Working The Street - Andre Deutmeyer

WORKING THE STREET.
An exploration of the dynamics linking community and business success

in the synthetic universe of Second Life.
Andre Hanyu-Deutmeyer
TC 660H
Plan II Honors Program
The University of Texas at Austin
May 8, 2007
Anne Beamish, Ph.D.

Department of Community Planning and Urban Studies
Supervising Professor
John D. Leckenby
Department of Interactive Advertising
Second Reader
Contents.
Foreword and Abstract. 2
Part I: An Introduction to Second Life and Marketing in Online Virtual Worlds.
a. Introduction: Working the Street. 6
b. Enter Second Life. 10
c. Recognizing an Electronic Pasture. 13
d. A World of Sex, Profit…and School? 16
e. A Winning Combo: Tech, Empowerment, and Dreams. 20
f. All the World’s a Stage. 28
g. Marketing and Advertising Potential. 31
h. A Word of Warning: Resident Backlash to Corporate Incursion. 40
Part II: Case Studies and Business Advice.
a. Resident Business Case Study – Atlantis Modeling Agency. 44
b. Corporate Case Study – Pontiac’s Motorati Island. 49
c. Metaverse Development Company – Green Grotto Studios. 59
d. Failures and Successes: Lessons from Corporate Ventures in Second Life. 67
e. Conclusion: A Contextual Framework for Business Ventures in Second Life. 70
f. Final Remarks. 73
Appendix
Additional Information. 75
Second Life Statistics. 80
Acknowledgements and Biography. 86

Work in g T h e St r eet. 2
Foreword
Before jumping into the meat of this paper, I would like to first address my reasoning behind
selecting the title Working the Street and its applicability to the content of this essay. For those
of you who have read Neal Stephenson’s Snow Crash, the reference to his center of the
Metaverse, The Street, is an obvious one. For those of you who are unfamiliar with the book,
“The Street” is the metaverse (virtual world) equivalent of Times Square or Wall Street. It is
described as a place where any sign or building located there will be seen by “the hundred
million richest, hippest, best-connected people on earth…every day of their lives.” That
description in a nutshell sums up the business potential of virtual worlds like Second Life.
Additionally the title is a reference to the colloquial meaning of the phrase “working the street” –
which is to say that it is a reference to prostitution. For better or worse, prostitution is an
inescapable aspect of Second Life. However, as this essay will demonstrate, it is but a minor
part of the much greater social revolution that is occurring with Second Life.
Efficacy of the title aside, it is worth noting that this paper is written from a personal perspective,
and while I do try to ground my conclusions by referencing existing literature and the opinions of
those more knowledgeable than myself, I perform no empirical research of my own. I mention
this here because while I am wholeheartedly convinced that my conclusions in this essay are
truths, I have conducted no empirical research of my own to back them, and in this regard, I feel
that my paper falls short. Consequently it is an area I hope to expand upon in the future.
Abstract
The present paper is composed of two sections. The first will serve to provide an overview of
synthetic worlds with a particular emphasis on Second Life. In doing so I will attempt to explain
the current success of Second Life over other similar constructs by arguing that it alone
embraces and thus is able to leverage certain important trends of the ongoing web 2.0
revolution – specifically the move toward interactivity and the proliferation of the OpenSource
philosophy. This paper (through the use of existing literature) will then proceed to build a
framework upon which the digital manifestation of self that is occurring through the creation of
avatar(s) can be understood. In doing so I will suggest that this trend is in fact the natural
progression of a reoccurring theme of self-identity creation. In establishing this relationship
between an individuals real self and the digital representation(s) of that self, I hope to show that
understanding the avatar – and its relationship to the individual behind it – is an essential part in
learning to leverage Second Life specifically but can also be applied to synthetic worlds in
general. Once this wall between what has traditionally been defined as fantasy and reality has
been breached, this essay will proceed to survey the marketing, branding, and revenue
generating potentials that exist or have the potential to exist in these synthetic environments.
The second part of this paper will be composed of three case studies which will be used to
explore the potential for business opportunities in Second Life by providing an in-depth look at
the three different business phenotypes that exist in relation to the synthetic world: the resident
(user) run business model, the corporate business model, and the mixed-reality business model
of the metaverse development company. Upon completion of this exercise, I will use the
conclusions drawn from each case study to create a preliminary framework from which
entrepreneurial individuals and innovative corporations can draw to begin successfully

leveraging Second Life. This framework will be based on my argument that the recognition of
Second Life as a unique community is the single most important factor in creating a compelling
business presence in Second Life.

Part I
An Introduction to Second Life and Marketing in Online Virtual Worlds.
All the world's a stage,

And all the men and women merely players:
They have their exits and their entrances;
And one man in his time plays many parts…
- WILLIAM SHAKESPEARE
Introduction: Working the Street.
In the past few years we have seen an explosion of user generated content. From the success
of MySpace and the nearly exponential expansion of the blogosphere to the popularity of
YouTube and Flickr, the defining characteristic of web 2.0 - the read/write web – is the move
toward interactivity between its tens of millions of participants. An entire generation has grown
up chatting and is intimately familiar with internet mediated interactions. It is a process that is
as familiar to them as conversing on the phone is natural to you or I. This generation and every
generation there after, referred to by Prensky (2001) as digital natives, are the “native speakers
of the digital language of computers, video games and the Internet.”1 They have rapidly adapted
to and utilized the tools provided to them to share self-generated content with friends and
strangers alike. For better or worse, this rapidly evolving technology empowers individuals and
allows them an unprecedented amount of freedom for personal expression. The story of
lonelygirl15, the YouTube user name of a young teenage girl who became world famous for
doing nothing more than creating a vblog (video blog) cataloguing the loves, heartbreaks, trials,
and tribulations of her life – albeit peculiar life – for the world to view2 is just the sort of
institutional decentralization the cyberarchitects3 imagined when they envisioned the web. That
1
Marc Prensky. “Digital Natives, Digital Immigrants”. On the Horizon. NCB University Press, Vol. 9 No. 5,
October 2001.
2
Additional information can be found at http://en.wikipedia.org/wiki/Lonelygirl15. The vblog can be
viewed at http://www.youtube.com/profile?user=lonelygirl15.
3
See John Perry Barlow (1996). “A Declaration of the Independence of Cyberspace.”
http://homes.eff.org/~barlow/Declaration-Final.html: “We are creating a world [in cyberspace] that all may
enter…where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of
being coerced into silence or conformity.” And Richard Barbrook and Alan Cameron (1995). “The
California Ideology.” http://www.hrc.wmin.ac.uk/theory-californianideology-main.html: “they want
the whole affair was discovered to be an art project4 manifested the fears of those who held a
more pessimistic view of the web as yet another medium for exploitation and profiteering. And
yet regardless of how you feel about the rapid proliferation and integration of the internet into
our daily lives or the consequences of this extension of personal expression which for many has
become inseparable from the idea of self, the movement toward interactivity is undeniable.
The reasons for the exponential expansion of the internet are debatable, but the democratic
ethos that is embodied in the distributive architecture5 of the web and the OpenSource
movement (begun in 1993 with the release of the Mosiac 2.0 source code and currently
embodied by the success of Firefox)6 has arguably played a significant role in that expansion.
But any way you choose to reason the explosion of the internet, the ascendancy of user
generated content and the growth in interactivity has benefited greatly from the success of the
OpenSource movement. If we assume then that this movement toward interactivity and user
generated content is inevitable in the sense that we acknowledge that there is a tremendous
amount of momentum behind it, what will be the end result? If the release of the Mosiac 2.0
source code was the Alpha point of this media revolution where is the Omega?
The 2D web is inherently limited in the degree of interactivity that is possible. In a chat room
you know that you are not the only individual present, but you only recognize that fact
cognitively – you see multiple names of people in the chat room therefore you know that you are
not alone. But there is no perceptual or spatial representation of what your mind recognizes as
information technologies to be used to create a new 'Jeffersonian democracy' where all individuals will be
able to express themselves freely within cyberspace.”
4
A copy of the letter admitting it was a hoax, along with additional commentary can be viewed at
http://www.zephoria.org/thoughts/archives/2006/09/07/lonelygirl15.html
5
Lawrence Lessig (2006). “Code version 2.0.” http://codev2.cc/: Lessig argues that in cyberspace “code
is law” and “[the code promotes] relative anonymity, decentralized distribution, multiple points of access,
no necessary tie to geography, [and] no simple system to identify content.”
6
http://blog.secondlife.com/2007/01/08/embracing-the-inevitable/
true, thus your ability to interact is limited. In recent years, however, we have seen the
convergence of computer games (and their simulated 3D virtual environments) with the internet.
The underlying code (architecture) of these computer games, in contrast to the internet, is
entirely proprietary, and the actions a user can perform within the game are further restricted by
its plot. However, computer games do have the advantage of being three-dimensional and,
within a multiplayer environment, enable a level of interaction with other players that is
impossible within a 2D environment; i.e. it creates a sense of presence through the impression
of physical proximity between your digital self and the other player(s) digital self which allows
you to appreciate the shared experience of participating (playing/fighting/racing/whatever) in
that environment. In short what I am proposing is that the 3D web is the next step of the current
momentum toward interactivity via the internet. Before long we will see the Sears and Circuit
City websites of today replaced with three-dimensional digital stores that you can enter via the
internet and walk through, much like you walk through their physical stores. You will be able to
see others walking through these virtual stores and perhaps stop in front of the same virtual
representation of that Sony HDTV or John Legend CD that you were contemplating buying.
Then, as a natural progression of events, you might find yourself asking what he/she thinks
about the product and a conversation will begin. Or maybe you will find yourself in this same
virtual environment, not shopping but rather going to a virtual John Legend concert that is taking
place simultaneously in the real world a thousand miles away. Upon entering this virtual
amphitheatre you start making your way to the stage, but even before taking your second step,
you are accosted by a girl who starts dancing with you and telling you how much she loves John
Legend. After chatting with her for a while, you discover that her name is Crystal; she is 31; and
she lives in Seattle. Sound farfetched? Well believe it because it is already happening.
The examples given above are fictional but already possible today, and they demonstrate the
interactive potential that is unique to a 3D virtual environment and impossible within a 2D

environment. A comparison of the efficacies of the 2D web vs. the 3D web, however, is not the
subject of this paper. Rather I will argue that developing expertise with the underlying
technology and more importantly experience with how individuals interact in a 3D virtual
environment is essential because it is quite possible that the next stage in the internet’s
evolution will incorporate elements from three-dimensional virtual worlds. This paper will place
particular emphasis on the marketing and advertising potential available to real world
businesses that choose to leverage virtual worlds, and it will do so by focusing primarily on the
virtual world of Second Life because of certain unique characteristics that its creator Linden Lab
has imbedded it with. This paper will proceed in two parts. The first half will provide
background of existing 3D virtual worlds7 and in doing so will (a) establish what these virtual
worlds are and why they (specifically Second Life) are important, and (b) establish the
necessary preconditions to understanding the psychological relationship between the user and
the experience via his/her virtual representation of self and how businesses can utilize this
knowledge to make their endeavors in Second Life more successful. The second half will
present three case studies of business ventures in or related to Second Life; the first being a
private endeavor executed by a Second Life resident, the second being a corporate branding
initiative by advertising agency Leo Burnett for Pontiac, and the third being a company who
serves as a bridge between the virtual world and the real world in order to help real world
corporations successful leverage Second Life. In writing about these companies, I will evaluate
the approaches each has taken toward their respective business endeavors in Second Life in
order to establish a preliminary framework for creating a compelling virtual world business
presence.
7
I will use the phrase 3D virtual environments, 3D virtual worlds, virtual worlds, and synthetic worlds
synonymously throughout this paper.
Enter Second Life.
Perhaps our first life – our physical reality – is just not good enough anymore. In the chaotically
morphing online experience that characterizes our interaction and growing dependence with the
web, along comes yet another breakthrough in virtual environments – aptly entitled Second Life.
Reactions with respect to benefits in education, business, and social interaction vary, but those
expressed by many of the five million or so people who have visited and/or reside in this
alternate universe suggests that Second Life is a virtual world with a difference.
Depending on whose figures you believe, perhaps a million unique avatars have touched down
in Second Life in the last month, and that number has been growing steadily. It's not the
numbers so much as what you find when you get there, a virtual world where possibilities seem
endless. Imagine that all of a sudden you can configure your body according to personal taste
and fantasy; you are able to customize everything from your gender to how big your eyes are.
You are given the ability to construct a projection of self, and it is this body – altered, marked,
ridiculous looking, or ridiculously good looking – that becomes you. Stop by one of the
multitudes of in-world vendors, drop some virtual currency8 and only your imagination can limit
your appearance. If you tire of your new look, switching back to the old you is just a mouse click
away.
Not only can you (or someone more patient than you) create the look you have always desired,
but now you can live in the environment of your choice. From the mystical lands of the planet
Gor, to the cyberpunk slums of Nexus Prime, to a virtual recreation of Amsterdam’s venerated
red light district, the possibilities are limitless. Every area is replete with gizmos and widgets
8
All economic transactions in Second Life occur with the use of the Linden Dollar (L$) or ellz, which can
be exchanged for real world currency via the Linden Exchange (LindEx). The exchange rate is
technically floating, but via regulation by Linden Lab, remains at a fairly constant L$270 per US$1. For
additional information on the Linden Dollar and the economy of Second Life please see Linden Dollar in
the Appendix.
that allow you to do anything that you might want to (like play music and make movies, or
provide you with utilitarian tools of communication and information, or even participate in the
more morally questionable aspects of life). Moreover, Newtonian laws of physics are reduced to
little more than trivia questions in a world where you can defy gravity and fly at will. Einstein’s
theory of relativity suffers a similar fate as you discover that even flying can be less than
convenient when you can teleport instantly from place to place.
Second Life, which now exceeds the size total area of Manhattan by eight-fold, can be slightly
overwhelming at first glance.9 From medieval landscapes of brown hills dotted with often-
fantastic buildings – some homes, some businesses – and a tantalizing array of sparring arenas
and information kiosks to island paradises where people race their personal yachts haphazardly
through a course littered with incredibly detailed shipwrecks and the occasional sea serpent and
other fanciful interactive places just waiting to be investigated.
If you fancy yourself a morning person, you can find birds singing their welcome as a gentle
breeze rustles the leaves and enlivens the scenery at dawn. Later that day, a casual stroll takes
you by a house and you hear music emanating from an open window as a husband and wife
chat gaily in the living room. If you loiter long enough, there is a good chance that they will call
out a welcome and invite you to join them. Communication is simple enough, assuming the
individual you attempt to converse with speaks the same language. But even this problem can
be reduced to little more than an inconvenience if you have the right technology.10 When people
approach you to chat – their hands mimic typing on an invisible keyboard to indicate that a line
of dialogue will soon appear on your screen. It’s true that their movements are slightly awkward
9
The area of Manhattan is approximately 60km2. As of the end of March, Second Life had over 500km2
of virtual land and has been growing at a rate of 50 - 100km2 per month since October 2006. See
Second Life Statistics in the Appendix
10
This is a reference to Timeless Prototype’s MultiGadget. For additional information see Timeless
Prototype’s Multi-Gadget in the Appendix.
or exaggerated at times. But these folks aren’t android-like in appearance or in action. Their
outfits are elaborate, sometimes fantastical, and most of their gestures – a nod, a shrug – are
quite realistic.
Other things in this virtual world may seem bizarre at first. Many residents wear sexually
provocative clothing, and entire communities of individuals choose to interact and express
themselves as animals.11 The truly odd thing about this place, though? You’re not you, or rather
you are you, but you are who you might imagine yourself being if you had the opportunity to
start life anew…and as a demigod. In Second Life, you live in a new body and take on the
identity of your “avatar” – that is, a being you’ve created as a representation of yourself in this
online environment.
But what does this all mean? Is Second Life ideally matched with the open source nature of the
read-write web and social networking, a next-stage in the level of conversations redirecting our
interpersonal and societal interactions (including those in the marketplace) applauded in the
Cluetrain Manifesto12 or is it heading in the other direction, uncomfortably toward corporate
exploitation and profiteering? And what if anything does it have to do with social interaction? No
matter where you think this particular virtual world is heading, the answer is, "a lot"!
Neal Stephenson’s Snow Crash is considered by many to be the novel that started it all.
Wagner James Au of New World Notes says “[it] taught us to dream about an online digital
11
This is a reference to a real life community / subculture of people known cumulatively as Furries.
Furries are individuals who have a particularly strong affinity to an animal or rather traits associated with
that animal and express themselves by dressing up as that animal or otherwise projecting themselves
through an anthropomorphized depiction of the animal. For additional information on Furries in Second
Life see Furries in the Appendix.
12
Cluetrain Manifesto. http://www.cluetrain.com.
world that exists in parallel with the corporeal realm.”13 Into this word we will plunge, but in
order to realize the importance of this evolving technology that we must first let go of our
preconceived notions of what a computer game is, what fantasy is, and even what reality is,
because here we will find that the lines between the three will blur.
Recognizing an Electronic Pasture.
It sounds like a computer game, looks like a computer game, and feels like a computer game,
so it must be a computer game…right? Not quite. It depends on how one chooses to define a
computer game. If the defining characteristic of a computer game (or game in general for that
matter) is that players engage in them via some achievement-oriented activity as established
explicitly or implicitly by the rules of the game (i.e. there is a generally agreed upon conception
of winning) then Second Life is not a computer game. It is true, however, that Second Life
incorporates elements of gaming and many games into the world. But there remains a
fundamental difference between a game and Second Life. Whether the game is a sport like
soccer, football, Nascar, a board game like monopoly, or a MMOG14 like World of Warcraft, each
is bound by a common trait. There is an ultimate objective in the game, something that if
achieved creates a sense of accomplishment. It serves as a benchmark with which you can
compare yourself to others who are playing the same game. In Second Life, however, you
cannot win; or rather you cannot win in Second Life anymore than you can win in the real world
because each and every person is playing a different game. Our objectives are personal, so
there can be no solid conception of victory. Instead winning becomes a state of mind.
13
Wagner James Au is an ex-Linden, embedded Second Life journalist, and founder / contributing editor
of the widely read Second Life blog New World Notes (http://nwn.blogs.com). For additional information
please see Wagner James Au in the Appendix.
14
MMOG - Massive Multiplayer Online Game
On the other hand if you choose to broaden the description of a computer game to include any
instance where a person interacts (either with others or with a program) within a virtual
environment then a computer game can be defined as a socially complex environment where
people are continually required to deal with social entropy, develop strategies to navigate
relationships, make decisions, and accept responsibility for those decisions. The games
establish a real reason to collaborate and build social capital. As demonstrated in both Edward
Castranova’s Synthetic Worlds (2006) and Julian Dibbell’s Play Money (2006) many of the
players do not just engage in the pursuit of mindless fun when participating in games. Rather
these games are less about acquisition of goals and rewards and more about interaction.15
Under this definition, Second Life becomes a computer game but then so does any sort of social
interaction via the internet, including but not limited to AIM, Facebook, and MySpace. We find
then that one definition of computer game is too narrow to accurately describe Second Life and
the other is too expansive to be considered useful.
If Second Life is not a computer game then perhaps it is a tool to facilitate learning and social
interaction between individuals, or collaboration between geographically separated teams of
workers, or even corporate exploitation and profiteering. Morrison (2004) suggests the key 21st
century skill is learning itself. "The most valuable skills someone can acquire are the skills to
learn rapidly and efficiently and to go into almost any situation and figure out what has to be
learned."16 So in the sense that people in participating in games are learning to learn not just
through a relationship with the technology but also through relationships with others, then
computer games are tools. Galarneau and Zibit (2005) support this view of computer games as
tools when they suggest that games allow players to develop a sense of mastery of many real
15
Julian Dibbell (2006). Play Money. New York: Basic Books. Edward Castranova (2006). Synthetic
Worlds: The Business and Culture of Online Games. Chicago: University of Chicago Press.
16
Morrison, J. (2004). “The future of learning technologies: An interview with Chris Dede.” Quote pulled
st
from Lisa Galarneau and Melanie Zibit (2005). “Online Games for 21 Century Skills.”
world skills - skills which include “critical thinking, teamwork, problem solving, collaboration,
facility with technology, information literacy, and more; they are all fundamental to the success
of knowledge workers.”17 The problem we are encountering here, however, is that while Second
Life displays many traits of a tool, limiting Second Life to the classification of a tool
oversimplifies it. A tool by definition is something that is used as a means for accomplishing a
specific task or purpose. The purpose of Second Life is that there is no purpose; or rather the
only purpose of Second Life is the one you (the player) gives it. Assuming that this last
observation is true then Second Life only becomes real as users give it purpose, so in a sense it
is the user that has become the tool, albeit a tool to satisfy one’s personal agenda. From these
brief interludes into what Second Life is not, we can come to the conclusion that Second Life
can be defined as both a game and/or a tool depending on how we choose to use the
environment. And in that observation lays the key to what Second Life is.
Second Life is an environment – a place – or, as defined by Edward Castranova (2006), a
synthetic world.18 It is a place for all the same reasons that it is not a game or a tool. A place
creates no objectives. The only objectives that occur in a place are the ones that are brought
into the place. For instance, take the Astrodome. At one point or another the Astrodome has
been at different times a football stadium, a baseball stadium, a rodeo arena, a concert hall, etc.
So while each event has an objective, the Astrodome itself has none, as it is with Second Life.
Or as Richard Bartle (2003) explains:
A virtual world [Second Life] is a place. They may simulate abstractions of

