Of crowdfunding, investment and entitlement – and how it all relates to Second Life

As is already well-known by pretty much everybody in the computing world, Facebook, Inc. acquired Oculus VR in a $2 billion deal, causing rather colourful reactions by both Oculus Rift backers and virtual reality enthusiasts, not least because of Facebook’s entirely hostile stance to important notions pertaining to one’s freedom of self-expression like avatar identity and anonymity and pseudonymity, notions that are integral parts of virtual reality and virtual worlds. Needless to say, this stance is what literally makes Facebook one of the worst candidates in the world to enter the virtual reality arena, despite their undeniable technological prowess and contributions.

However, many of the reactions on Oculus Rift’s Kickstarter crowdfunding campaign page were based on a misconception with which Second Life users are all too familiar: the idea that, by pledging money to the Oculus Rift’s development effort, the backers had somehow become investors and therefore had the right to co-determine Oculus VR’s future business decisions.

This, however, was not promised to the Oculus’ backers at all. Actually, it is written on the campaign’s page:

Join the development process and make your voice heard.

We have plenty of Rift prototypes internally – A few are even out in the wild, in the hands of developers like John Carmack. But we want to make the Rift available to all game developers, today, so they can be part of the development process. Kickstarter makes that possible. Your voice will be critical to making the Rift hardware and software as great as they can be.

Now, anyone who can reasonably comprehend a piece of written text should understand that what backers and receivers of Oculus Rift prototypes and Dev Kits would be given is the right to an opinion w.r.t. the development, features, troubleshooting and capabilities of the product so that, when it is ready to be launched on the market, it will be as complete and capable as possible.

The Oculus Rift. Image: Paste Magazine

The Oculus Rift. Image: Paste Magazine

Sadly, far too many people thought Oculus VR somehow promised them that they would be part of its Board of Directors, which was not the case. As Inara Pey and others pointed out in the comments of a pertinent blog post, this was a consumer transaction and not an investment transaction at all.

There is, however, an issue with the terminology used to describe the role of the people pledging money to crowdfunding campaigns. Most importantly, the term “backer”, which Inara Pey correctly identified as being somewhat confusing. Why is it confusing? Because it simply has the potential to make someone think that, by pledging an amount of money to a crowdfunding campaign, they automatically become an investor.

But, really, if that was the case, why would any start-up or group want to resort to crowdfunding? They could have taken on investors (including so-called angel investors) in the first place. Crowdfunding appears as a much safer option and provides far greater freedom than seeking angel investors: you get a chance to gather the funding to bring your idea to life and you don’t have to put up with the complications of having investors butting in; all you need to do is ship the promised goods (T-shirts, software copies, product prototypes etc) to your backers. From then on, you can do whatever you want with your project and/or company. Yet, many people were under this exact impression – they thought that they were going to be allowed to determine Oculus VR’s future business moves. Of course, they were wrong, because they were never promised anything like that, and most crowdfunding campaigns are not really suitable for that.

The Second Life connection

OK, now how does all this pertain to Second Life? It’s simple. Many people, from mere users who rent a parcel from a land baron to content creators that have spent, and made money, in Second Life believe that, just because they use this virtual world platform, they are investors and, therefore, have the right to co-determine Linden Lab’s business moves, decide what features Second Life should have, and so on.

One of the major examples for this was Qarl’s Mesh Deformer. A number of Second Life users hired him, via an initiative on Indiegogo, to develop a mesh deformer for rigged mesh clothing. They paid him and he developed the code. Then, they believed that Linden Lab had an obligation to adopt this code and incorporate it in the viewer – and when Linden Lab eventually chose to adopt Fitted Mesh instead, their reactions (against Linden Lab) were not a million miles away from the noisy reactions we see in the comments of the Oculus Rift’s Kickstarter campaign. In the mesh deformer’s example, however, people didn’t turn against the developer, but against Linden Lab.

Incidentally, I must note here that a Second Life user’s transactions with Linden Lab are strictly consumer transactions and not investor transactions; Linden Lab is a privately-owned company and, as far as I know, none of the people who claim that their status as Second Life users makes them “investors” in Linden Lab owns any Linden Lab shares.

An appraisal of these situations

Quite frankly, the reactions to both situations were unjustified. The backers of Oculus Rift got what they paid for: T-shirts, Oculus Rift developer kits, posters, etc. The backers of Qarl’s mesh deformers did, too: Qarl developed the code for them. In both cases, backers believed they would also be given something they were not promised:

  • In the case of the Oculus Rift, they believed that Oculus VR would also give them the right to co-decide its future business moves.
  • In the mesh deformer’s case, they believed that Linden Lab, an entity entirely unrelated to Qarl, as their cooperation had ceased, and entirely unrelated to the Indiegogo campaign, was obliged to adopt the mesh deformer code.

What does all this point to? In my opinion, there seems to be a strong and persistent sense of entitlement among many people and this leads to situations like the ones I described. People really should understand their relationship to a company whose products and/or platforms they use, as well as their relationship to the persons, creative groups, non-profits and/or businesses whose crowdfunding campaigns they choose to support. And, of course, a consumer transaction (such as the crowdfunding transactions with Oculus VR, or SL users’ transactions with Linden Lab – a purchase of goods and/or services) does not constitute an investor transaction in any way whatsoever.




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4 thoughts on “Of crowdfunding, investment and entitlement – and how it all relates to Second Life

  1. It’s not really about people feeling entitled to business decisions, it’s about people thinking they were backing A and finding out they had backed B.

    The Minecraft creator who was a top level pledger and got to visit them:

    “And I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition.”

    That’s a common theme in the comments, people are expressing disappointment that the great hope for VR gaming has turned into VR social, which isn’t something they would have backed.

    People are expressing great disappointment that something they helped to get off the ground has ended up in the arms of Facebook. That’s a reasonable complaint.

  2. Second Life is VR social. Now, as for the gaming community’s “sensitivities”… I simply fail to give a royally-endorsed fornication, not least because of the fact that my esteem for this community is sub-zero.

    1. That’s more than a tad unfair, gamers are far from being one big community. However this would be better discussed privately some time rather than eating up your comments.

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