It's not a game (cont.)

In this realm any resident can become an entrepreneur. There are nightclub owners, jewelry makers, landscapers and even pet manufacturers. In December, Linden Lab estimated that 17,000 residents had positive cash flow in Linden dollars, with about 450 generating monthly income in excess of $1,000 (that's U.S.).

One resident, whose avatar is known as Anshe Chung, has become a celebrity of sorts by claiming to have accumulated a real-world net worth of more than $1 million in Second Life real estate. She now employs 30 people in China who build things and otherwise improve the land she buys and develops for resale. Another Second Lifer developed a gambling game called Tringo, a cross between Tetris and Bingo. It became so popular that it has been licensed for Nintendo's Game Boy advance. These days, about $600,000 is spent daily throughout Second Life, for an annual GDP of about $220 million.

Some of that money is going to Nike (Charts), Sony BMG, Toyota (Charts), Sun, Starwood, and many others, which have operations in Second Life. Some sell virtual clothing and other merchandise for avatars; some even move real product. IBM has built stores for Circuit City and Sears, where, for example, you can mock up a kitchen with Sears appliances to see how it would look.

ABN Amro, the Dutch bank, recently opened an office in Second Life that will offer information about products and services as well as job openings. (Experts are already warning companies to avoid the pushy, ham-handed early Web marketing that enraged Net devotees. Second Lifers have taken flaming to new levels of imagination: One group that opposes virtual real estate development pelted Anshe Chung with a barrage of flying phalluses.)

All these enterprises need guidance and help building things. Linden Lab counts 65 companies that have sprung up inside Second Life to serve real-world business customers. CTO Cory Ondrejka says about 350 people work full-time for such companies, and there are at least $10 million worth of such projects underway.

For now Linden is enjoying its moment in the limelight and trying to cope with the infrastructure-straining influx of new visitors. That's not a minor problem: If its servers crash or its software is hard to use, Linden risks missing its chance to enchant millions of new users. In part to address that, and because of its belief that customers should be in control, Linden has taken another radical step: It announced that the software that residents use to view and navigate Second Life would become available for anyone to examine and modify. The aim is to speed up improvements. Eventually Linden intends to reveal the code for every aspect of Second Life.

CEO Rosedale hopes that other companies' virtual worlds will interoperate with Second Life. That could benefit Linden so long as it remains the biggest operator.

"Say IBM uses our code to build its own intranet version that's somewhat different from Second Life," he says. "A user may say 'Wow, this virtual thing IBM has built is pretty cool. Now I want to go to the mainland.' And we have another customer." In effect, Linden hopes to control the standards for virtual worlds so that they become the equivalent of the HTTP and HTML standards that define the web.

That could lead to what Rosedale thinks will be Linden's greatest long-term opportunity: running some of the lucrative services necessary to keep all these linked virtual worlds functioning smoothly. "We can recreate Google's business in this environment," Rosedale says, not to mention Network Solutions' web-address registration business and Paypal's online-payments system.

Easier said than done, of course. Metaverses will become a very competitive field, says Irving Wladawsky- Berger, vice president for technical strategy at IBM. These are just the earliest days of exploration, and needless to say, the outcome is anything but certain. "Today," says Wladawsky- Berger, "virtual worlds are where video and VCRs were in the early 1980s, or where the Web was in 1993."

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