Starting a Second Life Business

A million dollars of virtual loot. It's a concept that's difficult to wrap your head around, but in November, that's exactly what virtual real-estate developer Anshe Chung accomplished in the 3D virtual world Second Life, in which users live "second" lives as avatars. When her entrepreneurial success story hit the press, it spread like wildfire, leading many to ask: What exactly are the business opportunities available in Second Life? Are people really turning their love for Second Life into a full-time business?

Marketers have already been exploring the world, with big-name businesses like American Apparel, Starwood Hotels, Scion and Cisco setting up virtual areas for their products--a store for American Apparel, a hotel for Starwood--in Second Life. Even Reuters has assigned a bureau chief specifically to the site.

If you've never visited Second Life--or even heard of it—here's a quick look at it. Second Life is a 3D virtual world where people use avatars to explore and commune with other people. It's often lumped in with such online games as World of Warcraft or Star Wars Galaxies (which insiders refer to as "massively multiplayer online role playing games" or MMORPGs), but it's a different beast. There's no slaying of dragons to level up a character or collecting weapons to prepare for battle, but you can buy and develop online real estate, import images to craft your own in-world creations, or attend a drum circle with avatars created by users from all over the world. Based on the futuristic Metaverse from Neal Stephenson's seminal sci-fi novel Snow Crash, Second Life aims to truly be a second life for users, with opportunities for both work and play.

It's the work element--the embrace of entrepreneurship--that's perhaps most unique to Second Life. Linden Labs, the creator of Second Life, has welcomed the entrepreneurial inclinations of its community in two important ways. First, Linden dollars, the in-world currency, are easily traded for U.S. dollars at an official currency site. Second, Linden has taken the remarkable step of allowing players to retain the copyright for their in-game creations. It's these aspects of Second Life that attract entrepreneurs like Peter Lokke.

Time to Quit the Day Job
Lokke started his online adventures in the 3D virtual universe There. It was "there" that he discovered his love for virtual clothing design. That's also where he met his business partner, Theo Lament, and it was Lament who introduced Lokke to Second Life in 2004. Once he'd learned how much more creative he could be in this new world, he was hooked. Linden's intellectual property policies also helped.

"When I found out how expressive I could be in Second Life and that I retain copyrights for the things I make, I knew I was in Second Life to stay," says Lokke, who lives in Brooklyn, while his partner Lament, whom he's never met face to face, lives in Milwaukee.

Lokke has never considered himself a gamer but he did enjoy tinkering with computer graphics. Creating online clothing came naturally, and after designing his own duds in There and Second Life, he found that others wanted them, too. "[My business] has grown from [generating[ a few bucks a month two years ago to selling more than enough to live on now," says Lokke, who goes by the name Crucial Armitage in Second Life. "And it's growing every month."

Indeed, 2007 may prove to be a watershed year for Lokke: He's quitting his 17-year job as a supermarket manager to make the 50 hours he already spends in Second Life as the owner of Crucial Creations his true, full-time career.

Julian Dibbel, an MMORPG expert who chronicled the year he spend trying to earn an income in Ultima Online in his book Play Money, says Second Life--and not MMORPGs--is the place to look if you want to make a virtual living online. For one thing, it's often hard to earn much in online games because they often shut down the accounts of those selling in-game items, since such activities are against the rules.

Another major issue with multiplayer game money-making, as opposed to Second Life, is that many foreign businesses have cornered the market on entrepreneurial opportunities using inexpensive labor and cheap overhead. Dibbel says this isn't yet an issue in Second Life. "What's not so easily off-shored is the really creative and culturally specific stuff, and that's what you see in Second Life."

What's also interesting about Second Life, says Dibbel, is that while you can be wildly creative, you don't have to be. The aforementioned Anshe Chung (real name: Ailin Graef), who was the first Second Life entrepreneur with a net worth of more than $1 million, made her cash through virtual real-estate dealings. The German resident has even gone real-world with her talents, starting Anshe Chung Studios, a 3D environment developer with offices in Wuhan, China.

Opportunities Abound
The number of opportunities available is really only limited by your imagination. Real estate is a big moneymaker, as evidenced by Chung's success. Even Lokke has a side business as a landowner, subletting property on the 10 islands he owns. There are also numerous opportunities for coders who want to build more complex creations using Second Life's unique scripting language.

Even a B2B community has sprung up. When Dibbel decided to promote Play Money in Second Life, the infrastructure already existed. He found a bookmaker to create a virtual version of his book, and a pre-existing vending machine to sell it in. "There's already a community of solo entrepreneurs there to fill the gap on a B2B level," says Dibbel. "If you have an idea you think would be a good thing to have programmed up, you don't necessarily have to do the programming at this point."

Next Big Thing?
In December, Linden Labs reported there were more than 2.3 million Second Life "residents" (avatars that people have created), and that number seems likely to continue to rise. Some have criticized this population figure as not being representative of the true user base because it includes people who visited Second Life only once and never returned, as well as users who have more than one avatar. Regardless, there's no doubting that Second Life's popularity is growing and the media circus surrounding the virtual lifestyle has exploded.

But the bottom line for entrepreneurs is, will Second Life really pan out? Or is it just hype, since the majority of people have never ventured virtually or even heard of it?

Possibly both. After all, there are a lot of people who could care less about blogging, but it's now a well-established publishing and marketing tool that's here to stay. The audience for blogs may not be universal, but it's big enough that some writers--like Heather Armstrong of Dooce.com or the four bloggers behind Boing-Boing.com--are bringing in a nice, full-time chunk of change for crafting their thoughts for the world.

Second Life may prove to be a similar venture. Your mom may never understand exactly what a 3D world is, or the point of an avatar. But enough other people do that a whole new class of entrepreneurs has been born to serve their needs. Just ask Peter Lokke.

Getting Started in Second Life
First and foremost, you've got to start visiting this virtual world. It's free to start an account, but tiered pricing levels will allow you more access to the world in the form of a Linden dollar allowance and the ability to own property. And you can't jump into a Second Life business--you've got to get to know the world and decide if it's the type of place you want to really build another life in.

From there, your personal interests will guide you to potential business ideas. (Check the list below for some ideas from Linden Labs.) You'll also want to start developing your own community of contacts. Much of the work in a virtual world business--like a real-world business--comes from networking and building a list of contacts and friends.

Finally, be prepared to spend a heck of a lot of time on Second Life. Just because it feels like a game doesn't mean your work will always be fun. Like any hobby-turned-business, the "business" parts can suck much of the fun out of what was once your passion. Be prepared to spend 40 or 50 hours, as Lokke does, on top of your normal, full-time job before you can break free and take it full time.

Second Life Business Ideas
On the Second Life website, the company lists the following businesses as some real examples of in-world enterprises run by residents:

• Party and wedding planner
• Pet manufacturer
• Tattooist
• Automotive manufacturer
• Fashion designer
• Custom avatar designer
• Jewelry maker
• Architect
• XML coder
• Freelance scripter
• Game developer
• Tour guide
• Real estate speculator
• Publicist

For the complete list, click here.