Monday, December 8, 2008

Coca-Cola, Trademarks and Brand Advocacy

July 9, 2007 by Nic Mitham

Coca-Cola, trademarks and brand advocacy. A story that has gained much coverage in recent weeks is the case involving Coca-Cola and a well-known Second Life content creator, Vint Falken.


The story relates to a Coke-themed outfit made by Vint. There’s been much discussion about the use of registered trademarks on an unauthorised basis - this being the most prominent to date. The outfit, available to buy in SL, was also promoted on SLexhange (a website for retailer in SL). The outfit was originally removed from this website in light of trademark infringement (apparently a decision made by SLexchange, not Coca-Cola). Then, SLexchange released the following:

‘We have spoken to Coca-Cola and they have released their trademark to SL Merchants. Therefore, any of your items that were disabled on June 7, 2007 have been retrieved.’

Quite a turn-around.

So, is this a sign that real-world brands are simply giving up trying to police their brands in virtual worlds? Not at all. There’s a far more strategic reason for adopting this strategy. The reason behind Coke’s decision was originally explained in the K Zero Luxury Brands case study back in March 2007. Here is an extract from this case study.

One critical factor to be considered by brand owners is the fact that their products probably already exist in Second Life.

A key characteristic residing within large numbers of Second Life residents is the high degree of brand advocacy. Explore a little into Second Life and you will find virtual shops selling unofficial but high quality versions of brands and products. These people in some some cases are generating revenue streams from this activity.

On the one hand, this activity is potential illegal but for now loosely explainable by the terms and conditions of the Linden Lab IP clause - all content is the property of its owner.
A more proactive approach here is to remember that the majority of residents doing this do not make a living out of it - they do it in the first place for their love of the brand. This has to be leveraged.

Embrace these people, get them involved in your brands and let them continue to be brand ambassadors, in an official way.

This is a smart move from Coca-Cola. They’ve realised that allowing residents to work with their brand will yield far greater opportunities than if they prevented brand usage. Coke works hard to leverage their brand in the real world and are now opening up the options for their brand to be extended virtually - an importantly - by other people. In a way, this is user-generated NPD.

Herman Miller Fights Trademark Infringement in Second Life with “Get Real” Campaign

October 8th, 2007 by Benjamin Duranske

Virtual World News alerted me to this story: Herman Miller (who makes the best, albeit most expensive, chairs in the world) is fighting knock-offs in Second Life by giving away the real thing. Well, the virtual real thing. But not a knockoff. You get the idea.

From the VWN article:

Furniture designer and manufacturer Herman Miller announced that it would be entering Second Life with help from Rivers Run Red. In the real world, Herman Miller has taken aim at knockoff products with its “Get Real” campaign, and it will be bringing the same principle to the virtual world.

It will be offering a collection of 15 pieces for L$300-L$850, or approximately U.S. $1.40 to $3.50, but users that have bought knockoffs in the past will get the new pieces for free. … Those taking advantage of this limited-time, honor-based offer need only delete their old inventory and then “Get Real.”

And from Herman Miller’s in-world advertisement:

Herman Miller is pleased to give you the opportunity to own authentic virtual versions of some of our products. Each is designed to represent as closely as possible its real-world counterpart

This means three things to me. First, big companies are now — finally — starting to pay attention to trademark abuse in Second Life. Second, some of them, like Herman Miller, are going about it the right way, embracing the virtual world and trying to deal with the problem creatively. And third, my Second Life avatar ‘Benjamin Noble’ has a nicer chair than I do right now. A L$500 sixty-three prim chair, but a nicer chair nonetheless. And yeah, I paid for it.

Thursday, November 13, 2008

Second Life Virtual World Expands 44% in Q2






Second Life Virtual World Expands 44% in Q2
Tuesday, July 8th, 2008 at 11:58 AM by: Zee Linden

Linden Lab is pleased to announce results for Second Life the second Quarter.

