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A friend of mine who works in PR in San Francisco came up to me at a party last week, and was wide-eyed at what’s been going on lately at the virtual world Second Life.

“Now that Reuters has a correspondent actually reporting on stories from Second Life regularly, is this now becoming a real world?” she wondered. “How can you tell the difference anymore?”

It’s a good question. Second Life (SL) isn’t really a game. It’s a virtual world created by Linden Lab where you “walk” or even “fly” around a 3D graphical environment, interacting with avatars — computer representations of actual people who are also in the world. It doesn’t cost anything to join the action, but if you want land or posessions, you need to pay real money for them. And if you build up property or can create a cool line of clothes, you can make a business out of it that pays you real money converted from the game’s “Linden dollars.”

More and more real-life companies are spending time and money trying to figure out how to promote their products in Second Life. The virtual world recently logged its 1 millionth registered “resident,” though that pales in comparison to the 6.5 million players of the most popular online game of all time, World of Warcraft. But media companies are clamoring to write about Second Life and its culture bleeding into the real world, while simultaneously setting up a virtual presence there to promote their writers or publications.

I have received a growing number of emails from random friends who have heard about Second Life but wonder “Who has time for all this?” Obviously, these media companies are making time for it:

> Wired Magazine recently ran a Travel Guide to SL in its magazine, and announced it was opening up virtual offices in the world where it would host events and lectures with writers and editors.

> CNET built an in-game replica of its own headquarters building in Second Life, and plans to conduct interviews there and host events as well.

> The Reuters wire service has gone the furthest by creating an in-game presence in Second Life on its own island, along with a special SL website on Reuters with charts on the Linden/U.S. dollar exchange rate and real dollars spent in SL each day (nearly $600,000 today). Plus, Reuters reporter Adam Pasick has been assigned to head Reuters’ virtual bureau in Second Life under the avatar name of Adam Reuters. You just can’t buy this kind of hipster quotient, or can you?

> BusinessWeek, rather than set up its own virtual building or bureau in Second Life, chose the easier route of just hyping the entry of media companies into the game, with little criticism or thoughtful reporting. In fact, the photo essay accompanying the story online might as well be a series of ads for the companies that have set up shop in SL.

Reality Check for SL

While I haven’t checked out Second Life first-hand yet, I have played many of the percursors to it such as Ultima Online and AlphaWorld in the mid-‘90s. The problem with marketing products in these virtual worlds is that everyone is spread out over large plots of virtual land and don’t experience everything in the same way at the same time — as they do watching a TV show or even visiting a website.

While the 1 million figure for residents of Second Life has been trumpeted in the media, keep in mind that this is the total number of people who have registered for the game in its history. Many of those folks probably checked it out, got frustrated with long lag times or lack of quests, and left forever. More useful numbers are the dynamic ones posted on the Second Life site, which this afternoon read: 12,354 residents logged in now; 459,062 residents logged in over the last 60 days.

Just because CNET puts up a building to host events doesn’t mean people will attend those events, and that it will garner any modicum of attention there. And the Register recently questioned a close relationship between CNET reporter Daniel Terdiman and Linden Lab CEO Philip Rosedale.

[UPDATE: Terdiman tells me that the Register article was biased against him, and that the Register writer “hates Second Life.” While the Register complained that Terdiman had listed Rosedale as a reference on his resume, Terdiman says he put Rosedale there because “he could speak to my reporting skills.” See more on Terdiman’s response to me in the UPDATE below.]

A recent “appearance” in Second Life by singer Ben Folds resulted in just 25 avatar onlookers, according to The Age.

“Obviously an effort like this isn’t about record sales [by Ben Folds], but it’s also clearly not about offering Second Life residents a valuable experience,” wrote blogger Tony Walsh at Clickable Culture. “Like the handful of similar events preceding it, this one could only be leveraged for its external media buzz potential. The Age and other mainstream publications don’t know enough to identify events like this as anything but a major-label snow-job (that’s what we have bloggers for).”

Walsh has been checking out SL since its inception, and rang an early alarm against the hype last April, noting the small active user base and the technical glitches caused by user hacks of the system. But now that the media coverage is in overdrive, even Walsh has been unable to ignore Second Life, writing about the virtual world in six blog posts over the past week.

Despite the problems and excessive hype, Second Life and the other massively multiplayer virtual worlds do represent a strange and wonderful phenomenon worth writing about for journalists: people living in an alternate reality — literally creating their alternate reality — that affects their “First Life” either through virtual relationships or by running real businesses. Hopefully, more journalists will be able to tell the story of these cultural shifts without becoming the pawns (and customers) of the game’s creator.

What do you think? Do you play Second Life regularly and what motivates you to spend time there? What do you think about Reuters having a correspondent in the game, and the media companies’ push to open up virtual presences in SL? Share your thoughts in the comments below.

UPDATE: In an email to me, CNET’s Daniel Terdiman, who has been writing about Second Life, explained that he didn’t see a conflict of interest for media companies writing about the virtual world and also setting up shop there:

The money that CNET and Wired and Reuters (though I can’t speak for them, because I don’t know the specifics, but I am making an educated guess), spent setting up presences in Second Life didn’t go to Linden Lab. That’s not how Second Life works. At least in the case of CNET, our investment went entirely to a third-party contractor, and Linden Lab got none of it. That’s the point. When I pitched the idea of a CNET presence in Second Life to my bosses, I made the explicit point that the money would not go to Linden Lab because I knew that if it did, there would be a direct conflict of interest.

And just to be clear, I don’t even pay for the account I use for my CNET activities in Second Life. It’s a free account, since I don’t own any Second Life land. So as far as the CNET/Linden Lab relationship goes, not one penny has changed hands.

That might be true, however the fact that media organizations such as Wired, CNET and Reuters have made a concerted marketing push into the game seems like a validation of the game as a business platform. Would Adam Reuters ever write a piece explaining why Second Life will never really gain critical mass, and tell people not to visit the world, when he is now living his professional life there? I still believe that the journalists and media companies here are treading a thin line between being objective observers and touters of SL. Why couldn’t Reuters just assign Pasick to cover online worlds or online gaming in general and not specifically Second Life?