July 27th, 2007

It seems the Second Life buzz bubble is finally bursting. Earlier this week we talked about how a number of the corporations who jumped on board the set-up-shop -in-Second-Life band wagon are now grumpily jumping off (do I have that band wagon thing right? On? Off? I never know). We also talked about how the corporate set-ups that are still around are all but deserted. Well, on Tuesday Wired.com ran an article that explains the state of things much better than I could. It’s called, “How Madison Avenue Is Wasting Millions on a Deserted Second Life,” and parts of it are right on the money:

“Adrift in the uncharted sea that is Web 2.0 — YouTube, MySpace, social networking, user-generated content, virtual worlds — corporate marketers look at Second Life and see something to grab onto. At least 50 major companies have ventured into the virtual world to date, spending millions in the process. IBM has created a massive complex of adjoining islands dedicated to recruitment, employee training, and in-world business meetings. Coldwell Banker has opened a virtual real estate office. Brands like Adidas, H&R Block, and Sears have set up shop. CNET and Reuters have opened virtual bureaus there. It’s as if the moon suddenly had oxygen. Nobody wants to miss out.”

“In contrast, the kind of digital marketing that actually works requires a conceptual leap. Successful online marketing is targeted and specific, like direct mail — but it’s direct mail in a fun house, where the recipients can easily seize control of what the mail says, where it goes next, and how it gets there. You need to know how to buy up keywords to maximize search returns, how to make the most of recommendation engines, how to use the viral potential of Web video, how to monitor what’s being said in blogs and message boards, how not to blow it by trying to be deceptive. Building a corporate pavilion in Second Life doesn’t require any of these things. It’s simple and it’s obvious.”

Other parts are just jaw-dropping-ly informative. I don’t know about you, but I’ve been wondering about these numbers for a long time:

“The cost [of setting up a corporate presence] varies greatly: A company can stage an in-world speaking event for as little as $10,000, but hiring Electric Sheep or one of its competitors to create a full-time presence, with a private island and a lot of virtual construction, could run several hundred thousand dollars a year. (Linden Lab leases virtual land to cover its server costs but doesn’t take a cut of what companies spend establishing their presence there.) Opt for a really elaborate build, hold frequent events to keep people coming back, and hire an employee or two to keep things running, and the budget could easily hit $500,000 a year.”

“Second Life partisans claim meteoric growth, with the number of “residents,” or avatars created, surpassing 7 million in June. There’s no question that more and more people are trying Second Life, but that figure turns out to be wildly misleading. For starters, many people make more than one avatar. According to Linden Lab, the company behind Second Life, the number of avatars created by distinct individuals was closer to 4 million. Of those, only about 1 million had logged on in the previous 30 days (the standard measure of Internet traffic), and barely a third of that total had bothered to drop by in the previous week. Most of those who did were from Europe or Asia, leaving a little more than 100,000 Americans per week to be targeted by US marketers.”

My one fear is that, as Second Life becomes passé as a place for marketing–even passé as a topic of discussion–it will be harder and harder to do cultural research there without harping on old news. Don’t get me wrong, I think there’s a huge wealth of ethnographic information that has yet to be gathered from Second Life. I just hope that researcher’s and readers won’t look at it and think, “Second Life? That was so last year.”

Tags: business, MMOs

3 Responses to “Second Life Jumps the Shark?”

  1. John H. Says:

    My own fear is that, when the bubble has finally burst, that Linden Labs will go out of business, or wreck SL in attempt to salvage things.

    Despite the current backlash, Second Life really is quite an awesome place. The scripting facility is quite well-devised, and it’s a lot of fun to try to make stuff.

  2. Bonnie Ruberg Says:

    Despite the current backlash, Second Life really is quite an awesome place.
    It’s very true, but (for me) in a very specific way. There’s a ton of freedom, both social and creative, and that means that imaginations can run wild in a very revealing way. At the same time, I don’t think Second Life is the second coming of virtual worlds (hmm, what would be the first?). And like you, John, I’m also worried what Linden will do, especially given how it’s been cracking down–in appearance at least–on non-normative behavior. I guess we’ll have to see…

  3. Cybersexy Says:

    The beauty of SL is its freedom. The problem SL has is we live in a society which is restricting freedoms right and left. The second problem SL has is it’s not overly user friendly in the beginning (I was lucky to have some friends already playing it who helped me get started).

    As for businesses, there is a market within SL, but it’s limited by SL’s inherent flaws. Businesses which try to sell everything to everyone will find the advertising potential of SL VERY limited. But I guess they’re learning that lesson now. ;)

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