Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

Building Dystopian Economies in Facebook’s Metaverse

Posted on | October 31, 2021 | No Comments

Facebook’s new name “Meta” has me flashing back to a talk I gave on April 17, 2008 about Second Life, an online virtual world that was popular before social media began to dominate the Web. This post examines the dynamics and economies of virtual worlds while considering the hybrid conversions and interactions with the world outside it.

It’s no mistake that I’m writing this on Halloween, the holiday of expressive meanings and facades. Virtual environments like Fortnite, Minecraft, and Roblox explode with creative representations, not just as places to visit virtually but opportunities to interact, play, and conduct commerce. Now Metaverse promises new online services like working virtually and digital goods like designable avatars and NFTs (Non-Fungible Tokens). But are people ready to don VR helmets and live, play, and work in a Ready Player One universe?

The talk was held in downtown New York City at the Woolworth Building, known as the “Cathedral of Commerce” when it was built in 1913. The location was strangely appropriate given the topic, a wrap-up of a year-long project at New York University on Second Life. The project involved an animation class taught by Mechthild Schmidt-Feist, and my class, the Political Economy of Digital Media. I still have the tee-shirt my students gave me that says “Got Linden?” a reference to Second Life’s currency, the Linden. Click on the image for a larger view of my mind map notes from my talk:

Symbolic Economies of Second Life talk

The talk gave me a chance to tie in the results of my PhD dissertation, Symbolic Economies and the Politics of Global Cyberspaces (1993). I went back to my dissertation because it looked at money in fictional virtual worlds, particularly William Gibson’s cyberspace trilogy and his classic Neuromancer (1984).[1] Cyberspace was originally conceived as a digital world, the “matrix,” that someone could “jack into” with a neural plug in their skull. I also discussed Neal Stephenson’s Snow Crash (1992) that coined the term “Metaverse.” At the time, I was looking for a way to understand how money could become electronic. ” rel=”noopener” target=”_blank”>Cyberpunk was intriguing.

It necessarily examined historical texts regarding money. Sir Thomas More’s Utopia (1516) was central as it imagined a place WITHOUT MONEY. Utopia, which means “no place,” was an imaginary land ruled by its leader Utopus. The island nation outlawed gold and ridiculed it. But it was not within certain symbolic formations, including the significance of its leader Utopus. So I used the notion of symbolic thirds from Jean-Joseph Goux to analyze the political economy of utopias and the “dys”-topias of these cyberpunk genre novels.[2] This strategy also involved a reversal. In this case, what happens to a place with an excess of money and other symbolic forms?

Dystopias are places with excesses – of money and other significations. Symbolic economies refer to society’s tendency to both fix meanings and elevate certain things into “symbolic thirds.” Social pressures tend to isolate and elevate a member of a category to a higher position that is then used to judge the other members of that class. Money is the most recognizable symbolic third, but others include certain artists, captains, creative works, monarchs, and other and political leaders. Donald Trump, it can be argued, rose to a type of symbolic currency for the MAGA movement. These thirds evaluate relationships, reconcile values, and facilitate exchanges. I decided to revisit my old work that examined Second Life and now turn to Facebook’s Metaverse to investigate how economies and monies can emerge in these electronic/digital environments.

I had a useful bridge, the work of Cory Ondrejka, a Second Life co-founder and Chief Technical Officer for Linden Labs, the developer of Second Life. His “Escaping the Gilded Cage: User Created Content and Building the Metaverse” also used the cyberpunk genre as a point of departure but was mainly focused on the costs and strategies of producing video games (particularly massively multiplayer online games-MMOGs) and virtual environments.[3]

Ondrejka addressed problems that plagued virtual reality and identified four issues with creating content in digital worlds like Second Life and also video games for the consoles such as PlayStation and Xbox. They were difficulties in:

  1. creating first-class art;
  2. the lengthy development cycles needed;
  3. the hours of gameplay that had to be produced;
  4. the many players that needed to be accommodated, and;
  5. the large teams that had to be hired and managed effectively to create digital content.

These technical issues continue to be addressed by software engines like Unity and Unreal. They have combined with innovations in hardware such as the Oculus Rift headset goggles and the HTC Vive Virtual Reality System to create significant advances virtual environment and interaction. Increases in computation speed and facility in scripting languages have empowered professional designers and players to create new immersive experiences.

The resultant tools and techniques include:

  1. better scripts for avatar and player locomotion;
  2. responsive user interface synchronization and haptic (feeling) controls;
  3. editor techniques to create virtual 3D environments such as landscapes and urban architectures;
  4. adjustable stereo media for VR Head Mounted Displays (HMD);
  5. advanced plugins to expand and facilitate VR interactions and gameplay elements, and;
  6. high-volume high-speed/low-latency data networking that connects the temporal and spatial dimensions of a VR/AR environment with the user navigation actions.

They can be combined to continue to improve the desired quality of the virtual experience for the end user, despite expected limitations in available system resources. However, they are insufficient to maintain the gameplay and psychic investments necessary to ensure long-term engagements in a virtual world like the Metaverse.

Creating successful virtual worlds and economies with the traditional model of a single group is highly unlikely. User-created content is a key ingredient for a dynamic online world with a vibrant economy and that requires vesting user participation. Do it yourself (DIY) tools and techniques need to be tied to online and real world rewards.

