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Virtual World Business And Development Information

Real Sales In A Fake World

Posted by SIM on April 2, 2007

Kim Shiffman
March 2007

Question: Who would pay actual money for a virtual product? Answer: Hundreds of thousands of active users of Second Life, the much-hyped computer-generated world created by San Francisco-based Linden Lab Inc.

Second Life “residents” create a computer-generated representation of themselves (called an “avatar”) and spend time almost as they would in the real world: exploring, connecting with others, creating things and—of most interest to entrepreneurs—buying stuff.

Second Life (www.secondlife.com) costs nothing to join. Yet users spend almost US$1 million every day in the in-world currency, Linden dollars, which they buy using real U.S. greenbacks (US$1 = L$266). And they generate most of the content, designing then selling or trading their creations—anything from furniture to high fashion. What’s more, they own the intellectual property rights.

That’s partly why real-world companies have begun throwing money into creating a presence and hawking their wares in Second Life. Retailer American Apparel opened a store selling digital renderings of its T-shirts that players’ avatars can wear. Telus sells mobile phones, complete with in-world features. Although the items sell—curious, considering your avatar comes with clothes and has no real need for a cellphone—revenue isn’t what’s drawing the corporate crowd. Instead, they’re keen to reach a young, tech-forward demographic in a unique environment. According to Joshua Fairfield, an Indiana University law professor who studies the economics of virtual worlds, “People’s attachment to places and objects in the virtual world can transfer to purchases in the real world.”

But to be successful in Second Life, you have to translate your brand in a way that works there, says Reuben Steiger, president of Millions of Us Inc., a Sausalito, Calif.-based firm that helps companies market in virtual worlds. He points to news agency Reuters as a firm that gets it: “Instead of building a chest-thumping monument to Reuters, they asked themselves, ‘What can we do to add value to Second Life?'” The result: Reuters assigned a full-time employee to cover Second Life goings-on, which residents can access for free.

Second Life isn’t a marketplace just for corporations. Nothing Reuters has done would be prohibitively expensive for most entrepreneurial firms. Still, is marketing in Second Life a smart move for an SME? “That’s still an open question,” says self-described e-business and marketing geek Stuart MacDonald, who started Expedia Canada and co-founded Mesh, an annual Web 2.0 conference in Toronto. He says Second Life still has only a limited user base. Moreover, most of the value firms have realized from being there has come from real-world PR and buzz, which will fade as the novelty wears off.

Yet, if you’ve been itching for an innovative way to expose a small but exclusive group of global, tech-savvy early adopters to your brand—and you’re confident your marketing staff can figure out how to truly engage those prospects, not repel them—then Second Life may be worth a second glance.

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