Virtual Economy: Get A Second Life
In a world that exists only on computer screens, virtual consumers (controlled by real people seated at computer desks) teleport to malls and window-shop along virtual high streets for goods ranging from ball gowns to hovercraft. With a simple wiggle and click of a mouse, visitors enter these shops, browse around and, often, purchase the wares on display.
Some of these stores have familiar names like The Gap, American Apparel and Telus; others are new and funky businesses resembling what you might find on Vancouver’s Main Street – except that they’re run by entrepreneurs from their home computers.
Welcome to the virtual economy of Second Life, a wildly popular online realm where nothing’s “real” except the cash – and some plucky Lower Mainland entrepreneurs are raking it in.
“I thought I could earn beer money through Second Life, but I now earn enough to live on,” says Vancouverite Steve Cavers, who worked as a technical writer until ¬ becoming one of Second Life’s hottest vehicle makers, designing everything from elaborate World War I-style biplanes to ¬futuristic hover-bikes for his Second Life clients. (Just to be clear, these vehicles don’t actually exist. He’s selling virtual vehicles to fellow “avatars,” the digitally animated characters inhabiting this virtual world, who buy them with ¬virtual dollars that can then be exchanged for real cash.)
Surrey fashion designer Nyla (who has dropped her surname, Kazakoff, in real life and online) is also cashing in on the exploding popularity of the online virtual-reality platform. Her Second Life avatar is Nyla Cheeky, whom she controls from the computer in her home office. Before Nyla Cheeky sets foot in her online fashion boutique, House of Nyla, she not only changes outfits, but also alters the shape of her body and switches the colour of her skin, from black to white. Once ready for work, she levitates into the air and enters the building from the third floor. Today it’s empty, except for one virtual patron who’s wearing a Nyla outfit the avatar’s real-world analogue paid for with real money.
Since March 2006, the online world of Second Life – a so-called “metaverse,” where avatars created by people from more than 80 countries attend virtual concerts, go dancing, meet for coffee, play slots and, of course, shop – has seen its population skyrocket from 160,000 users, or “residents,” to more than 2.5 million at the beginning of 2007. (For a glossary of Second Life terms, see “Linden lingo,” below)
Unlike online role-playing games played simultaneously by thousands, if not millions, of people worldwide (such as EverQuest or World of Warcraft, where people band together and go on quests), Second Life has no objective other than to be a venue for people (well, their avatars) to meet and socialize in a world they help to create.
“People are walking up to you and introducing themselves. You just don’t get that in the real world,” says Nyla, 30, as she chats with a customer via instant message.
The commercial potential of this new world has not gone unnoticed. Stores like Nyla’s might not exist in the real world, but she and other residents, who legally own their “in-world” creations as intellectual property, are starting to make real-life incomes from their virtual businesses. According to Second Life’s Economic Statistics webpage, 140 in-world business owners grossed between US$2,000 and US$5,000 in December 2006; 90 others earned more than US$5,000 that month. And it’s not just computer-savvy entrepreneurs.
Looking to brand themselves as cutting-edge, companies and institutions including Starwood Hotels and Resorts Worldwide Inc., Toyota Motor Corp., Reebok Ltd., Telus Corp. and Harvard Law School have quickly established footholds in the metaverse. (Big name perfume-makers have also embraced the marketing potential of the virtual realm – Calvin Klein’s new scent, ckin2u, was recently released in Second Life.) Even Vancouver’s soon-to-be-inaugurated Great Northern Way Campus has built a Second Life campus (see sidebar, “Going Digital,” below).
For those too caught up in their real lives to tap into Second Life, here’s how it works: The entire online world of Second Life – every home, store, hotel, casino and nightclub – is created by users with design software provided by the realm’s creators, a privately held San Francisco-based company called Linden Research Inc. (Linden Lab has an impeccable pedigree and impressive backers. Its founder, Philip Rosedale, was previously the chief technology officer of RealNetworks Inc. Investors include eBay chairman Pierre Omidyar and Amazon CEO Jeff Bezos.)
Anybody with a computer and a broadband Internet connection can enter Second Life for free. (They must first download the client software at secondlife.com.) From some basic options, a new user can choose a generic body type and some nondescript clothing (white T-shirt and khaki knee-pants) without spending a virtual dime.
But to have a first-class time on Second Life and enjoy some of its niftiest toys, such as a spaceship that seats 11 or customized skin with freckles that will allow you to fit in with virtual cool kids, users need to spend cash.
Transactions are made with an in-world currency, Linden dollars, which can be converted back to U.S. currency on LindeX, Second Life’s official currency exchange. Those who pay for premium Second Life memberships receive a weekly allowance of 300 Linden dollars. They’re also allowed to own land in the metaverse. Others may buy Linden dollars using a real-life credit card at a fluctuating rate of approximately 270 Lindens to one U.S. greenback.
Not business as usual
As their businesses take off, Second Life entrepreneurs are scrambling to sort out how to apply real-world business practices to the commerce of virtual goods and services.
Nyla, who studied fashion at the Helen Lefeaux School of Fashion Design in Vancouver, wasn’t looking to start a new business when she stumbled onto Second Life. She was hoping to promote her real-world one. “I actually wanted to have a 3-D boutique attached to my website,” she says, “a place where people could spin my clothes around and see what they look like from all angles.” An Internet-savvy friend introduced her to Second Life.
What started out as a marketing idea is now a healthy side business. Although she declines to reveal her monthly earnings from Second Life, Nyla estimates that 30 per cent of her income is earned in the virtual realm.
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