In cyberspace, no one can hear you scheme

Second Life, with an alleged population of 7.979 million, is changing the way businesses think about what their customers want, and whether "virtual" is a viable way to give it to them.

The bombing of the ABC's newest office was hardly the kind of reception the national broadcaster would have expected -- but that's exactly what it got just weeks after the branch opened.

Fortunately, the owners of the real estate where the office was located were able to rebuild the ABC's office with just a few taps on the keyboard. Those owners, of course, were Linden Lab, the US-based company whose Second Life (SL) virtual world has become to virtual reality what YouTube is to viral videos.

The attack was perpetrated by anarchists known as "griefers", who also notably launched exploding pigs in a January attack that ravaged the SL site of French presidential candidate Jean-Marie Le Pen (which had been attracting 10,000 visitors daily). A wakeup call for any organisation contemplating a foothold in the rapidly expanding virtual world, such attacks were noted by Sheryle Moon, CEO of IT industry body the Australian Information Industry Association (AIIA), when planning the organisation's recent entrance into the SL world.

The AIIA's Second Life presence reflects Moon's desire to educate Australian businesses about the environment's vast potential to reshape the way they interact with customers. Recognising that a firebombing or vandal attack would hardly inspire confidence amongst the organisation's constituency, Moon's team worked with Melbourne-based SL designers Cattle Puppy Productions to bolster the AIIA's "island" with a number of protective mechanisms designed to thwart malicious intruders.

"You have to consider the same sorts of issues that you do in real life," she said. "There are things like 'how do I secure my building', 'how do I make sure that the right people come in', that I'm conveying the right messages, and that I constantly refresh the content. The only way to evaluate whether a new technology is of benefit is to immerse yourself in it; if people don't understand the new technologies, they don't identify the opportunities."

The place to be
With even politicians hanging out their shingles in Second Life -- Hillary Clinton, Barack Obama and numerous other US presidential wannabes all have their own SL "islands", as did all four major presidential candidates in France's election earlier this year -- it's clear that the virtual world is 2007's place to be.

Bruce Willis dropped in for an interview upon the launch of Die Hard 4.0, musician Jay Z recently performed online, and ???next week the American Cancer Society hopes to better last year's US$40,000 raised by using its third annual Second Life Relay for Life to raise US$75,000.

Like the AIIA, all are finding great value in experimenting with the creative freedom that Second Life provides. One after another, the world's major brands are also exploring this value: one company directory recently counted 85 global brands in Second Life, ranging from Nissan, BMW and Toyota to Reuters, Wired, Reebok, Vodafone, Sony Ericsson, Philips, H&R Block, and Visa.

While many of the efforts are little more than the 3D equivalent of mid-1990s "brochureware" Web sites, others are using SL's unconstrained interactivity to put new spins on concepts related to their businesses. In April, for example, Brazilian Airline TAM began offering branded clothing and planes for those who took free "flights" from TAM's own Berrini Island to islands called England, Milan, New York and Paris.

Last month, the Mexican Tourist Board set up virtual models of the pyramids at Chichen Itza to promote their New 7 Wonders campaign. IBM's two dozen or so SL islands include a re-creation of its famed research and development labs. And US real estate giant Coldwell Banker has been buying large tracts of SL land and selling them below cost to ensure increasingly popular in-world land auctions don't push real estate out of reach of ordinary punters.

Though somewhat less visible, Australian businesses are there too. Telstra Big Pond remains one of Australia's biggest Second Life investors, but it has more recently been joined by the likes of recruitment agencies TMP Worldwide and Sapphire Technologies, the Australia Council for the Arts, REA Group (parent company of realestate.com.au), and the Universities of Sydney and Southern Queensland.

Commercial return on such sites is notoriously unclear; many SL residents are actively anti-commercial, and rue the entry of real-world brands into their virtual playground (hence the rise of "griefers"). Some companies also worry about the virtual world's reputation as an outpost of sex and depravity, which could hardly do well-established brands any favours.

Bret Treasure, a Perth-based marketing consultant who recently launched a real-world Second Life consultancy called Inside This World, has found such fears keeping many Australian companies on the sidelines for now. "Gone are the days where a company will wait until a technology is completely mature before entering these environments," he said.

"The Internet has shown that you can be left behind. You're seeing American companies, in particular, with big brands taking serious risks by going in and risking damage to their brands on a very, very open platform. But I was recently speaking to a major Australian beverage company and they decided they don't want to participate in SL at the moment because they're worried about the risks."

