Get a Second Life

01-12-2006

by Maxim Kelly

Maxim Kelly explores the lucrative online market place of virtual realty and imaginary currencies.

Amongst the tens of thousands of websites that facilitate online commerce, Second Life stands out with its three-dimensional representation of an entire virtual world.

The first time you sign up, register a name for your character or "avatar", and use a mouse to navigate through this graphical representation of a fantasy world constructed by its inhabitants rather than by any one programmer or designer, it seems like a computer game: a virtual reality role-playing environment where you can be and do anything you wish.

However, it is also a make-believe environment in which a very real proto-economy has emerged and where real life companies such as Adidas, Nissan, IBM and many others have established their globally-accessible online offices.

Second Life is owned and run by American company Linden Lab, but its topography, buildings and streets are designed by its 1.6 million residents.

Just like in the real world, resources like land on which to build your virtual fantasy house or office costs money. In terms of area the Second Life world is currently the equivalent of around 250 square kilometres, and land is bought and sold with the community's virtual currency -- the Linden dollar.

Although the value of a Linden dollar does fluctuate, it is usually pegged at around LSD250 to USD1. Well, why would anyone exchange a real life greenback for an intangible virtual currency you might ask?

The best way to answer this question is to look at the value of transactions in Second Life where avatars spend on average USD500,000 per day not only on virtual objects like the latest clothing or even pets for their characters, but real-life goods too, such as at Dell's Second Life retail outlet where computer hardware can be ordered.

The top 10 individual entrepreneurs within Second Life are currently averaging around USD200,000 per year and, according to Linden Lab, the population is growing at 39 percent per month so there is a steady stream of "newbies" with cash in their virtual pockets.

It costs nothing to sign up to Second Life and through clever deep structure programming pioneered by Linden Lab founder Philip Rosedale there is no need to purchase any special software to run the 3D world through a normal web browser.

One reportedly successful Second Life entrepreneur is Irishman John Mahon (known as Ham Rambler online) who works in an aviation business in reality, but has constructed a stunning virtual representation of Dublin city centre within the Second Life universe.

'Dublin in SL' stretches from O'Connell Street to St Stephen's Green, and Mahon's team of graphic designers have created replicas of Trinity College, the Ha'penny Bridge and even a pub in Temple Bar where Second Lifers can meet and chat.

Mahon, the mayor of Dublin in Second Life, garners revenue from renting out prestigious properties such as sites on Grafton Street to businesses who want to establish a presence in this virtual world.

Mahon recently posted on the EirePreneur blog that his virtual city, which was launched in April, has reached the point where it will have to expand in the New Year, and commercial organisations are becoming more and more interested in establishing a presence there.

"Warner Music has already chosen Dublin as its point of entry into Second Life, and others will follow. An interesting statistic is that Trinity College in Virtual Dublin received more visitors yesterday than the huge Sony BMG Island and entertainment centre in Second Life," he wrote earlier in November.

What makes this online economy so fascinating is that it provides an entirely new environment for commerce to flourish based on the trade of items made up of bits and bytes rather than atoms and molecules.

In numerous online interviews the creators of Second Life have continually asserted that their creation is also an emotional experience as well as a purely digital one.

Bizarrely, 'the oldest profession in the world' even has practitioners in Second Life with avatars selling virtual sex to one another for a few quick Linden bucks.

Individuals are making real profit in this virtual world, and no doubt soon established businesses will be keen to follow.

Global public relations firm Text 100 for example recently invested USD10,000 to set up an office in Second Life, and its European regional director Andrew McGregor told ENN it expects a 500 percent return on investment within six months as it communicates its clients' message to an increasingly important online audience.

"If your primary sales demographic is over 35-years-old then this is not the place for you. But if you are trying to penetrate the younger demographic then this kind of immersive experience is vital," he said.

The experience is not totally complete yet for businesses: there is no virtual tax man to collects duties in Linden dollars. This may change however as in the US Congress is poised to investigate the scale of commerce in online virtual worlds and interactive games with a view to cream off some tax revenue.

It adds poignancy to the maxim that there are only two things that are certain in life: death and taxes. Neither, so far, affect Second Life.