How to make real money from virtual worlds

The phenomenal growth of the website Second Life has sparked a cyber space gold rush as entrepreneurs and big business attempt to make real millions out of a new virtual reality. Your contemporary multi-millionaire business hero doesn’t bother with sharp suits these days. He or she is more likely to sport blue wings, perhaps a unicorn’s head or a Japanese kimono. You see, if you want to make millions these days, you need to move to a virtual world, create a virtual version of yourself (wings, rabbit ears and horns optional) and then sell virtual goods. At the end of the working day you cash in your virtual currency for real dollars. Easy.

Andy Round reports

Well, that’s the theory anyway. Since Anshe Chung became the first person to make a real million out of the website Second Life, more and more entrepreneurs and big businesses have been logging on after her for a piece of the virtual action.

Chung, who in reality lives in Germany and has a design studio based in China, spends most of her time in the three-dimensional web space of Second Life, doing the same things she does in real life only it’s all virtual. She meets friends, goes to hotels, buys things and runs her business.

The difference is that her self-created online character (known as an avatar) sometimes wears rabbit ears and kimono. And, as a result of selling thousands of virtual homes for around US$200 each to the estimated 5.6 million other people on Second Life, Chung has become a real dollar millionaire in just three years.

It is now estimated that there are at least 13,000 other businesses operating on Second Life. “We encourage people to interact and to create,” says the site’s creator Philip Rosedale who set up the SL’s founding company Linden Lab. “Ultimately it brings value and makes for a richer experience for everyone.”

It’s certainly made Rosedale richer. Premium Second Life subscriptions cost just US$9.95 a month and you’ll need one if you want to buy virtual land. Once you’ve bought your plot (perhaps from a broker like Chung for example) you pay a monthly ‘maintenance’ fee to Linden Lab. The result? Well, it’s not just Chung or Rosedale who are making serious real money.

Adam Frisby’s Second Life company Deep Think has been successfully selling expensive property in virtual volcanoes for years; Peter Lokke’s avatar clothing company enjoys annual revenues of US$100,000 and Stroker Serpentine’s virtual toys retail for US$40. This latter blingtastic-looking entrepreneur recently made a killing out of his virtual version of Amsterdam when he sold it on eBay for US$50,000.

As for clothes designer, party planner and consultant Alyssa LaRoche, well, she may wear virtual butterfly wings, but her business sense is very real. As a consultant she charges real world companies between US$30,000 and US$100,000 to help them create businesses, buildings and events that will attract the millions exploring Second Life.

And this is where things get seriously interesting. Small-scale entrepreneurs are now working with real world corporate giants. Reuben Steiger who started working with Linden Lab now has his own company Millions Of US whose clients include Coca-Cola, Warner Bros and Microsoft, while webmaster Sibley Verbeck, who founded a small online operation called Electric Sheep, now consults for Reuters and Sony BMG.

During a recent press conference (held virtually of course) Chung said: “There will be many millionaires in Second Life. I predict that in 12 months we will have five and within the next two years somebody will become a millionaire overnight by creating a cool product and selling a million copies.”

The real world of business is naturally fascinated by the opportunities Chung is describing. Major companies have been quick to establish their presence on the site in the hope that it will generate greater web awareness of their brands and also shift some product.

Mercedes-Benz, at the time of going to press, was offering virtual C-Class test drives and sales in Second Life while Toyota had just opened its own specially created island and race track. One of the biggest property companies in the States, Coldwell Banker, recently launched a virtual sales office after buying up some of Second Life’s prime land for sale and rent. It will also be encouraging avatars to purchase in the real world as well.

Famously Adidas has sold more than 21,000 virtual trainers to fashion-conscious avatars. The footwear company has claimed that at one stage it was selling more trainers in the virtual world than it was in its real stores.

“Second Life is the perfect place to test out brands and get feedback from clients,” says ‘Justin Bovington of virtual design agency Rivers Run Red. “Companies can engage with their customers in a way that is unprecedented. How useful is it to have such instant feedback and such instant focus groups?”

It is easy to see why Second Life design, event and building consultants earn so much money. If you manage to create good word of mouth among the internet literate on SL even with a few thousand people, who knows how many millions of websites you may ultimately reach.

That was the philosophy of major corporates such as the news service Reuters which is now well established with its own virtual headquarters and news bulletins on Second Life. IBM and Dell host meetings online and organises major conferences; Starwood created the virtual hotel Aloft, 18 months before it is completed in reality and INSEAD the French business school has opened a campus online. Every hour another major organisation sets up shop in Second Life.

Major events are also gaining momentum. As well as exhibitions, corporate events and lectures, major concerts have been staged by the BBC which last year tripled traffic to the site while the UK newspaper The Guardian sponsored a film festival on Second Life. Duran Duran, U2, Gorillaz and Suzanne Vega have also done virtual gigs online and politicians in both French and US campaigns have been making their presence felt in Second Life.

Clearly there are no real limits to this virtual world. As Rosedale says: “We are only at the beginning and the market will determine where this is going. We don’t see the lines between real and virtual worlds being blurred as much as see them converging.”

Rosedale believes that operating a virtual avatar in the future will be as every day for people as having a mobile phone or email address. The incredible thing is that Second Life is only one of hundreds of virtual three-dimensional worlds on the web. Others like, Active Worlds, whyville, Habbo, Cyworld and Sims online attract as many visitors (and as much corporate interest) as Second Life. Clearly it’s the end of the real world as we know it. Better get your avatar wings ready.

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