reality; they may be operated as a service; creating them may be an art;
people may visit them to play games. Ultimately, though, they’re a set of
locations. Places [where the imaginary meets the real].19
17 st
Lisa Galarneau and Melanie Zibit (2005). “Online Games for 21 Century Skills.” pp 5.
lisa.socialstudygames.com/Galarneau_Zibit_OnlineGames.pdf
18
Edward Castranova (2006). Synthetic Worlds: The Business and Culture of Online Games. Chicago:
University of Chicago Press.
19
Richard Bartle (2004). Designing Virtual Worlds. Indianapolis: New Riders Publishing. pp. 475.
With this in mind, where does Second Life fall in the rapidly changing and ever evolving
environment of the web? We have established that Second Life is not the educational tool of the
21st century or the up-and-coming harbinger of collaboration and productivity online. But neither
is it a game - a banal trap that is consuming resources and time best spent elsewhere – further
isolating the socially inept from the real world. Rather it is all of these things and more, which is
what makes Second Life categorically unique from existing 3D virtual environments.
A World of Sex, Profit…and School?
The 3D virtual worlds come in many forms but can basically be divided into two types. The most
popular by far are combat-focused games, such as EverQuest, Lineage, and World of Warcraft
(WoW alone claims more than 6 million paying subscribers). Other virtual worlds, even if they
include game-like elements, primarily offer the opportunity for social interaction. In these worlds
– places like Second Life and Entropia Universe, which are aimed at adults, and the more teen-
oriented There, the Sims Online, and Habbo Hotel – users customize not only themselves but
also their environments and experiences, decorating personal living spaces or running their own
events. The settings are more realistic than those in the typical sci-fi or fantasy combat game.
Though you often need to pay a monthly subscription to get the full experience—to buy your
own land in Second Life, for instance, or to sell virtual items you’ve made in There – the
operators of many of these social virtual worlds recently have allowed people to join and explore
the worlds for free. This approach has boosted the sites’ membership numbers but controversy
has arisen because it is a misleading measure of the actually number of active users and
popularity of the world.20
20
Clay Shirky. “A Story too Good to Check.” ValleyWag. 12 December 2006.
http://valleywag.com/tech/second-life/a-story-too-good-to-check-221252.php
Second Life appears at first glance to be a reincarnation of Active Worlds, a 3D MUVE (multi-
user virtual environment) developed in the mid-90's which once had around half a million
users.21 The world still exists and remains open to those who would like to explore it, but what
remains today is reminiscent of a ghost town. A cursory glance at the Active World community
forums makes it painfully obvious that diminishing populations are taking the fun out of life
there.22 This is not a surprising observation when one considers the defining characteristic of a
social virtual world is embodied in its name (i.e. that they are meant to be social), and it is a
view that is supported by a cadre of influential game studies.23
Among the varying uses of MUVEs such as Active Worlds and Second Life has been their use
in education as simulating environments capable of providing immersive learning
opportunities.24 Compelling evidence for the use of virtual environments for commercially viable
activities executed by entrepreneurial individuals has also been presented.25 Julian Dibbell’s
(2006) personal anecdote of how he made over US$40,000 trading virtual currency is told in
Play Money and is a recommended read for anyone interested in the further exploration of the
real world economics of MMOGs. However, the single most infamous use of 3D virtual
environments and particularly Second Life has been rooted in sexual interaction between
21
See Active Worlds Portals. http://awportals.com for additional statistics.
22
See Active Worlds Forums. http://forums.activeworlds.com/archive/index.php?t-5429.html to follow the
discussion on the increasing emptiness in Active Worlds.
23
University of Chicago Press. F. Gregory Lastowka and Dan Hunter (2003). “The Laws of the Virtual
Worlds.” Institute for Law and Economics Research Paper No. 03-10. Mikael Jakobsson and T.L. Taylor
(2003). “The Sopranos Meet EverQuest.” Presented at MelbourneDAC, the 5th International Digital Arts
and Culture Conference. Yee, N. (2007). “Motivations of Play in Online Games.” Journal of
CyberPsychology and Behavior 9, pp. 772-775.
24
Refers to the River City Project and Designing Virtual Communities. The River City Project is a Harvard
organized experiment using Active Worlds to develop an interactive computer simulation for middle
science students in learning disease transmission and scientific method. Additional information can be
found at http://muve.gse.harvard.edu/rivercityproject/index.html. Designing Virtual Communities is a
graduate level course taught at the University of Texas by Architecture Professor Anne Beamish which
utilizes Second Life to allow students to explore how architects, urban planners, and game designers can
create physical, social, economic, and institutional environments to facilitate and foster public life.
25
Julian Dibbell (2006). Play Money. New York: Basic Books. Edward Castranova (2006). Synthetic
Worlds: The Business and Culture of Online Games. Chicago: University of Chicago Press.
avatars. Columnist Marshall Sella wrote an entertaining article in the April 2007 issue of GQ
cataloguing the Second Life adventures of his avatar Fitzgerald, who “out of shear boredom
[would] almost always end up plodding into a sex club or strip joint” sometime during the day.26
Although the actual statistics are debatable, it has been suggested that as much as a third of
Second Life’s economic activity is related to sex and the purchase of the instruments required
for sex.27 Others argue that it is closer to five percent28, but the answer to the question of
whether or not real money can be made through sex in Second Life is an emphatic yes.29 But
although it is true that sexual activity plays a visible role in player-to-player interactions and the
economy of Second Life, it is not unique to Second Life. In fact it can be found to occur in
nearly every existing virtual community, past and present.30 The teen community of Habbo
Hotel has been noted as having one of the odder forms of cybersex (cybering) where sex is
performed for furniture, which happens to be the only item that costs money in the world.31
From a historical context even the text only MUDs (multi-user dungeons) of the early 90s had
their share of sex. Julian Dibbell’s (1993) account of a “Rape in Cyberspace” that occurred in
LambdaMOO is perhaps one of the more disturbing incidences of cybersex catalogued.32
I would normally have avoided discussion of sex in Second Life and sex in general because it
has the tendency to provoke people, but it is an inevitable aspect of these environments and to
26
Marshall Sella. “The Adventures of Fitzgerald.” GQ Magazine. April 2007. pp. 181-186 and 255-257.
27
Tony Walsh. “What’s the Truth About the Sex Industry in Second Life?” Clickable Culture. 8 February
2007.
http://www.secretlair.com/index.php?/clickableculture/entry/whats_the_truth_about_the_sex_industry_in_
second_life/
28
Wagner James Au. “A Sexual Census of Second Life.” New World Notes. 8 Febuary 2007.
http://nwn.blogs.com/nwn/2007/02/a_census_of_sec.html
29
A digital recreation of Amsterdam in Second Life was recently sold for US$50K via eBay. See Wired
Magazine’s interview (Stroker Serpentine, Second Life's Porn Mogul, Speaks) with the creator of SL
Amsterdam, at http://www.wired.com/culture/lifestyle/commentary/sexdrive/2007/03/sex_drive0330
30
See Wired Magazine’s “Sex in Games: It’s a Turn-On” for a glimpse into this phenomenon at
http://www.wired.com/culture/lifestyle/news/2006/06/71136
31
This is referred to as babbo[ing]. See Second Life Herald’s post “The Furni Whores of Habbo Hotel” at
http://www.secondlifeherald.com/slh/2005/12/the_furni_whore.html
32
Julian Dibbell (1993). “A Rape in Cyber Space.” http://www.juliandibbell.com/texts/bungle_vv.html
ignore or deny that it occurs blinds us to the greater significance of it – that even in a virtual
environment sex can and many times is regarded as an intimate act. Nobel (2006) suggests
that this is in fact the case in his survey of sex in Second Life. He concludes that cybersex is
many times “used to enhance their [the couple’s] existing and potentially fruitful real-world
sexual activity” rather than as a commercial endeavor.33 Still more interesting, however, is that
you will find a unique blend of altruism and sex in Second Life that you cannot and will not find
in other synthetic worlds.34
We can conclude from the preceding discussion that Second Life does not introduce any
particularly new concepts in regards to the types of activities that can occur in these virtual
environments. In fact the look and feel of all of these worlds (Active Worlds, Coke Studios,
There, Habbo Hotel, Entropia Universe, Second Life to name a few) is strikingly similar. 35 In
each, you appear in a 3D environment as an avatar in the company of other avatars. You can
purchase goods for you avatar, converse with other avatars, teleport (navigate) to other spaces,
make money, and otherwise participate in the seedier aspects of these worlds. Why then has
Second Life taken off so successfully where older MUVEs like Active Worlds never quite
achieved that threshold? And why has Second Life garnered publicity that that its competitors36
have not?
33
Nick Nobel (2006). “Aesthetics and gratification: Sexual practices in virtual environments.”
http://www.trinity.edu/adelwich/worlds/students.html
34
For a L$25,000 donation to Relay for Life, the avatar Taylor Barnes agreed to pose nude for the
Second Life Herald’s weekly female avatar centerfold Post 6 Grrl. To read the article, see the 28 April
2007 Second Life Herald post “Taylor Barnes - Post 6 Grrrl” at
http://www.secondlifeherald.com/slh/2007/04/taylor_barnes_p.html
35
See Gwyneth Llewelyn’s “The SL Killer” for a brief overview of existing and emerging virtual worlds that
threaten to “kill” Second Life. http://gwynethllewelyn.net/article141visual1layout1.html
36
I will use the term “competitors” to refer to any MUVE that exists today including but not limited to
Entropia Universe, Habbo Hotel, There, and branded virtual environments like Coke Studios, but
excludes MMOGs like World of Warcraft and EverQuest.
A Winning Combo: Tech, Empowerment, and Dreams.
How do we explain the success of Second Life? Perhaps the answer lies in that tedious idiom
timing is everything. Second Life emerged in a world where the personal computer has become
an extension of self – a medium that not only allows us to express our personal and intellectual
sensibilities but has also come to define us by the brand of computer we use. It emerged in
world where being socially connected means participating in the ever-present electronic web of
communication on the internet. It, unlike its predecessor Active Worlds, is supported by a core
of technological advancements that allows for its widespread adoption. And that is the reason
for Second Life’s success right? Not quite. It may be true that Active Worlds had certain
inherent problems that probably slowed down its user adoption rate, specifically that at the time
of its inception it pushed the limits of computing power available to the majority. But although
technology has come along way since then, Second Life encounters a similar issue today. The
processor requirements aren’t all that demanding, but the video card and broadband
requirement make mainstream access to Second Life problematic, and thus wholly enjoyable
only to those who possess above-average hardware and bandwidth. It took me nearly five
months (from when I began this paper) and US$2000 to finally buy a computer that would allow
me to access Second Life. Ironically I still can’t access Second Life from my apartment
because I lack the necessary broadband connection. And yet despite these related technical
issues, Second Life is sitting at over 5 million registered users today. Moreover both Active
Worlds and Second Life share similar user computer competency requirements (i.e. that the
user possesses above average computer literacy and perhaps patience) because there is a
steep learning curve to familiarizing oneself with the avatar controls.
One reason for the success of Second Life may be that "average" computing power increases
more rapidly these days, as do the skills of those behind the keyboard. Computing power and
the number of individuals considered to be proficient with the computer increases with every
subsequent generation, thus we find that individuals in our society as a result of our increased
digital literacy are more receptive to virtual spaces and their potential than was the case ten
years ago. This increase in individuals – who Prensky (2001) dubs as digital natives – has had
the secondary effect that even the mindset of digital immigrants (those who still find the use of
internet assisted sociality foreign) have changed to greater acceptance of immersion in virtual
worlds.37
Another reason for the success of Second Life is that there is much greater mutual community
awareness than there was when Active Worlds appeared on the horizon. The nature of the
blogosphere plays to the popularity of Second Life, and promotes the formation of viable
communities within virtual spaces. When Active Worlds was developed in the mid-90's viral
marketing capabilities were limited. News was spread by e-mail, BBS (bulletin board systems),
static web pages, and emergent IM clients like ICQ. Second Life appeared with the web 2.0
evolution of the read-write environment (characterized by the explosion of the blogosphere and
RSS), and the increased viral marketing potential created by these closely linked conversations
of individuals via the blogosphere and other social networking devices. News of interest to
particular communities now had the potential to spread nearly instantaneously across the web.
Furthermore the news now had the capability of carrying with it objects such as video clips,
called Machinima, – via Youtube – that allow people to vicariously experience Second Life
without actually being there.
The previous two reasons, however, are not unique to Second Life and can arguably be applied
to the popularity of other social virtual worlds that exist today. Similarly the argument presented
37
Marc Prensky (2001). “Digital natives, digital immigrants.” On the Horizon 9,5.
http://www.marcprensky.com/writing/
by Vance Stevens et al (2006) 38 that the “reason for the success of Second Life is [because] it
is being taken quite seriously by a growing number of successful people and entities firmly
rooted in the real world” can also apply to these other virtual worlds, in particular There – who
does extensive work with MTV and Pepsi – and Habbo Hotel – who has done work with the
Center for Disease Control. These three reasons do provide a sufficient explanation for the
success of today’s virtual worlds over past iterations, but the question of why Second Life in
particular has garnered a pervasive – though not uniformly positive – media response remains
to be answered.
We have seen reasons so far that there is compelling evidence as to why Second Life is
succeeding but not why it seems to have seen a disproportionate gain in popularity compared to
its competitors. More important than Second Life’s timing and fortunate position as a vehicle for
community development or the interest of recognized real world organizations and entities is
that Second Life provides any and all of its users with the freedom and the tools necessary for
community development. Since the mid-90s, we have seen persistent growth of communities in
the "long tail"39 due to a dramatic growth in the availability of the internet and computer access.
Second Life emerged in the midst of this and because of reasons that will be explained below
was intuitively positioned to have its services adapted by these groups.40 In doing so it has
become a vehicle for the development of these communities, seized by its participants as a
means of stimulating interaction among their particular band of constituents in regards to these
long-tail communities?
38
Vance Stevens. Dennis Newson. Barbara Dieu. Nick Noakes. Venny Su. “Second Life in Education and
Language Learning.” TESL-EJ. Volume 10, Number 3. December 2006. http://tesl-ej.org/ej39/int.html
39
Long tail refers to people’s ideas or interests that fall outside of what is traditionally
considered to be popular. For example people who are part of the Furry subculture fall into the long tail.
Graphically you get a "power law" demand curve, with the yellow (right) portion of the curve representing
the long tail.
40
Chris Anderson. “The long tail.” Wired 12.10. October 2004.
http://www.wired.com/wired/archive/12.10/tail.html.
The answer is actually two-fold, but each reason while distinct is also indivisible from the other
in attempting to explain Second Life’s success over the other worlds. Simply put, though,
Second Life’s creators – Linden Lab – (a) imbedded a hand-off, do-as-you-please philosophy41
and granted users explicit intellectual property rights to any content they created42 within the
End User License Agreement (EULA alternatively referred to as the Terms of Service)43, and (b)
developed a robust content creation program and scripting language44, which allows the user to
in essence create anything that he/she wants to. In doing this, Linden Lab empowered the user
to do two things that are unique to Second Life. First the promise not to interfere with the lives
and creations of the residents of Second Life allows them an unparalleled amount of freedom to
express themselves through their creations. And second because the creator retains IP rights,
he/she is also free to monetize and otherwise regulate the distribution of their content, thus
providing them with an incentive to continue creating.45 Combine these two capacities with the
content creation tools and you have the seeds for a rapidly evolving virtual environment that not
only reflects the diverse interests of its residents but also represents an expansion of public
space. This is in fact what you find in Second Life: a place where a group of avatars who carry
41
Section 1.2 of the EULA or Terms of Service states that Linden Lab “allow[s] people to interact online
regarding topics and content chosen by users of the service, and that users can alter the service
environment on a real-time basis.”
42
Section 3.2 of the EULA or Terms of Service states that the user has explicit “copyright and other
intellectual property rights with respect to Content [they] create[d] in Second Life”, which means that
users are free to monetize and otherwise regulate the distribution of their creations. This right is unique
to Second Life and represents a dramatic break from the traditional EULA.
43
The EULA or Terms of Service is a contract between a producer and a user of computer software that
specifies the extent of the permission granted by the owner (Linden Lab) to the user of the program
(Second Life). The purpose of the EULA is to protect corporate interests in corporate products, and
therefore is written in such a way as to grant ultimate control of the product to the corporation in the event
of a dispute. Traditional EULAs for persistent virtual worlds (MMOGs and MUVEs) that allow the user to
create content (like Ultima Online and There) provides the corporation with explicit rights to all virtual
property created by the user within the environment.
44
Reference to the ability to create any shape or combination of shapes by manipulating Primatives
(Prims) and the ability to imbue those objects with unlimited attributes through the Linden Scripting
Langauge (LSL).
45
Angela Adrian (2006). Intellectual Property or Intangible Chattel? Journal of International Commercial
Law and Technology Vol. 1, Issue 2.
Uzis, parade around in paramilitary dress (albeit sexy ones – think Angelina Jolie in Tomb
Raider), and assemble themselves into the world’s first virtual guerrilla army fighting for avatar
rights can coexist and even participate in exquisite fashion shows that involve flying
leprechauns who shower prizes on the audience below. This is an environment where various
communities can disseminate and share a wide range of objects and tools supporting the mash-
up of the 2D web with Second Life, or the real world and Second Life.
This endless possibility for expression and creation has resulted in controversy as well. In
November of 2006, uproar arose in the Second Life community when an object (originally
created by a team of Second Life developers as a content backup tool and later modified by an
unknown developer to replicate any object in Second Life without permission from the objects
owner) appeared and began being abused by various users. 46 These actions prompted threats
of expulsion from Linden Lab against any resident using the CopyBot illegally.47 But despite this
unfortunate abuse, Linden Lab has undeniably opened doors to a level of individual freedom,
creativity, and imagination suggestive of the democratic ethos48 that continues to stimulate the
rapid growth of the 2D web. This fact in conjecture with the gradual move already
demonstrated by Linden Lab to open source49 more and more of the Second Life source code50
will presumably allow Second Life’s explosive expansion51 to continue until the “web-scale
project”52 envisioned by Cory Ondrejka, Linden Lab’s CTO, becomes a reality.
46
The CopyBot was originally created as a debugging tool by the libsecondlife development team, and
was created with such purposes in mind as an import/export or "backup" tool. For more information on
libsecondlife and CopyBot see LIbSecondLIfe and CopyBot in the Appendix.
47
See Linden Lab’s warning “Use of CopyBot and Similar Tools a ToS Violation” at
http://blog.secondlife.com/2006/11/14/use-of-copybot-and-similar-tools-a-tos-violation/
48
Cluetrain Manifesto. http://www.cluetrain.com/
49
Linden Lab released the source code for the Second Life viewer in January 2007. The announcement
can be read at http://blog.secondlife.com/2007/01/08/embracing-the-inevitable/
50
This is suggested by Linden Lab CTO Cory Ondrejka in his interview with Glyn Moody. The transcript
can be viewed at http://lwn.net/Articles/217831/.
51
See Second Life Statistics in the Appendix.
52
Cory Ondrejka describes the future of Second Life as “a globally interconnected grid with clients and
servers published and managed by different groups, allowing tens of millions of users to simultaneously
The prognoses on Second Life are not unanimously considered rosy, however. Charlie
O'Donnell53 raised some interesting points in his blog post “Ten Reasons to go Short on Second
Life” as does VC consultant Randolph Harrison54 who goes as far as to compare Second Life to
a ponzi pyramid scheme. But defenders of Second Life, in stereotypical blogosphere fashion,
were quick to react. O'Donnell's post was swiftly countered by Chris Carella's "Ten Reasons to
Go Long on Second Life.”55 Carella, though, seems to have been intent on perplexing his
readers because despite the bold proclamation of his post’s title, he only addresses 1-9 of
O’Donnell’s criticisms. Stevens et al56 picks up Carella’s slack, and in regards to O’Donnell’s
last observation that Second Life should be relegated to a curiosity rather than a social
phenomenon57, he argues that Second Life [is] a crucible for ideas about how people can
augment their interaction and [support] real productive efforts. Besides, perhaps the fantasy vs.
reality argument is little more than self-aggrandizing diatribe on part of the critics. The existence
of goldfarming58 and the very tangible real world currency that can be made doing it59 suggests
travel through and interact within Second Life as they do on the 2D web today.” This description can be
found in the official Linden Lab blog at http://blog.secondlife.com/2007/01/08/embracing-the-inevitable/
53
Charles O’Donnell’s ten reasons that Second Life is over-hyped are: 1. Second Life (SL) will probably
never be mobile. 2. Events in SL cannot be easily disseminated because they cannot be saved. 3. SL is a
benevolent dictatorship. 4. SL is a business and therefore must be run like a business. 5. Diminishing
returns for brand participation will mean less corporate interest. 6. Users cannot casually browse SL or
otherwise have it running as a background program like you can with AIM or MySpace. 7. SL lacks
guidance and context. 8. Copyright infringement problems. 9. Small concurrent user base. 10. SL is
fantasy. The full post “10 Reasons to Go Short on Second Life” can be viewed at
http://www.thisisgoingtobebig.com/2006/11/10_reasons_to_g.html
54
Randolph Harrison has a dual MBA from Columbia and UC Berkley – Haas and currently works as a
Venture Consultant in San Francisco. His full argument can be found at
http://randolfe.typepad.com/randolfe/2007/01/secondlife_revo.html.
55
Chris Carella. Ten Reasons to Go Long on Second Life.
http://blogs.electricsheepcompany.com/chris/?p=178
56
Vance Stevens. Dennis Newson. Barbara Dieu. Nick Noakes. Venny Su. Second Life in Education and
Language Learning. TESL-EJ. December 2006 Volume 10, Number 3. http://tesl-ej.org/ej39/int.html
57
O’Donnell makes the argument that because the Second Life environment and the way people presents
themselves there are fantasy – as compared to uses of more traditional social environments (MySpace,
Facebook, etc) where profiles are a “reflection of real interests and real personality” – it should not be
taken seriously by businesses.
58
Goldfarming is a term used to describe the process of exploiting the repetitive (and menial) elements of
a MMORPG’s gameplay to acquire (farm) a large quantity of items (usually with minimal unit value) in
order to convert them into the game’s currency which is then traded for real money via eBay.
that what is one man’s fantasy is another man’s reality. As Nick Yee (2006) suggests, computer
games – specifically MMOGs like EverQuest (which is clearly fantasy) – are changing the
nature of both work and play. 60 In a world where work and play – reality and fantasy – overlap to
the point that they become indistinguishable from each other, does it really matter which label is
attached to which?
If O’Donnell is guilty of overlooking the social revolution that is occurring with Second Life
because certain aspects of it seem fantastical, then Harrison is equally guilty of failing to grasp
the nuances of the Second Life economy, particularly the consequence of scale.61 Additionally
his argument (that the economy of Second Life is unsustainable) is flawed because one of his
underlying assumptions is wrong. Harrison assumes that growth in money supply in Second
Life comes from new users alone. Based on this assumption he makes the argument that
“Second Life must register around 45 million unique players by the end of 2008; a growth rate of
40% per month by that point.” I agree that the growth rate of 40% per month is entirely
unfeasible. Even MySpace and YouTube, which are arguably the fastest growing internet
properties today, have not been able to sustain that sort of growth rate over an extended period
of time. But Harrison forgets that a considerable amount of the new money coming into
Second Life comes from corporate endeavors. Whether those endeavors be through filling out
surveys to earn L$250 + per survey or working promotions for Electric Sheep Company at
USD$10 per hour62, you have a significant amount of money moving into SL from sources other
than individual users.
59
Julian Dibbell (2006). Play Money. New York: Basic Books. Edward Castronova (19 January 2006).
“How Gold Farming Works.” TerraNova Blog.
http://terranova.blogs.com/terra_nova/2006/01/how_a_gold_farm.html
60
Nick Yee (2006). The Labor of Fun: How Video Games Blur the Boundaries of Work and Play. Games
and Culture , 1, pp. 68-71. http://www.nickyee.com/index-papers.html
61
Edward Castranova (26 January 2007). “SL Economy Misunderstood Again.” TerraNova Blog.
http://terranova.blogs.com/terra_nova/2007/01/sl_economy_misu.html
62
http://www.slnn.com/article/wages-marvelousley/
In my eagerness to present retorts as to why arguments made by O’Donnell and Harrison are
flawed, I seem to have strayed a bit from my original purpose, which was to demonstrate why
Second Life has garnered an unequal portion of media attention (and as a result growth) when
compared to other virtual worlds like There, The Sims Online, Habbo Hotel, etc. The reason for
the media attention (both in support of Second Life as well as the less than favorable reports) is
because of the unprecedented amount of freedom that is allowed in Second Life. The
cyberlibertarian philosophy – the empowerment of the individual – that is embraced by the
upper management of Linden Lab and promoted by encouraging residents to manipulate the
code for their own endeavors separates Second Life from the other virtual worlds. Second Life
promotes a spirit that proclaims that there is much scope (in personal / gratification / business /
education / whatever…take your pick) for experimentation and enjoyment, and the result doesn't
have to be even remotely related to its equivalent in the real world. The freedom to do anything
means that everyone can find some use for Second Life, and it is this flexibility that attracts
interest from people of all measures of life – individuals, businesses, government, etc. But it is
also suggests an important rule for those organizations who are looking to enter Second Life. If
people are drawn to Second Life because of its flexibility…if the-powers-that-be (Linden Lab)
recognizes this idea of freedom as paramount then businesses who want to be in the best
position to successfully leverage Second Life must also embrace and encourage this freedom.63
63
Later in this paper I will provide three case studies that attempt to demonstrate this fact by showing that
businesses that have adhered to this rule have in fact recognized the most success.
All the World’s a Stage.
People have long taken on alternative identities, from the authors’ noms de plume (pen names)
to the truckers’ evocative call names to the chat-room visitors’ sexually suggestive screen
names. Long before you and I were born, Shakespeare seems to have understood that our
identities were fluid when he wrote, “one man in his time plays many parts.”64 Goffman (1959)
further extrapolates the metaphor of individual identity creation as theatrical performance in The
Presentation of Self in Everyday Life.65 And Turkle (1995) extends this idea to a virtual stage –
the internet – which she reasons has “contributed to thinking about identity as multiplicity,
[flexible, and fragmented, where] people are able to build a self by cycling through many
selves.”66 But in the last few years, technology has expanded the possibilities – MySpace,
Facebook, Orkut, AIM, ICQ, and MSN Messenger to name a few. Today, those of Generation Y
will communicate in the voice of multiple personae – one transmitted over cell phone, another
via instant messaging, still another through email and social networking sites – to the same
friend at the same time. An unattractive, shy man will transform himself into the sexiest and
most aggressive guy – or, disturbingly, girl – to work the virtual street. What began in the early
nineties as an opportunity for the socially distressed (or merely awkward) tech savvy individual
to realize a measure of social satisfaction by recreating his/her persona in the virtual
environments of MUDs (multi-user dungeons) and text only chat rooms has evolved into a social
orthodox where anyone and everyone participates in one or several of the thousands of chat
rooms, forums, social networks, and three-dimensional virtual environments that litter the
internet today. Like the ancient rite of the masquerade ball, modern technology helps people
64
William Shakespeare. “All the World’s a Stage.” As You Like It, Act 2, Scene 7.
65
Erving Goffman (1959). The Presentation of Self in Everyday Life. New York: Doubleday Anchor Books:
Goffman argues that man in his everyday social interactions creates “masks” which are changed as a
situation warrants in an attempt to control and guide the impressions others form of him, much like an
actor presenting a character to an audience.
66
Sherry Turkle (1995). Life on the Silver Screen: Identity in the Age of the Internet. New York: Simon &
Schuster. pp. 178.
realize an innate desire to experience what it would feel like to be something or someone else in
order to communicate one of the many fragments that define self – who they are. In the words
of Peter Steiner’s famous cartoon showing man’s best friend conversing in front of a computer
screen: “On the Internet, nobody knows you’re a dog.”67
How then do individuals project these digital identities? The avatar is the most striking online
manifestation of people’s desire to try out alternative identities or project some private aspect of
themselves.68 Broadly defined, “avatar” encompasses not only the complex three-dimensional
beings created for use in shared synthetic worlds but any digital representation of a user in an
online community. For example, both the textual constructs of the early LambdaMOO
community and more recently the hundred thousand people in the US who have created Meez
avatars (simple 3D anime-like characters that can be customized, animated, and embedded as
pictorial calling cards in activities ranging from MySpace profiles, to instant messaging, to your
mobile phone) qualify as avatars. Jump over to Korea and you encounter a similar occurrence
in the cultural phenomenon of Cyworld. I can almost guarantee you that every Korean you talk
to under the age of 30 will have an account and an avatar – all twenty plus million of them.
However, the experience of living through an alternative digital self (avatar) is the most powerful
in the elaborate three-dimensional synthetic worlds of MMOGs69 and MUVEs70. In these
environments, an individual’s avatar can evolve from the generic incarnation created using
standard character and appearance options offered when a user first joins into a unique and
richly developed manifestation of self. The hundreds of hours that users spend leveling
(customizing) their avatars endow each with mannerisms, skills, and a wardrobe that becomes a
67
The New Yorker (5 July 1993). Vol.69 (LXIX) no. 20. pp. 61.
68
The word “avatar” was originally used to describe the many worldly incarnations of the Hindu god
Vishnu, but Neal Stephenson popularized it in its digital sense in his 1992 cyberpunk novel Snow Crash.
69
MMOG – massive multiplayer online game
70
MUVE – multi-user virtual environment
unique projection of their users personality. Indeed, while the avatars’ anonymity is part of their
appeal, many people take considerable pride in their creations as public expressions of hidden
aspects of their identities. Outfitting and otherwise customizing each of these avatars
individually can become a life-consuming task – a task that not all are willing to participate in.
So for these individuals who want the satisfaction of an uber-avatar but do not have the time
and/or the desire to personally build it, an industry has emerged to cater to them. The
combined economic activity from the exchange (via internet auction sites like eBay) of avatar
accessories – digital weapons or armor earned or crafted by others – that can improve the
avatars’ appearance, performance, and status in a particular world; outsourced avatar leveling71
and avatar “moving” services72; and the purchase of virtual currency to be used in these worlds
total at more than US$100 million a year.73
As if further proof that we seem to enjoy projecting ourselves through a collection of masks is
needed, we find that many times people reproduce their avatars - often having multiple avatars
not only within the same game but also within other synthetic worlds. And each can and usually
does differ substantially from the individual’s other avatars and from the creator’s public self.
Gender switching is common, as is the exaggeration of sexual characteristics. Some of these
worlds have communities of nonhuman avatars – for example, “furries” (animal-like beings that
often reflect their real-life creators’ strong psychological associations with certain animal types).
Yet for others, avatars provide a sense of mobility and independence that they lack in the real
world because of some physically disability or disease. In fact one of the first avatars in Second
71
Avatar leveling is a service provided to those who do not want to spend the time accumulating the
‘experience’ required to create a powerful avatar (and the in-world status that comes with a powerful
avatar) in MMOGs like Ultima Online or World of Warcraft. For example in World of Warcraft “real”
gameplay doesn’t begin until your avatar is level 60. Anyone lower is considered a newbie (new user).
72
Avatar “moving” services emerged as a result of individuals’ desires to move their avatar (and all its
goods) from one game server to another game server – a process that normally cannot be done because
of restrictions imposed by the technical architecture of the game’s network.
73
Life that I had the opportunity to interview was a real world cancer survivor. In Second Life she
is a strikingly beautiful female avatar by the name of Chelle Moore who works as a DJ, a model,
and an amateur racecar driver. But in real life, Chelle is still confined to her bed for most of the
day. And still other avatars seem to have garnered a level of public notoriety that far surpasses
the real life individual behind them. Because of real-world news reports about their virtual-world
activities as community geniuses or wealthy entrepreneurs, these avatars seem to have taken
on a life of their own.74
Living in the skin of an avatar – looking out through its eyes and engaging with other beings,
themselves the digital avatars of flesh-and-blood individuals – can be an intense experience.
Though in most worlds avatars don’t eat, sleep, or use the bathroom, serious relationships are
formed – avatars form teams to participate in Relay for Life, numerous virtual-world
relationships have led to real-world marriages – and gripping conversations from sex to politics
abound. Put it all together and you have an avatar that is “not a puppet but a projection” of some
aspect of the creator’s self according to Philip Rosedale, founder and CEO of Linden Lab.75
Marketing and Advertising Potential.
Radically and frequently changing one’s appearance has become an accepted component of
virtual worlds. When considered from a marketing perspective, what consequence is there to
having the ability to change your appearance on whim? Is it important for marketers to
recognize each of an individuals separate avatars as different persons? Perhaps the more
important question, though, is does the creation of identity in Second Life relate to one’s
74
See Anshe Chung and Timeless Prototype in the Appendix.
75
Quote was pulled from Paul Hemp’s “Avatar Based Marketing.” Harvard Business Review. June 2006.
http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/index.jsp
physical appearance as it does in the real world or is this corporeal limitation left behind when
one jumps to the virtual?
Advertising has always targeted a powerful consumer alter ego: that hip, attractive, incredibly
popular person just waiting to emerge from an all-too-normal self…with the help of the
advertised product of course. It is about creating hope - creating a sense of escape that allows
us to get away from the everyday drudges of life. When we see a Corvette being advertised on
television, we may long for the car but more often than not we also long for the beautiful blonde
that is riding shotgun. The truth is buying the Corvette will probably never deliver the blonde,
but despite this recognized reality, we still hope. Now that, in virtual worlds, consumers are
taking the initiative and adopting alter egos that are anything but under wraps, the argument
presented for the marketing potential of these worlds is that companies will be able to further
segment, reach, and influence them directly. It’s important, however, for companies to think
about more than the potential to extend their reach and further entwine themselves in the
everyday life of the individual through virtual worlds and consider a new potential customer – the
avatar. It is as Tor Myhren, Executive Vice President at Leo Burnett Detroit, suggests a unique
opportunity to reinvent the relationship between consumer and the brand because “advertising
is aspirational…an avatar is aspirational. You don’t own the brand anymore..you curate it. Now
you find a group of like minded people and begin a conversation.”76
The real-world marketing potential of Second Life is suggested by the active virtual commerce
(resident to resident) that already takes place within it. Businesses in Second Life, for instance,
range from services you might expect – virtual clothing and furniture design, event planning, real
estate brokering, etc – to those as unlikely as detective agencies, which keep an eye on virtual
76
Tor Myhren. “Motorati Island.” Virtual Worlds 2007 New York Conference Day 2. Audio available at
http://www.virtualworldtimes.com/news/2007/04/mp3s_available_.html
infidelity; a notary public, who guarantees the legitimacy of avatar contracts (and offers
mediation services if problems arise); and an advertising agency, which designs and places ads
for other avatar-operated businesses. There are in addition the inevitable sex shops, which sell
not only racy garb and paraphernalia but also computer code (script) that allows two avatars to
engage in a passionate embrace as well as other…shall we say rather explicit instances of
virtual wrestling. If you can imagine it, you will probably be able to find it.
One of the most persistent questions regarding Second Life and virtual worlds in general is:
Who does your marketing efforts target? Do you chase identity version 1.0 – the flesh-and-
blood Second Life user who gave their credit card numbers to register for the game…or do you
appeal to identity version 2.0 – their virtual manifestation, the avatar, who resides in the virtual
world? Sure, the real-world human controls the real-world money. But the avatar arguably
represents a distinctly different shadow consumer, one who is able to influence its creator’s
purchase of real-world products and make its own real-world purchases in the virtual world.
And at the very least, the avatar can offer insights into its creator’s more obscure tastes.
Up to this point, such questions have predominantly remained in the academic sphere. But that
is soon to change and arguably has already begun changing. As I mentioned previously,
Second Life is just one of a growing number of three-dimensional virtual worlds in which users,
through an avatar, are able to interact socially with potentially thousands of people
simultaneously. By some estimates, more than 10 million people spend $10 to $15 a month to
subscribe to online role-playing environments, with the number of subscribers doubling every
year.77 Millions more enter free sites, some of them sponsored by companies as brand-building
initiatives. Users on average spend 22 hours per week in these worlds, with some spending as
77
much as 60 hours.78 And as the technology improves, virtual worlds may well eclipse film, TV,
and other passive forms of entertainment in popularity within the next five to ten years. That’s
because, instead of watching someone else’s story unfold in front of them on a screen, users in
these worlds are able to create and live out their own stories. The user has become an active
part of the relationship rather than just the passive observer. Time Magazine recognized this
when they dubbed the 2006 person of the year as YOU. Predicting the future has always been
problematic, but considering the evidence it would be foolish not to acknowledge the growing
prominence of immersive online virtual environments.
The combination of robust virtual-world commerce and the growing overlap of virtual worlds and
the real world suggests opportunities for creative real-world marketers. Marketing online today
provides more than just a plethora of data on your customers. In addition to the availability of
user click-through (to a purchase, product information, whitepapers, etc) tracking data on web,
the growing interactivity of the web has provided opportunities for compelling and innovative
branding initiatives. The web 2.0 evolution saw the rise of rich media applications which
allowed companies to promote sustained engagement with their brands. The appearance of
immersive virtual worlds provides even greater opportunities for engagement via the users
avatars. Given this potential, marketers need to acquaint themselves with the phenomenon of
avatars and to consider whether it requires a rethinking of marketing messages and channels.
For many companies this will be a daunting task, but thankfully enough, there is help out there.
Though the industry is still emerging, marketers can draw on the handful of pathfinding
companies (known as Metaverse Development Companies or MDCs) that have begun to open
up this realm, and provide help to individuals and corporations looking to make a presence for
themselves in Second Life.
78
Nick Yee (2006). “The Demographics, Motivations and Derived Experiences of Users of
Massively-Multiuser Online Graphical Environments.” PRESENCE: Teleoperators and Virtual
Environments, 15. pp. 309-329.
There obviously is a real danger that product placement in virtual worlds will feel to residents
like three-dimensional spam. In fact, there is evidence suggesting that this may already be
occurring in Second Life.79 To be effective, marketing in these worlds needs to be consistent
with the virtual environment and enhance participants’ experience. You don’t want to simply
shove a billboard in people’s face. You want a brand to be integrated into the daily routines of
the players and their avatars so that they can, if they choose, interact with it in a meaningful
way.80 In that sense, campaigns like those for Levi, Nike, and Pepsi in There represented
successful virtual-world placements. Moreover, the Nike initiative, by helping in-world wearers to
run faster, had the added benefit of heightening the user’s virtual-world experience. Similar
arguments can be made for Second Life with companies like Pontiac’s Motorati Island and
Reuter covering both real world and Second Life news for residents of Second Life.
Perhaps more significant than the use of avatars in a marketing role, is the creative potential
that can be leveraged in a world where the individuals who participate in them are arguably
skewed in favor of creatives. Capitalizing on this fact, corporations could use these avatars to
design products with real-world potential. The potential success of such an endeavor is already
being explored in the traditional web environment, so there is little reason to believe that a
similar Second Life based endeavor could not also be justified. As I write this, the success of
this approach has arguably already been demonstrated with Tringo. Tringo81 began its life as
(and still is) one of the most popular games in Second Life and resembles a cross between
Tetris, and Bingo. In early 2006, it was licensed by Donnerwood Media for distribution in the
79
Wagner James Au. “Why Marketing doesn’t work in Second Life.” http://gigaom.com/2007/04/04/3-
reasons-why-marketing-in-second-life-doesnt-work/. See also First Opinion survey data available at
www.adlatitude.com
80
Conclusion is supported by research conducted by marketing research company Market Truths Limited.
A copy of their report “Real Life Brands in Second Life (Q1 2007)” can be viewed at www.adlatitude.com.
81
For additional information on Tringo and why it has been so successful in Second Life please see
Tringo in the Appendix.
real world. The Game Boy Advance version was released in April 2006 and a PC version is set
to be released shortly.82 I don’t know how successfully it has faired in the real world, but this
example adequately demonstrates the creative movement that can occur between the digital
universe and the real world.
Avatars could also be used as brokers to link up real-world companies with virtual landowners
willing to rent space for the companies’ marketing initiatives. To a certain degree this can
already be seen as happening with the success of synthetic world real estate moguls like Anshe
Chung. A good portion of her operating revenue comes from providing prefabricated buildings
(both residential and commercial) for others to rent. 83 Additionally avatars could as Marc
Girolimetti, CEO of the Metaverse Development Company Green Grotto Studios, suggests be
employed to run virtual-world stores selling real-world products, or become what Internet culture
blogger Tony Walsh84 calls “advertars,” paid to publicize, overtly or not, those same products.
Some of this can already be seen occurring in Second Life as well. 85
One of the most persistent questions, though, is what about real world revenue generation?
Will avatars actually buy real-world products that are marketed in virtual worlds, in effect
purchasing real-world goods for their creators, just as those creators buy virtual-world
paraphernalia for them? Could an avatar who currently spends Linden dollars to buy a virtual
skirt from another avatar’s designer clothing store in Second Life be enticed, while visiting an in-
world imitation of a real life retail outlet, to click on a cash register and use his or her creator’s
credit card to buy a real-world version of the sweater that would be shipped to the creator’s
82
John Burn (01 May 2006). Virtual World, Real Money (MP3). Business Week Magazine.
http://www.businessweek.com/mediacenter/qt/podcasts/cover_stories/covercast_04_20_06.mp3
83
See Anshe Chung in the Appendix for additional information.
84
If interested in internet culture, check out Tony Walsh’s blog http://www.clickableculture.com
85
Advertising boards for avatars to wear are being offered by a SL company called Publicenter. Avatars
are paid at a rate of L$2 per ten minutes.
doorstep? I have yet to encounter a real world company that has had success in this regard,
but the potential is a very real one. American Apparel thinks so too. They offer a 15% discount
to people who choose to purchase the real life version of their virtual purchase through Second
Life. And at the very least, avatars are likely to window shop. Michael K. Wilson, CEO of
Makena Technologies, which runs the virtual world There, says that e-commerce sites, while
they have reduced retailers’ brick-and-mortar costs, do not address the inherently social nature
of shopping. But in the mall of a virtual world, an avatar could try on – and try out in front of
virtual friends – real-world clothing brands or styles her creator typically couldn’t afford or
wouldn’t dare to wear. If she got rave reviews from her pals and became (along with her creator)
comfortable with the idea of wearing a particular outfit, a purchase in the real world might
follow.86
Another question of interest is whether or not this relationship between avatar and creator will
evolve to the point that a real life purchase can be motivated not by any real desire for the item,
but rather because purchasing that item in real life also provides one with a virtual item that
would otherwise not be available? Again the idea is not as far fetched as one might think.
Consider for a moment Burger King’s success with the trio of xBox (Sneak King, Pocketbike
Racer, and Big Bumpin) games only offered with the purchase of their value meal.87 It operates
on a principle that could hypothetically be easily mimicked using virtual goods – i.e. the process
of limiting the availability of a digital item (in Burger King’s case a video game) to people who
purchase a specific physical item (the value meal).
86
Mickael K. Wilson. “Virtual World Applications That Work.” Virtual Worlds Conference New York 2007
Day 2. http://www.virtualworldtimes.com/news/2007/04/mp3s_available_.html
87
Colin Campbell. “Xbox Promo Boosts Burger King.” Next Generation. 30 January 2007.
http://www.next-gen.biz/index.php?option=com_content&task=view&id=4636&Itemid=2
This idea suggests yet another approach to avatar marketing. Rather than limiting the potential
of marketing to avatars by cooping such efforts up in the virtual world, a company might, for
instance, create a real-world advertising campaign aimed at a particular avatar segment – say
Furries. Or you might offer, in real world stores, a distinctive clothing line available only to
people whose avatars had, through achievements or purchases in an online world, earned their
creators the right to own and wear the gear, thus giving people credibility in the real world based
on their avatars’ virtual world status. Marketers could thus “tie products to the game without
busting the fantasy of the game itself” which is always a risk when marketing in virtual worlds.88
Once again returning to the Burger King example, one could feasible assume that those people
who are avid players of the Sneak King video game would be amiable to the idea that they
could receive an exclusive Sneak King costume for achieving a certain level of success or
distinction in the game. When considered from this perspective there really is no reason why
the idea of marketing directly to avatars has to disappear after they (the avatars) accompany
their creators back to the real world.
Furthermore, the future of virtual 3D mediated commerce seems to have a lot in store for it.
Experiments conducted at Stanford University’s Virtual Human Interaction Lab has found that
users are more strongly influenced by avatars that mimic their own avatars’ body movements
and mirror their own appearance.89 Moreover the technology utilized in the experiment may
soon find its way into virtual worlds like Second Life. Before long, avatar clerks might
automatically adjust their behavior to become more appealing to the avatar customer. This
88
89
This process is referred to as Transformed Social Interaction (TSI) and permits changing the nature of
social interaction by providing interactants with methods to enhance or degrade interpersonal
communication. TSI allows interactants themselves, or alternatively a moderator of the Collaborative
Virtual Environment, to selectively filter and augment the appearance, verbal behavior, and nonverbal
behavior of their avatars. Jeremy N. Bailenson, Andrew C. Beall (2005). “Transformed Social Interaction:
Exploring the Digital Plasticity of Avatars.” Avatars at Work and Play: Collaboration and Interaction in
Shared Virtual Environments. New York: Springer-Verlag.
virtual manifestation of an old sales trick makes avatars potentially, if insidiously, powerful
salespeople. Using a simple computer script, the selling avatar clerk could, hypothetically, be
able to subtly and automatically tailor its behavior – its gait, the way it turns its head, its facial
features – to the avatar buyer’s, thus making the clerk seem more friendly, interesting, honest,
and persuasive. Even more astonishing is the possibility of expanding this to situations of n-
person interactions. Digital technology is reaching the point that avatar salespeople will soon
be able to modify their behavior and appearance so that they simultaneously “sense and render
the visual NV cues of multiple interactants” allowing them to mimic the different gesture and look
of every avatar in the room. The resulting image and actions of the salesperson will appear
different to each and every individual, depending on his or her own avatar.90 On a slightly less
optimistic note, Bailenson et al (2005) suggest that as the technique becomes more ubiquitous,
users may become less susceptible to these changes, but for the immediate future at least the
potential returns seem substantial.91 Furthermore research conducted in regards to the use of
