IMVU founder Eric Ries commented on Virtual Goods Summit and suggested that virtual worlds can be divvied up along three axes of UGC/first-party, subscription/pay-for-stuff, and economy/gameplay focus. This is certainly one good way of thinking about the focus decisions needed when designing and developing a product in this market, but personally, I think this model, along with others I've seen and played with myself, suffers from a few key weaknesses that arise from the need to simplify things. I'm not saying the model can't help put things in order, just that there's more to finding the right solutions than this. Lets go with the great blogger tradition of point-for-point response.
UGC vs first-party
It's amazing Sulka didn't comment on this: UGC is not just about letting users upload pictures or items to a world. More to the point, Habbo certainly is not first-party content focused. Yes, all our furni is designed and developed by our own teams, and we don't enable user uploads. But at the same time, over 90% of all of the activities in Habbo emerge from the community - users take what we've made, and do their own things with it. Most of what's going on, we had no idea would happen.
Eric says IMVU's efforts to enable UGC dwarf those to create their own first-party catalog. Well, so do ours, despite his classification of Habbo being first-party content focused. Every feature, every furni, every activity, every news item receives more thought on "how do we support users to go to their own directions here?" than "what do we want this to be about?". Plus the significant fraction of our work that has absolute no effort to produce content attached to it, and is fully focused on player activities.
Lets just use the old, tired LEGO analogy here. How much of LEGO is first-party content? Just enough to get the imagination of the players going so they can create something of their own. Anything more would be too much, and this applies to any VW that can call itself "social" - and none that isn't social isn't going to be interesting. Trying to make a useful UGC split for any purpose other than copyright infringement monitoring is a red herring, and even for that one purpose it's not very likely to be useful due to other moderation requirements.
Subscription or pay-for-stuff
This is one of the stronger arguments, if only just because those are the business models the industry has latched on to. They're certainly not the only possibilities though, nor are they alternatives to each other. Eric's points about the strenghts and weaknesses are good - but you can benefit from both at the same time, and support the weaknesses of one model with the strenghts of the other. This is certainly an area where we have a lot of experience, over 8 years of it, and I don't think we've gotten very far yet..
Economy or gameplay
Eric used the word "merchandising" instead of economy, and I think that's the crucial over-simplification that leads to thinking that pay-for-stuff games and worlds are just about cross-selling opportunities best left to a competent marketing department to handle. I'm wondering whether he's simplifying the choice to make it easier to explain, or purposefully misleading someone on what's crucial to think about, or whether our friends at IMVU simply haven't realized this yet: the first-hand sales are a small fraction of the total trade in an item-based game, and the gameplay balance is just as critical here as it is in a game built out of designer-created quests and gameplay mechanics. What's more, because its emergent behaviour, it's nearly impossible to predict, and very difficult to measure, model and understand. Yet that's exactly what's required in order to succeed.
I hope that explains why I choose to call it economy-driven rather than merchandising.PS. Browsing around Eric's blog a bit further, this article is a gem