In the first major news coverage of our Second Life winery project, an article is running today in the National Post (sort of the Canadian equivalent of USA Today) by journalist Danny Bradbury. Sadly the story is firewalled behind the Post’s pay section so I can’t link to it. Instead you can read the text of the article by clicking on the more link below.
Good times.
Virtual living, real-world moneymaking
Second Life: The life may be unreal, but some people are finding real
profits
Danny Bradbury, Financial Post
Published: Monday, January 08, 2007
A young architectural graduate in Calgary is designing a winery for a
family in California that will include tasting facilities and the
ability to design your own wines. But the winery will never exist–at
least, not in the physical world. The Capozzi Winery Island will be a
collection of ones and zeros stored on a hard drive, and you will be
able to visit it only by logging into a 3D Internet-based world called
Second Life.
The designer, Chad Oberg, is a sessional lecturer at the university of
Calgary and founder of Device Paradigm, which creates 3D walk-through
models for architects. It also has an online consultancy called the
Prion Design Group, which focuses on designing virtual buildings in
Second Life. He is one of an increasing number of entrepreneurs
offering products and services in this virtual world. People are
selling everything from clothes to real estate and construction
services–and others are buying.
Second Life evolved from popular online games such as World of
Warcraft in which players logged into 3D worlds to collaborate on
quests. These quests were such typically teenage pursuits as slaying
dragons or travelling to distant planets. In Second Life, the audience
is more mature (company executives put the average participant in
their thirties), and there are no pre-set goals involved.
Instead, Linden Labs, the company behind Second Life, made the
environment as customizable as possible. The idea is to enable people
to do anything in the virtual world that they could do in the real
one. Participants can configure everything from the images used to
represent themselves (avatars) to the land they walk around on.
A programming language built into the game enables Second Life
“residents” to create objects and buildings. Skilled residents are
building everything from nightclubs to shops and hotels, and then
turning them into businesses. Business owners pay for the use of
virtual “land” within the game, and then they can sell their goods and
services to other residents. People pay each other using the in-game
currency, Linden dollars, which are directly exchangeable for U.S.
dollars. Linden Labs even operates a currency exchange on its Web
site.
Who would want to buy an island that exists only on a computer screen?
Lots of people, if the success of Anshe Chung is anything to go by.
Chung is the Second Life nom de plume of an anonymous real-life
entrepreneur who recently became Second Life’s first millionaire (in
U.S. dollars). Chung is an online real estate agent who buys land,
landscapes it to suit client requirements and then constructs virtual
buildings to the customer’s requirements, before selling it on.
Canadians also trade in real estate. Montreal-based Azure Islands
resells parcels of land from its Second Life based continent to
participants, for example. Mr. Oberg may not be in that league–he has
made only a few thousand dollars from his pursuits, but so far has
only pursued his virtual business on a part-time basis.
Nevertheless, Mr. Oberg–whose online name is Chip Poutine–sees
potential in Second Life. “My role would be to add value to those
pieces of real estate either by putting houses on them, or structures,
that are appropriate to the geographic and landscape features of the
place,” he says.
Real estate speculation aside, the biggest opportunities for
real-world businesses wanting to become involved in Second Life centre
on brand marketing rather than revenue generation. Creating games that
promote your product or holding virtual events (including everything
from “live” music concerts to product demonstrations or even streaming
film festivals) could help bring people to your part of Second Life
and generate buzz around your real-world company.
That is the goal of Josh Hermsmeyer, who owns real-life Capozzi
Winery. “Part of our target demographic are these Web 2.0 types that
you find online,” he says, adding the virtual winery will complement
his winery’s blog. The site is essentially a game, enabling people to
design their own wines and have them rated.
It is theoretically possible to use Second Life as a sales tool for
real products, with virtual stores that link to e-commerce sites on
the Web, says T. Sibley Verbeck, founder of the Electric Sheep
Company, which advises on strategy and creates premises for online
businesses. Residents could walk around a store and interact with
sales staff, and even pick up and hold 3D representations of products,
for example. But online shopping in a virtual world is still limited.
“That day will also come, because user numbers are growing
exponentially,” Mr. Verbeck says.
Mr. Hermsmeyer is already thinking about revenue-generating
opportunities. In the future, he says, it may even be possible for the
real-world winery to make the wines designed by visitors to the
virtual company. Such concepts could move sales beyond mere real
estate speculation and into more interesting areas. For the moment,
just like a good wine, sustainable business models in Second Life will
take time to mature.
Good article, Second Life has been getting a lot of hype recently and this article summaries what is going on pretty well. I expect in the not-too-distant future every online business will try setting up virtual stores with this software.