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Big brands in search of a Second Life

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Newsflash! Virtual Reality has arrived. If you think it’s still the domain of pasty-faced geeks in bulky black goggles slaying digital dragons or bedding impossibly voluptuous sprites, brace yourself.

For those wishing to break free from the drudgery of their first life, there is Second Life, a sprawling online parallel world where residents can lease land, build houses, launch businesses, hold parties and do or create just about anything they can imagine.

‘What a waste of time,’ I hear you murmur. Well, not according to some of the biggest brands in the real world, who have recently established beachheads (quite literally) in Second Life in search of market penetration with 1.4 million Second Life residents.

In Second Life, having a tail is a fashion statement, everyone can fly and a saucy stripper named Candice might very well be the second life of a balding, middle-aged school principal from Utah. It seems a curious place for the likes of Reebok, Sony BMG, Sun Microsystems and other corporate titans to set up base. But with the decline of captive television and print audiences, advertisers are merely following the crowd – and they’re getting creative.

Anyone can sign up, create a character (known as an “avatar”) and wander through Second Life for free. But if you want to get serious, you can purchase the in-world currency – Linden Dollars (L$) – which has its own currency exchange with US Dollars (currently trading at about L$400 for US$1). Residents can lease a virtual acre from Linden Labs – the company behind Second Life – for US$20 a month, or an island for around US$300 a month (or buy one for a one-time fee of US$1,250 and US$195 a month). With only about three percent of Second Life residents leasing land, that still works out to a revenue base for Linden Labs of about US$1 million per month. Linden Labs does not sell advertising. Essentially, it is a virtual real estate company.

Whereas other popular online worlds such as World of Warcraft provide players with fully formed artefacts that they combine to complete missions/goals, Second Life provides “primitives” – the equivalent of atoms _ which residents can use to build just about anything from scratch.

Linden Labs ensured from the outset that residents retain the intellectual property of their creations. And property rights inevitably lead to trade. There are many Second Life in-world entrepreneurs, who trade everything from shoes to couches to sex (that’s right, there is a red light district, though by most accounts sex in Second Life runs along similar tedious lines to chat room sex – ‘Oh yeah, oh God!’).

Since Rupert Murdoch’s News Corporation acquired MySpace for US$580 million in July 2006, corporate marketers have been allowed to purchase premium space for fictional profiles (characters from movies, commercials, etc.). This enables them to host extra long videos/movie trailers and more images than a free profile. More importantly, it enables brands to network with consumers – to make ‘friends’.

The MySpace and Second Life crowds are cut from the same cloth. Traditional advertising doesn’t work with this media-savvy generation – it’s clunky and obvious. What works is sophisticated product placement and viral marketing. That’s why Nissan leased an island in Second Life and hired a team of computer programmers to build a huge virtual driving course and design digital versions of the company’s new Sentra model, which residents could drive around Nissan Island and get a “feel” for the car ahead of its release in the real world.

Nike, Reebok, Amazon and American Apparel have all set up retail stores in Second Life, where residents can buy virtual and real world products. Sony BMG has built a vast complex on Media Island, where musician Ben Folds recently played some virtual gigs to promote his new album. IBM alumni held a virtual world reunion, and Reuters, CNet, Wired and the BBC have redefined the term “foreign correspondent” by assigning journalists to report full time from within Second Life.

Yes, this virtual world is very real.

Naturally, Second Life purists have been displeased with the rampant commercialisation of Second Life. Placard-waving avatars are not uncommon at in-world corporate events. There is even a “Second Life Liberation Army”, which stages raids on big brand retail stores to highlight its struggle for voting rights and an equity share in Linden Labs.

Philip Rosedale, the CEO of Linden Labs, says Second Life residents should not be worried about the entry of big corporates into Second Life, as economies of scale do not exist, and if they are not impressed with an especially commercial patch of turf, they can fly off to another one (similar to television or internet surfing).

This journalist didn’t get past the formative stages of Second Life. One life is frantic enough without taking on a second. But Anthill publisher James Tuckerman (AKA Jethro Shirabyoshi – pictured right) soon found his wings, as have thousands of other avatars. And one thing’s certain: consumers are consumers, wherever they may roam.

Paul Ryan is an editor and senior writer at Australian Anthill.

Photo: froodmat

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