The Virtual Whirl: A brief history of Second Life (2007)

2007: Scams, bans and friction

By 2007, a pattern was beginning to emerge. While Linden Lab was lax (some might say excessively lax) in various forms of enforcement, the Lab wound up closely scrutinizing exhibits at the anniversary and Burning Life events from 2007 on. Frictions between artistic expectations and enforcement actualities caused users and the Lab to increasingly square off as opponents at these events, taking strongly adversarial positions.

This trend has continued through 2010, and is commonly referred to as "nipplegate" among users and bloggers. Linden Lab also decided this year that June would be called Second Life's Birthday, rather than the Anniversary, a trend which continued thereafter, despite previous assertions that June was the Anniversary and that the Birthday was in March.

Linden Lab also took user-created materials for marketing purposes and edited the material to remove the creator credits; and not for the first time.

The FBI, the Lab and gambling

Early in 2007, Linden Lab invited the USA Federal Bureau of Investigation (FBI) to view content and activities in Second Life, particularly those items that Linden Lab found to be "questionable" in nature. The FBI investigators did not indicate that there were any "areas of concern" in the content or activities that they examined.

Nevertheless, it is commonly (and mistakenly) held that the FBI initiated the investigation and that -- post hoc, ergo propter hoc -- the gambling ban enacted by Linden Lab was a result of this investigation finding questionable activities.

In actuality, the several weeks preceding the ban involved legislation regulating online gambling in the UK and particularly the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) in the USA.

The US UIGEA bill had a bit of a rocky history, and in 2009 was put on hold, and then sent to the House Financial Services Committee, where it now appears to be dead for all intents and purposes.

Banks and pyramids

Ginko Financial was an apparent Ponzi scheme offering too-good-to-be-true rates of interest, operating out of Sao Paulo, Brazil – where it would have been in violation of Brazil's banking regulations. During 2007, the operation folded up along with an estimated 750 thousand US Dollars in user's funds.

Around the same time a number of similar unlicensed banking operations in Second Life were hacked due to poor security and large sums of money taken, though the sums paled in comparison to the Ginko losses.

The number of Premium (subscription) accounts began to fall for the first time, a trend which continued at least until Linden Lab stopped publishing that data.

The Lab trademarked "Your World, Your Way" and began eliminating all traces of the old "Your World, Your Imagination" slogan from its websites and materials. The new trademarked slogan, however, seems to have seen barely any use at all. That might be because the new slogan was already in use for IBM's Websphere Portal (as well as by innumerable travel agents).

In the middle of the year, Linden Lab said it was shifting to an increased consumer focus, with goals of simplifying the user interface and experience, fixing bugs and stabilizing the platform. It was a familiar message, having been recited in previous years, but this time a number of feature-development projects were axed, and staff associated with them were let go.

There's a whole lot more that went down in 2007 that we don't have room for here, but that we've already recapped.

Join us next week for the final installment, as we run through 2008, 2009 and the events of 2010 so far, and look to what the future might hold.