Second Life – Tool or Fool?

Teaser Second Life

Have you ever heard of Second Life? No? Have you never thought about the opportunity of a virtual new market? Then better not tell your neighbour and start reading!


Second life, is deemed to be the most modern Internet community. Close to reality, real existing companies started to do business in there. Is this hype overestimated or can it be a real chance for your company joining in this platform, too?


Authors: Silvia Nitsche, Helen Krockow, Romain Bosio

Second Life – Second World ?!

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Virtual worlds where everyone can join in, are no longer a future topic. Since 2003 Second Life is “online”. Founded by Philip Rosedale (Linden Lab) it was created to experiment how a virtual world market would develop itself. You create virtual characters, so called Avatars, which can act like a person in real life. You can move around, using your arrow keys, you can chat to people and, most interesting, you can do business in purchasing and selling in there.

Virtual money links to reality

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With the implementation of the Linden Dollar, a virtual currency, which can be transferred into real US Dollars though, via real existing or virtual banks, activity on Second Life does not stay virtual. Linden Dollars you spend or earn on Second Life get real dollars, effecting your real bank-account. They are floated on the LindeX, a specially developed virtual stock-market. In 2006 the first real-life US$ millionaire, made on Second Life, came up. Ailin Graef, which showed up as Anshe Chung in Second Life began a business as a real estate broker, dealing with virtual landspace. In between 2 1/2 years she earned 1 million US$, which was feasible in exchanging Linden Dollars into US $ (1US$ » 270 L$) . Nowadays she employs about two dozens contributors in China, which keep her online Second Life store busy.

While Ailin Graef started business as a non-professional, established companies like Nike, Loreal or BMW entered the Second life-market in the meantime. They use this community to do advertisement, to create stores, to get people attracted to their own business and enlarging their degree of popularity and boom products. Most seductive is, once again, that virtual money can get real money and reverse.

Is it or is it not? – future marketplace

Referring to an article, Maren Martell published on stern.de, experts on trade and advertisement see Second Life as a new and important distribution channel to reach a young, and willing to buy clientele directly. However, Philip Rosedale gave an Interview (spiegel-online, 29.01.08), saying that Second Life turned out to be not as efficient as imagined for being used for marketing aspects at present, because there are too little users to merchandise products from the real world to the Second Life market. Nevertheless an virtual economy was built up, which does a turnover of about US$ 1,5 million a day which is more than few small African countries do.


Money spent on Second Life in the years 2006 – 2007
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Business as usual ?

Catch Avatars attention

So, what opportunities exist for you, to do business in Second Life as an real existing company? There are different ways, you can present your company on Second Life.

Like in the real world you can choose real-world advertisement. Using posters on the street, taking out ads in “AvaStar”, a newspaper especially created for Second Life by the publishing company Springer, or in the radio channel to get business started, Second Life offers something for everyone. Or just buy land or an island to build your companies residence like in real life. Avatars can go there and if you want to do it really professional, you can place own Avatars there, which can answer questions and do personal mouth-to-mouth advertisement. You can put hyperlinks into Second Life, on posters or in shops which will direct the users to your real homepage or online-shop. In doing this advertisement you can represent your company and within that develop your brand and Internet-appearance, too.

Get your business started!

To get your business started on Second Life you can hire real-life companies, that specialized themself to help businesses getting started on Second Life, or you can search for advertisement agencies, build inside Second Life, which borrow billboards for you, do special media campaigns or special teleportation to your shop. These services you have to pay for in Linden Dollars.

The harder way to get business or advertising started is to do it by your own. 12.400.000 users signed up might evidence easy usability, but that is not what it is, when you freshly start in there. Experience shows, that you need a lot of time, getting through all the possibilities you might have. But in the end you might succeed, which means for example, that you made it to put your own private island into the game. 50 companies, like IBM, Areva or Alstom, purchased or developed their own private islands in this game already. Now they sell their own products and brand on these and in the same time recruit workers, even for real life.

It seems, that there are no boundaries set to do successful business.

The pullout of companies / Disillusion after the first hype

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Even though it looks like Second Life is going to be a future important market-place or at least a place you represent yourself, there are companies like Dell, Adidas and Deutsche Post pulling out of Second Life, just in the last and upcoming days. How can this divergence of opinions be manifested?

We cannot look into the head of the decision makers, that decides to leave Second Life, but there are some obvious reasons to leave Second Life as a company though. This number of 12.4 Million users is kind of dazzling. Going into detail it reveals, that there are only 1.1 Million users active at all, and from which only 550 000 are online at least once a week, on average. Second Life’s market is overestimated. There are less “possible” consumers, than it appears to be, so though you can spent a lot of Linden or real Dollars into marketing activities, there is the risk, that all your marketing activities go into no man’s land.

Watch out: your government might join, too!

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Since no such virtual world existed before, the legal regulations are not pointed out clearly yet. If Linden Lab, the company, that runs Second Life wants to delete your account it can do that without any reason. Additionally so far there is no copyright or brand secureness given on Second Life. Dazzlers can feel free to imitate your brand, logos, etc. There is no legal obstruction yet. This means too, that your revenues, earned on Second Life in Linden Dollars, could be taxed. But maybe not. And when they get taxed, it is not clear at all, which country line’s the taxes in whos pocket, because since it is cyberspace, it is not clear in which country the tax may be gained. BIG NEBULOSITY!!!

Second life’s backfire

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So, why should you go there? To polish up your image in showing that your company is up to date? Could backfire on you, too. After child pornography uncovered on Second life in May 2007 doubts were raised, if ethic claims could bear up in this virtual world. If child pornography was able to be evolved, there might be no barrier for other suspicious groups like terrorists or members of right wing extremists to find a communication platform under legal disguise in Second life.

Join Second life as a business company could mean that you support the formation of this groups in supporting the whole experiment.

So you should have a look at the companies next to your Second Life appearance, because there may be the possibility of using an island together with bagnios and casinos. And this could be transferred to your image. But that’s like in real life, isn’t it? So watch out!

Don’t fool and doze!

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Second life was and still is an experiment. You can see it how graphic is still in developing, the malfunctions the system has, the ungoing decisions about ethics and legal contours and more.Maybe there are unimagined powers slumbering within this systems, which we and you do not know yet, maybe it will be THE world we act in in some years, but who knows. Fact is, that either your competitors nor Second Life’s competitors idle, so do not doze to obvious, that might kick you out of the race some day.

There are some risks and some efforts for your company in joining this platform. So in the end it’s like all decisions in life you have to take: just listen to your good feeling!

Sources:

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