The Virtual Whirl: Questions from the virtual mailbag

This week, in The Virtual Whirl, we're going to take a selection of reader questions that we've received in comments and in the virtual mailbag and do our best to offer up some useful answers. Join us as we whirl through the mail. Not surprisingly, the two most frequently asked questions involve the demise of virtual environment, There.com.

The big question this week is: What the heck went wrong with There.com?

In mid-February, There CEO Michael Wilson responded to suggestions that There might be in trouble by saying, "There.com is alive and well."

That was 18 February, so what went wrong in the space of just two weeks?

I'll take Wilson at his word, and assume that his assessment of There's viability was correct insofar as he was aware of the circumstances at the time.

That suggests that either Wilson wasn't aware of the true state of There at the time, or things went wrong very quickly.

Wilson wrote, "While our membership numbers and the number of people in the world have continued to grow, there has been a marked decrease in revenue, which, in these economic times, is no surprise."

After some consideration, I'm going to go with the "things went wrong very quickly" theory.

If you've not been involved in the finances for a business, it can be surprising at just how expensive it is to keep a bricks-and-mortar business open and operating each week, however efficient that business might be.

Even a small software-service business can cost tens of thousands of dollars each week. From seeming incidentals, like coffee and floor-cleaning, to phones, network connections and paychecks; it all adds up and if you're already running lean and efficiently, there's not a lot of room to cut back anywhere. We believe that all of that paring back had already been done in There's case.

But two weeks, can a business really fail so quickly?

Absolutely. There.com wasn't a heavyweight contender in the space with piles of (positive and negative) hype like the media heaped onto Second Life. It did well, and it was growing, but it probably didn't have a large profit-margin.

In those cases, yes, things can go from viable to unviable within just a fortnight – from a position where you've got all the running costs covered, to a position you know you can't recover from.

Some companies will try it anyway. Many do. Staff work unpaid for weeks or months, living off of their personal savings, the company runs up huge debts, and everyone tries to turn things around.

Fact is, that not even one in one hundred companies that attempt this actually return to profitability. It's what is colloquially called "a mug's game." Staff end up without jobs and without savings, and what's left of the company in liquidation amounts to nothing once the creditors are paid.

Wilson appears to know when to throw in the towel and save his employees, while the business is still able to meet its obligations.

The other big question I've gotten over the last week is: Where would I recommend that Thereians go now?

There isn't an easy answer to this one.

If you're a Thereian, there's no other place that's quite like the one you're leaving. Nothing is going to feel the same. Even setting aside the matter of your friends and fellow Thereians and the communities you were a part of, the environment you're leaving isn't and can't be faithfully replicated in any of the alternatives that are currently available.

While that's really quite a sad thing, that doesn't mean that things can't work out well for you.

There's no easy recommendations to make, however. Your experience and the things you liked about There.com may make one environment better for you, than it is for another Thereian.

Some of you would doubtless be happy in IMVU, or in Second Life. Some will be happy with Twinity or Blue Mars, Entropia Universe or Frenzoo (who have offered a migration deal for Thereians).

Utherverse, the adults-only social network that incorporates Red Light Center are also offering a deal for migrating Thereians. A spokesperson for Utherverse tells us that, "Within the first 24 hours of the announcement, more than 2.5 million Therebucks had been redeemed for Rays [the virtual currency used within the Utherverse network of virtual worlds]."

If you can handle the language barrier, there's even Chinese offering HiPiHi, which remains in public beta since April 2008.

I suppose my best recommendation for you, as a departing Thereian is actually try out more than one potential destination. By all means, try to stay in touch with your existing friends, and compare notes about what you (and they) like and don't like about each option. The more options you consider, the more likely you are to find a good fit.

The worst thing you can do for yourself is to just try out a single option.

The last question I've got an answer for this week is: How many Linden Dollars would have to be dumped onto the Lindex to cause a significant slide in the exchange rate?

It's hard to say, but some considerable work with a spreadsheet and the back of an envelope yields the figure 1.4 billion Linden Dollars, or about 5.2 million US Dollars.

That, I feel, would be enough to tip the exchange rate into an actual crash.

Linden Lab, however, has 'circuit breakers' in the Lindex that freeze trading if the exchange-rate moves more than a certain amount in either direction due to either excessive supply or demand. Without a genuine situation where these breakers might trip, however, it's hard to determine just how effective they might be in practice.

We'll be answering questions every month, so if you've got something you'd like us to explain or get to the bottom of, or ask a developer about, drop us a line in the comments, or via email (tateru at massively dot com) and we'll do our best to find out for you.