The business press turns on Second Life, and boosters fight back

I am sorry Shannon is so

I am sorry Shannon is so cynical about my motivations, but the truth is that I'm not trying to give anyone the hard sell here. I tell everyone that this is not mainstream yet, and try to look at the strengths, weaknesses and potential of the platform (and delineate between the three).

If I knew what Shannon's real world product was that flopped, perhaps I could try to productively examine what happened, but to say that everyone is selling and no one is buying is simply wrong. They're not buying huge numbers of corporate products but they are buying virtual goods and services in large numbers.

This isn't the magical land where everything you touch turns to gold. It's hard and it takes time to ramp up a business, promotion, and constant refreshing of your content. As I've mentioned before, in many ways it is not unlike a blog. There's a much more level playing field in SL between RL brands and new virtual ones.

If you want to sell virtual goods, you have to make them interesting and keep things fresh and new. If you want to create a community or destination, you have to constantly have activities and life in your space, and be patient for several months while people discover that you have a dependable place to have fun and meet people.

Ian, to answer your question, our clients are quite happy, even ones that I would have *thought* would be frustrated seem to be happy about what they learned. The vast majority continue to work with Second Life. I'm not just blowing sunshine here because I've long been one worried about the hype (hype leads to backlash -- I prefer steady growth).

Sometimes their happiness is due to PR, but for others this continues to be a fascinating marketing or community experiment. When Showtime sees engagement figures that rival or beat top website stickiness, they realize there is something going on here. Nissan's island may only have a few people there at a time, but they've given out over 44,000 virtual nissans and you never know where you're going to see them out in Second Life (we don't track how many avatars are in and around every parked or driving virtual nissan).

We have had one or two who came late and *just* wanted the PR, and got frustrated when they didn't get it. What was ironic was that one of them was getting the kind of community response many corporations dream of, but not the PR, so they put everything on hold - it was shortsighted in my view but what can you do.

We don't know what virtual world platform is going to dominate this space, and it will definitely be easier for companies to be successful and "move the needle" once the population numbers get higher. We work in multiple worlds, as does Anshe Chung Studios of course she is going to diversify her revenue streams - that's just smart business).

More responses: @Giff

More responses:

@Giff Constable: I agree that there is huge potential in virtual worlds. One piece of data that really surprised me was the recent finding by the Pew Internet & American Life Project that more than five million Americans are taking virtual tours in cyberspace on a typical day. These are not necessarily forays into virtual worlds like Second Life or MMO games like WoW, but may include 3D demos, such as real estate tours.

Applying your 1994 Web analogy to virtual worlds, a lot of people are wondering, "when will it be 1998"? I think there is a widespread sense of disappointment over the promises and hype surrounding Second Life in 2006 and early 2007. Millions signed up, looked around, shrugged, and left after failing to see what the fuss was about. Others are understandably angry after investing serious time and money in the virtual world, and failing to see any ROI. Your company deals directly with such clients -- what are you hearing from them?

Lastly, perhaps part of the problem are the comparisons with the early days of the Web -- most websites that sell things or provide information about products did not/do not require live human beings to interact with customers. Virtual worlds are optimized for live interaction, and that requires a different type of investment than companies were making in the 1990s.

@Ecocandle Riel: I think the American Apparel experience would make a great case study. Your "what if" scenario is interesting, but there is still the issue of having enough customers and griefers ruining the party. Perhaps a better option for American Apparel: A small unmanned boutique with a different branding placed in a high-traffic area, and regularly monitored for vandalism.

@Shannon: Thanks for sharing your tale, and giving advice for others considering Second Life. If you are interested in being interviewed about your experience, could you shoot me an email at ian_lamont at computerworld dot com?

@Dirk Singer: I agree that new way of thinking about engagement is required, and with your first bullet point about avoiding carbon copies (who gave such companies that piece of advice?) but I have the question some of your other suggestions. You say "the key is to add value, and to work with the community." Many companies could rightfully say that they have added value -- for instance, Sun provided a forum for residents to directly interact with senior technologists, an experience that would be practically impossible for most people in the real world. Barely anyone showed up, and there were other problems. As for "working with the community," which community are you talking about? There are many factions/groups/communities within SL, and many of them are fundamentally opposed toward any corporate presence (check out this Second Life Herald thread to get a sense of what diehard residents think of corporate efforts in Second Life). Finally, why should any company plan for a long-term investment in Second Life, when it is far from clear that Second Life will be a virtual world that really takes off when we reach the mass adoption stage? The Internet is littered with the husks of platforms that never caught on. One company that had a panelist at the MIT conference (a Psion brand manager, I believe) said that they are really hedging their bets by building presences in three virtual worlds. That's great if you have deep pockets, but it is not a realistic strategy for most firms.

I want to thank Shannon for

I want to thank Shannon for her comments about bringing her real life business into SL. I've considered it as well and decided against it when I saw the price tag associated to it. I will get into virtual world marketing because I feel it will be as lucrative as in-game advertising has become as the customer is engaged and 'playing' while interacting with your brand...but spending thousands and even millions of dollars on an unproven concept is not something I am prepared to do. SL made a big mistake touting that they had 6 million active users when in fact the number is closer to 100k...that lie has caused their bubble to burst and make way for other virtual worlds to break in to this growing space. I'd like to see a virtual world that mirrors the real world so i can tie in my real world business wiht my virtual business so no guess work is needed.

