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

The honeymoon between the business press and Second Life is officially over. Last year, outlets like BusinessWeek and CNet were only too happy to report on the frenzied business charge into the virtual world. "Virtual worlds abound in useful business applications," was the breathless message from BusinessWeek. "If one thing has become clear about the virtual world 'Second Life,' it's that it is providing lucrative business opportunities to a large, and growing, number of entrepreneurs," claimed CNet.

These days, the appraisals are far more critical. The slide started late last year, partly in reaction to all of the the nuclear-powered hype, but this year the frequency of negative assessments has picked up, as reporters have taken off the rose-colored glasses. In a March article about Coldwell Banker opening up a real-estate office in Second Life, Fortune's David Kirkpatrick noted a major problem with the virtual world:

The employees will help combat a big problem of Second Life - the loneliness that sets in when you are wandering anywhere other than the sex clubs and new-member gateways. Much of the impressive virtual world landscape, even sections constructed at considerable expense by major corporations, is eerily empty.

This sentiment was echoed by Allison Fass in the latest issue of Forbes magazine. Not only are multinationals concerned about a lack of customers and other issues, but a few companies are even bailing from the virtual world:

American Apparel, the first retailer to set up a virtual store on the site, in June 2006, is all but shuttering its Second Life shop, which attracted more critics than shoppers. Not long after it opened, a group called the Second Life Liberation Army--its members are grumpy about commercialization on Second Life, among other things--shot American Apparel customers with virtual guns. Rasmus Schiönning, Web director for the company, says the retailer is disappointed by "insignificant" sales from the site.

An even more-withering critique came from Wells Fargo. Just last year, there was a lot of marketing spin surrounding Wells Fargo's Stagecoach Island, a private space in Second Life where young adults could learn about financial education in a "fun, engaging way." Not anymore. According to Fass' report in Forbes, the bank no longer has a presence in Second Life.

"Laughs Erik Hauser, creative director of Swivel Media, Wells Fargo's digital agency: 'Going into Second Life now is the equivalent of running a field marketing program in Iraq.'"

But Second Life's many defenders are not taking the negative press lying down. The Second Life Herald published a piece entitled Forbes Starts Hating on Second Life that drew more than 50 comments, many of them attacking failed corporate marketing efforts (Example: "There's no sight more entertaining than an expensive, deserted corporate sim with two avatars standing behind the counter doing their 'job'.") Giff Constable, a VP at virtual world design consultancy Electric Sheep, whacked out this angry blog post to dispute a recent BusinessWeek article that was "rife with inaccuracies."

Second Life's parent company, Linden Lab, is also getting testy. Last Friday, Mitch Kapor, the chair of Linden Lab, spent a healthy portion of his keynote address at an MIT/IBM conference on virtual worlds criticizing the critics. He noted that when the short-term benefits of new technologies are less than predicted, the hard-core skeptics take cheer. But when long-term impacts are observerd, former skeptics "develop amnesia."

But Kapor's best defense of Second Life was his comparison of virtual world adoption now with PC adoption in the early 1980s. The PC revolution is something that Kapor is intimately familiar with -- some Computerworld readers will recall that he was the founder and CEO of Lotus -- and he noted that the technology adoption curve wasn't too kind to PCs back in the early days, either.

"There's always a great deal of skepticism about these technologies that persists for a very long time," Kapor said, recalling an MIT PhD who declared, in 1979, that "personal computers are useless toys." Virtual worlds are currently "a fairly marginal phenomenon," he said. "We're not even at the DOS era of virtual worlds. We're probably still in the terminal emulation era."

Kapor went on to say that the technology is now at a tipping point, with a critical mass of passionate early adopters, and a range of "historical enablers" in place, including:

  • Fast PCs with powerful GPUs
  • Widespread broadband connectivity
  • An Internet-enabled "ethic of participation" that has led to the GNU General Public License, Wikipedia, and other efforts 

What does this mean for the corporations and marketing campaigns that are struggling to gain traction in Second Life? While large firms are "intrigued and experimenting," Kapor readily admitted that the virtual world does not have an enterprise-driven economy -- rather, it's dominated by small businesses and "marginal entrepreneurs." But once virtual worlds enter the next stage of the technology adoption curve, when pragmatic users jump on board, Kapor predicted there will be new software, hardware, and other uses that spring to the fore. He was cautious about exactly what those applications and devices might be ("There is going to be lots of new hardware and software associated with virtual worlds that we haven't even thought about yet") but expressed hope in social applications aimed at business, the introduction of voice chat, and software that creates faithful representations of reality.

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