My talk focused on how our society and culture shape us so much that it makes it hard override our “default settings”. I believe it undermines our happiness by preventing us from understanding what really matters to us. One specific area where it impacts our lives is socialization. This is a topic I have been researching on for quite some time due to my work on online communities. As I invested quite a bit of effort in this talk and only shared it with the 50 or so people who attended, I went the extra mile and subtitled it for online viewing. Enjoy!

“The Myths of Innovation” talks about the misconceptions around entrepreneurship and innovation.
In a nutshell: entrepreneurs who make it big are lucky people with not only ideas (which they might have borrowed), but good timing (too early and you’re doomed) and access to both talent and capital. There is a significant incentive to iron out this narrative into a super hero story, and a huge selection bias in doing so.

“Digital Innovation in Asia” is about some innovative services and business models found in Asia.
The Western framing of innovation has short-changed the rest of the world despite their achievements, and Asia is definitely doing fine in many aspects.

I would like now to move on to the second part of my talk, the one connecting online and offline behaviors.
Just like many of you, I was surprised when I heard about, or witnessed, some extreme behaviors:
- Flaming wars in forums
- Guys dying in Internet cafes
- Parents neglecting their “offline” baby in favor of some online thing
- People protesting online
- Bots mistaken for people and people mistaken for bots
- Even Chatroulette was interesting – though at that time it was not a surprise to me anymore. At least the creativity of people such as the piano guy, remains encouraging to witness, and stays alive as long as the environment does not reach a too high toxicity.

So what did I find in social psychology and social dynamics? I picked a few key things:

- People’s behavior is largely shaped by their environment. The simplest example is the “broken window theory”.

- People behave differently according to the likelihood of getting caught, or interacting again. There are examples from Zimbardo’s “Stanford Prison Experiment” to the abuses of Abu Ghraib, or simply “would you cheat a stranger if you knew you will never meet him again”. The depressing answer to this is: many people would. You can study Stanley Milgram’s “Obedience to Authority” experiment to see the reality of it.

- There are mechanisms to socialization and even seduction. I studied the research done by various social coaches, and looked into ways to engage and interact with total strangers. I even advised a startup who was developing an iPhone app just for that purpose.

Unfortunately, I don’t have time to go into details about those mechanisms but in short, they mean that as a service operator or “virtual world” builder, or a “resident”, there are ways to improve dramatically socialization and behaviors within digital environments.

Which leads me to the conclusion of my talk: what about the future of digital socialization, and the business around it?

There is enough research and proven cases out there showing what people are happy to pay for, so the business aspects I am not worried about. It is more about the pace: things like the semantic cells around “virtual” and “game”, payment systems are hurdles to overcome to help the market grow. It is getting better, but is still slow.

More interestingly, I actually think digital environments are one of the solutions to a real social problem. With neighborhoods disappearing and the prevalence of the “car” or “commuter” culture, we, as social beings, are very isolated, constantly in contact with vast numbers of strangers. The beauty of online environments – and they can be text-based, 2D, 3D, Stereoscopic and what not – is that those spaces – and I call them spaces in an architectural sense – can help us create new neighborhoods.

Some of you might be familiar with the concept of “third place” – the collection of places aside your home and workplace. Those are often essential to us to be social, creative and enjoy our life. A city with lots of them is very enjoyable to live in. What I am looking for – and working on with the company Cmune as an early iteration of that – is the creation of those “digital third places”. Second Life has been a great inspiration and raised awareness to a very high level, but is limited on many aspects: the business model, the clunkiness, the client install and more generally the poor social design and lack of “fun”. I am looking forward to seeing the next generation of services tackle those challenges and enrich our lives with old and new experiences in digital places.

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+8* | Plus Eight Star believes in a better future online, as proven by Asia. Follow us at @plus8star or @benjaminjoffe for more.

I would like to start by thanking the organizers and all participants to this event. After all the hype virtual worlds and Second Life went through, I see this as a sign that we might be past the “disillusionment” and are ready to move forward. Whether SL will be the platform for that in the future is yet to see, and I hope to learn from you what you think about it.

Though I explored a bit before, this is the first time I do a talk in SL and quite frankly I feel like a hack. I possibly have the least hours spent in SL of you all. In addition, I am in the “East” track when first, I am not Asian and second, I am today in San Francisco on a business trip. If you look at my avatar, it was graciously provided by the organizers because I had no time to prep one that would not betray my identity and errands in SL ;-)

So what could I have to say?

Well, the fact is that I did spend quite a bit of time with virtual things, digital goods and Asia, where I have been based for the past 10 years. Also, though I like technology, I am most interested by the social aspects of technology.

What Clay Shirky says “When a technology becomes boring, that’s when the social effects become interesting” resonates strongly with me. It is true also at micro-levels. Many of what has been observed in SL has been around in graphic or even text-based VW since the 80′s. I was visiting Howard Rheingold in Mill Valley last week-end and the man has been researching this field for about 25 years.

So to understand why people were acting in certain ways online, I researched offline behavior, social psychology and social dynamics. I came to understand a lot better why people behave the way they do in various social environments. I can even tell you this came at a price when experimenting with offline social dynamics.

Since I have 30 minutes what I would like to talk about is three things:
1- What I learned from researching Virtual Worlds, Social Networks and Online Games in Asia
2- What I learned by researching social psychology and social dynamics
3. I’ll then share some ideas on the good things the future might hold for us, and how we can shape it.

Digital goods

First, you might have come across some numbers about virtual goods: the market would have been around $1B in US and $7B in Asia in 2009. I have some confidence in the second estimate because I actually did it myself based on our research and estimates of the various free-to-play online gaming markets in Asia.