It's very convenient to

It's very convenient to blame the medium (in this case virtual worlds), when in a lot of cases the creative execution is at fault.

I will declare my interest right away: I too bring brands into Second Life and when doing so I follow three simple rules:

1) Don't just carbon copy your real world brand and expect virtual world users to go for it - it's a waste of money and of the medium

2) Someone, somewhere is probably already providing the same service as you in Second Life. The key is to add value, and to work with the community

3) Don't go in expecting a quick PR hit. This is an investment where you build credibility over time

More here: http://www.metaversed.com/dirkthecow/blog

The fact is a lot of brands in Second Life have made a very simple mistake: They treated consumers and residents there like idiots and expected them to flock to whatever they built and sold. It simply doesn't work like that.

And we can dispute the numbers, but what they do show is that regular users spend 90 mins a day in Second Life.

These are 90 mins that would previously have been spent in front of the box (the other one!), and brands need to think of new ways to engage with these consumers who are no longer as susceptible to TV advertising.

As much as Electric Sheep

As much as Electric Sheep would like to claim otherwise (what would you expect them to say since they profit from bringing in your company regardless of the outcome?) the fact is that the Second Life bubble has burst. There are people logged on, but you won't see them in your place. Most are either sitting on "camping" platforms up in the clouds trying to earn a few Linden Dollars or hustling tricks in one of the "escort" houses. People aren't logged in to buy and explore your brand, they are there trying themselves to make money. "Too many cowboys and no Indians" sums the situation up well.

Back in November I was one of those who took my real life company into Second Life after reading the hype. My company spent thousands of dollars and I, personally, lived in Second Life for all of my days and plenty of nights working to get things going and ensuring that there was a "knowledgeable sales person, who could explain the virtues of the brand" readily available. My company was one of the first to bring real life goods into the virtual world.

We are still there, only we've since sold off our island sim and moved onto a smaller parcel of mainland. The fact of the matter is, the results simply can't support the cost of owning a sim. It is nothing personal, I hold no grudge, and having sunk thousands of dollars and thousands of hours into it, I wish more than anyone that the promise of Second Life had worked out. At the end of the day though, I run a business, and anyone that runs a business can tell you that it would be foolish to continue to invest in something that isn't benefiting your bottom line. In this case in fact, not only didn't it recoup the expenses, but it actually started draining the coffers.

My corporation's experience is obviously not unique as you can see by the news headlines. I recently checked out the Nissan and Mercedes sims. Both expensive builds, both ghost towns. I stopped by the Playboy sim which only just recently opened with much hype. They were having a scheduled event/party and had several employees present. Total avatars present including myself? A grand total of five.

Anshe Chung, once featured as the model Second Life business person, has even begun to move on to other virtual worlds in an attempt to continue the revenue she once saw. Several months ago people were seeking out her services, however, just today I saw that she is running low-budget banner ads on Second Life themed web sites in a desperate attempt to keep her Second Life business alive.

I realize that I'm an anonymous post on the internet, but I've been there and my advice to real life businesses wanting to try it out is to start small and save your capital. Buy a smaller plot of land on the mainland and buy yourself a pre-fab building at www.slexchange.com or have a custom one made for you at a Second Life developer freelancer site like www.myslproject.com . You likely won't have any better success than any of us who have gone before you, but at least it won't be such a costly mistake.

There has to be a healthy

There has to be a healthy and honest middle ground between fawning and antipathy.

There are plenty of things to criticize, but my attitude is let's get the facts right and not over-simplify or over-sensationalize what is going on in a virtual world like Second Life.

Some corporations are in there experimenting but not ready to invest serious resources until the audience numbers get higher. Others see the level of engagement they can achieve, and the amount of time people are dedicating to virtual worlds going up as traditional marketing channels continues to lose attention, and are stepping in more seriously.

It will be a mix, and like Web projects in 1994 some will succeed and some will fail. Like the Web in 1994, there will be a lot of talk about sex and porn. Like the Web in 1994, there will be many who dismiss the potential of an important new communications medium, and those criticisms can be healthy and push innovation further. Like the Web in 1994, the technology and usability has some hurdles to leap before many returns can be realized. And like the Web in 1994, I think virtual worlds have huge potential to have an impact on us all.

Would that be the same

Would that be the same Randolf Harrison that hilariously and ineptly claimed that Second Life is a ponzi scheme after his get rich quick scheme didn't work? He's just another self proclaimed expert who blames his failures on anything but his own lack of research and understanding. Really, his diatribe was by far the most idiotic thing I've ever seen written about SL, and considering the fierce competition in the "most idiotic, poorly researched, overblown press" field, that's quite an accomplishment.

Kapor forgets that the

Kapor forgets that the "ethic of participation" has lead to a multitude of morons on sites like Wikipedia. Do a search on "Wikigroaning" to see what I mean.

Moreover, the backlash is long overdue. Analysts like Randolf Harrison over at capitalism2.org have long been dismissive of the actual economics of virtual worlds, and now perhaps the mainstream press is beginning to realize this.

Most importantly, we must ask ourselves this question: do we really want to be a society where SL and WoW have become more than socially acceptable pastimes, but rather intractable (indeed, joyful) aspects of modern life?