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This weekend the NY Times does a color piece on the life of a chinese gold farmer. Gold farming is a topic that the BBC also covered recently, and that is the subject of an emerging documentary.

This an area which conjures up strong emotions. The “Chinese Goldfarmers must die” crowd has many adherents. The arguments that they make are that “It’s cheating” and that “They make it harder for ‘real players’ to get ahead by increasing competition”. As PC Gamer magazine said when they banned advertising by gold farmers:

For the record, PC Gamer’s official stance on these types of companies is that they are despicable: not only do they brazenly break many MMOs’ End-User License Agreements, but they all-too-often ruin legitimate players’ fun.

Opposing reactions have ranged from “You’re racist” to “Don’t blame the suppliers, blame the buyers”.

Blizzard and other game publishers have largely come down against goldfarmers for economic reasons, frequently banning accounts that they suspect to be used for gold farming. Quoting from the the NY Times article:

As Mark Jacobs, vice president at Electronic Arts and creator of the classic M.M.O. Dark Age of Camelot, put it: “Are you going to get more sympathy from busting 50,000 Chinese farmers or from busting 10,000 Americans that are buying? It’s not a racial thing at all. If you bust the buyers, you’re busting the guys who are paying to play your game, who you want to keep as customers and who will then go on the forums and say really nasty things about your company and your game.”

Interestingly enough, Gamerprice.com and the University of Sheffield did some research earlier this year that shows that this “hard line” on policing against gold farming is enforced far more on US servers than on EU servers, resulting in much higher prices for gold on US servers:

Real world prices of Gold on WoW US vs EU servers

Coincidentally, this weekend GigaOm reports that World of Warcraft has stopped growing (see chart below, originally sourced from Warcraft Realms, showing player activity at peak hours declining from a peak in January when the Burning Crusade expansion pack was released.)

WoW peak hours player activity

One wonders whether these two facts are related.

I posted last week about the Facebook platform where I quoted Brad Silverberg on the three elements needed to make a platform successful:

* wide distribution
* application developers making money
* good tools

Blizzard is clearly taking a stand on the second of these elements – it appears NOT to want “application developers” to make money. Second Life, vastly smaller, has taken the opposite approach.

Companies like IGE and Sparter will hope that Blizzard and other MMORPG publishers change their minds over time. While its always possible to live in the grey market, its much easier to do so out in the open.

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Venturebeat has a great interview with Lance Tokuda and Jia Shen, the co-founders of Rockyou, on virality and Facebook. Rockyou is a Lightspeed portfolio company.

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Facebook is transforming a lot of social media companies right now with its platform release, and its getting a lot of well deserved coverage.

Marc Andreessen put up a good post yesterday analyzing the facebook platform . He comes up with a few interesting conclusions which I paraphrase below but you should read the whole thing.

1. (Open) Platforms always beat (closed) applications, therefore Facebook platform is a winner and an advantage over Myspace

2. Facebook did a pretty good job of it.
– Its technically sound
– Its highly viral
– Third party widget/app developers have economic freedom to keep 100% of revenues

3. If you’re not large or careful success can beget failure as usage volume overwhelms your servers

4. Underground apps are being released outside the Facebook application directory (due to issues or bottlenecks with application approval)

and they need to find an alternative way to seed their growth

On 1. and 2. I agree, but with a quibble. As Seth Goldstein points out:

In 1999 I sat down with Brad Silverberg of Ignition VC who Microsoft recruited out of Borland in the early 90’s to become the lead developer and project manager of Windows 95. Never has there been a more valuable platform. He described 3 things that platforms needed to have:

* wide distribution
* application developers making money
* good tools

Let’s test those three axioms against the preeminent platform play of our time, Google:

* Wide distribution? YES
* Application developers making money? YES (if you count all the adsense publishers)
* Good tools? YES (all the adwords and adsense self-service goodness)

Now let’s test these axioms against Facebook:

* Wide distribution? YES
* Application developers making money? NO (at least not yet, I will comment on 3rd party Facebook developers such as Slide, Rockyou, and AttentionSoft)
* Good tools? YES

Marc is right that app developers can keep 100% of the revenue that they make, but today that revenue isn’t much. As I’ve commented before, we need a standard for social network advertising, and until that standard emerges, ad revenue growth will be slower. But this will come in time, and so we can expect the Facebook platform to grow as well.