animated characters in a traditional 2D web environment suggests that they have a similar
effect on anxiety and performance as being monitored by a human, either in person or
electronically. 92 And because the use of an animated character turns up the volume on social
presence, accentuating the effects of everything present for good or bad, situations must be
considered individually to evaluate when the use of an animated character or avatar will be
beneficial.
90
Jeremy N. Bailenson, Andrew C. Beall, Jack Loomis, Jim Blascovich, Matthew Turk (2004).
“Transformed Social Interaction: Decoupling Representation From Behavior and Form in Collaborative
Virtual Environments.” Presence, Vol. 13, No. 4. pp. 428 – 441.
91
It should be noted however that the studies that have focused on CVE (Collaborative Virtual
Environments) involve virtual reality headsets with participants interacting through a first person
perspective so certain advantages – eye contact – will not translate well in Second Life at this point.
However, it does indicate the existence of the underlying technology upon which a Second Life
compatible application can be built.
92
Raoul Rickenberg and Byron Reeves (2000). “The Effects of Animated Characters on Anxiety, Task
Performance, and Evaluations of. User Interfaces.” CHI Letters. volume 2. issue 1.
A Word of Warning: Resident Backlash to Corporate Incursion.
While the prospects for business opportunities in Second Life are expansive, anecdotal
evidence suggests a cultural tendency to revolt against corporate incursions. One survey
conducted by the German research firm Komjuniti suggests that over 70 percent of residents
view advertising in Second Life in a negative light. Another company puts that number at 40
percent, but regardless of which number you choose to go with, both indicate that successful
integration into Second Life will first involve overcoming this inherent skepticism. However
significant this skepticism may be, Au (2006) suggests that it is dying down as Second Life
grows. Two years ago, he wrote sign-waving resident protesters marching picketing an island in
Second Life that was purchased by a British marketing company. In comparison, today “a
Starbucks—or whatever—isn’t likely to generate that kind of acrimony.”
That said, though, you still find considerable consternation should you make the mistake of
fabricating claims to being the “first” of anything in Second Life. Chances are there was a
resident doing it first so the lesson here is: do your research. For instance in late of October
2006, the marketing company Crayon opened it’s doors for business by simultaneously
launching in the real world and Second Life. The act would have been a brilliant public relations
move had it not been for the inflated claim that they were the “first company to be launched in
Second Life.”93 The claim garnered nearly instantaneous criticism from around the
blogosphere, including the Second Life Herald94 founder and contributing editor Urizenus Sklar
(a.k.a. Peter Ludlow – a Professor of Philosophy and Linguistics at the University of Michigan)
who referred to Crayon (and other corporate entities in Second Life) as f**ktards.
93
Neville Hobson. http://www.nevillehobson.com/2006/10/22/its-time-to-unveil-crayon/
94
The Second Life Herald is one of the most popular blogs on Second Life. But the content and writing
style of the blog resembles a tabloid more so than newspaper publication. It’s content while slightly
offensive and anti-corporate at times, gives voice and glimpses into the Second Life proletariat that
Some corporations will find this issue more problematic than others because of differences in
reputational vulnerability that can be observed between companies. As Tulder et al (2006)
suggests,95 those companies that attach great value to the image and the lifestyle they project
through their branding will be more vulnerable to reputation damage; in other words the more
the reputation of the product is imbued with a specific lifestyle and matching image, the more
important (and problematic) the individual’s brand perception becomes. Because positive brand
association is about positioning and image creation, it goes to reason that the different
communities of people will have to be appealed to in different ways. A single marketing
approach won’t work. While giving away a Nissan Sentra may seem like a good idea on
Nissan’s corporate island, trying to do the same thing in Gor96 will probably be less than
successful. On the other hand if Nissan’s Hands Free Grappling Hook97 were sold there, it
would (hypothetically) be more successful.
Additionally, as the information gathering and tracking capabilities in Second Life improve and
begin to mimic the robust tracking already available on the traditional web, companies can
expect to face similar challenges and concerns presented by personal privacy advocates. But
conceiving of avatars as a new set of potential customers - ones that can be analyzed and
segmented – as well as vehicles if insight into the psyches of the user behind them provides a
useful way to think about new marketing opportunities.
95
Rob van Tudler, Alex van der Zwart (2006). “Lessons in Reputation.” International Business Society
Management. New York: Routledge. pp. 337.
96
Gor is the name of a Second Life area that is based on a series of fantasy novels by John Norman in
which Goreans (the residents) exist in a society where elves, leather, and swords abound, and slavery
and male domination by women are themes.
97
Nissan’s Hands Free Grappling Hook is a digital grapping hook for your avatar in Second Life. At one
time you could find advertisements for it in Second Life as a means of promoting the hand’s free
Bluetooth phone system that could be found in Nissan’s real life vehicles.
Clearly, this is “virtually” unexplored territory for businesses. It slaps a new skin on old
challenges as well as creating entirely new challenges that are unique to virtual environments.
At the same time, however, if successfully leveraged the business opportunities for innovative
companies can lead to beneficial new relationships with the individuals who use these virtual
worlds. If the best way to learn is by example, then the following section will be of particular
interest.
Part II
Case Studies and Business Advice.
I am a firm believer in the theory that humans (and the companies they lead) learn best by
doing. But in situations where mistakes can be costly, it never hurts to have some guidelines to
follow. This part of the paper will provide a detailed view of three successful business ventures
in Second Life. Each case study focuses on one of each of the three major business categories
in Second Life: one resident run business, one corporate endeavor, and an intermediary
company – the metaverse development company. The individual businesses targeted are by no
means the only types of businesses that exist in these categories but in exploring their individual
motivations and approaches, each will hopefully provide insights into how a successful venture
is built.
Resident Business Case Study – Atlantis Modeling Agency.
Atlantis Modeling Agency provides a fascinating example of the evolving business and social
interactions possible through a synthetic world. The story of Valerie McDunnough, CEO of
Atlantis Modeling Agency, is a story of discovery and opportunity. In less than two months she
went from a Second Life newbie to CEO of her own company. Now a year later her company is
one of the premier modeling agencies in Second Life. This will serve to demonstrate two ideas
that play a critical role in understanding the culture of Second Life and the way a successful
Second Life business is run. The first is trust between the individuals of the organization or
business, and the second is the importance of in-world networks.
Background.
Born March of 2006, the avatar Valerie McDunnough (real name unknown) entered Second Life
with the generic body shared by the hundreds of thousands of avatars created before her, the
hundreds of avatars being created that day, and the millions of avatars created after her. She
didn’t come in with any plans to become a Second Life millionaire, which at the time was an
unheard of accomplishment. Rather she joined to have a little fun. As so many others before
her, she began her career as a dancer at one of the multitude of strip clubs in Second Life.
Did she have any real life desire to become a stripper? Was Valerie McDunnough the
projection of her “real” self without the limitations of the “real” world? When I asked her these
questions the answer was an emphatic no. The truth is, dancing at a club was better money
than planting one’s avatar on a dance pad and earning L$2 for ten minutes of dancing, and the
job was just as easy. More importantly, though, it provided infinite opportunities to meet people
and socialize. In fact the social aspect of a strip club is significantly different in Second Life than
in real life. Because it is understood that the girls are here to have fun rather than make a living,
there is no obligation to tip, thus, conversation plays a much stronger part in your interaction
with the dancer.98 Similarly, the relationship between dancer and club owner is much less
hierarchical than in real life. This resembles what Nandhakumar et al (2004) describes in
regards to inter-organizational relationships as a “club environment” which is based on the
premise that “no single [individual or] organization dominates. The planning process is more
participative, as those involved need to accommodate each other’s needs and expectations.”99
This structure of organizational equality promotes cooperation and friendship between
employees, and provides opportunities for innovation and career development. In the case of
Valerie McDunnough, soon after beginning her dancing career, the owner of the club she
worked at approached her with a proposition to work in a fashion show featuring, among others,
the designs of the owner. The show itself was poorly organized and to quote Ms. McDunnough
98
My first conversation with a dancer in Second Life. Full transcript of the conversation can be found at
www.adlatitude.com
99
Joe Nandhakumar, Niki Panteli, Philip Powell, Richard Vidgen (2004). “Trust in the Digital Era.” Social
and Economic Transformation in the Digital Era. ed. Georgios Doukidis , Nikolaos Mylonopoulos , Nancy
Pouloudi. Hershey, PA: Idea Group Publishing.
ended up “being a mess.”100 However at the completion of the show, one of the designers
featured in the show (Adri Saarinen) approached her and offered her a modeling job, i.e. she
was discovered.101
The first show Adri put on occurred about a week later. It was bad, though not nearly as bad as
the first one. Half the models backed out minutes before the show started, but everything else
ran more or less smoothly. Most importantly, though, the show gave Ms. McDunnough a
reputation as a reliable person. Because Second Life lacks any reliable system of contracts or
dispute arbitration, trust becomes a crucial factor in creating a functional organizational structure
within the world. Similar arguments have been made for the importance of trust in digital
environments and its correlation to the success of an online business.102
Following shows with Adri resulted in similar outcomes – decent but not good – and the shows
themselves began coming less frequently, so she began working additional shows around
Second Life. Those ended up being absolute nightmares. As in real life, fashion in Second Life
is all about the details. The clothes can look great and the models can look even better but if
the clothing doesn’t fit the model, you have a disaster. Because the clothes exists in a digital
environment, rather than have a seamstress putting last minute touches on outfits as models
walk out onto the stage, adjustments are made by adjusting pre-programmed attributes, but
these adjustments take time. The clothing and jewelry weren’t given to the models until ten
minutes before the show started. As Ms. McDunnough puts it “we just kinda haphazardly
wandered down the runway and prayed that the clothing would not fall off.” Further
100
“Conversations with Ms. McDunnough.” Full transcript of the conversation can be found at
www.adlatitude.com
101
The designer was Adri Saarinen (real life Adrienne Haik – one of five partners in the MDC
Metaversatility).
102
complicating the situation, the MC was given little to no description of the designers and their
outfits as the models walked the runway.
Completely disenchanted with modeling in general, Ms. McDunnough contemplated dropping
the profession completely. But about the same time, Adri put her in contact with a friend of
hers, Sitearm Madonna, who was the events coordinator for the one of Second Life’s oldest
sims -the Dublin Sim. Sitearm was interested in putting a fashion show together, but wanted it
fully planned with a script for the MC to read describing the designs being modeled, tidbits on
the designer, something that complimented the creator, etc. In essence he wanted was a full-
fledged fashion show. Because of his friendship with Adri, the interview process was informal,
short, and sweet and Ms. McDunnough was hired to produce the show. It ended up being a
great success and a month later (May 2006), Atlantis Modeling Agency was born.
Success through Social Networks.
Atlantis Modeling Agency has grown from a one-woman shop to employ 29 models of which 6-
14 will work any given show, depending on size. Typically 4-12 designers will present their
outfits in a show, but according to Ms. McDunnough the 1-2 designer shows are actually better
because it reduces brand confusion among the audience.
Since its inception, AMA has been responsible for one show a month, though on occasion they
have organized two. Because of the novelty of the concept of a modeling agency and the
generally leery attitude professional designers have toward being in poorly organized fashion
shows, reputation plays a significant role, so 2006 was a reputation-building year for AMA. Ms.
McDunnough hopes to double or triple the number of shows organized this year. On average,
the shows see 80+ unique visitors who stay for 5 or more minutes. It is not unusual to see an
avatar remain for the duration of the show which can last anywhere from one hour to three days.
All shows include music and fireworks, but the larger ones will take on the atmosphere of a
festival like Mardi Gras with live music and free goodies being passed around.
Currently there are two primary venues for the show: the Dublin Sim and a skybox above the
AMA headquarters. AMA is responsible for all promotions. Branding and show promotions in
Second Life mimic real world approaches and include internet press releases103; blog posts104;
ad buys in Second Life’s in world magazine The Metaverse Messenger; and ads placed in the
classified section of the search tool. But by far the most effective form of promotion in Second
Life is through word of mouth, and because of this the models play an integral role in promoting
the agency and the show. Again we see the relationship between AMA models and their boss
mimic Nandhakumar et al’s (2004) “club environment.”105 Many of the models in addition to
working the shows, “chill” outside of work. One of the AMA models I spoke with, Chelle Moore,
also owns a dance club and regularly DJs there. Prior to AMA shows, she will insert plugs into
her broadcast to promote the shows. Coincidentally, or perhaps not, many of the AMA models
and their friends also socialize at the club.
AMA shows command on average L$30000 to cover organizational and promotion costs; plus
the cost of models, djs and mcs (which start at L$600 per person per show); and outfits (which
can cost upwards of L$1000 a piece). If you convert that to $US, the amount of money is
significantly less impressive. Additionally considering that Ms. McDunnough puts in 3-4 hours a
day to run AMA, the monetary compensation seems wholly inadequate. However, the goal of
the company has never been to make money according to Ms. McDunnough but rather was
103
Garret Bakalava. “BELLISSIMA! Eclectic styles for men and women.” Second Life News Network. 15
April 2007. http://www.slnn.com/index.php/print-article/articleID/452.html?sid=g4op8vt6OoazW0df.
104
“Bump: Reveal Fashion Show.” Second Style Blog. http://blog.secondstyle.com/2007/02/reveal-
fashion-show-february-25-26-noon-slt.html
105
simply to “enjoy myself…and produce something that is worth being in for the designers,
models, and sponsors.”
Corporate Case Study – Pontiac’s Motorati Island.
Some companies get it and others fall horribly short. Sometimes the reason for failure is as
simple as the product or service has no place in a world like Second Life, as in the case of Wells
Fargo. But more often than not, it’s because companies fail to grasp or even attempt to
understand the world that they are about to enter. Others however seem to have taken a
genuine interest in the world and their approach – their builds - mirror their interest. Creative
and social, they embrace the community in which they are building and create something of
use.
Of the real world car companies – and perhaps real world companies in general – in Second
Life, the most successful has arguably been Pontiac. The following will explore why this is the
case.
Background.
Plagued with the same problem of sluggish sales as their parent company GM, Pontiac has for
the past few years been faced with the task of rebranding their image. So it became extremely
important to them that everything they did as a company forced a reappraisal of the company.
They wanted to surprise people. Traditional advertising didn’t offer a way to force people to
reappraise the company. Traditional media campaigns (television and print) have continued,
but Pontiac has for the past three years increasingly focused on non-traditional (read innovative)
marketing campaigns to reach its target demographics. Such campaigns have not been limited
to the United States alone, but rather have reached internationally as well. In the words of Jim
Scott, ad manager for Pontiac Canada, “we need[ed] to put the mojo back into Pontiac.” The
2005 debut of the Solstice was the launch of a flagship vehicle whose “sole reason for being is
as an image vehicle…[something] to put up on the platform as what the brand is.” The Solstice
represented what Pontiac hoped to reinvent itself as. It was sexy and fast – faster than a
Porsche and cost less than half the price. It was to be the Pontiac Firebird of Generation Y.
Finally Pontiac had built a car that people could feel and feel passionate about again. The
Solstice was about "Feel[ing] Free.”106
The next step was to implement a marketing campaign that exposed people to take notice of
this tour de force. They wanted people to start talking. And what resulted was a brazen multi-
million dollar marketing campaign with risk written all over it. In September of 2004, Pontiac had
276 G6’s (worth approximately 7 million dollars) given away to Oprah’s in-studio audience.
While not generally credited as boosting sales, it did generate media exposure to the tune of
110 million dollars.107 A few months later it designed and built a 9,000 square foot ice maze at
the Toronto Auto Show.108 Again their efforts paid off with significant media buzz. The ice maze
placed Pontiac in the Guinness Book of World Records, and in front of the eighty-two media
outlets as well as the almost 20,000 people who passed through during it during its 10 day
span.109 Then in April of 2005, Pontiac premiered its new flagship, the Solstice, through NBC’s
Apprentice. At the time of the Solstice’s debut, the car had never been seen before – save a
106
Annette Bourdeau (December 2005). “Pontiac gets its mojo back - Jim Scott, ad manager, Pontiac,
Buick and GMC.” Strategy Magazine. http://www.strategymag.com/articles/magazine/20051201/scott.html
107
108
“North America’s Largest Ice Maze to be Built in Downtown Toronto.” General Motors Canada.
http://email.gmcanada.com/corpdb/cachq/pressrel.nsf/7a15ac9c7647fb7985256790005e5a02/49f930bf40
ff511b85256fa2004d0b79?OpenDocument
109
Annette Bourdeau (December 2005). “Pontiac gets its mojo back - Jim Scott, ad manager, Pontiac,
Buick and GMC.” Strategy Magazine. http://www.strategymag.com/articles/magazine/20051201/scott.html
few concept versions, yet in 41 minutes sold every last one of the 1000 Solstices it had built at
the time.110
It’s propensity toward the advertising novelty already demonstrated, Pontiac again began
looking for the next big thing. In June of 2006, Pontiac found Second Life. And five months
later in November of 2006, Pontiac made its debut.111 (For a quick, entertaining glimpse of
Pontiac’s plans for Second Life search “Pontiac Second Life” on YouTube.) Two facts separate
this new endeavor from the three mentioned above:
1) It was cheap, relatively speaking. Total cost was slightly over the average cost of one
production of a car commercial before media (media is usually 6x production cost.)
2) It is sustained. Oprah, the ice maze, and the Apprentice created instant buzz that
died quickly. With Second Life, Pontiac received its media coverage and created a
permanent community around it.
Pontiac’s hopes for Second Life.
If you assumed money, you were wrong. Pontiac’s entry into Second Life had nothing to do
with tapping into the much hyped million dollar v-commerce112 that exists in Second Life today.
At the time Pontiac began looking into Second Life, this held even truer. With a total registered
user base of approximately 300,000 and concurrent logins at less than ten thousand people, the
economy of Second Life was significantly smaller than it is today. Even with today’s numbers113
an argument focusing on monetary profit would be nearly impossible to make. In retrospect it
becomes even more obvious that approaching the world with the intent of selling cars would
110
“1,000 Solstice Roadsters Sell in 41 Minutes.” Pontiac News and Events.
www.pontiac.com/divisional/newsevents/news.jsp?brand=divisional#solstice.
111
“Pontiac Empowers Car Culture In Second Life.” Autoblog. Press release available at
http://www.autoblog.com/2006/10/23/pontiac-buying-property-in-second-life/
112
V-Commerce (or virtual commerce) is a recently coined term that refers to e-commerce (electronic
commerce) taking place within an immersive 3D virtual world.
113
As of 0130 CST April 10, 2007, total residents - 5.4 million; concurrent login – 2.1k; US$ spent in the
last 24h – $1.6 million.
have been a huge disappointment. Consider this: Pontiac sold 1000 Solstices in 41 minutes on
the Apprentice for $27k a piece generating revenue of 2.7 million dollars. In comparison it took
them four months to sell 1000 virtual Solstices in SL at L$600 a piece (or about US$2.50). So if
not the potential for profit, then what?
Answer: Pontiac found in Second Life the perfect branding experience. With the rapidly
evolving community dynamic of web 2.0, the internet had already proven itself as the place to
discover and leverage the next big thing. The birth of YouTube and the rapid growth of social
networking sites like MySpace demonstrated a prominent cultural phenomenon. The proletariat
demanded and craved the opportunity for personal expression; all they needed was the opening
to express their inner creativity. Leo Burnett and Pontiac recognized this “power to the people”
trend being stimulated by the internet and wanted to leverage it for the Pontiac brand. That
said, though, Second Life failed to register in their search for the next big thing. It was relegated
to a realm comprised of technophiles (read geeks or nerds) and generated little interest with the
company. Not unlike the role of Albert Brennaman in Hitch114, sometimes all need we need is a
nudge in the right direction to get noticed. That nudge toward Second Life came from a
burgeoning viral media company called Campfire.115 They served as the driving force in
convincing Leo Burnett and, via Leo Burnett, Pontiac to enter Second Life. The important story
here, however, is not so much what brought Pontiac to Second Life, but rather how they got
started or according to Tor Myhren of Leo Burnett Detroit “how it didn’t start.”
As of June of 2006, no real life corporation had entered Second Life yet. So the initial idea was
to become the first major advertiser in Second Life. The desired effect was similar to what had
happened with Oprah or the ice maze – it would make a great press release. However, as fate
114
Kevin James (Albert) plays a shy accountant who is infatuated with his celebrity client and enlists the
help of Will Smith (Alex Hitchens) to get her to notice him.
115
More information on Campfire can be found at www.campfiremedia.com.
would have it American Apparel beat Pontiac to the punch. So no longer able to be the first,
they tried to be the best.
In making this choice, Pontiac decided not to jump in right away. Leo Burnett spent about 4
months researching the culture via blogs and working with metaverse development company
Millions of Us. This delay was nearly made at the expense of being fresh. Not only were they
no longer the first real life company to enter Second Life, but in October of 2006 Nissan beat
Pontiac out as the first real life car company to enter Second Life. In retrospect, however,
Pontiac’s patience paid off.
Nissan, through metaverse development company Electric Sheep, created an island to promote
the Sentra, so in order to maximize brand exposure began giving their cars away for free. This
action produced considerable backlash from the Second Life community because it showed a
blatant disrespect for the community Second Life. Car producers especially were outraged
because they believed that it undercut their profits. Pontiac learned from this mistake and when
they finally entered Second Life in November of 2006, charged a modest L$600 for the Solstice.
Though not as large a build as Nissan’s, Pontiac’s 96 acres has fared exponentially better at
creating the image they were after. Why? Because they genuinely tried to enhance the Second
Life experience. Tor Myhren said Pontiac hoped to fit in with the culture of Second Life better
than other advertiser efforts, using its island to showcase resident creations rather than simply
to showcase the brand. It also took care to cede control to users over the cars, allowing them
to customize them however they wish. "What we're trying to do is go far beyond a press release
saying we're on Second Life," he said. "We want to connect with the people there."116
116
Brian Morrissey. “Pontiac Drives Into Second Life.” Adweek (23 October 2006).
http://www.adweek.com/aw/iq_interactive/article_display.jsp?vnu_content_id=1003286949
So in an effort to connect with the people they came up the idea of a landapaloza – giving away
almost all the land on the island to residents who were interested in promoting Second Life’s car
culture. The only thing Pontiac built was a racetrack and a dealership. Free reign was given to
the residents as long as it was about car culture. Resident shops include clothing store based
on racing fashion, dance clubs, a drive in movie theatre, and automotive stores.
Examples of Pontiac’s efforts to the culture and residents of Second Life into Motorati Island:
• Having legendary Second Life scripter Francis Chung build the Solstice GXP.
• Allowing celebrated fashion designer Callie Cline to open up a shop on the island to
“create a line of clothing for a team of "girls" aka: motorati girls…who will/can be used in
promotions/posters/calendars” and “increase [her] brand name.”117 She will soon be
hosting tours around the island.
• Concerts and shows including a mixed reality simulcast of Jay Z on a Second Life
replica of the Pontiac Garage as seen on the Jimmy Kimbel show. The stage is built on
the intersection of 4 sims (allowing for a max of approximately 100 avatars). The show
was invitation only and sold out in 20 minutes.
• Parkade Nightclub – a night club built within a venue that looks like garage. It is run by
Andy Asylum who also (DJs / owns?) BootieSF – a real life dance club in San Francisco.
Music is streamed live into Second Life from the San Francisco club.
• Spin Martin Emerging music mogel in SL. Launches new bands in SL. Designed a
object that allows you to take his music around SL.
• All Pontiac profits from Motorati go to the Electronic Frontier Foundation (EFF).
117
Callie Cline. “Motorati Girls.” http://motoratilife.com/directory/detail.php?id=99
In addition to Second Life related builds, Pontiac has also integrated the 2D web into its island
with an active blog promoting events that occur on the island (Corporate sponsored and
resident created). They have also turned this website into a Second Life portal, allowing curious
visitors to create their avatar through Motorati Island. While the capability of joining directly
through a branded portal is a good idea, I was slightly disappointed with the experience. The
avatar creation process has been shortened simplified significantly when compared to what you
have to go through if you create an avatar through the Second Life website. Pontiac has
created a simple two-step process. First you register a name, and second you choose male or
female. If you choose male, you are given the generic boy next door avatar (blonde hair, blue
eyes, a white T-shirt, and blue jeans) and if female you are given generic girl next door look.
There are two problems with this registration process. The first is cosmetic. I would have
expected to at least have been given a starter avatar more in line with the racing motif that
Pontiac is creating. Doing so would further accent the islands theme. Additionally the process
provides yet another branding opportunity that should be utilized (i.e. Pontiac could include its
logo on the T-shirt). Second and more problematic, no instructions are given on how to interact
with the world save that the arrows on your keyboard will move your avatar around. This
oversight renders negligible what is arguably the single most compelling aspect of Second Life –
its interactivity and its ability to engage. In discussing advertising formats as they relate to the
conventional web, Leckenby and Li (2004) suggest “interactivity (with the ads) will be low on the
part of the user if the user does not possess expertise about surfing the internet.”118 This
conclusion can be generalized to read that a user who does not know how to interact within a
given environment (because he/she is unfamiliar with it) will have a lower level of interaction
with that environment (than a user who knows how to interact) and may eventually refuse to
participate out of frustration.
118
John D. Leckenby, Hairong Li (2004). “Internet Advertising Formats and Effectiveness.” p. 11. Full text
can be found at http://www.ciadvertising.org/
Potentially losing visitors because they don’t understand the environment is a very real threat,
and I say this from personal experience. The learning curve required for an individual to feel
comfortable navigating around Second Life is a steep one. I consider myself a fairly computer
savvy individual and, at one point in my life, a gamer, but even after traversing the tutorial
available on Welcome Island, I had difficulty acclimating myself to the avatar controls and the
Second Life environment. Assuming that the visitor will figure out how to engage with
environment without some sort of instruction is a terrible move. Pontiac needs to have an
instructional system built to further engage the visitors. My suggestion is to structure it along
the lines of a racing simulation, have an avatar greeting all new residents, and Pontiac will have
a winner.
In general, however, I agree that simplifying the avatar creation process is necessary.
Anecdotal evidence suggest that website conversion rates (as measured via visitor registration
through online forms) can be increased significantly by merely shortening the form.119 So it is
arguably true that shortening the avatar creation process will mean more people actually sign up
to visit Motorati Island. But, as with the conventional web, if the overall experience after
registration does not match up with the time taken to register then there is little reason for the
user to return. In order to motivate the visitor to come back, he/she needs the visitor to be
engaged with the environment. And because engagement is invariably related to the users
ability to navigate the environment, Pontiac will need to find a balance between expedience and
avatar control instructions (as will any company wishing to create a branded Second Life
registration portal).
119
Conversion Rate is a term that refers to the process of having a website visitor submit his/her contact
information to that company. I work for an internet marketing company and observations of client visitor
registration data suggests that website conversion and length of registration are inversely proportional.
Success through Community.
Has Motorati Island a success for Pontiac? It depends on how one measures success. As of
March 2007, Motorati Island has had 2.1 million total visitors and 30,000 unique visitors. With
thirty resident run businesses running on Motorati Island, every bit of the original 96 acres is full.
And Pontiac has sold 7000 Solstices in Second Life for the dollar equivalent of about
US$21,000 (all of which has been donated to the EFF). How many of these in-world sales
resulted in real world sales is unknown, but as Tor Myrhen puts it “this is not direct marketing or
retail marketing. It is brand marketing [the purpose of which is to] create an emotional
connection with the brand. [It] makes you feel a certain way about the brand. [This is] not a
classic ROI [return on investment] case. [It] doesn’t sell cars today…but will it a year from now,
probably.” Coming from the mouth of an advertising executive, these observations are naturally
suspect but when taking into consideration the demographics120 of Second Life, they may not be
that far from the truth.
Where is this all headed? Even Tor Myrhen couldn’t answer that question. “The plan is to blow
out the campaign in 2007…contests and live shows…but [what is occurring here] isn’t
controlled. It isn’t media. And it isn’t contrived. What happens with the island depends on the
people.” Again this statement needs to be taken with a grain of salt because Pontiac still has
administrative control over the servers, which means they can at any point in time choose to
ban/expel any person or business from Motorati Island on a whim.
Despite some issues with the registration process, Pontiac has built a compelling presence in
Second Life; a presence which more real world corporations entering Second Life should
120
Surveys conducted by First Opinion Panel, brainchild of the Social Research Foundation, indicates
resident demographics of Second Life as follows: progressive adults, 60/40 male-female split with an
average age of 33. My personal experience with the residents of Second Life agrees with these
numbers. Survey data can be viewed at www.adlatitude.com.
imitate. This conclusion is based on two ideas that need to be recognized. The first is that
Second Life possesses its own culture, and it is a culture that needs to be recognized and
respected before one plunges ahead with whatever grand scheme one comes up with. Pontiac
recognized this and played to it when they made the decision to charge for the Solstice GXP
rather than giving it away for free so that the existing economics of the game would not be
disrupted (i.e. they did not want to undercut resident run car dealerships). Additionally in
continuously providing unique content to Second Life, Pontiac propagates the idea that Second
Life is exclusive, and exclusivity promotes loyalty. Pontiac, for example, used Second Life to
provide a sneak peak of the concept G8 that was being revealed the next day at the 2007
Chicago Auto Show. The second is that Second Life is about community. Users don’t go in to
Second Life to play alone. They go in to Second Life with the intention of interacting with other
people. In inviting residents to set up shops on Motorati Island and continuously hosting shows,
Pontiac has created a community within which users can interact with other people who share
their interest. History seems to venerate this approach as Robert Wright suggests when in
reference to the evolution of human society he says “rational pursuit of self-interest [leads] to
economic cooperation and social integration that make them (societies) better off than they
otherwise would be.” Perhaps even more interesting, however, are Pontiac’s plans to further
integrate Motorati Island and the community into the real world.121
121
At the Virtual Worlds 2007 Conference in New York, Tor Myhren hinted at upcoming real world events
that included using Callie Cline and the Motorati Girls but details were not disclosed. The full audio of his
presentation on “Motorati Island” Virtual Worlds 2007 Conference Day 2 can be found at
Metaverse Development Company Case Study – Green Grotto Studios.
The Metaverse Development Company (MDC) is perhaps the most intriguing of three company
types profiled in this paper, primarily because of their novelty. This is an industry that has
arguably only emerged within the last year as immersive social virtual worlds such as There and
Second Life have grown in popularity and begun attracting big business. The reason for the
emergence of MDCs is that “big brands are showing up [in Second Life] and other brands
recognize this…marketers like to be in on the newest trend. Some of them missed the
YouTube/MySpace wave, and Second Life is their opportunity to get in on something cool…we
[the MDCs] are there to bring them in.” 122 Within MDCs you find a range of companies from
pure virtual world – metaverse – design companies to web design companies who “play” in the
virtual worlds to marketing and ad agencies who are expanding their reach into the virtual
universe.123 Additionally in the whole scheme of business ventures related to Second Life and
virtual worlds in general, this is where the money is at right now. MDC’s have without a doubt
disproportionately benefited from the popularity surrounding virtual worlds and the money
flowing into them.124 They have to a certain level become the stewards of Second Life and it’s
community because of the cash that filters through them. And with that power comes
responsibility. In my opinion, they (more so than the corporations that employ them) are
responsible for ensuring that the Second Life community and corporation exist in a mutually
beneficial relationship.
122
From my interview with Marc Girolimetti. The full audio can be found at www.adlatitude.com
123
The following is a brief list of MDCs that I have encountered: Rivers Run Red, Electric Sheep
Company, Green Grotto Studios, Millions of Us, and Metaversatility. A full list of MDCs as well as
freelance developers can be found at http://secondlife.com/developers/directory.php
124
Electric Sheep Company grew from 2 to 25 in less than a year and projects with Electric Sheep range
from ten thousand to two hundred thousand dollars (US): see Business Week’s “Second Life Lessons” at
http://www.businessweek.com/innovate/content/oct2006/id20061030_869611_page_2.htm.
Metaversatility’s projects also fall in a similar range – from five thousand dollars (US) to 200 thousand
dollars (US) on the high end: see “Interviews with Adri” at www.adlatitude.com.
The company I chose to profile is Green Grotto Studios for no other reason than that I liked their
approach to Second Life, and I liked their CEO, Marc Girolimetti. This is by no means a slight
against any of the other companies or individuals I spoke with125, but Marc’s vision of what a
MDC should be echoes my own opinion, so this profile provides me with the perfect opportunity
to expound on it.
Green Grotto Studios is by no means the best known or as Marc willingly admits even the most
skilled MDC out there. And unless you have worked with them, there is little chance that you
have ever heard of them. Companies like Electric Sheep, Rivers Run Red, and Millions of Us
are much larger and much better known, but while I cannot say much about those companies, I
am willing to bet that Marc and Green Grotto Studios are very much as capable as any of the
other MDCs you will find out there. In writing about Green Grotto Studios, I hope to demonstrate
the importance of MDC’s to Second Life because of the responsibility that these companies
have for the prosperity of Second Life and the cultivation of the community that exists there. In
doing this, I also hope to provide a framework through which a successful MDC can be
organized. With that said who is Green Grotto and why in my opinion does this company in
particular "get it" in regards to Second Life?
Company Summary.
Green Grotto Studios (Green Grotto) began as a specialty Flash development and design
company, but now serves as a full service interactive web development firm that specializes in
rich media emerging technologies. With less than 15 full time employees, it is by all accounts
still a small firm, but in the years since it opened its doors the company had done interactive
marketing, consulting and developing for companies such as Microsoft, Best Buy, Adobe
Systems, DuPont, Warner Brothers Home Video, as well as startup companies like RatePoint.
125
This comment is primarily targeted at Adri of Metaversatility. I am especially grateful to the time and
help that she provided to me, and I just wanted to make that clear.
As of my last conversation (March 2007) with Marc, the company was also negotiating
engagements with UC Berkley, Este Lauder, DKNY Fragrance, and Playboy126.
Background.
Like all entrepreneurial success stories, Green Grotto was the result of a collection of
coincidences. From Marc’s beginning as a fresh college grad serving as a technical support
manager for Netscape 1.0 to years later working another tech job at a firm he hated to the
booming popularity of Second Life, each event was an isolated occurrence in time – which is to
say that at the time each occurred, no one could have predicted its eventual consequence: the
birth of a successful MDC. And yet as the proceeding account will show, each event played an
essential role in the creation of the company: Marc’s involvement with Netscape 1.0 for
beginning his career with the internet; his working a job he hated for introducing him to a good
friend and a better salesman Eric Brunker, currently Director of Sales for Vox Technologies; and
the popularity of Second Life for jumpstarting the business and convincing Eric to join him and
sacrifice his free time for Green Grotto.
Green Grotto Studios is a bootstrapped company. Meaning that from the very beginning this
company was funded with the dual blessings of Visa and MasterCard and built on the shoulders
and dreams of Mr. Girolimetti. The company began as an attempt to provide others with a
resource to leverage the dynamic, rapidly changing technology of the internet. When Marc
envisioned Green Grotto, Flash was the web's next big thing. It was going to change the web.
The days of boring, inanimate websites were numbered because Flash was going to replace
HTML as the primary means of web design. Though this has yet to occur (primarily due to the
inability of search engines to peruse Flash code), Flash has become a ubiquitous presence on
126
The Playboy deal seems to have closed. There was an advertisement on New World Notes today
(5/10/07) indicating that Playboy will be coming to Second Life on June 7.
the web as a compliment to HTML design.127 And while Green Grotto has had some success
with its Flash endeavors in the past, today Flash development has assumed a subordinate
position to metaverse development in Second Life.
The transition to Second Life and metaverse development was a natural next step for a
company with a “passion for emerging technologies.” But the ultimate reason for expanding into
Second Life was revenue driven. According to Marc, Second Life provided a great opportunity
for profit because it “is a great way to get your foot into the door…corporations that would
normally have little use for a company of our size immediately perk up when you mention
Second Life because of all the press it has been getting lately.” And because of competency in
other areas of web design, what many times initially begins as a Second Life pitch evolves into
a much broader web marketing campaign – ad banners, custom built registration api,
microsites, and movies. Green Grotto also takes on the responsibility of distributing the ads
across the ad networks. The advantage provided here is that the brand image being cultivated
by the campaign and coordination in general becomes simpler than if it was undertaken by
separate agencies. So the contribution to Green Grotto brought by Second Life are two
fold: it was the motivating factor that finally brought Eric onboard, and it brings in clients.
The Human Factor.
Behind every successful company are good people. Behind Green Grotto Studios are Marc and
Eric. Marc and Eric seem to love what they do and do what they love. They are able to talk so
enthusiastically about their work that getting caught up in their excitement is nearly reflexive.
127
I mention this because Second Life, with the appearance of the SLurl (Second Life URL), seems to be
taking a similar path toward integration into existing websites. Just as organizations have used Flash to
augment the online experience, SLurls allow progressive organizations to further the user experience by
linking the 3D virtual representations of their organizations within Second Life to their websites. The
widespread adoption of this practice has yet to occur, but it is arguably just a matter of time before it does
because it follows the same formula as Flash (i.e. the client needed to view and interact with the
environment is free to download). Additionally there have been reports that a 2D modification for the
Second Life application is being developed.
Once you get them talking about Second Life, there is little you can do to stop the conversation.
For some that probably sounds tedious, for me however it was invigorating to listen to someone
who was as fascinated, or at least seemed to be as fascinated, with the topic as I was.
Eric is a salesman, so projecting this sort of persona is almost expected from him. In the
technology service industry especially, it is important to ensure that expectations on the client
side align with what the company can deliver. That responsibility falls on to sales, so being able
to converse naturally and compellingly about a topic that your prospect is only superficially (if at
all) familiar with is the forte of a good salesperson. To hear Marc speak compliments about Eric
is refreshing because it reinforces the idea that the strongest asset in a company is a good
team, but at times it can be borderline nauseating. In any case, Marc describes Eric as being
able to “sell the concepts and ideas that maximize the value from each client by getting the
development side [of Green Grotto] on pre-sale [and ensuring expectations align with
capabilities and vice versa].”
Marc on the other hand is not, by profession, a salesman. He does, however, believe in what
he and his company is doing, both as a service for his clients and as a steward of the Second
Life community. It is this perception of Green Grotto as steward that I believe is especially
important to have when a MDC (or any corporation for that matter) engages the Second Life
community, and one which I will expand upon in the following section.
Success through Stewardship.
Although numbers vary depending on who you reference, somewhere around 70 percent of
Second Life residents are turned off by the presence of brands.128 Most marketers would find
128
Survey data courtesy of German research firm Komjuniti. However, a similar survey conducted by
Market Truths has reported significantly lower numbers (51% who expressed a negative or neutral
attitude toward brands).
this number appalling, but it by no means demonstrates that real life corporations should not
enter Second Life. Rather it reinforces the argument that the approach that the majority of real
life brands have taken toward marketing and advertising in Second Life is flawed.129 Marc
agrees with this assessment. It makes “no sense. We rely on big corporations to manage the
everyday affairs of our lives. What they hate is the [user] experience [created by these brands
in Second Life], not the corporations. Reebok sucks…Adidas sucks. [Both] completely ignored
the market dynamics (the retail economics) that exist in Second Life and disrespected the
community.” Marc is referring to two things here: first that despite the fact that in entering
Second Life both Adidas and Reebok were trying to create a positive brand experience rather
than make money, they undercut resident run stores by charging L$50 per pair rather than
going with the market price of L$250 per pair, thus disrespecting the community. Second their
builds are empty of people (employees or visitors) and neither brand offers more than one
product. I have previously referred to these types of builds as empty theme parks130 but
perhaps Marc’s description of them as “glorified ad banners” is more appropriate. Now compare
this approach with the approach of resident run businesses in Second Life, and where the
corporations fall short becomes apparent. All the private shop owners have their stores packed
full of merchandise and they are continuously introducing new products. But I think more
importantly than that, they hang out in their stores when they have time. Because Second Life
is a social environment putting effort into communicating with and relating to their customers is
arguably the most important aspect of a successful virtual business – an idea that most
corporations have failed to recognize in their approach to Second Life.
129
Conclusion drawn from my conversation with Joel Greenberg (at the time a Senior Planner at GSD&M,
now Vice President of Marketing Innovations for Electric Sheep, and author of the blogs Idea City and
Friends Talking).
130
See my Talk Second Life blog post “Tracking Corporate Success in Second Life” at
http://blogs.talksecondlife.com/tsl/2007/02/20/tracking-corporate-success-in-sl/
Now I will admit it is unfair to place all the blame for their failures in Second Life on the
corporations themselves. The MDCs responsible for creating the corporation’s presence in
Second Life should probably take most of the blame because of their self-titled claims to being
Second Life experts, and their unique relationship as bridges between Second Life and the real
world. In the case of Adidas the MDC Rivers Run Red should have recognized the flaws in
Adidas’s approach to Second Life and done something about it. But they did not, either
because they did not recognize the flaw or they chose to ignore it. Regardless of why, however,
this illustrates an inherent flaw in many of the MDCs. They are composed primarily of
programmers (with web design backgrounds). It is true that they may be very good at what they
do. They can build/script some very cool stuff. But while these individuals may be particularly
skilled at building things, they do not have the time or even the desire to sit there and make sure
these projects succeed in the long term. Or as Marc explained “what [they] bought was a
gorgeous island and a fantastic building, but not the staff to see these ventures prosper.”
Websites can be built and left to their own accord because no one expects a website to begin
chatting with you when you visit, but the Second Life is understood to be a place where people
can socialize, so the build and ignore mentality doesn’t work.
Recognizing this, Green Grotto takes a different approach when it brings clients into Second
Life. Green Grotto approaches the process of branding in Second Life like branding in real life
because they recognize that the basic rules of good business practice that apply in the real
world also apply to businesses in the virtual world, specifically the need for novelty, interaction,
and good customer service. The marketing campaign they are running for RatePoint131
demonstrates this philosophy quite well. In addition to building the RatePoint island sim, a
dedicated manager is assigned to the account whose primary responsibility is to promote the
131
RatePoint is a private start-up company that specializes in building online community feedback/rating
systems like eBay’s Seller Feedback. For additional information please refer to RatePoint in the
Appendix.
both build the RatePoint brand and promote their avatar rating system in Second Life. To this
affect, the account manager has free rein to hire street teams132, solicit blog posts and articles
from Second Life related web publications, solicit articles from in-world publications, purchase
ad spots from both in-world publications and Second Life related web publications, and organize
any other promotional activity he/she feels will create a positive brand relationship with the
Second Life community including but not limited to throwing parties and hiring in-world bands to
perform on RatePoint island.133 It is this micro-management of their client’s relationship with the
Second Life community and the distribution of client money throughout the Second Life
community that I refer to as stewardship. It is a concept that I believe more MDCs will embrace
in the future, not only because their clients will begin demanding that they do so, but because
their fates are closely entwined with the proliferation of the Second Life community and they are
in a unique position to promote corporate responsibility toward the Second Life community.
132
Street Teams refers to Second Life residents who are hired Avatars hired to promote the company’s
events in-world.
133
Posting for their live music events like this one Slim Warrior – Smooth Ambient Live at RatePoint
[http://secondlife.com/events/event.php?id=569460] can be found in the Second Life Community Events
section of SecondLife.com. Alternatively you can visit their corporate blog at
http//blog.ratepoint.com/category/second-life for updates on upcoming events.
Failures and Successes: Lessons from Corporate Ventures in Second Life.
As the preceding three case studies demonstrate, what defines itself as success varies
significantly depending on the business type and motivations of the company. What the
individual resident considers successful is not always what the corporation will consider
successful. As with the case of AMA and most resident businesses in Second Life the
motivation is not to be profitable but rather to enjoy oneself. My interview with KallyFaith and
Omega of K.O Designs suggests that even those business owners that do demonstrate a
tangible profit, note that having fun or creative expression (not making money) is the primary
motivation for continuing to do what they do.134 Besides this, however, there is no way that you
can compare what an individual would consider successful in regards to profit to what a
corporation would consider successful. As Castranova (2006) suggests, generating an amount
of revenue that can be considered significant in Second Life is nearly impossible because, while
active, the scale of the economy is still extremely small, so approaching Second Life with the
idea that you will be able to extract a large amount of real world currency is a mistake. This is
perhaps a sophomoric observation to make so I would like to add some additional clarification
as to how one should measure success from a corporate stance.
For starters, if revenue generation is an equation for failure at this point in time, what other
methodology can be used for tracking the success of (or lack there of) real life corporations in
Second Life? The expansive tracking analytics that have become synonymous to running a
successful e-business have not yet found their place in Second Life yet. In regards to analytics
Second Life is still stuck in the dark ages of web 1.0. Avatar visitors, the Second Life equivalent
of the page view, is the primary and to the best of my knowledge only means of providing a
concrete number from which to gauge the success of a venture.

