Why Open Sourcing the Server Side Can't Be Done With The Wave of a Wand
There has been a lot of commentary throughout the blogosphere and mainstream media about the open sourcing of the SecondLife client. Of all the commentary, the more insightful ones at least consider open sourcing the server side as the next bold move, some say it should have been done and the client side is bad.
While the server side includes Beowulf clusters and LAMP Servers is all well and good and makes SecondLife possible, the server side is more than just a technological framework - the server side is more than just about code. It reminds me of Tao's 'Dreaming about a better life' - where the issues of topology, assets, friends, performance, commerce and disconnected usage were brought up.
Open Sourcing the server side requires a lot of care when it comes to the architecture - how are assets to be handled on a distributed SecondLife Server network, where some networks will not be under the control of Linden Lab? What about the SecondLife economy; will there be different currencies for each instantiation of the Server side, or will the economy remain united? Will being on one Server network mean being unable to communicate with a friend on another SecondLife server network?
It isn't that easy, and it certainly isn't straightforward. There are inherent security issues as well - where access to one server may compromise the entire metaverse. While there have been arguments for making SecondLife open source and Linden Lab plans to open the server side in the future, there are a lot of things which need to be hammered out such that the metaverse itself doesn't fall under its own weight.
What is interesting is that they have open sourced the client which means that they have decided a general direction in what the client side will do - which means that, I expect, they have been thinking of the server side scalability issues.
Imagine downloading an application that can make your server a part of the metaverse. Now think about all the security you would want to assure that your part of the metaverse was safe and secure while remaining well connected with the rest of the metaverse. Then you're really beginning to think of what opening the server side means... and while this may ultimately be a business decision for Linden Lab, to remain dominant SecondLife has to be open - or it will be replaced.

My guess, based on talks
My guess, based on talks that I've heard Philip Rosedale give, is that the backbone - object ownership, money, and avatar login/logout - will remain part of Linden proprietary code and run on Linden machines only for ever. That split between the backbone which governs those and the server which runs your island is a key one, and has to be retained if SL is to work.
Build another backbone
If it's going to work that way, we may - and probably should - have other companies which provide these same services.
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