Second life presence, real-life money
As with any business investment, money is an issue when contemplating a move to Second Life: while participating as an avatar is free, building your own island costs US$1,675 (A$1,902) for 65,536 square metres (16.1 acres) of "land" and US$295 (A$335) per month for maintenance. Those that want just a little piece of the rock, so to speak, can pay a US$9.95 (A$11.29) monthly membership fee and sliding-scale fees of up to US$5 (A$5.67) per month for 512 square metres of virtual land.

That's equal to 1/128th of an island, and hardly likely to satisfy serious SL business investors. Just as you wouldn't set up a factory on a residential street, most large companies are opting to set up their own complete islands, if only for branding purposes: Playboy's often-mentioned site, for example, is shaped like the company's iconic bunny.

The pricing for full islands is out of reach of most hobbyists, leaving the majority of Second Life's terraforming squarely in the hands of corporations and other organisations with enough cash reserves and open-minded marketers to make a play for the virtual mindshare of the 900,000 or so real people logging into SL every month.

Despite these numbers, traditional demographic analysis -- most importantly that there are fewer than 10,000 Australians in SL -- leaves many companies wondering what all the fuss is about. "Some of the times their eyes roll in their heads and they look at you strange," Treasure says. "They say 'sorry, with 10,000 people in Australia we're not interested'. On a cost per thousand basis, there is no justification for getting involved with it."

Nonetheless, Second Life gained over 500 new islands in July alone -- highlighting just how much potential the world's businesses still see in it. Oft-discussed red-light districts are easily found and best avoided by those easily offended, but a growing number of perfectly legitimate sites -- including major brands launching fledgling e-commerce efforts -- reflects the steadily growing faith that SL is, at least, worth testing.

Just don't expect to recover your investment any time soon: "It is absolutely not a sales channel," says Treasure, adding that for those expecting financial returns "it's a mistake. What they should be very interested in is the fact that SL is a global microeconomy, and there has never been one before. One of the things this is going to do is to change the way people relate to their customers, and change the way people relate to their brands."

SL could also become a focal point for mundanity: as with the early World Wide Web, lack of fresh content in the virtual world could actually be damaging to any organisation's efforts. An unforgiving populace, many of whom are well entrenched inside the blogosphere and all of whom have zero switching costs, can quickly lay waste to half-hearted corporate presences.

This last point is front of mind for Laura Thomas, US-based corporate editor with Dell, which launched its SL presence last year and has used it as a sounding post for a range of customer outreach activities including blogging, in-world launches of real-world products, the recent offer of free and growing SL "trees", and the recent simulcast -- and solicitation of customer questions from all over the world -- of a town-hall styled meeting by Michael Dell. A number of the questions featured in the live Web cast originated in Second Life, including one from Latin America.

It is this kind of global flattening that makes the virtual world so promising, says Thomas. "Dell has been known as a leader in e-commerce, and the executive team is interested in continuing that," she explains.

"We were ready to look at new ways to connect with people. And while looking at the statistics tells us things are levelling off a bit lately, I take that as a challenge to come up with new reasons for people to come and interact with use there. What we've done so far just may not be something that's going to keep people coming back."

Virtual longevity
Aiming to strengthen its in-world presence, Dell will soon open a virtual office that will be staffed by a real person who will be on hand to answer questions from SL members in real time. To suit customers from around the world, the coffee shop-styled site ("even though avatars don't drink coffee," Thomas chuckles) will be staffed during a range of hours that will be decided upon through an in-world popular vote.

This new blend of three-dimensional interactivity, participatory marketing and virtual brand building isn't for everyone. However, it has certainly brought out entrepreneurs keen to see how well real-world models translate into Second Life's world.

As well as running Inside This World -- which is currently engaged with around two dozen non-Australian companies interested in the platform's global reach -- Treasure has co-founded Conference Island, which provides virtual shared workspaces where companies can set up meetings, deliver presentations, and chat using Second Life's built-in voice streaming features.

It's a similar idea to a venture recently launched by real-world hotel chain Intercontinental Hotels Group, and something that IBM has long done through its own site. However, Treasure concedes there has been "not a lot of interest" in the idea of paying for virtual conference space.

"This platform offers people a shared sense of space, and for people who are remotely located it allows for a compelling social experience," he explains. "But mostly if companies are interested in the environment they want to come in and create their own space; larger businesses go straight to Linden Labs and say 'who do we talk to?'"

Griefers or no griefers, the organisations building their own Second Life are steadily finding their feet. While the Internet has offered VRML (Virtual Reality Markup Language) 3D worlds for over a decade, SL will prove once and for all whether the world will really respond to immersive user interfaces over the long term.

With its combination of flexible design, global community involvement and integration with audio, video and other content, SL is the best chance at reality that virtual reality has ever had. Just mind the bombs -- and the exploding pigs.