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Online exchange dumps 'Second Life'

Facing competition from virtual world's publisher, a leading exchange for game's currency decides to cut and run.

Gaming Open Market, which for the last two years has facilitated the sale of $2.76 million in currency from virtual world "Second Life," is getting out of the game.

Since its inception in 2003, Gaming Open Market has dealt almost exclusively in the trade of Lindendollars--the "Second Life" virtual currency--for U.S. dollars. Players with too many Lindendollars would use GOM as an exchange through which to sell their excess to players looking to buy more. GOM charged a commission for each transaction.

The relationship between GOM and Linden Lab was so close, in fact, that the publisher promoted the inclusion of ATMs in "Second Life." That allowed players to make deposits to or withdrawals from their GOM accounts.

But about a month ago, Linden Lab began talking about launching its own player-to-player exchange. The forthcoming competition appears to have led to GOM's decision to get out of the Lindendollar business.

GOM did not respond to requests for comment.

"We started talking to GOM and told them what we (were going) to do," said Linden Lab CEO Philip Rosedale. "They were like, 'Jeez, if you do that, it's going to have a big effect on us.' And that's true."

Rosedale said Linden Lab began talks with GOM about possibly purchasing the exchange, but in the end, the two companies couldn't reach an agreement.

GOM's announcement, sent to its members on Tuesday, said it would halt all Lindendollar trades on Oct. 2 and that, "we feel that closing the (Lindendollar) market to concentrate on other projects is in the long-term best interests of GOM."

GOM didn't mention what other projects it might pursue, and Rosedale said he had no insight into the exchange's plans.

But because GOM has dealt exclusively with Lindendollars for so long--it initially traded in the currencies of many online games, but later decided to focus on Lindendollars--it isn't clear what options it has.

GOM's decision doesn't mean "Second Life" players can't turn to third parties to buy or sell Lindendollars. There are several other such exchanges, including IGE, one of the largest secondary markets for the virtual goods of online games like "World of Warcraft," "EverQuest" and others.

In any case, one observer of virtual worlds told CNET that Linden Lab might be better off creating its own player-to-player exchange and that the company's move could be a precursor to similar future moves by other publishers of online games and virtual worlds.

"In the long run, virtual worlds that intend to support (real money trades) may want to manage--if not operate--that process themselves," said Nate Combs, an editor of Terra Nova, the leading Web site about online games and virtual worlds. "I believe that what we may see ultimately emerge is an eBay model among such virtual worlds where the core market--and data--is owned or controlled by the center but where third parties are able to value-add and innovate via add-ons regulated via a 'developer program.'"