134
A copy of the full transcript can be found under the post “Conversation with KallyFaith and Omega
Roland of K.O. Design” at www.adlatitude.com.
Tateru Nino over at New World Notes has pulled together some interesting numbers and a
perfect place to start. As a traffic benchmark, we can probably consider the L-word with its
20,000 weekly visitor to be a successful corporate venture in Second Life.135 Now whether or
not this number when compared to web traffic on a traditional website is good or bad should not
matter. Trying to make that comparison encounters the same problem as trying to compare
resident perceptions of success and corporate perceptions of success. It is like comparing
apples to oranges; it just can’t be done. So although I arrived at this benchmark arbitrarily, I
believe the choice was justified because of the necessity to create an internal scale of
comparison.136 Now that a benchmark has been set, it of course begs the question: what
explains the success that L-word has experienced and why is it that none of the other corporate
ventures on Tateru’s list even close to this mark? The answer to this is a theme that I have tried
to emphasize repeatedly throughout the course of this paper – the singular importance of
recognizing those who participate in Second Life as distinct individuals within a community.
Accepting this explanation also goes a long way in explaining the success of resident
businesses (based on traffic numbers) over their corporate counterparts. As a side note,
anecdotal evidence suggests that Second Life players derive utility from supporting individual
entrepreneurs. Whether or not this holds up as true should be determined empirically; however
even assuming that this does indeed hold true, my own attempts to answer this question have
lead me to believe that there is at least one other equally plausible explanation for the apparent
135
See Tateru’s Mixed Reality Monday (05 February 2007) at
http://nwn.blogs.com/nwn/2007/02/taterus_monday_.html. That number has dropped to a little over 4,000
visitors / week today but the L-word is still among the top corporate builds in Tateru Nino’s charts. See
http://nwn.blogs.com/nwn/2007/05/taterus_mixed_r.html for the numbers.
136
I would like to note that at this benchmark, Pontiac’s Motorati Island with its 2.1 million visitors in 4
months over qualifies as a successful corporate venture. For more visitor numbers to corporate builds
see http://campfiremedia.com/2007/05/07/motorati-has-a-big-week/ for a list of Second Life’s most
popular real world brands.
success of resident businesses in Second Life. Simply stated, residents recognize what
corporations, save a few, have failed to recognize. Second Life is an environment or place that
permits limitless self-expression, and it is one of the primary reasons that residents use Second
Life. A cursory visit to Second Life and its expansive fashion industry should be enough to
demonstrate the truthfulness of this statement and quell even the most skeptical minds. But if
you doubt this assertion on the grounds that I am no fashion expert (which I admit whole
heartedly), then I will turn to GQ columnist Marshall Sella to explain it. In his words,
“appearance is absolutely essential in-world. If you don’t eventually purchase a skin you are
forever derided as a newbie. Complete strangers will openly scoff at your poorly fitted hair and
cheap clothing.” And it is in his last sentence that you find (implicitly) the observation that
interaction with other avatars is what Second Life is about. Second Life is about community and
the most interesting thing about a community is the people and the ability to meet people.
Following this train of thought, I think it is a fairly safe assumption to say that people will prefer
to go and hang out where other people are. It is with this in mind that I will proceed to establish
a framework of rules / concepts that should be recognized for a business venture to succeed in
Second Life.
Conclusion: a Contextual Framework for Business Ventures in Second Life.
In writing this paper, I tried to restrict my analysis of Second Life to its position as a virtual world;
however as this paper proceeded it became increasingly obvious that this restriction would be
impossible because it was evolving within the greater network topology of the web. Virtual
worlds are a manifestation of an ongoing trend in the internet in general (that the internet is by
nature a decentralized network and as resources for personal creation/expression via the web
become cheaper and easily accessible, it will increasingly become a network of individual one-
to-one relationships rather than a mass one-to-many medium.)
The value that Second Life presents at the macro level to business organizations is evident
within this framework because it represents what Damaskopoulos (2004)137 defines as an
“innovation [in the] new economy” and “constitutes the foundation of the competitiveness and
value creating capabilities of economic organizations.” This new economy has emerged as a
result of “the alignment and re-articulation of information and communications technology” in
which “networks are increasingly becoming the basic units of economic activity and analysis.”
Second Life is perhaps the single most conspicuous example of the new economy at work,
because it is both a result (an innovation) of and a tool (driver) of the new economy. In respect
to it being an innovation, I have attempted to argue in this paper that Second Life’s success
over other virtual worlds is a direct result of it being more open (in respect to how it can be
manipulated by the individual). It is this openness that is driving its rapid adoption/evolution and
place it in the category of an innovation. “The process of innovation is increasingly driven by
open source networks of cooperation and involves dynamic interrelationships between
technological transformations, organizational capabilities of firms, and highly skilled labor.” In
137
Panagiotis Damaskopoulos (2004). “Network Topology of the New Economy.” Social and Economic
Transformation in the Digital Era. ed. Georgios Doukidis , Nikolaos Mylonopoulos , Nancy Pouloudi.
Hershey, PA: Idea Group Publishing. pp. 221.
regards to Second Life being a tool, the international scope of Second Life and its rapid
expansion138 further accentuates the affects of the internet in diminishing the limitations imposed
by physical proximity by catalyzing interaction between individuals who reside in different
places. It is this capability as a tool to augment collaboration (networks) among geographically
distant individuals that suggests that it is also a driver of innovation for companies that learn to
leverage it. Just as Lee et al (2004) 139 argues that companies must understand that the web
today is not a mass medium but rather a personal network which companies must use to
personalize the experience of individual users to be successful, so to is Second Life an
opportunity to further this relationship
The AMA case study was my attempt to demonstrate this collaborative capability of Second Life
as a tool to foster network relationships and trust between individuals who have never met each
other in real life, but at a more pragmatic level it served to demonstrate the importance that both
an active network and trust plays in the success of a business in Second Life.
In a similar manner, both the Pontiac Case Study and the Green Grotto Case Study were an
attempt to validate specific approaches to Second Life through example. It is probably true that
corporations can justify their involvement in Second Life by the PR it generates. However if it is
true that novelty is already beginning to wear off as mainstream news sources and magazines
138
As of April 2007 half of registered residents of Second Life originated from outside the United States.
Europe makes up the bulk of this number, but Second Life has begun its expansion into Asia as well.
Japanese are estimated to make up a little over one percent of the total number of residents, and this is
without a Japanese language version of the Second Life client. We can expect that number to expand
when Linden Lab releases the Japanese language client and as companies like Tokyo based Melting
Dots work to create sims designed specifically for Japanese. See Second Life Statistics in the Appendix
for more information.
139
Chung Sing Lee and Nicholas Vonortas. “Business Model Innovation in the Digital Economy.” Social
Pouloudi. Hershey, PA: Idea Group Publishing. pp.164.
tire of writing on the topic as noted by Linda Zimmer140, the cost of subsequent entries into
Second Life will have to be justified in other ways. As I have argued, this cost can be
substantiated through community goodwill and brand association. With this positive brand
association comes the possibility of creative expressions of the brand or ideas associated with it
that can be utilized in endeavors outside of Second Life. Pontiac’s Motorati Island is an example
of this idea. Current Second Life demographics suggest that it is skewed in favor of creative
and/or digitally savvy individuals, which perhaps makes it an even better environment with
which to find creative talent than similar attempts to leverage community creativity on the web141.
Who knows the next Pontiac car design may originate in Second Life.
Green Grotto’s approach to metaverse development further demonstrates the importance that
community goodwill plays in the success of business ventures in Second Life. They understand
that development in the label Metaverse Development Company refers to more than just the act
of building something, rather it refers to the cultivation of the community with which they are so
closely entwined. This idea of the MDC as the emerging stewards of Second Life and the role
that this position requires them to play is the key theoretical point behind this case study. From
a more pragmatic stance, I suggest that anyone wanting to build a successful MDC should
adhere to this idea.
140
Linda Zimmer. “Second Life Riding Gartner's Hype Cycle.” Business Communicators of Second Life.
December 2006. http://freshtakes.typepad.com/sl_communicators/2006/12/second_life_rid.html
141
This is a reference to Pepsi’s Design the Next Pepsi Can campaign on Facebook.
Final Remarks.
Even as I write this, Second Life grows and evolves. It is inevitable that because of this the
numbers and examples that I have used in this paper will change. For this reason I have tried
to generalize the framework that I have created, and root its legitimacy in those parts of Second
Life that will never change: the underlying philosophy of freedom and the persistent ideas
related to human interactions.
As Second Life continues to grow in size, more and more corporations and other organizations
will inevitably begin taking interest. But in spite of this burgeoning interest, Second Life will
continue to remain an experiment, both for corporations and for its residents. No one is quite
sure yet what it is capable of and what it will become. Of the few things that can be considered
truths in regards to Second Life, this paper asserts that the importance of community and the
recognition of that community by its participants are principal among them. On a similar note it
is important to recognize that the Second Life community extends well beyond the realms of the
virtual world itself and can be found integrating itself into the basic structure of the web, so
appreciating this aspect is an essential step for any corporation wanting to create an effective
business model in Second Life.
While this paper has primarily focused on Second Life from a business perspective, it is
important to also recognize the broader implications of the environment. What is occurring in
Second Life is a revolution – not the beginning of a revolution and not the culmination of the
revolution but rather the proliferation of a broader social and economic revolution that is
occurring across the internet. It is both the “media revolution and soon to be creative revolution”
that Tor Myhren describes142 as well as the invigoration of social capital argued by Chadwick
(2006) and others in reference to the internet.143
I have made no effort to presume the future of Second Life or other specific virtual worlds that
exist today, nor will I attempt to here because the argument falls outside the scope of this paper,
but acknowledging that persistent 3D virtual worlds/collaborative virtual environments/multi-user
virtual environments/however you want to label them will continue to influence and play an
increasingly important role in all aspects of our lives is one assumption that can safely be made.
In the relentless virtualization of self that is occurring today, we can observe what seems to
have always been true: that we are a fluidity of identities, existing and changing as the
interactions surrounding us exist and change. Who and what we are is no longer as important
as who and what we are not because of the ease with which we can become so many different
things. As I began this paper with Shakespeare’s All the World’s a Stage, so I feel it is
appropriate to end with the final lines of that poem.
Last scene of all,