One of Ondrejka’s inspirations was the The Mystery of Capital by Hernando De Soto, a popular economist throughout the “Third World,” who focused on capitalism being a system of representations and rights. He argued that connecting poor people to property via a system of legal representations was the most effective way to empower them to build wealth. Connecting the construction of online wealth to individuals would be crucial to successful virtual economies.[4]

Ondrejka suggested that online virtual worlds with vibrant economies are really only possible if:

  1. users are given the power to collaboratively create the content within it;
  2. each of those users receive broad rights to their creations. These would be primarily property rights over virtual land, in-world games, avatar clothes, etc.;
  3. they also need to convert those creations into real world capital and wealth.

Online virtual worlds need a system of incentives and symbolic currencies to propel them. The software tools to create and program virtual content are readily available but the legal systems need to be refined for online environments to protect property rights both within the virtual sphere and outside it.

Player-created content was not entirely new to virtual environments. id Software, a small Texas-based company, used the ego-centric perspective to create the first-person shooter (FPS) game, Wolfenstein, in May of 1991. id followed with the extraordinarily successful DOOM in December 1994. DOOM combined a shareware business model with the distribution capabilities of the emerging Internet. Just two months after Netscape introduced its first browser as freeware over the Web, DOOM enthusiasts by the droves were downloading the game by FTP to their PCs, many of them with just a 14.4 kb modem. In a prescient move, id decided to make DOOM’s source code available to its users. Making the code available allowed new modifications to the game called “mods.”

This innovation allowed their fans to create their own 2.5D (not quite 3-D) levels and distribute them to other players. A popular one involved using the characters from the Simpsons’ animated TV show running around the DOOM environment. Homer Simpson was able to renew his health by finding and eating donuts. The US military created a version called Marine DOOM designed to introduce them to urban fighting and the idea of killing. Many of the company’s new employees were recruited because of the excellence of their mods, and the extra help allowed them to create the next stage of their innovative online gameplay, QUAKE.

Second Life was born in June 2003 and offered users the ability to create content using built-in tools. They could develop objects and give them scripted behaviors (i.e., a tree and its leaves swaying in the wind). They could create their own avatar (representation of themselves or an entirely fictitious persona) and architectural structures. They could buy and sell land and any other objects they made because they had an in-world currency and sought to protect intellectual property. Some 99% of the new world was user-created, and no permits, pre-approval processes, or separate submission were required. The key was the ability to perform transactions and maintain property rights.

It will be interesting to watch these dystopian virtual worlds emerge. Gibson used the motif of “the biz” to refer to the dangerous circulations of various currencies in his cyberspace trilogy, both online and in the gritty urbanscape where real bodies existed. But virtual markets for currency exchanges have existed since at least the 1970s when Reuters introduced its Money Monitor Rates.

We’ve been living in this online/offline world for a while. Databases and spreadsheets structure the “real” world, but we don’t often perceive the changes or attribute causality to the online dynamics. Amazon’s impact on retailing is one of the more obvious effects, but you have to go to the mall or see a local store close up to conceptualize it. Amazon excels in its offline infrastructure, but integration with its online capabilities gives its particular power. Big data collection and search, recommendation algorithms, one-click (licensed from Apple) payment capabilities, combined with its delivery information and extensive logistics and warehouse system, give it massive economic power. This suggests that the Metaverse, or Nvidia’s Omniverse, will have synergistic economic effects in the offline world.

The dynamism of virtual worlds depends on the ability of participants to communicate, collaborate and sell items to each other for in-game virtual currency or barter for such things. The purchase of in-game items for real-world money is also crucial, as are the exchange markets to convert virtual currencies for real-world currencies and vice-versa. It is a crucial dynamic in the dystopic economies of his cyberpunk vision.

The type of personal interactions via avatars are what makes the metaverse intriguing. I think it will be a matter of how they are structured. Second Life wasn’t that impressive because people were just walking around in their “costumes” most of the time and wound up insulting or hitting on people. We had some classes that were ok. Multiplayer games illicit a lot of “trash talk,” but they are structured around the gameplay. Productive online places might need to have dress codes and parameters for behavior depending on their purpose.

Ironically, it was Facebook (and the digital camera) that largely displaced Second Life. People quickly became bored of living through avatars in a world of jerky, low-resolution graphics. Second Life became a sort of continuous online Halloween party with people hidden in costumes and behind constructed facial facades. Instead, people gravitated to Facebook and then Instagram because they preferred a representational style that was closer to real-life. They wanted to post pictures of friends and family, and of course, their cats, dogs, and dinner foods. They wanted to construct stories of themselves and narratives about what they found funny and important in the world. So are people ready for the Ready Player One universe? That remains to be seen.

Notes

[1] Gibson, W. (1984) Neuromancer. New York: Ace Books.
[2] Goux, J. (1990) Symbolic Economies. Ithaca: Cornell University Press).
[3] Ondrejka, Cory R., Escaping the Gilded Cage: User Created Content and Building the Metaverse. Available at SSRN: https://ssrn.com/abstract=538362
[4] Soto, Hernando de, (2000) The Mystery of Capital : Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books.

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AnthonybwAnthony J. Pennings, PhD is a Professor at the State University of New York, Korea. Previously, he taught at St. Edwards University in Austin, Texas and was on the faculty of New York University from 2002-2012. His first teaching position was at Victoria University in Wellington, New Zealand. He has been examining the emergence of digital money and monetary policy since he wrote his Masters thesis on telecommunications and banking deregulation and how it led to the “Third World Debt Crisis” in the early 1980s.

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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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