Land mass grew over 44%. The total number of regions owned by residents increased 44.2% over Q1 to just over 1.5 billion square meters. Our growth was due to the popularity of our newly launched “Openspace” land product along with a change in pricing to make the purchase of land more accessible to first time buyers. “Openspace” regions are full 65,000 square meter regions with an upfront fee of $250 and a recurring monthly fee of $75. We decreased the price for full regions by 40% to $1000 upfront (the recurring monthly fee remains $295). We also launched a new Land Store that instantly provisions new regions. Pricing changes plus a dramatically improved purchase experience fueled land sales in the quarter. On the other hand, premium subscriptions have remained flat since we decreased the stipend to L$ 300 per week in the second quarter of 2007. Prior to that the premium account essentially provided residents with a way to purchase L$ at a discounted rate. Because land represents nearly 8x more revenue to us than premium accounts, our focus has been on the launching of new land products rather than on enhancing the premium subscription.

User Hours grew by 8.5% while peak concurrency grew modestly. Resident user hours grew approximately 6% from an annualized rate of just under 350 million user hours in Q1 to over 380 million user hours in Q2. Peak concurrent users grew modestly from Q1 to Q2 to just under 67,000 users. Significant outages in April prevented this number from growing as fast as it otherwise might. However, uptime improved dramatically in May and June – see the grid status page – so we’re expecting to see continued growth in Q3.

User-to-User Transactions grew over 14%. Total user-to-user transactions, a measure of the gross domestic product in Second Life, grew 14.3% during the quarter from an annualized rate of $300 million in Q1 to $338 million in Q2. Resident spending remained a healthy $0.87 per user hour.

Volume on the Lindex grew 5%. Volume on the LindeX, our virtual currency exchange where users can buy and sell our inworld currency, grew 5% to an annual rate of $108 million. The total value of all the Linden Dollars in circulation grew 8.6% over Q1 to $19.7 million in Q2 with the exchange rate remaining steady against USD at approximately L$ 267 to one USD.

The number of “profitable” inworld businesses grew by 9%: Taking advantage of the growth in the economy, the number of inworld businesses with Positive Monthly Linden Flow, a measure of profitability, grew to 59,000 in June.

Meta Linden has posted the full data for June in a Google Spreadsheet here. We have made some modifications to the format to make them easier to review.

http://lindenlab.files.wordpress.com/2008/07/59kpmlf.png

http://spreadsheets.google.com/pub?key=pxbDc4B2FH94lKcWU2YDVFQ

Wednesday, November 12, 2008

Brainstorm

Miriam, 12 November 2008

What makes the problem so complicated is, I think, the search for sustainable solutions. Do these really lie in the law?
Because, in the real world, the trademark laws are solid, yet infringement is abundantly present everywhere in, for example, the form of illegitimate replicas of products being sold. If laws on this matter are not sustainable even in the real world, then why would they be effective in a virtual world?
Quoting trademark lawyer Martin Schwimmer: "If Nike goes to Chinatown and shuts down 10 sources of counterfeit Nikes, they will have to come back next week to shut down ten more".

Can law be a sustainable solution to this? And, if not law, what else could be used to regulate intellectual property violations? Is there even a different option to think of than laws?


Mr. Savirimuthu, 12 November 2008

Think about you and the brands that attract you? Are you surrounded by branded goods? Home, work, clothes, food etc?
Switch gears - think about your surfing habits. Do you spend lots of time online? Do you notice brands as much as you do offline? Did you notice the 'pop-up' or targeted advertising when you logged onto the Internet?
What do you notice about the way companies market to your generation? And even the generation that was born ten years before you?
Imagine - 1890. It is the industrial revolution. People have started to move from the countryside to the cities. They
have money and time for leisure/entertainment. You had brands then - the law too had a role. Laws and brands were very much tied up with geography and proximity. People were less mobile. Did law provide a sustainable solution? Well - you always had a problem with counterfeits. Nothing has changed - well, something has. Now. How does the Internet change the way companies target their consumers? Then, think about VW. How many registered users? A Marketing Managers dream, don't you think? Pause. VW is different from real world. Sim island is largely user generated content.
If you are a company - how much would it cost you to monitor, police and enforce. Avatars are 'real' people. Think the impossible - can we give our brands away? Go and look at IBM and LANCOME (SL search function). Maybe even Coca Cola.
Therein lies the answer to your dilemma. Law is never a solution, particularly in a decentralised environment.


