But here in the United States, interest in creating real-world outposts among the avatars only took off when users themselves started populating these sim-verses. Although There.com and Second Life have had small cult followings for years, the demographics at SL in particular exploded in 2006, from about 120,000 residents in February to about 2 million by the year’s end. “It was a cascade, a tipping point,” says Wagner James Au, a former employee of SL publisher Linden Lab. In the early years, worlds like SL and There.com attracted proactive content creators, but now a broader populace is dropping in and demonstrating more typical consumer-like behaviors.

And there’s no shortage of familiar brands looking to grab these new SL users. Suzanne Vega had a virtual concert in SL. Starwood erected a model hotel, the Aloft, where residents could preview guest rooms of the future. And car makers such as Pontiac and Scion started selling autos here. IBM actually has a compound of offices in SL where it conducts “v-business,” meetings among geographically distant clients, and training sessions for employees and partners. Big Blue isn’t just playing in these worlds: it announced an investment of $10 million in research and development into online perpetual universes.

For one next-gen marketing firm, crayon (www.crayonville.com), SL was the place to launch its new company in October 2006. The press was invited to attend the announcement in SL, where the company set up crayonville island and announced Coca-Cola as its first client. In a few days, the small startup had made the cover of The Wall Street Journal for being the first real-world enterprise to launch and maintain headquarters in a virtual world. “It was a way to commit more internally than externally,” says co-founder Joseph Jaffe. SL was a way to create a virtual office space for a dispersed staff of eight stationed around the globe. “How else to meet?” asks Jaffe. “We could use WebEx, but they don’t come with context and emotion and richness and fun and life.”


Whose Economy Is This, Anyway?

Of course, WebEx doesn’t come with controversy, either. Not all virtual residents are happy with the way their homegrown universes are attracting big business. It feels too much like Wal-Mart overtaking a downtown of mom-and-pop shops. When the first real-world marketing company, Rivers Run Red, appeared in SL in January 2004, Au recalls how “the next day people were on the island to boycott it.” Reuben Steiger, founder of virtual worlds marketing specialist Millions Of Us (see the “Q&A” sidebar), says of such backlashes, “we are seeing a little and will continue to see a little, I think. I would characterize it as fear, and well-founded fear. They feel they have built this very special place, and they feel private ownership.”

But what really ticks virtual worlders off is when real worlders dismiss or overshadow their own good work building their own online cultures and economies. For example, late 2006 an executive from Ogilvy Public Relations posted a “Gallery of Virtual ‘Firsts’ in Second Life,” listing only initiatives from known mainstream entities such as Suzanne Vega and Scion. SL worlders were quick to point out that residents had spent years of creative energy developing nightclubs, clothing brands, and events without the help of Toyota, Starwood, or Dell. SL’s newspaper The Second Life Herald discussed the thousands of “firsts” in all of these categories that preceded the entry of outsider marketing. “Never mind all the virtual hotels and rental properties that have existed in Second Life, and clothing stores,” the newspaper read, “[the marketers] are being exposed as clueless frauds.”

“There is a great sense of ownership in what they perceive themselves having created,” says Michael Bloxham, director of insight and research, Center for Media Design, Ball State University. Bloxham and his students study virtual worlds and are planning anthropological studies of users’ behaviors here. Places such as SL and Habbo Hotel are very different from MMOGs such as World Of Warcraft. People tend to go to two extremes, either constructing very uninhibited avatars who perform in ways they never could in real life, or they stay very close to their real-world personalities with avatars that resemble their real faces. Regardless, incoming marketers have to respect what residents have built.

One of the things brands need to respect is the economic balance of virtual worlds. The value of Linden Dollars in SL is based on current levels of exchange and going rates for goods in-world. Although marketers need to give value to this world, they can disrupt it with their generosity. If a car maker comes in and starts giving away autos to ingratiate itself with the locals, for instance, it depresses the value of the currency everywhere. Becoming a rational part of the virtual economy is the best way to get along here.

