Web2.0 is here and the surrounding hype shows no sign of dying down. The latest focus is Second Life, a virtual world where people bored of their real life can chat, flirt, argue, shop, build a dream home and, essentially, live on-line. Increasingly, they can also make some real money while they’re at it.
Created by developer Linden Lab, Second Life has over 1.5 million registered users, of whom over half a million are regular visitors. And, according to Linden Lab director of marketing Catherine Smith, there are more than 6500 profitable businesses in Second Life and new ventures are cropping up all the time.
Businesses operating in Second Life include a variety of in-world brands created by the inhabitants themselves, but also, increasingly, virtual representations of real-life brands. Earlier this month, American hotel chain Starwood Hotels first launched its latest concept Aloft – urban boutique hotels opening in the real world in 2008 – in Second Life.
The BBC has rented a tropical island there, Reuters has ’embedded’ a journalist and American Apparel, Adidas and Nissan are just some of the household names now trading in the digital world.
If you think this is all just so much virtual fun, think again. On just one day last week more than US$650 000 (£330 000) was spent by Second Life residents in 24 hours. That’s real cash, not the Linden dollar, the in-world currency of Second Life.
Design groups are also beginning to recognise the opportunities that Second Life offers and are making moves into the space, either on their own or on behalf of clients. Interactive consultancy Glass works with Disney, Sky and EMI Records, among others, and chief executive Ben Hart says the group is actively talking to clients about business opportunities within Second Life. The group also plans to open a shop of its own, Glass Boutique.
Hart believes there is ‘lots of hype’ concerning business prospects in the space, but also believes it ‘offers a real glimpse into the future’. ‘It’s a real twist on everything that’s traditional on-line,’ he says. ‘It’s a twist on chatting forums, different to gaming and different to other user-generated content sites. Communication exists in a future dimension, somewhere between 2D and 3D. It’s fascinating for all the right reasons.’
Splendid managing partner Dan Morris agrees. The consultancy, which already specialises in interactive design, is considering opening an office in Second Life.
‘This type of virtual environment is something people have wanted to do for a long time,’ says Morris. ‘I think it’s important that we test the water and see what we can do; perhaps integrate it with our other music sites or create virtual designs.’
Despite the commercial potential of the space, real-life businesses are not looking at Second Life solely as a revenue opportunity, but often see it as a way of extending their brands, says Smith. It’s an approach Hart endorses. ‘Right now I think brands should see it as a learning opportunity – the chance to see how it works and how it might manifest itself in the future,’ he says. ‘Some brands are using it as a PR tactic at the moment, but commercially the opportunity is real. People are beginning to realise the audience is there.’
Hart counsels against ‘opening a superstore’ in the space. ‘Brands should avoid blatant brand messages or sales techniques. They need to work with the community and create value and a reason to be there,’ he says. Smith agrees. She points out that business success in the virtual world is not linked to success in the real world. She says, ‘If you are not authentic and do not offer anything to the community, you are likely to be ignored, at best.
‘We recommend that people join, learn and really feel things out before jumping in,’ she says. ‘Those firms that commit to a long-term, creative presence in Second Life have an opportunity to interact with their community in new and innovative ways.’
While the site clearly has appeal for sectors such as music and technology, whose customers are already confident on-line, there are broader business opportunities available. As Hart points out, the site’s nascent form makes it fertile territory for innovation. ‘Businesses that get in first have an advantage and that’s an opportunity waiting to be taken; there’s still that chance in lots of sectors,’ he says.
How business works in Second Life
• Residents can take free classes to learn how to build and script using Second Life’s 3D modelling tools and then create virtual property, to which they own the IP rights
• Residents can sell their property to other residents in exchange for the in-world virtual currency, the Linden dollar
• Linden dollars can be exchanged for real-world currencies based on a changing exchange rate
• Consumers can also buy Linden dollars using their own currency in order to purchase items in-world