That ends this strange eventful history,
Is second childishness and mere oblivion,
Sans teeth, sans eyes, sans taste, sans everything.
Perhaps that is our future – a future without the tangible…a synthetic future. If that is true then I
only hope that I can dream of electric sheep.
142
143
Andrew Chadwick (2006). Internet Politics. New York: Oxford University Press. Peter M. Shane, ed.
(2004). Democracy Online. New York: Routledge.
Appendix: Additional Information.
Anshe Chung – is the Second Life name of self proclaimed virtual world millionaire Ailin Graef,
and her avatar graced the cover of the May 2006 edition of Business Week. Interestingly
enough, she began her career as an escort girl, but soon made her way into the real estate
speculation and development business in Second Life. It was hear that she made her million.
Since then, her company Anshe Chung Studios has received venture capital money, and has
begun branching out to include business in other virtual worlds. As with all celebrities however,
her good fortune has not been met with universal kindness. In December of 2006, during a
Second Life interview with CNET, the in-world studio was bombarded by flying penises. On a
separate note, Anshe Chung is regarded as a harsh but fair governess, and she has no issues
enforcing the community covenants she established for her land holdings.144 For additional
information on Anshe Chung, see her corporate website at http://acs.anshechung.com/
CopyBot - CopyBot was originally created by libsecondlife (see libsecondlife below) to be used
as an import/export or "backup" tool, or to assist in the development of Second Life AIs and
NPCs (non-player characters). However it also allowed for the copying of any avatar or object,
including those that are designated as “no copy” by their creators causing an outcry by residents
who were concerned about theft of their creations, and the potential for unscrupulous people to
undercut their prices and essentially take away their business. For additional information on
CopyBot and the controversy surrounding it see Reuter’s “Outcry as ‘Copybot’ threatens
copyright protection” at http://secondlife.reuters.com/stories/2006/11/14/outcry-as-copybot-
threatens-copyright-protection/ or Raph Koster’s writeup at
http://www.raphkoster.com/2006/11/15/copybot/.
144
Prokofy Neva. “Sheep Warned After Violation of Dreamland Community Covenant.” Second Life
Herald. 10 April 2007. http://www.secondlifeherald.com/slh/2007/04/sheep_warned_af.html
Furries – Furries are a subculture distinguished by their members’ enjoyment of
anthropomorphic animal characters. These individuals have a particularly strong affinity to an
animal or rather traits associated with that animal and express themselves by dressing up as
that animal or otherwise projecting themselves through the anthropomorphized depiction of the
animal. As the internet became increasingly accessible to the general population, it became the
most popular means through which furry fans could socialize. Virtual environments (such as
Multi-User Dungeons) and more recently synthetic worlds like Second Life are used extensively
by furry fans to meet and communicate.
Perhaps the most conspicuous aspect of Furries is the sexual connotations that accompany the
description. Furries have become notorious for engaging in rather odd sexual behavior;
however this is a misleading stereotype because even within the Furry culture differing
approaches to sexuality have been a source of controversy. There are of course many who
happily participate, but some members of the culture regard these sexual practices as
“distasteful, unrelated, or deviant aspects” and have staged protests vehemently opposing this
type of behavior. For additional information see Wikipedia’s article on Furry Fandom at
http://en.wikipedia.org/wiki/Furry_fandom.
Hamlet James Au – Hamlet Au, alternatively known as Wagner James Au in Second Life, is an
ed-Linden and the founder and contributing editor of the online Second Life publication New
World Notes. He has been interviewed by CNN, NPR, the BBC, The Los Angeles Times, and
Harvard Business Review about his work as an embedded journalist for Second Life. He also
serves as a contributor for GigaOM and occasionally for Kotaku. For additional information see
his website at http://nwn.blogs.com/about.html