Miriam, 12 November 2008

I am completely surrounded and influenced (not always consciously) by branded goods. I surf a lot and I do notice that every web site is drained with advertising, and though I do not always look at it and rarely click it, it does somehow have its influence, I think.
Though a virtual world is different from the real one, it does have the important similarity that people can create themselves an image/attitude/appearance with branded goods. And I think this aspect of brands is even more significant in a virtual world, because the possibilites are more extreme and 'more endless'. Or are they not?

The internet makes country boundaries insignificant. Enforcing trademark laws in a world such as Second Life brings along tremendous complexity in pursuiting laws and regulations, because the users all come from different countries and continents, with different laws, am I right? Though Second Life has Trade Mark Laws, and can enforce them, the responsibilty of doing this actually lies with the brand owner. And so if a brand owner wants to fight piracy, it has to track down the avatar's real user, and sue him in real life, which brings along his or hers country's laws and regulations. And this then brings along large costs, much time, and maybe even negative effects on the brand.

So what do you mean exactly by 'giving brands away'? Are you referring to cooperation with users so as to join forces instead of fighting it? That is something Playboy is willing to do, seeing that in the article I posted on our Research Blog, the manager has offered its cooperation with unauthorized Playboy product creators:

Grosso's even offered a few partnership deals with knock-off creators. "In some cases," he said, "we have already said, 'We love what you designed. Are you up for a rev share for using the brand?'
"Some are up for it because we will help promote them," he says. "Some are not so cooperative." In those cases, they've occasionally turned to the vendor's landlord. "Some have signed lease agreements with landlords that say 'no copyright infringement'," Grosso explains, "and when you alert the landlords they shut the store down."


This can be an option, and would probably generate money instead of costing? So, this would be a more sustainable solution to resolve losing value by (mis)use of a brand than investing in monitoring, policing & enforcing? But is it possible? And it would not eliminate the problem, would it?


Mr. Savirimuthu, 12 November 2008

My point about Brands - there are really no "new" questions or issues. What is true of society in the 1800s, is true now. There is no "silver bullet" to the problem of counterfeiting. I was in Beijing before the Olympics - one of the shopping complexes had a big sign in the entrance, claiming respect for IP. The various floors on the Complex sold every conceivable 'knock-off' item of all the leading brands.
VW introduces what I call "lifestyle" branding - corporations like LANCOME, COCA COLA (maybe you can find some more - use the search function under purchases etc) are keen get you and I to define our identities through their brands. We are already doing this - why would a young person walk around with those iPod earphones. What does the iPod brand "say" about that person: cool, unfussy, uncomplicated and savvy. Guess what - is Apple "stopping" you from doing this. They are in one sense giving the brand/image away. Why should VW be different?


Miriam, 12 November 2008

I get your point about brands. Hence, the aim is not to find a 'silver bullet' to eliminate the problem, but to find measures 'to make the most of it'? I mean to turn the company's strategy towards this enormous opportunity and turn the situation into a profitable one instead of a 'profit-decreasing' one? Which, of course, some are already (successfully) doing. Such as, indeed, Apple.

But companies that have already adapted their strategies to this opportunity and that are officially present in the virtual world still lose a significant percentage of potential sales due to trademark infringement and counterfeiting, or not? So there has to be done something against -or 'with' - that situation, and that is the problem we have to find solutions for, is it not?
The unauthorized use of trademarks. The Playboy strategy of offering partnership deals with 'knock-off' creators gives an idea for that problem, right?

