Johnson School professor and Metanomics host Robert Bloomfield studies the economics of virtual worlds
Johnson School professor and Metanomics host Robert Bloomfield studies the economics of virtual worlds
Cornell Alumni Magazine: Many people think of virtual worlds just as venues for gamers. Why do they matter to business? Robert Bloomfield: They're the next generation in online platforms. Think of it this way: A conference call is like being in a room with people with a blindfold on, so all you hear are voices. Then you move into something where you see video and desktop sharing. But a virtual world is a real-seeming place—you feel like you're there with other people, so it's much more engaging.
CAM: These days, how blurry is the line between real and virtual?
RB: Is downloading music on the Web real world? Is reading the New York Times on your Blackberry somehow less "real" than buying the paper? I would argue we're already seeing a lot of blend between the physical and the digital. During the election, CNN had holograms of people being interviewed; that's an example of the type of thing that will happen. Or you'll go to eBay, see 3-D representations of the objects you bid on, and meet the buyers and sellers. It would be much more like a real auction.
CAM: What's "Metanomics"?
RB: I coined the term to mean business and policy in the "meta-verse" of virtual worlds. But now it's best known as the weekly show I do online in Second Life that covers people who are taking virtual worlds seriously. This can be anyone from the companies who are developing them for profit to the federal agencies that are using them to collaborate, train soldiers, all sorts of things.
CAM: At first glance, Second Life looks like another video game.
RB: It's not a game, it's a platform. You download the software and you see a 3-D world where you can walk around and talk with people using a headset. You have an avatar, which is a cartoon representation of yourself you can modify. It combines the visual elements of a world with the social networking tools of Facebook. If you're trying to build a community, Second Life is great because of that immediacy. But it's much less imposing on bandwidth than video, because all you're sending is bits of information about your avatar.
CAM: What's your avatar called?
RB: Buyers Sellers. It's accounting humor.
CAM: Why do people join Second Life?
RB: Different reasons. A lot want to make new friends and do unusual things—for them, it's entertainment. They typically want to retain their anonymity; it's separate from their "first life." For me, this is part of what I do as a researcher trying to understand new trends in business.
CAM: How many people "live" there?
RB: There are about 600,000 active users and 60,000 to 85,000 are online at any moment. Everything you see is created by a user, so it's filled with graphic artists, architects, musicians, actors, set designers, scientists. There's also a system for helping people with disabilities come in. People who can't walk in real life can walk in Second Life.
CAM: How might virtual worlds change how people socialize? RB: There was a study at MIT where they put people on virtual dates—one in a chat room, the other in a virtual art museum— and found that interacting in a virtual world was a much better way to figure out if they had an affinity. Would you rather watch funny YouTube videos alone or with friends? You can go into Second Life and stream them into a region where you're with people all over the world who share a common interest in seeing cats crawl in and out of boxes.
CAM: Why is Second Life particularly interesting to an economist?
RB: Any time you have things that people want and resources are constrained, you have supply and demand—and that's what economics is all about. In Second Life, people retain intellectual property rights over anything they create; if you make a dress or a house, you can sell it in a currency called Linden Dollars. There's an exchange market in which you can trade Lindens for U.S. dollars and vice versa at around 270 Lindens to the dollar. The recent statistics are that over $1 million a day changes hands.
CAM: Does the Second Life economy offer wider lessons?
RB: In the real world we've had major problems that many people attribute to deregulation. I saw that all happen a year or more earlier in Second Life, where the banks and stock markets were entirely unregulated—it was a libertarian's dream. In the absence of regulation, the banks did a lot of risky things and had their own systemic failures.
CAM: Can you give an example of how the platform facilitates business?
RB: A woman at Samsung in California was trying to interact with Korean researchers, who faced a language problem. They tried conference calls, but it didn't work because the Koreans weren't comfortable, so they switched to Second Life. And immediately they opened up— everything you've heard about their buttoned-down, blue-suit culture went away. Here they were, showing up in wedding dresses and bringing in props to help the conversation.
CAM: Besides Metanomics, how does the virtual world aid your work?
RB: I direct a research initiative for the Financial Accounting Standards Board, and we've been meeting in Second Life every week since October. We've had more than 100 professors and PhD students come, and people often hang around afterward to continue talking. They may say, "This was fun. Do you want to chat a little longer?" And they'll go take a balloon ride over a neighboring island.
— Beth Saulnier