LibSecondLife – LibSecondLife is a Linden Lab supported developers project to reverse
engineer aspects of the Second Life software in order to understand how Second Life works
from a technical perspective, and how to extend and integrate the metaverse with the rest of the
web. This includes understanding how the official Second Life client operates and how it
communicates with the Second Life simulator servers, as well as providing for the open source
development of independent third party clients and tools. For additional information see the
LibSecondLife Wiki at http://www.libsecondlife.org/wiki/Main_Page.
Linden Dollar - All economic transactions in Second Life occur with the use of the Linden Dollar
(L$) or ellz, which can be exchanged for real world currency via the Linden Exchange (LindEx).
The exchange rate is technically floating, but via regulation by Linden Lab, remains at a fairly
constant L$270 per US$1. Linden Lab regulates the monetary supply using prescribed in-world
sources and sinks. Sources include such things as stipends to premium users and direct L$
sales on the exchange and serve as a way for Linden Lab to put L$ into the virtual economy.
Sinks include such things as the L$ fee that Linden Lab charges to post classified ads or upload
images and represent ways that the L$s are taken out of circulation.
Although many have begun to treat the L$ as a true currency, it should be noted that the
Second Life Terms of Service (End User License Agreement) suggests otherwise. Section 1.4
asserts that
Linden Dollars represent a limited license right governed solely under the terms
of this Agreement, and are not redeemable for any sum of money or monetary
value from Linden Lab at any time. You agree that Linden Lab has the absolute
right to manage, regulate, control, modify and/or eliminate such Currency as it
sees fit in its sole discretion, in any general or specific case, and that Linden Lab
will have no liability to you based on its exercise of such right.
Furthermore Section 1.5 states