The reality today is that there are two shifts happening. On is a business model shift, another is a mindset shift.

The business shift is the transition, or rather diversification, of the video gaming industry to free-to-play. The West and Japan have been lagging due to their huge package software legacy, while Korea then China and now most developing economies are embracing the model, generating huge profits by cutting many costs and middle-men out of the value chain.

The mindset shift is more fundamental. It is about what Aldous Huxley called in his last series of lectures “Semantic Prisons”.

I quote here “There are plenty of semantic prisons which do not permit us to think straight”.

I think this is very true. The closest everyday expression would be “assume make an ass of you and me”. We have tons of assumptions and many of our words and thoughts are locked within semantic cells. I witnessed that countless times when discussing culture or business in Asia to foreigners, or foreign things to Asians. In the specific case of virtual worlds and the business opportunities associated, I identified two major ones:

“VIRTUAL”

For many, “virtual” sounds odd because it sounds like it does not exist, has no value. Anyone paying for something virtual would surely be slightly stupid. The fact is that “virtual” is a legacy word, and so vague it is actually hurtful to the development of the industry. The opposite of “real” is not “virtual”, it is “imaginary”. And things happening online are not “imaginary”, they are “digital”.

To make an offline parallel, when you go to a concert, you don’t get anything physical either. When you buy a CD and put it into MP3, you just got yourself a sequence of 0s and 1s. It is digital too. What you have paid for is an experience, not the plastic. Brands are very good at selling physical objects charged with symbolic value, but how many are yet able to sell non-physical objects? If the margins are better, they should!

About a month ago I did a talk for 700 P&G employees, including the CEO, about digital innovation. P&G’s products might be great, but they are commodities. For them, the symbolic value is where the margin is. What if they could add a digital component and an experience to it?

The other term that is a very damaging semantic cell is:

“GAME”

Why is “game” a problem? Because we are too serious. Games are for children; games are a waste of time; games are a waste of money.

Well, there are a few things to know about games:

- First, games are a great way to learn anything. Much better than a manual or a tech demo. Just try it, have fun and there you go – you know how to use it. New technologies have a much higher chance to spread when introduced from a gaming angle. The other possibility is adult content, but I won’t cover that here.

- Second, games are already the biggest contributor to digital goods sales – if you exclude music, movies and books. In Asia, it is about 3/4 of those $7B I mentioned earlier. So it’s already working! Many people are ok to spend to have fun, despite the mental barrier of “it’s not real”.

- Third, we are already all gamers, but we don’t want to be called gamers. My aunt, a woman in her 50’s who lives in Mountain View, California plays almost every day a puzzle game on Facebook. She also likes Sudoku. I told her she was a gamer because she played more than me. She was certainly surprised to realize that. When you go bowling, play poker you can call it sport or whatever, the reality is that you are playing a game. In the case of bowling you are even renting physical items to do it.

Not long ago, the game designer, professor, thinker and writer Jesse Schell gave a talk at DICE and Long Now Foundation about the “gamification” of everything. He was mentioning a toothpaste service could measure how long you brush and give you points for each minute. 3 minutes in a day and you get, say, 100 points, 7 days in a row and you get a bonus. You could even compare scores with friends. It could be used of course to sell more products, or simply to help you embrace positive behaviors by giving you feedback, social proof and a gaming aspect.

So my conclusions here are that:

First, “virtual” is a terrible term and we should say “digital”, or not say anything.
Second, “game” should be renamed “entertainment”.

As Cary Rosenzweig, CEO of IMVU, former P&G exec and client of ours – said “Virtual goods are consumer goods”.

I would say also “video games” should be renamed “digital entertainment”, putting them alongside movies and music. It would then become apparent that movies are simply non-interactive narratives, while music is “auditory entertainment”. Nothing wrong with that, it just shows they are more alike than we usually think.

What else is there to learn from Asia?

- That online games make a killing, are extremely profitable.

- The mobile also makes huge amounts of money. In Japan, a *mobile* social network named GREE using Flash games with digital goods and avatars made over 400 million USD last year with only 20 million users.
The profit margin is 60%. Facebook made double the amount, with much less profit and over 20 times the user base.

- Tencent, who operates QQ, the #1 IM service in China, and is also a game and SNS operator, made over $1.3B IN THE FIRST HALF OF THIS YEAR! Net profit margin is 42%. The company is now the world’s third largest Internet market cap after Google and Amazon, with $35B, and still growing fast.

- Other developing markets – including, for instance, Russia, Vietnam and Thailand – are following the same path.

(to be continued)

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+8* | Plus Eight Star thinks that it is not because you follow us at @benjaminjoffe that you are virtual and that learning from Asia can help us bridge the gap.

I chose to address a few topics around the business, the sociology and the future of virtual economies and socialization.

The challenges identified were:

“Who would pay for something that doesn’t exist?”
“Asians are not like us”
“Online relationships are not real”

And my plan:

1. What I learned from researching Virtual Worlds, Social Networks and Online Games in Asia – from the business of digital goods to the discovery of semantic prisons.
2. What I learned by researching social psychology and social dynamics: how spaces and social design shape interactions both offline and online.
3. Some ideas on the good things the future might hold for us, and how we can shape it.

I will be posting a script of the talk in coming posts. In the meantime, please enjoy the slideshow:

As well as an in-world video. My avatar, graciously provided by the organizers, has a “clubber” style (don’t ask me why!). The first part is embedded below, the other parts (7 parts, total of ~40 minutes) can be found here.