IF YOU have a compulsive, addictive side to your personality thendon't, whatever you do, log on to a website called Second Life. Alas,I am not so pure and have become an addict.
For those of you who still don't know about Second Life, it is upthere with YouTube (bought by Google for GBP 883 million) and MySpace(bought by Rupert Murdoch for GBP 332m). These are the so-called web2.0 companies - the second generation of internet services that haveemerged since the dot-com crash. They are characterised by the factthey let people interact via the internet, with the content beinguser-driven rather than producer-created like this newspaper.
I have sampled both MySpace and YouTube but, not being a pre-teen, I soon got bored with watching silly video clips. Second Life,on the other hand, has got me and another million adults hooked. Moreimportantly, it has a business model that makes MySpace and YouTubelook seriously overpriced. I predict that, before long, someone willbuy Second Life for big bucks.
Second Life is a complete virtual world (83 square miles of it andrising) where you can make your every wish come true. You simply logon and create the life you always wanted. You can design your ownperfect body (called an avatar) and interact with fellow residents ofSecond Life, or SL to the locals. Acquire the house of your dreams onthe plot of land of your dreams - penthouse, castle, pirate island,or Japanese garden.
You can join a yacht club and ocean race, or launch into orbit.You can own and fly your personal jet. You can shop till you drop fordesigner clothes, hair styles and furniture. And that's before westart on the sex.
Not only is this seductive, it is the world's perfect retailexperience. For Second Life is a giant consumer market place with itsown currency, called Linden dollars. You buy these at virtual ATMmachines with your ordinary credit card and use them to shop.
SL being a free market, Linden dollars are bought and sold byprivate dealers. The exchange rate has dropped sharply since thesummer to around 280 to the US dollars . That tells me a lot of realworld money is flooding into Second Life.
Second life residents can earn Linden dollars and then convertthem back into US dollars. But is this virtual economy a US state, aforeign country or is it even on planet Earth? The richest avatar inSecond life, called Anshe Chung, has built up a virtual propertyempire worth US dollars 250,000 and employs 17 real-world staff tolook after it. With this sort of earning power in SL, I predictjurisdiction disputes on a par with America's banning on on-linegambling.
Prices are extremely modest in Second Life and very much lowerthan in the real world. You can buy a designer outfit for 50p inBritish money. A fabulous modern home can knock you back GBP 10 inour money. There is also a lot of free stuff given away by computernerds who just like designing things.
As I write this, U dollars 567,793 was spent in Second Life in thepreceding 24 hours. That works out at over US dollars 200m per year.As there are currently around one million Second Life members, theyare spending around US dollars 200 each. With membership growingexponentially - at nearly 200,000 a month - it won't take long beforewe see the GDP of Second Life hit real billions.This lure isattracting real-world retailers to open stores in Second Life.Companies such as Adidas, Coca-Cola, MTV, IBM, and Microsoft arealready there. Being a virtual world, production costs arepractically zero. Murdoch's 20th Century Fox held a premier for thethird episode of X-Men while Aunty BBC recently held a Radio 1concert on a Second Life island.
The ease of market entry in SL has spawned a phalanx of privateentrepreneurs designing bespoke houses, clothes and bodies to buy. Ipredict this new generation of fashion designers will graduate intoour world. And I can also see real-world fashion houses test-marketing designs in SL before manufacturing them in real cotton andsilk. Second Life has invented the perfect marketing tool imaginable.
Not surprisingly, the media are on to the possibilities of SecondLife. Reuters already has a permanent stringer called (obviously)Adam Reuters. In real life, he is Adam Pasick, a veteran US mediajournalist.
IBM has embraced Second Life to an extent unmatched by any othermajor company so far. It has more than 230 employees spending time in-world and it owns some half-dozen islands. IBM uses this footholdpartly to allow staff to hold virtual meetings but also to test-drive new software. Second Life is at the forefront of what is knownas the "massively multiplayer online role-playing online games"industry (MMORPG) and IBM wants a share of this expanding market.
Naturally, Second Life has started to come to the attention of thetax man. The US House of Representatives (the real one) has set up acommittee to investigate how virtual assets and incomes should betaxed.
"Right now we're at the preliminary stages of looking at the issueand what kind of public policy questions virtual economies raise -taxes, barter exchanges, property and wealth," says Dan Miller, thesenior economist for the joint economic committee. "You could arguethat to a certain degree the law has fallen [behind] because you canhave a virtual asset and virtual capital gains, but there's nomechanism by which you're taxed on this stuff."
So far, I've not come across a Scottish Enterprise branch officein Second Life or any representative of VisitScotland. I might justbe frequenting the wrong bits of Second Life, but I have a sneakingfeeling Scotland is missing out again.
Somebody should create a Scottish island and offer every Scottishuniversity and software firm a permanent base. This should be aprelude to a massive attempt by Scotland to exploit the businessopportunities afford by Second Life. We might call our island SecondDarien.
Comments to gkerevan@scostsman.com
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