Real World Businesses Are Abandoning Their Second Life Shops

The Los Angeles Times is reporting that Second Life marketing may be grinding to a virtual halt. Only four or five months ago it seemed the gold rush was on. Companies raced to buy an island, build a store, and wait for the avatars to soak up their branding. Today, an increasing number of brand stand-ins stand empty -- no virtual customers, no virtual staff. No real benefits to speak of. The Times identifies two culprits: 1) despite the huge number of sign-ups, only about 30 to 40 thousand users are active at any one time; 2) those that are active are actively naughty, and what they're buying you can't buy in a mall.

Los Angeles Times: July 14, 2007
By Alana Semuels

Virtual marketers have second thoughts about Second Life

Firms find that avatars created by participants in the online society aren't avid shoppers.

SECOND LIFE — a three-dimensional online society where publicity is cheap and the demographic is edgy and certainly computer-savvy — should be a marketer's paradise.

But it turns out that plugging products is as problematic in the virtual world as it is anywhere else.

At http://www.secondlife.com — where the cost is $6 a month for premium citizenship — shopping, at least for real-world products, isn't a main activity. Four years after Second Life debuted, some marketers are second-guessing the money and time they've put into it.

"There's not a compelling reason to stay," said Brian McGuinness, vice president of Aloft, a brand of Starwood Hotels & Resorts Worldwide Inc. that is closing its Second Life shop and donating its virtual land to the nonprofit social-networking group TakingITGlobal.

Linden Lab, the San Francisco firm that created Second Life, sells companies and people pieces of the landscape where they can build stores, conference halls and gardens. Individuals create avatars, or virtual representations of themselves, that travel around this online society, exploring and schmoozing with other avatars. Land developed by users, rather than real-world companies, is among the most popular places in Second Life.

But the sites of many of the companies remaining in Second Life are empty. During a recent in-world visit, Best Buy Co.'s Geek Squad Island was devoid of visitors and the virtual staff that was supposed to be online.

The schedule of events on Sun Microsystems Inc.'s site was blank, and the green landscape of Dell Island was deserted. Signs posted on the window of the empty American Apparel store said it had closed up shop.

McGuinness said Starwood's venture into Second Life did accomplish something. Feedback from denizens gave Aloft ideas for its physical hotels.

The suggestions included putting radios in showers and painting the lobbies in earth tones rather than primary colors. But now that the design initiative is over, he said, it's difficult to attract people to the virtual hotel to help build the real-world brand.

For some advertisers, the problem is that Second Life is a fantasyland, and the representations of the people who play in it don't have human needs. Food and drink aren't necessary, teleporting is the easiest way to get around and clothing is optional. In fact, the human form itself is optional.

Avatars can play games, build beach huts, dress up like furry animals, flirt with strangers — sometimes all at once.

Their interests seem to tend toward the risque. Ian Schafer, chief executive of online marketing firm Deep Focus, which advises clients about entering virtual worlds, said he recently toured Second Life. He started at the Aloft hotel and found it empty. He moved on to casinos, brothels and strip clubs, and they were packed. Schafer said he found in his research that "one of the most frequently purchased items in Second Life is genitalia."

Another problem for some is that Second Life doesn't have enough active residents.

On its website, Second Life says the number of total residents is more than 8 million. But that counts people who signed in once and never returned, as well as multiple avatars for individual residents. Even at peak times, only about 30,000 to 40,000 users are logged on, said Brian Haven, an analyst with Forrester Research.

"You're talking about a much smaller audience than advertisers are used to reaching," Haven said.

Some in the audience don't want to be reached. After marketers began entering Second Life, an avatar named Urizenus Sklar — in the real world, University of Toronto philosophy professor Peter Ludlow — wrote in the public-relations blog Strumpette that the community was "being invaded by an army of old world meat-space corporations."

He and other residents accused companies of lacking creativity by setting up traditional-looking stores that didn't fit in. His column was reproduced in the Second Life Herald.

Nissan Motor Co., a subject of such protests, has since transformed its presence in Second Life from a car vending machine to an "automotive amusement park," where avatars can test gravity-defying vehicles and ride hamster balls. Sun Micro has made its participation more interactive and fanciful, Chief Gaming Officer Chris Melissinos said.

Ludlow isn't impressed. He said most firms were more interested in the publicity they received from their ties with Second Life than in the digital world itself. "It was a way to brand themselves as being leading-edge," he said.

Angry avatars have taken virtual action. Reebok weathered a nuclear bomb attack and customers were shot outside the American Apparel store. Avatars are creating fantasy knockoffs of brand-name products too.

Some buying and selling does go on in Second Life. An avatar can acquire currency — called Linden dollars — by earning it or buying it with U.S. dollars. (The exchange rate is 268 Lindens to $1.) With a stack of Linden dollars, an avatar can spice up his or her look or while away the time in a casino.

Only a few other virtual worlds allow avatars to create and sell content as Second Life does. But users are flocking to the other worlds, in part because some don't require people to download software to take up residence.

Others just want to access a larger community than Second Life offers. Between May and June, the population of active avatars declined 2.5%, and the volume of U.S. money exchanged within the world fell from a high of $7.3 million in March to $6.8 million in June.

Companies are following them. IBM Corp., which has an extensive presence in Second Life, is expanding into the other environments, including There, which features a digital version of the popular TV show "Laguna Beach," and Entropia Universe, which pits users against one another in a sci-fi civilization.

Consulting firms that were set up to bring brands into Second Life are busy helping clients explore other worlds.

One such agency, Millions of Us, recently announced that it had formed a partnership with Gaia Online, a site popular with teenagers, and CEO Reuben Steiger said it would be unveiling more soon. Millions of Us had previously worked only with Second Life.

"It's not about whether Second Life is good or bad," Steiger said. "It's just that there are a lot of alternatives."