But We Can Buy Pontiacs Anywhere

Indeed, the virtual worlders not only have a thriving economy where millions of Linden Dollars change hands every week but where the in-world businesses make the newcomers seem bland by comparison. One of the most popular nightclubs is The Edge, run by an avatar named Jenna Fair-play who turns out to be, in real life, a Jewish-Russian immigrant psychologist who taught at Brandeis University. When Au interviewed her, she explained that her risqué club was designed around the psychological theories of Abraham Maslow. Now that’s something you don’t get at the Hard Rock Café. Then there’s the popular car dealership Need 4 Speed and the clothing brands TorridWear and PixelDolls.

The painful irony is that virtual-world residents seem to prefer these edgy, grassroots creations to the high-profile brands. According to traffic metrics within SL, the resident-made brands outpace the Toyotas and other corporate entities by multiples. For all the worry about big business coming in and ruining the place, “it is not disrupting the world at all,” says Au. “The world is not really noticing them. The user-generated content is the dominant force. The corporations are struggling to make themselves known, and they are failing.” After all, you can buy branded jeans at any real-world store, but a virtual world is the only place to find IceDragon’s Playpen Island or an outrageous furry suit from Luskwood.

And yet, it’s this very imaginative energy in virtual-world economies that could be their most lasting legacy, says researcher Bloxham. "It is going to influence the expectation of its users, particularly younger users, in all screen-based media. The degree to which one can interact with and control and create the environment is going to have a huge impact on underlying expectations.” The lesson for the future is being built in virtual economies. “Media is not just for consumption. It is to create, control, and to make money off of,” says Bloxham. Ultimately, it’s not virtual worlds that will look more like real worlds, but our world feeling more like a Second Life.

by Steve Smith

Q&A Reuben Steiger: Don't Advertise, Engage One of the leading marketing companies working in and outside of virtual worlds is Millions Of Us, founded by Reuben Steiger, formerly an “Evangelist” for Second Life’s publisher Linden Lab. Steiger’s company helped construct the Scion car brand presence in SL and works with major brands such as Warner Bros., Sun Microsystems, and Intel. According to Steiger, marketing in SL represents a very real next stage for all marketing—beyond the pesky ad. CPU: How are virtual worlds such as Second Life and There.com different from MMOGs such as World Of Warcraft? Steiger: In a conventional video game, the story is written. In virtual worlds, it is so open in terms of what you create. We think of Second Life as a story that is being written in real time by 2 million authors. The opportunity for a brand is to become a participant in that story. CPU: What is your basic approach to marketing in virtual worlds, and how is it different from marketing in the real world? Steiger: We do an interesting brand translation. We take the focus on community. This is very important to whatever brand we are working with. We build an experience, a translation of the brand that is highly interactive and lets the community own that experience. CPU: What are some controversial issues you come across trying to extend your business or brand into these virtual worlds? Steiger: In the real world, billboards work. In Second Life, you go wherever you want [via instant teleportation], so that form of entrapment advertising doesn’t work. You are going into a virtual world to fail if you treat it like it’s somewhere to make another media buy. You must view it as a separate culture and treat it as you might treat China. Do some market research and learn a little about the tastes and proclivities of the people. Then you translate the brand in an effective way to add value for people who are spending 40 hours a month here. CPU: Is the kind of marketing and economy we see in virtual universes now a portent of things to come in the real world? Steiger: We’re in an age where people are extremely tired of being advertised to in one way or another. They have the tools now to avoid it, and that is a big problem for advertising. The catchphrase is don’t advertise; engage them and play with them. Take your brand and let people play with it and open the lines of communication. Let them show you what they want the brand to be like.

Infinite Loop: Spammers Giving Up Day Jobs The spam-filtering firm Ironport recently determined that nine out of every 10 emails floating around on the Internet are spam. This comes as a great shock to nobody, except, perhaps, Bill Gates. In 2004, Gates said that we’d all be living in a spam-free world in two years. To make amends, Bill Gates is sharing his fortune with anyone who participates in Microsoft’s Email Tracing Program. Seriously, it’s in my inbox! Source: www.nytimes.com/2006/12/06/technology/06spam.html