SL residents can buy SL virtual real estate, usually in the form of a private island, from Linden Labs. The San Francisco based company provides residents with the graphics tools to create everything in the users virtual ecosystem. Island-owners can develop their land any way they like — by building a mansion or a dungeon, or creating a forest or a snow-swept steppe. Residents also get to design their own avatars, often idealized human forms of themselves, who then function, on command, in any in-world environment. (To access Second Life, you need to download proprietary SL browser protocols and sign up for membership.)
It costs nothing to join and explore until you want to build houses, buy an island for $1,200 or products from the resident-owned shops that are springing up. In fact this world has its own free enterprise economy driven by users.
This virtual world is poised to become the next big thing in the cyber economy, and the big media players are getting in early. The BBC recently staged a pop concert on a Second Life island and the news agency Reuters now employs a full-time Second Life reporter to write stories only on life within the game complete with a Reuters news office. Other media have jumped in as well, placing virtual correspondents to wander in the cyber world of Second Life.
But this is only the tip of the iceberg. At least 60 universities have bought space to build campuses to experiment with virtual worlds as a teaching tool, including Harvard and Stanford. Many classrooms are functioning right now, giving a whole new meaning to interactive distance learning.
Architects, teachers, scientists and anthropologists are colonizing it, as are real estate developers out for a quick buck. It has been used for community schemes to help sufferers from strokes and other conditions. Second Life sports its own money - Lindens, convertible into dollars…and even a red-light district.
Recently, a conference at Harvard was simultaneously replicated in Second Life so that others could participate in a virtual conference hall. One way of looking at Second Life is that it is a virtual ecosystem capable of replicating almost anything in the real world that can be digitised, but without any shortage of resources.
There’s really no limitation to what can be created on the site, which has space flights that include trips to Mars.
Imagine if the Okanagan and its communities could be replicated in Second Life. This would give a whole new opportunity to create interactive planning and resource management, not to mention a chance to experiment with business and community concepts that can actually generate revenue as well.
How important is all of this?
Well, if cyberspace can help remedy growing consumer demands for more ‘stuff’ by providing a venue where we can “Keep up with the Joneses” without putting pressure on natural resources, then this might all be a good thing.
It is possible that as post-industrialisation gathers force in the west's virtual economies, with unlimited scope for expansion, some of the unemployment in the real world might be remedied. If you think this is far-fetched, there are already successful companies that exist only in Second Life, one of which employs 20 people to build structures for people who haven't the time to do it themselves.
Cory Ondrejka, vice-president of product development at Linden Lab, claims it has 330,000 users and is growing at 12% a month without any marketing. The demographics are interesting: the average age is 33, half of users are women and a very large number haven't played online games before. He also claims that 60% of users create their own content compared with less than 1% of readers of the online encyclopedia, Wikipedia. He admits that the accelerating success of Second Life surprised its creators but that hasn't stopped speculation about a billion-dollar company emerging within its space.
It’s a brain twist for sure, but think about it.
You buy an island in the Second Life world, perhaps it’s for your own private utopia or maybe you’re a developer that has a better idea for people to live and experience the virtual world. That development with its environment, homes and even cities has to be created. They would apply innovation and skill to make that island enticing to potential purchasers. If that means hiring designers to construct that world, then so be it, it’s a cost. If they find buyers for these virtual homes, products and experiences, a financial transaction is made, just like the real world. So what if they want furniture? Transportation? Or a pet?
Let’s face it, it’s an economy driven by the same consumerism as this one. If you can’t make what you want yourself, you’re going to have to buy it from someone who can. And for sure, you don’t want to invite all your virtual friends over for a party wearing a shirt with one sleeve longer than the other, or to a house where the windows are out of square with an unfinished and goofy view?
Heck you wouldn’t want to be the subject of bad gossip from 300,000 online users.
Yup, the same peer pressure, but for most participants it’s a chance to live a privileged life with few limits, perhaps one very different than they experience in the real world.
Let there be no mistake, this is a form of escapism and with all that is happening in the real world, there must be a temptation to climb into Second Life and just stay there.
But don’t hold that thought too long.
The US Government has now launched an investigation on the amount of trade being carried out in online fantasy games such as Second Life, prompting fears amongst some gamers that it will tax virtual trading.
The Joint Economic Committee (JEC) of the US Congress will investigate the scale of commerce taking place in games such as Eve Online and Second Life. Though the Committee said that it does not intend to start taxing trade, it did say that it wants to get an idea of where the line falls between taxable and non-taxable trade.
Second Life has it’s own exchange system. Today 267.5 Lindens equals one US dollar. Every Linden can be exchanged for real dollars. In the past 24 hours just over $1million US dollars were spent in the Second Life economy.
According to Reuters, December was a strong month for Second Life business owners as the number of residents with a positive cash flow climbed 26 percent, with the biggest percentage rise coming among business owners earning more than US$5,000 a month.
That compared to a 40 percent month-on-month jump in November.
The number of cash-flow positive users rose to 17,327 in December, according to new data released by Linden Lab. At the top end of the scale, users earning more than $5,000US climbed 55 percent to 90, and those earning $2,000-5,000US rose 48.9 percent to 140.
In the grand scheme of things, the economy is pretty small scale, but just about everyone can see the potential. The BBC reports that some studies have shown that the amount of time spent on playing the game and creating online wealth have created in-game economies equivalent in size to the GDP of Namibia.
These fantasy games involve re-creations of many normal activities, and trade is a huge part of that life. Currency in some of the worlds is bought for actual money and can be reconverted, which means that in-game trades have quantifiable economic value outside of the game.
In other cases attributes and in-game gold are won through game play and sold for hard cash outside of the games. Reports have emerged of 'gold farmers' in China who play the game for a living.
"Clearly, virtual economies represent an area where technology has outpaced the law," said the JEC statement announcing its investigation. "The goal of the forthcoming JEC study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies."
The JEC's senior economist Dan Miller said that the investigation was at an early stage. "You could argue that to a certain degree the law has fallen behind because you can have a virtual asset and virtual capital gains, but there's no mechanism by which you're taxed on this stuff," he told the Reuters news agency.
Increasing amounts of real-world economic activity is also taking place in the games.
Computing giant Sun recently held a press conference inside Second Life. The company opened a 'pavilion' in which programmers within the game could try out software that company produces.
Let’s face it, to consider Second Life a game would be getting stuck in an outdated vocabulary.
From my vantage point, we’re seeing the ground level of a new media that will provide the world with a technological jump comparable to television, film or the computer. All of which had staggering impacts on our culture, but are very much part of our everyday lives today.
Like them or not, these new virtual worlds are going to apply new forms of innovation into our society that will expand virtual reality into such tangible forms that they will compete with every part of our real life.
If nothing else, it’s time to pay attention to them.
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