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Digital Loot: Second life and the virtual economy

Several years ago, Mike Oldfield was pitching a virtual reality game with the unique selling point that it was non-violent and non-competitive. This managed to confuse his potential investors, who after watching a dolphin swim round a lake before turning into a seagull and flying off into an artificial sunset said: ìThat's fine, but how do you kill it?î
 Digital Loot: Second life and the virtual economy
 
 
Several years ago, Mike Oldfield was pitching a virtual reality game with the unique selling point that it was non-violent and non-competitive. This managed to confuse his potential investors, who after watching a dolphin swim round a lake before turning into a seagull and flying off into an artificial sunset said: "That's fine, but how do you kill it?" Fast forward a decade or so, and they might just be kicking themselves. The virtual worlds Oldfield imagined are now established, and are changing beyond all recognition. Yet, to the uninitiated, even the most mainstream example, Second Life (SL), seems a little sad. Internet based SL invites its users to interact with each other through an `avatar' which can explore a mind bogglingly vast `metaverse'. So far, so geeky. But when SL hit the headlines in the mainstream media in late 2006, it made some heavyweight businesses prick their ears up faster than you can say `monetize'. Virtual world, real economy? Their interest was founded in the fact that SL is much more than a game; as with Oldfield's concept, there are in fact no `winners' in the conventional sense of the word, no levels, end strategy or points system. Instead, it's a user-defined world in which people can interact, play, and even do business; crucially, Second Life's virtual currency, the Linden Dollar (otherwise referred to as the Linden, or L&) is exchangeable for real world currencies in a marketplace consisting of residents, SL founders Linden Lab and an increasing number of real life companies. While the Linden does have a tendency to fluctuate more frequently than established currencies, it trades at around L&300 per &1. It's tempting to dismiss the concept as highly theoretical and when the game was launched in 2003, most assumed any real world financial gains for the user would be paltry. They were wrong. In November 2006, an avatar named Anshe Chung (Ailen Graef in the real world) became the first `online personality' to achieve a net worth exceeding one million US dollars from profits entirely earned inside a virtual world. The online business that Chung has established has numerous platforms, including development, brokerage and arbitrage of `land', items and currencies. Her business employs 60 (real) people, has received venture capital investment and is branching out into other virtual worlds. While Second Life's figure of around &900,000 being spent every 24 hours is undoubtedly impressive, closer inspection of the figures is revealing. In November, just 154 people made more than &5,000 dollars in SL. Yet the fact that virtual commodities can be bought and sold in the game for real world financial gain makes SL a radically different proposition from other online trailblazers such as Facebook. A firm such as Reebok can pay a monthly fee to own real estate in the virtual world… To read the full article, click here
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