Putting a Second Life First
There is little about virtual worlds that is solid. Granted, life in an online fantasy like Second Life is supposed to be ephemeral, no more concrete than the electrons that make a computer screen come to life. But Philip Rosedale is CEO of a living, breathing company behind Second Life called Linden Lab, and it is riding a real-world wave of new users and publicity that suggests the blossoming of an Internet superstar. Unless, too, the fame and fortune prove as fleeting as a user's alter-ego appearance in the world that Rosedale dreamed up.
Second Life, where users interact in a cartoonlike world that they create, has rocketed in recent months, luring hundreds of thousands of people to download its free software and step inside. But the fast growth could spur a backlash, warns Stephen Prentice, a market analyst at Gartner, particularly if the company can't keep up with demands on its creation, which at times appears overcrowded. "It's an immersive and attractive experience," Prentice says. "But there are glitches."
Open sesame. So the 38-year-old Rosedale is making changes, electing recently to "open source" the software that enables real people to interact with the world, letting anyone muck with it. He's also preparing to do the same for software that runs its core computers, allowing others to add to Second Life's virtual terrain. "It's a way to bring in the broader community in helping us to develop this," Rosedale says.
Opening up can also extend the business model that has put Linden Lab, based in San Francisco with about 110 employees, on the verge of profitability four years after launching Second Life. Its approach is similar to Web locales like YouTube or MySpace, where users do most of the work. It has also drawn savvy investors, including Mitch Kapor, of Lotus 1-2-3 fame, and Amazon founder Jeff Bezos.
At any time, Second Life is typically hosting about 20,000 avatars, or fake personalities, who are chatting in its simulated streets, shopping in storefronts, attending shows, and otherwise participating in the charming and seamy sides of a culture that is much like our own. Only it is in a virtual, 3-D world, meaning objects can be rotated and avatars can pivot to see what's around them. It's similar to the popular Sims computer games, except the Sims Online version never caught on.
In Second Life, residents themselves have constructed most of what exists there. Second Life residents also earn local currency, called Linden dollars, by developing their real estate or selling goods and services, including sexual chitchat (the software, so far, doesn't envision physical contact). Residents buy the currency using real credit cards and can cash them in using an official exchange ratecurrently about $270 Linden to an RL, or real life, dollar. At least one "resident" claims that she has assets valued at more than a million real dollars. Linden Lab makes its money by selling and taxing the real estate in Second Life, as well as getting a cut from currency exchanges.
Still, some question if Second Life can maintain its momentum. "The track record is not good for general-purpose, virtual-reality sites," says Clay Shirky, who teaches about online communications at New York University. Worlds with more of a focus, such as shoot'em-up games, give users more incentive to master the technology, he says. Rosedale concedes that perhaps 10 percent of the 2.7 million registered personalities are regular players, with many put off by Second Life's complexity. "We think it's getting better," Rosedale says. "That's what seems important."
Rosedale developed Second Life after leaving as technology chief at RealNetworks, which had bought a company he started developing in high school, a time when he also began dreaming of creating a virtual world. After launching in 2003, Second Life slowly gained players, only to take off last fall, propelled at least partly by publicity about high-profile companies setting up shop in Second Life, including Nike and Amazon, to hawk virtual and real goods. But marketing to residents isn't the main point, says Linda Zimmer, a consultant who hosts conferences in Second Life on its business possibilities. Companies want to understand how they might use virtual worlds, she says. "What is it forfor commerce, for training employees, for prototyping, or what?"
That, she says, is the beauty of Linden Lab's plan to open its servers to others. Conceivably, a company like General Motors might establish an island with its own rules and purpose, while wanting to retain links to a larger world. If Second Life becomes the universal grid, maintaining its standards and rules of commerceand its cut of transactionsits future is bright.
Opening up its software came at a great time, Zimmer says: "It was the peak of its buzz." The buzz will inevitably die down, at least for a while. So then the question becomes how many lives there will be for Second Life.
This story appears in the January 29, 2007 print edition of U.S. News & World Report.