Unsurprisingly, the other big social networks (not just Myspace) have been rocked by the success of the platform and are all racing to build competitive responses.

On 3., where Marc seems to primarily base his conclusion on iLike’s experience, I side with James Hong who says:

I disagree with this. iLike’s application may have been particularly heavy, but it is not inconceivable (in fact I think it is more likely than not) that people will come up with massively popular apps that are not as machine intensive as ilike’s particular application might have been. Combine that with the fact that facebook allows advertising, and the fact that managed hosting companies exist, and i think it is quite feasible for 2 guys and an idea to scale.

Two of the companies I’m invovled in, Flixster and Rockyou, combined have four of the top twelve apps on Facebook. They have certainly worked hard to keep up with load issues, but none of them have struggled as much as iLike, partly because iLike has so many users, partly because they were already scaling outside of Facebook, and partly because their apps are lighter weight.

On 4. I think Marc overemphasizes the importance of being in the application directory. While we techcrunch readers obsess over the directory (I reload it at least once an hour when I’m at my PC!), the data I’ve seen suggests that the key drivers of virality are (i) profile virality (ii) invite virality and (iii) feed virality, with very little growth coming from the application directory at all.

However, to me, the most important part of the Facebook platform is that it commoditizes the social map. A lot of social media companies have built their value in creating a social map. For many broad based social networks, where communication and self expression are the key activities, the social map largely IS the value. When I was at AOL a few years ago and social networking was just beginning, we considered opening up the AIM friends list as an API to commoditize the social map and allow others to build on top of it (we didn’t do it in the end… sigh…). These companies are most threatened by a world of commoditized social maps.

What this forces social media companies to do is to build value on TOP of the social map. Yelp does a great job of this – the byproducts of their members communication are rated merchant reviews, information that has lasting value. For Flixster it’s movie reviews and ratings. For Rockyou, its photos. For iLike, music preferences and affinities.

Not all facebook apps build value on top of the map, and despite their virality, they are the ones that may be the most business model challenged on a standalone basis. Examples here include Slide’s Fortune Cookie, Rockyou’s “x me” and Graffiti. While these may have value for distribution or user acquisition, they don’t add much value on top of the social map, despite their popularity.

I’d be interested in hearing from readers examples of other apps that both DO and DO NOT add value on top of the social map.

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One of the hallmarks of the last few years on the internet has been the growing length of the “long tail”. Compete released some data last year showing that its panel was visiting 77% more websites than it did five …

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Marc Andressen’s latest post on how to hire the best people you’ve ever worked with is long but useful reading for all entrepreneurs. It reminded me to post a hiring process that I recommended to some entrepreneurs recently; I figured …

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I just spent the last two days at the Internet Retailer conference, and emerged convinced more than ever that we’ve just scratching the tip of the iceberg with ecommerce opportunities. There are still many more $500m+ revenue ecommerce companies

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I’ve posted in the past about the three ways to build an online media company to $50m in revenues. One of the three ways is to focus on a topic with endemic advertisers – because RPMs are higher, you …

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I’ve been obsessing over the Facebook platform since it launched last week. As has been extensively covered, its an incredible distribution platform for other companies. The most popular apps in the platform early on were existing companies like iLike

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For those who liked my previous post on how casual immersive worlds are hitting the mainstream in the US, there was a good article in Sunday’s San Francisco Chronicle, found via Ypulse.

My favorite comments was about webkinz

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Allison Randal put up an interesting contrarian post on the O’Reilly Radar blog yesterday where she says:

The trend of moving traditional desktop applications to massively networked, Web 2.0 online applications like Google Docs is well-known. The problem is, a

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