, in the forms of smuggling and adulteration. And there were changes in employment, caused by the fact that people were drinking tea in preference to beer and spirits, not to mention a whole new agriculture in India. Finally, there was the boost to marine technology resulting from the fad, for that’s what it was, for getting the tea harvest back to England as fast as possible. Hence the tea clippers. I’ve no idea what the total value of all this, and more besides, was to the economy but it’s clear that it must have been huge.

So my question is, just how ‘real’ was the tea economy? Europeans had done without it for hundreds of years. So did anybody actually need it? No. Did it cure any serious disease? No. It was, in fact, a triumph of marketing, initiated primarily by Catherine of Braganza, the wife of Charles II, who was pretty much a tea addict. So a lot of people spent a lot of money on something they didn’t need. It was, to all intents and purposes, a virtual economy, even though it had a tangible output. But it resulted in investments in technologies that, for example, allowed us to sail faster than ever before. And, incidentally, we don’t think of tea-drinkers as mad.

So should we take a totally virtual economy seriously? You bet we should. The value of an item or service is what someone is prepared to pay for it, regardless of how ephemeral or superficial we may consider it to be. So I encourage any and all of you to work out how you can add value (and hence derive income) to the various virtual worlds out there in cyberspace. Where there is no (real) muck whatever, there appears to be brass. Then again, what do I know? Not only don’t I buy Nike trainers, I don’t even drink tea.

[Something you’d like to get off your chest? Email me (Robin Jones) at eo@iap.org.uk.]

Comments are closed.