Business in Second Life: an introduction

Due to its unique range of creative, experimental and commercial possibilities, the online persistent virtual world Second Life is attracting significant interest from business and service industry sectors throughout the world. Big name brands such as IBM, Dell, ING, Philips Electronics, Telstra, and the Australian Broadcasting Corporation have entered this immersive environment. Though return-on-investment is not readily measured, canny early adopters are realising the potential in understanding how virtual worlds work, particularly in regard to social networks and peer-to-peer exchange. For this reason, active engagement with residents, one which goes beyond merely establishing a shop front, is advocated. Second Life is emerging as test bed for new ideas, where real world prototypes can be released at low cost, with direct feedback from users significantly enriching the design process and leading to innovative or unexpected results. The process is enhanced by the nature of its residents who, typically, are techno-savvy, playful and demonstrate a high receptivity to new ideas. Many residents are classified as user-producers, which is why the lead innovation models come not from real world companies hoping to import their services but from the in-world eco-system where virtual start-ups have sprung up to support residents. The demand for virtual products and services, underpinned by a digital rights management arrangement where creators of in-world content retain their IP, has spawned new businesses in the area of content creation, retail, conference and event hosting, land development, media services and financial services. While virtual businesses can be profitable, few are significantly so, as they deal in Linden currency which amounts to mere micro-payments (L$275 = approx US$1). However in-world service providers deserve close attention as their methods shed light on ways in which social networks and peer-to-peer exchange drives trade. This points the way ahead for real world businesses seeking to monetise services in today’s ‘pull-driven’ consumer environment. Virtual-to-virtual business methods may well lead the thinking in devising business models for future 3D web-based services, particularly as add-ons to the ‘mirror worlds’ of Google Earth and Microsoft’s Virtual Earth emerge. [Executive summary]