Playboy Bunnies track down unauthorized Playboy products

New World Notes
Wagner James Au reports first-hand from Second Life
Monday, May 12, 2008

Vigilant Bunnies: Second Life's Playboy Staffers Investigate Knock-Offs, Offer Partnerships To Some Violators

According to CNN, virtual Playboy Bunnies are leaving their island paradise to track down unauthorized Playboy products being sold in Second Life. This is not a sentence I ever imagined writing, but it happens to be the case, with voluptuous managers Kimberly Laughton and Kattatonic Yates showing up in full regalia at sites advertising knock-off Playboy items, and scrupulously taking notes.
Contrary to the CNN report, Playboy Island manager MSGiro Grosso tells me, it's not a "crack-down"-- at least not yet.
"I asked the managers to find out who was doing knock offs," he tells me. "I just wanted to know how widespread it was." In real life, Grosso is Marc Girolimetti of Green Grotto Studios, the metaverse development company that's running Playboy's official presence in Second Life. Concerns over content theft have wracked SL's grassroots content creators for months, but this may be the first instance of a real world company actively joining their cause.
I ask Grosso how widespread the Playboy knock-offs are.
"It's enough to justify me asking who is doing it," he says.
For the moment, he adds, "I just want to know, and will decide what to do when I see the list."
Grosso's even offered a few partnership deals with knock-off creators. "In some cases," he said, "we have already said, 'We love what you designed. Are you up for a rev share for using the brand?'
"Some are up for it because we will help promote them," he says. "Some are not so cooperative." In those cases, they've occasionally turned to the vendor's landlord. "Some have signed lease agreements with landlords that say 'no copyright infringement'," Grosso explains, "and when you alert the landlords they shut the store down."
Those are two options that don't require invoking the DMCA, or other outside forces. "The harder ones may be dealt with through Linden. I'm still deciding."
For now, the investigation continues, led by leggy babe avatars in rabbit ears who are themselves so integral to the Playboy brand. Perhaps other real world companies in Second Life will take a cue from the Bunnies, sending out their own virtual emissaries. Supermodel avatars patrolling Second Life fashion emporiums in search of L'Oreal rip-offs, for instance, or Mario and Luigi flying off Nintendo Island, looking for violators to hop on.

Tuesday, November 4, 2008

CopyBot

Outcry as ‘Copybot’ threatens copyright protection
Tue Nov 14, 2006 5:13am PST

By Adam Reuters

SECOND LIFE, Nov 15 (Reuters) - A software tool called CopyBot that can clone avatars, objects and textures is stoking the ire of Second Life business owners who fear their creations could be illicitly copied and sold.

“This product has caused tremendous worry among content creators who want to understand how its use may possibly affect their business,” Community manager Robin Linden said in a blog post after meeting with concerned residents. “In particular, they are concerned about theft of their creations, and the potential for unscrupulous people to undercut their prices and essentially take away their business.”

Linden Lab has attempted to make the protection of intellectual property a cornerstone of Second Life, giving residents ownership rights for the content they create in-world, and setting up a mechanism for residents to file claims of copyright infringement under the Digital Millennium Copyright Act.

CopyBot was originally created by libsecondlife, a Linden Lab-supported open source project to reverse engineer the Second Life software. It allows the copying of any avatar or object, including those that are designated as “no copy” by their creators.

Amid increasing criticism, the group moved to pull the Copybot source code, but on Monday evening Copybot was put up for sale on the online marketplace SLExchange, raising the prospect that it could become widespread.

In a comment on the Official Linden Blog, apparently written before CopyBot was made available for sale, libsecondlife member Baba Yamamoto said: “CopyBot is not a product that we sell or distribute. It’s a debugging tool and silly demo with a [now] obviously bad choice of name. Hopefully you won’t be seeing copy bot on SLex any time soon.”

Yamamoto was not immediately available for comment on Tuesday.

Prim Revolution, the resident who has put CopyBot up for sale, said he has had made less than a dozen sales at L$3,000 each. In an in-world interview with Reuters, he demonstrated CopyBot by making a perfect replica of the Adam Reuters avatar (above).

“You’ll never get around the potential for abuse and the negativity associated with this particular app,” he said. “But I think the idea of clones and bots is very cool and i’ll be adding more new features for things like automated go-go dancers at clubs.”

