Second Life creates a millionaire

by Stephen Lawson

November 30, 2006 —

A press conference this week on Second Life, the virtual world where "land" and buildings are now so valuable someone is claiming to have made a million dollars, proved remarkably like a reporter's first life.

Except for the teleporting and the dancing squirrel, that is.

The news was that Anshe Chung, a Second Life character created by a woman named Ailin Graef, now has assets in the online world that are worth more than US$1 million in the real world. Second Life has its own currency, called Linden Dollars, but people in real life (RL) are willing to pay for things like islands, office buildings and houses that will only ever appear on someone's PC screen.

Second Life is the brainchild of Linden Research Inc., which has its real-life headquarters in the San Francisco that spawned many of the imaginary business models of the dot-com era. According to Linden, it is owned and built entirely by its inhabitants, and there are more than 1.6 million of them (a subscriber can have more than one character).

New residents come into the world with nothing but some plain clothing. They can get a small number of Linden dollars with a free, basic account or buy a premium account for $9.95 per month. (Quarterly and yearly payment plans cost less.) Using Linden Dollars, residents can dress up and buy things, including (for premium members) virtual land. But Linden also lets users buy Second Life assets with real money, through online auctions.

With the aid of a press release made available to reporters outside Second Life, the announcement drew a healthy crowd of avatars, the animated characters that populate this newly lucrative world. More than 30 people -- it was unclear how many were media, either virtual or real -- gathered in a hall that looked a bit like a small Chinese opera house.

In some ways, a meeting's just a meeting: It starts with finding the venue (the hall, called Mengjing, could be found through one search feature but not another), getting there on time (one-click "teleporting" is a lot easier than navigating Silicon Valley traffic), and making small talk while waiting for the event to start. If a few strangers need something to discuss, it helps if half of them don't yet know how to move their bodies and the other half do.

At this press conference at least, all the talking took the form of text-messaging the entire room. That made for an eerie silence once the event began, with typing and picture-taking the only sounds. One participant asked if there was sound available and got no reply. (There was some soothing music piped in, which made it seem even less like a press conference.)

Typing questions and answers takes longer than talking, so the meeting went on for about 90 minutes, a long time for a press conference. Most attendees stayed for the whole thing, though their human counterparts may have been doing other work on the side. The whole transcript was saved through a History function in the chat tool. Characters walked and flew in and out, including one with a big bushy tail, who danced in front of the stage for a moment and then moved on.

Graef, a German citizen, grew up in Hubei, China. In 2004, with help from husband and business partner Guntram Graef, she started out selling small items such as clothes and animations. Then she began buying and selling land, and today their company, Anshe Chung Studios (ACS) specializes in developing "sims," or virtual places to live and work. ACS owns about 500 sims, each of which simulates 256 meters by 256 meters of land. Their value has gone up to between $1,675 and $2,000 each, depending on the evaluation method, she said.

In early November, the company used $250,000 in profit as an investment to expand Dreamland, its biggest residential project. It was the biggest investment ever in virtual real estate, Chung said, and in mid-November the market boomed, pushing her assets firmly above $1 million. Chung stressed that this million isn't money that Graef has in the bank; it's all assets inside Second Life. But Ailin has made real money from Second Life, Chung said. She has sent money to her parents in China and helped out a disadvantaged boy in the Philippines.

After the press conference, Chung took reporters on a teleporting tour of some of ACS' sims, both finished and under construction. The real-life company affiliated with ACS has about 25 employees, including a team in Wuhan, China, building the sims. It's hiring and plans to double in size soon, she said. Renters include real-life companies, including a major TV station, she said. Many of them want to remain anonymous while they explore Second Life.

Some companies are already active in the virtual world. Toyota Motor Corp.'s Scion brand, which sells youth-oriented cars in the U.S., has a space where avatars can look at and test drive virtual cars.

Chung thinks Second Life's economy is just getting started. She predicted there would be 10 or more millionaires there within a year. She balked at the suggestion that her fortune is immaterial because of the threat of hackers disrupting Second Life.

"A lot of what people own in the real world is immaterial, too," she said, fingers typing away in the air. "Value is defined by what somebody is willing to pay for something. There is a risk of SL failing. There is also a risk of nuclear war."

IDG News Service