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Doing Business in Second Life

For a March 18, 2008 presentation on doing business in Second Life for the Charlottesville Business Innovation Council, I developed a white paper covering the background, economics, dos and don’ts, and notions to consider when starting a business in Second Life. The white paper is published under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States license in a PDF version here and in a HTML version here.

For those who do not have the time to read the entire paper, I have copied the executive summary into this post. Appropriate citations are made in the full versions. I also added a citation list at the end of the post.

Executive Summary

“Every human being is interested in two kinds of worlds: the Primary, everyday world which he knows through his senses, and a Secondary world or worlds which he not only can create in his imagination, but which he cannot stop himself creating.”

—W.H. Auden

Second Life is a 3D “virtual world” that allows people to interact with others in the same environment through the use of avatars. An avatar is “an Internet user’s representation of himself or herself, whether in the form of a three-dimensional model used in computer games, a two-dimensional icon used on Internet forums and other communities.” Since its inception in 2003, membership in Second Life has grown exponentially, now boasting nearly 13 million residents, with nearly 500,000 residents visiting Second Life in rolling 7 days periods.

Due to this growth and participation in the community, businesses have sprouted up all over Second Life, with nearly 55,000 businesses appearing in Second Life as of the end of February, 2008. Furthermore, over 328,000 of the residents in Second Life spend money.

With this growth story, the allure of Second Life seems to be irresistible, and the promise of quick profits draws in companies both large and small to establish a presence in Second Life. Many companies underestimate the cost of establishing a vibrant presence in Second Life, and those who understand the costs do not get the short-term ROI that investments in the tech bubble of the early 2000 time period did.

Still, the trend in moving towards virtual worlds is clear and nearly inevitable. As personal computers gain processing power and the ability to rapidly generate the complex graphics inherent in virtual worlds such as Second Life, more users, particularly those who regularly utilize the Internet, will begin to inhabit those worlds. As Gartner reported, by the end of 2011, “80% of active Internet users (and Fortune 500 enterprises) will have a ‘second life’, [although] not necessarily in Second Life.”

Therefore, a company that wishes to either establish or grow its online presence in selling goods and services to consumers will be wise to consider the implications that Second Life and other virtual worlds have on the future of consumer interaction with the Internet. Furthermore, doing business in Second Life is not as simple as setting up a website, nor does it have all of the same parallels of opening up a brick and mortar retail store. The paper discusses the implications of doing business in Second Life and what businesses not currently in Second Life should consider when deciding if and when to establish a presence.

Sources Cited

Jason Hull posted this entry on Monday, March 17th, 2008 at 9:33 am. It is filed under Business, Community, Speaking. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “Doing Business in Second Life”

  1. OpenSource Connections » Blog Archive » Jason Hull Will Be Presenting “Doing Business in Second Life” For the Charlottesville Business Innovation Council Says:
    March 17th, 2008 at 9:31 am

    […] On March 18, 2008 at 7:30 AM, Jason Hull will be presenting “Doing Business in Second Life” for the Charlottesville Business Innovation Council. The event has sold out; however, if you wish to attend, please call the CBIC office at (434)817-6300 to get on the standby list. cbic, Charlottesville Business Innovation Council, doing business in second life, second lifeRelated PostsArin Sime To Chair CBIC Tech Awards CommitteeOpenSource Connections Announces Hiring of Riley O’Brien Wolff, Business Development ExecutiveCommonwealth ScholarsDoes the virtual world equal the real world?Battle of the Scaffolds Aug 9th Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. […]

  2. Dustin Hux Says:
    March 26th, 2008 at 9:01 am

    Jason, I really enjoyed you presentation on second life for CBIC. Could you let me know how to get a copy of the white paper?

  3. Jason Hull Says:
    March 26th, 2008 at 10:59 am

    Dustin,

    I’m glad that you enjoyed the presentation! You can find the white paper at http://www.opensourceconnections.com/Doing_Business_In_Second_Life/Doing_Business_in_Second_Life.pdf

    Jason

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