Linden Lab may deny any sell order or buy order individually or with respect to
general volume or price limitations set by Linden Lab for any reason.
This provision gives Linden Lab the final say over any buying and selling of the L$ presumably
as an insurance against fraud, violations of other laws or regulations, or deliberate disruptions to
or interference with the Service. However, it does also provide for the more insidious ability to
effectively appropriate all money in Second Life by preventing its exchange in to US$.
With that said though, Linden Labs has up to this point demonstrated no abuse of this right to
arbitrarily control the money supply. Should Linden Lab abuse this right, one can expect to see
the Second Life economy and thus Second Life collapse.
On a brighter note, the Second Life economy has been growing at a break neck pace. A Virtual
Economy Analyst at the Metastat statistics bureau in Second Life estimated Second Life's 2007
GDP will be between US$500 million and US$600 million, about nine times higher than the
US$64 million reported for 2006. For additional data on the Second Life economy and the
money supply of the Linden Dollar see Appendix: Second Life Statistics section of this paper.
RatePoint - RatePoint is a private start-up company seeking venture funding for its program –
an eBay type rating service that can be attached to any browser and allows users to rate
websites they visit. The ratings are then visible to anyone who goes to a rated site and has
registered for the RatePoint service. Upon entering Second Life, they built a similar program,
which allows you to rate the avatars you meet in Second Life (Trustworthy, Not Trustworthy,
Helpful, Cool, etc). The program itself has a lot of potential in Second Life for two reasons: first
because trust has always been a problematic issue in an online environment and as Second
Life grows cases of exploitation and abuse will probably become more rampant.145 And second
because RatePoint is the most comprehensive program of its kind. Other rating systems do
exist, but they lack many of the features the usability that RatePoint.146 If their online product
and Second Life product can attract enough users, then the assumption is that their popularity
will make them a more attractive investment for venture capitalists. For additional information
see the Ratepoint blog at http://blog.ratepoint.com/.
Timeless Prototype - Timeless Prototype is the name of an infamous Second Life developer.
Real name is unknown but he has become famous throughout the Second Life community for
the Multi-Gadget (see below). For more information on Timeless Prototype or his endeavors,
visit his blog at http://sldevelopers.com/blogs/timelessprototype/default.aspx.
Timeless Prototype’s Multigadget – The MultiGadget is a Second Life object scripted
(created) by Timeless Prototype (see above) and is exactly what its name suggest it is…a
gadget that can do multiple things. Imagine a “swiss army knife on steroids” capable of doing
everything from creating a grappling hook to translating foreign languages, and you have a good
idea of what the MultiGadget is. The item can be found in numerous stores around Second Life
and range from L$238 and up. For additional reading on the MultiGadget see Reuter’s
“Timeless Prototypes Swiss Army Knife on Steriods” at
http://secondlife.reuters.com/stories/2006/11/03/timeless-prototypes-swiss-army-knife-on-
steroids/.
145
146
For a list of additional rating systems, including the Linden Lab announcement discontinuing their own
global rating system see “Removal of Ratings in Beta.” Second Life Blog. 12 April 2007 at
http://blog.secondlife.com/2007/04/12/removal-of-ratings-in-beta/
Tringo – Tringo was created by Nathan Keir, otherwise known in the community of Second Life
as Kermitt Quirk. Motivation for the creation of Tringo was derived from the importance of traffic
in Second Life to the success of Second Life businesses. To illustrate this problem think back
to phase 1 of the internet. Before Google and the dominance of search, people navigated the
internet through the use of portals. In the portal model of the internet, you wanted to be one of
those sites that brought masses of visitors to it because revenue was generated by the number
of times a banner ad was seen (eyeballs) calculated in units of a thousand (cost per thousand
impressions or CPM). The same concept applies in Second Life right now. The search function
is nearly useless because ranking on search isn’t content specific, but rather it depends on
keywords the creator selects to describe his/her business/place and the amount of traffic the
location gets. Thus the more people you have visiting your store, club, etc. the higher you
appear on the search list when someone types in one of your keywords. Thus the question of
how you bring people to your land and get them to hang out was (and is) paramount.
The motivation to create Tringo was born out of this question. The idea was to create a highly
addictive game, that was simple to play, and could be played in a group style competition. And
its success at every one of these qualifications meant that its adoption was nearly self
perpetuating because the market already existed and because it served its purpose better than
other similar invention (like the dance pad which pays a players avatar to stand and dance on it
at a rate of L$2 per 10 minutes). Tringo was licensed at the equivalent of US$50, and it became
the go to game for casinos in Second Life and other businesses that wanted to inflate their
traffic numbers.
The in-world popularity attracted the attention of real world video game companies and in early
2006, it was licensed by Donnerwood Media for distribution in the real world. The Game Boy
Advance version was released in April 2006 and a PC version will also be released shortly. For
additional information see the Tringo Wiki (Triki) at http://triki.tringoweb.com/triki/tiki-index.php.