“Even if I pull this program, plenty of other people out there have it or have the knowledge to create something bigger and better,” Revolution added. “My advice is to offer the whole package when you sell something. Don’t just offer a couch, but a couch that has several custom poses … work one-on-one with people to create unique things, and offer customization services instead of throwing up some prims for sale and forgetting about it.”

Revolution’s avatar was created on Nov. 13, but he said that he has been in Second Life for about two years. He declined to provide any additional information, including his real-life identity, citing “the nature of the (CopyBot) program.”

Robin Linden said that content creators who feel their copyrights have been violated “have the option of using the DMCA process to file a complaint. It’s a difficult process, but it is one that we’re willing to pursue on your behalf because we agree that copying is a disincentive to creation.”

Linden Lab is also considering other measures, including a “first use” tag that would signal who created an item, similar to a brand name garment label. But the company’s plans to open-source Second Life have raised concerns among in-world businesses that protecting intellectual property may become increasingly difficult in the future.

Timeless Prototype,creator of the popular Multi Gadget, told Reuters in an interview earlier this month: “If the server is put in control of users, they can reverse engineer everything,” he said. “If they had access to that source, they could take (the Multi Gadget scripts) in 10 seconds — it’s a big worry.”

Second Life - real world lawsuit on virtual world copyright infringement

SL business sues for copyright infringement
Tue Jul 3, 2007 12:13pm PDT

By Eric Reuters

SECOND LIFE, July 3 (Reuters) - Second Life entrepreneur Kevin Alderman filed a copyright infringement lawsuit on Tuesday against Second Life resident Volkov Catteneo, and Alderman’s lawyer said he plans to subpoena Linden Lab to force it to disclose Catteneo’s real-world identity.

Alderman (Second Life name: Stroker Serpentine) runs the adult-content company Eros LLC. One of the company’s most popular products is the SexGen bed, virtual furniture that contains more than 150 sex animations and retails for L$12,000 (US$45.11).

In “Eros LLC vs John Doe,” filed in the U.S. District Court in Tampa, Alderman accuses Catteneo of illicitly copying and selling the SexGen bed for as little as L$4,000, sharply cutting into Eros’ sales.

Filing a copyright infringement case against “John Doe” is an established practice in Internet cases where the defendant’s identity is not initially apparent, said Alderman’s lawyer, Francis Taney of Buchanan, Ingersoll & Rooney. For example, the music industry has filed thousands of “John Doe” lawsuits against people it alleges have illicitly shared music online.

Taney said he will seek Catteneo’s identity, chat histories, and financial records from Linden Lab and PayPal.

“Despite reasonable efforts, Eros does not presently know Defendant’s true identity or address but intends to obtain this information by way of subpoenas directed to one or more internet service providers that are likely to have obtained said information from Defendant,” the lawsuit states.

Catteneo told Reuters in a Second Life interview that Alderman had never been in touch with him. Catteneo said he had sold about 50 of the beds on behalf of a third party who pocketed the proceeds.

Catteneo, who declined to provide his real name, said he doesn’t fear the subpoena. “I’m not some kind of noob,” Catteneo said. “My name isn’t on [Linden Lab's] file. I don’t even have a permanent address [in real life] either.”

Alderman estimated that Eros has sold 100,000 of the beds. Earlier this month the Amsterdam sims, another Alderman creation, were sold to Dutch media firm Boom BV for US$50,000.

The SexGen beds are sold as “no-copy” objects, normally prohibiting their replication. Alderman said he doesn’t know how a copyable version of his product began to circulate in Second Life.

Alderman said he tried to report the copyright violation to Linden Lab in accordance with its Digital Millennium Copyright Act compliance policy, but that he was told to use the in-world “abuse reporting” system.

Linden Lab was not immediately available for comment.

The lawsuit seeks damages equal to three times the damages sustained by Eros or three times the defendant’s profits. But Alderman said he’s less interested in winning damages than stopping the theft of his property.

“We’re not going to sue him for a million dollars,” he said. “I don’t want to crucify the guy. I’m trying to protect my income and my family.”