Appendix: Second Life Statistics.
Active % of residents in the top 100 Population Statistics (01/05 – 03/07)

countries (March 2007)
Country Percentage Created Created Total Residents Unique

United States 26.78% Year Month Registrations Residents
Germany 13.53% 2005 January 18,944 13,868
France 8.17%
United Kingdom 6.56% 2005 February 20,887 15,181
Netherlands 5.42% 2005 March 23,019 16,620
Brazil 4.73%
Italy 3.99% 2005 April 25,313 18,249
Spain 2.96% 2005 May 27,583 19,824
Canada 2.76%
Denmark 2.61% 2005 June 30,753 22,039
Japan 2.43% 2005 July 36,579 26,234
Australia 2.43%
Belgium 2.18% 2005 August 40,099 28,801
Switzerland 1.44% 2005 September 52,495 38,888
Poland 1.21%
Austria 1.03% 2005 October 69,347 52,790
Sweden 0.86% 2005 November 83,943 64,878
China 0.76%
Argentina 0.50% 2005 December 99,831 77,488
Turkey 0.47% 2006 January 123,851 95,712
Portugal 0.45%
Norway 0.39% 2006 February 144,412 112,043
Ireland 0.38% 2006 March 164,530 128,038
Romania 0.32%
Greece 0.32% 2006 April 197,487 155,559
New Zealand 0.32% 2006 May 227,728 180,245
Mexico 0.32%
Chile 0.31% 2006 June 322,563 235,117
Singapore 0.25% 2006 July 426,656 298,112
Finland 0.24%
Afghanistan 0.21% 2006 August 595,748 403,290
Israel 0.20%
2006 September 803,624 528,294
Korea South 0.19%
India 0.19% 2006 October 1,200,531 777,423
Hungary 0.19%
2006 November 1,735,053 1,094,454
Russia 0.17%
2006 December 2,271,447 1,429,127
2007 January 3,143,142 1,987,867
2007 February 4,147,041 2,626,932
2007 March 5,144,889 3,177,434

Second Life Gender Usage

Second Life Age Range (March 2007)
Year Month Female Male
Age Range Percentage
2005 January 48.36% 51.64%
13-17 (Teen Grid) 1.04%
2005 February 49.25% 50.75%
18-24 25.74%
2005 March 49.84% 50.16%
25-34 38.46%
2005 April 49.74% 50.26%
35-44 22.20%
2005 May 51.17% 48.83%
45 + 12.56%
2005 July 48.36% 51.64%
2005 June 49.87% 50.13%
2005 August 48.59% 51.41%
Average Age Adult Grid 2005 September 47.92% 52.08%
30 2005 October 46.57% 53.43%
2005 November 46.09% 53.91%
2005 December 44.86% 55.14%
2006 January 44.50% 55.50%
2006 February 43.96% 56.04%
2006 March 44.43% 55.57%
2006 April 43.79% 56.21%
2006 May 43.16% 56.84%
2006 June 43.51% 56.49%
2006 July 42.99% 57.01%

Second Life Land Size (km2) 2006 August 42.98% 57.02%
Calendar Total 2006 September 43.76% 56.24%

Date Mainland Islands Size
2006 October 42.65% 57.35%
31/10/2006 83.97 134.28 218.25
2006 November 42.14% 57.86%
30/11/2006 84.59 170.13 254.73
2006 December 41.42% 58.58%
31/12/2006 87.35 206.31 293.65
2007 January 41.11% 58.89%
31/01/2007 102.71 258.08 360.79
2007 February 41.07% 58.93%
28/02/2007 116.15 295.83 411.98
2007 March 42.06% 57.94%
31/03/2007 132.04 372.24 504.28
Lindex Virtual Currency Exchange Summary (09/2005 – 03/2007)
Month L$ Exchanged US$ Exchanged # Sells # Buys LL L$ Sales LL US$ Sales
September 2005 33,358 $118 20 19 0 $0
October 2005 61,191,476 $235,100 1,957 8,792 0 $0
November 2005 89,166,475 $349,312 2,667 12,284 0 $0
December 2005 115,999,615 $437,180 3,843 15,051 0 $0
January 2006 147,066,103 $538,844 3,859 19,161 0 $0
February 2006 167,313,359 $601,414 4,875 28,946 0 $0
March 2006 205,094,989 $719,476 4,715 37,803 0 $0
April 2006 227,587,286 $762,065 5,236 46,879 0 $0
May 2006 293,896,724 $928,439 6,737 56,407 0 $0
June 2006 376,774,753 $1,140,317 8,079 59,623 0 $0
July 2006 408,742,563 $1,341,997 8,792 64,011 660,718 $2,203
August 2006 444,451,150 $1,499,843 10,119 69,027 2,389,282 $8,092
September 2006 481,134,877 $1,726,581 10,588 76,604 20,117,994 $73,511
October 2006 580,545,638 $2,116,961 12,048 90,717 49,728,404 $183,824
November 2006 717,580,354 $2,626,763 12,237 112,236 77,327,855 $286,676
December 2006 1,043,298,924 $3,858,847 15,002 145,764 198,449,261 $740,943
January 2007 1,341,270,320 $4,987,208 16,187 169,621 165,833,743 $622,839
February 2007 1,511,954,743 $5,621,839 16,444 185,536 212,986,188 $799,166
March 2007 1,948,813,701 $7,251,903 20,496 224,670 223,000,000 $838,204

Second Life Money Supply (09/2005 – 03/2007)
Date Linden Resident Sinks to LL Sources (Non Linden Sales Other Linden Resident
Balance, Beginning Sales) Sources(sinks) Balance, Ending
Sep-05 368,005,821 -9,019,847 45,631,573 0 0 404,617,547
Oct-05 404,617,547 -8,440,135 40,041,228 0 -4,711,942 440,930,582
Nov-05 440,930,582 -8,014,829 45,562,072 0 -5,741,984 484,219,809
Dec-05 484,219,809 -8,815,128 40,288,698 0 -5,010,237 520,703,616
Jan-06 520,703,616 -11,760,822 68,961,044 0 -1,285,721 579,189,559
Feb-06 579,189,559 -14,597,501 49,137,750 0 -1,091,482 614,821,290
Mar-06 614,821,290 -17,819,797 52,321,829 0 -1,421,329 650,744,651
Apr-06 650,744,651 -17,785,205 59,277,885 0 -583,177 692,820,508
May-06 692,820,508 -22,147,473 74,722,420 0 -560,707 745,956,162
Jun-06 745,956,162 -23,532,998 55,950,559 0 768,819 777,604,904
Jul-06 777,604,904 -27,132,093 65,693,243 660,718 2,369,214 814,457,558
Aug-06 814,457,558 -30,048,287 79,698,205 2,389,282 2,047,839 864,448,919
Sep-06 864,448,919 -34,367,829 71,944,403 20,117,994 -13,313,950 935,457,437
Oct-06 935,457,437 -36,401,711 107,909,396 49,728,404 1,134,099 1,055,559,427
Nov-06 1,055,559,427 -90,038,057 104,395,573 77,327,855 -14,328,211 1,161,573,009
Dec-06 1,161,573,009 -57,425,915 115,652,202 198,449,261 -105,966 1,418,354,523
Jan-07 1,418,354,523 -76,141,758 161,068,442 165,833,743 -2,946,615 1,672,061,565
Feb-07 1,672,061,565 -57,317,670 133,566,984 212,986,188 -3,599,674 1,964,896,741
Mar-07 1,964,896,741 -76,424,827 148,527,507 223,000,000 -8,495,182 2,268,494,603
Working The Street. 86
Acknowledgements.
A great many individuals contributed to the success of this paper. In particular I would like to
thank my supervising professor Anne Beamish for guiding me through the process of writing a
paper of this length. Her advice was invaluable, and our conversations were liberating. But
even more importantly she believed in my ability to complete this project even after my multiple
failures to meet deadlines. Similarly I would like to thank Professor John Leckenby for his
assistance on this paper. I am especially grateful to him for agreeing to fulfill my last minute
request to be my second reader. His high praises, though unmerited in my opinion, were
nonetheless invigorating.
To all those who took time out of their day to answer my sometimes sophomoric questions
regarding Second Life, I thank you. Susie Davis thank you for always being available as a
resource, and thank you for introducing me to your friends and acquaintances in and around
Second Life. My conversations with them provided invaluable insight into Second Life. Marc
Girolimetti, likewise I am sincerely grateful to you for allowing me to interview you and for
introducing me to KallyFaith. Both her story and yours found a place in my thesis. Additionally
your opinions and observations on Second Life were indispensable in formulating the approach
my paper would take. Valerie McDunnough, I wish I knew your real name so that I could thank
you properly for allowing me to interview you. What you have built in Atlantis Modeling is
spectacular, and I wish you the best in that endeavor.
Finally I would like to thank Joel Greenberg and Adrienne Haik for their insights into Second
Life. Both your knowledge and enthusiasm in regards to Second Life were invaluable to my
completing this paper. Without our discussions I do not believe that I would have the same
confidence in my conclusions that I do.

To those of you who I did not mention hear (and there are a few), I do apologize, but I ran out of
energy. Just know that I appreciate your advice, your critiques, and your time because it made
this paper that much better and the process of writing this paper that much more enjoyable.
Biography.
Andre M. Hanyu-Deutmeyer was born in Iowa City, Iowa on November 2, 1983. His journey to
Austin was a convoluted one, but his eventual arrival was predicated by the fact that he had
decided to become a Longhorn while growing up in southeast Texas. In 2002, he enrolled in
the Plan II Honors Program at the University of Texas at Austin, and that fall began his
memorable five-year tenure there. While a student, he served as President of a university pre-
law society, Beta Alpha Rho, and while he no longer has any ambitions of pursuing law, the
experience was invaluable in of itself. He graduated in 2007 as a triple major in Plan II,
Japanese, and Government. Though the immediate the future holds no plans of graduate
school, he does hope to attend either MIT’s or Stanford’s graduate school program in order to
further pursue his interest in synthetic environments and virtual interaction.

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WORKING THE STREET.

An exploration of the dynamics linking community and business success

Anne Beamish, Ph.D.

Foreword and Abstract. 2

Part I: An Introduction to Second Life and Marketing in Online Virtual Worlds.

a. Introduction: Working the Street. 6

b. Enter Second Life. 10

c. Recognizing an Electronic Pasture. 13

d. A World of Sex, Profit…and School? 16

e. A Winning Combo: Tech, Empowerment, and Dreams. 20

f. All the World’s a Stage. 28

g. Marketing and Advertising Potential. 31

h. A Word of Warning: Resident Backlash to Corporate Incursion. 40

Part II: Case Studies and Business Advice.

a. Resident Business Case Study – Atlantis Modeling Agency. 44

b. Corporate Case Study – Pontiac’s Motorati Island. 49

c. Metaverse Development Company – Green Grotto Studios. 59

d. Failures and Successes: Lessons from Corporate Ventures in Second Life. 67

e. Conclusion: A Contextual Framework for Business Ventures in Second Life. 70

Second Life Statistics. 80

Acknowledgements and Biography. 86

which is to say that it is a reference to prostitution. For better or worse, prostitution is an

progression of a reoccurring theme of self-identity creation. In establishing this relationship

entrepreneurial individuals and innovative corporations can draw to begin successfully

business presence in Second Life.

All the world's a stage,

Introduction: Working the Street.

you to appreciate the shared experience of participating (playing/fighting/racing/whatever) in

interactive potential that is unique to a 3D virtual environment and impossible within a 2D

Enter Second Life.

convenient when you can teleport instantly from place to place.

other fanciful interactive places just waiting to be investigated.

Cluetrain Manifesto12 or is it heading in the other direction, uncomfortably toward corporate

Recognizing an Electronic Pasture.

the other is too expansive to be considered useful.

interaction between individuals, or collaboration between geographically separated teams of

Second Life is an environment – a place – or, as defined by Edward Castranova (2006), a

Or as Richard Bartle (2003) explains:

A virtual world [Second Life] is a place. They may simulate abstractions of

A World of Sex, Profit…and School?

popularity of the world.20

view that is supported by a cadre of influential game studies.23

in education as simulating environments capable of providing immersive learning

LambdaMOO is perhaps one of the more disturbing incidences of cybersex catalogued.32

in other synthetic worlds.34

A Winning Combo: Tech, Empowerment, and Dreams.

steep learning curve to familiarizing oneself with the avatar controls.

without actually being there.

project”52 envisioned by Cory Ondrejka, Linden Lab’s CTO, becomes a reality.

than individual users.

cyberlibertarian philosophy – the empowerment of the individual – that is embraced by the

All the World’s a Stage.

to realize a measure of social satisfaction by recreating his/her persona in the virtual

screen: “On the Internet, nobody knows you’re a dog.”67

in the elaborate three-dimensional synthetic worlds of MMOGs69 and MUVEs70. In these

total at more than US$100 million a year.73

Gender switching is common, as is the exaggeration of sexual characteristics. Some of these

on a life of their own.74

themselves the digital avatars of flesh-and-blood individuals – can be an intense experience.

Marketing and Advertising Potential.

one jumps to the virtual?

you find a group of like minded people and begin a conversation.”76

engage in a passionate embrace as well as other…shall we say rather explicit instances of