Starting a Second Life business

By Laura Tiffany

updated 7:45 p.m. ET Feb. 22, 2007

A million dollars of virtual loot. It's a concept that's difficult to wrap your head around, but in November, that's exactly what virtual real-estate developer Anshe Chung accomplished in the 3D virtual world Second Life, in which users live "second" lives as avatars.

When her entrepreneurial success story hit the press, it spread like wildfire, leading many to ask: What exactly are the business opportunities available in Second Life? Are people really turning their love for Second Life into a full-time business?

Marketers have already been exploring the world, with big-name businesses like American Apparel, Starwood Hotels, Scion and Cisco setting up virtual areas for their products — a store for American Apparel, a hotel for Starwood — in Second Life. Even Reuters has assigned a bureau chief specifically to the site.

If you've never visited Second Life, here's a quick look at it. Second Life is a 3D virtual world where people use avatars to explore and commune with other people. It's often lumped in with such online games as World of Warcraft or Star Wars Galaxies, known as "massively multiplayer online role playing games" or MMORPGs. Second Life is different, though, because there's no slaying of dragons to level up a character or collecting weapons to prepare for battle, but you can buy and develop online real estate, import images to craft your own in-world creations, or attend a drum circle with avatars created by users from all over the world. Based on the futuristic Metaverse from Neal Stephenson's seminal sci-fi novel Snow Crash, Second Life aims to truly be a second life for users, with opportunities for both work and play.

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It's the work element — the embrace of entrepreneurship — that's perhaps most unique to Second Life. Linden Labs, the creator of Second Life, has welcomed the entrepreneurial inclinations of its community in two important ways. First, Linden dollars, the in-world currency, are easily traded for U.S. dollars at an official currency site. Second, Linden has taken the remarkable step of allowing players to retain the copyright for their in-game creations. It's these aspects of Second Life that attract entrepreneurs like Peter Lokke.

Lokke started his online adventures in the 3D virtual universe There. It was "there" that he discovered his love for virtual clothing design. That's also where he met his business partner, Theo Lament, and it was Lament who introduced Lokke to Second Life in 2004. Once he'd learned how much more creative he could be in this new world, he was hooked. Linden's intellectual property policies also helped.

"When I found out how expressive I could be in Second Life and that I retain copyrights for the things I make, I knew I was in Second Life to stay," says Lokke, who lives in Brooklyn, while his partner Lament, whom he's never met face to face, lives in Milwaukee.

Lokke has never considered himself a gamer but he did enjoy tinkering with computer graphics. Creating online clothing came naturally, and after designing his own duds in There and Second Life, he found that others wanted them, too. "[My business] has grown from (generating) a few bucks a month two years ago to selling more than enough to live on now," says Lokke, who goes by the name Crucial Armitage in Second Life. "And it's growing every month."

Indeed, 2007 may prove to be a watershed year for Lokke: He's quitting his 17-year job as a supermarket manager to make the 50 hours he already spends in Second Life as the owner of Crucial Creations his true, full-time career.

Julian Dibbel, an MMORPG expert who chronicled the year he spend trying to earn an income in Ultima Online in his book Play Money, says Second Life — and not MMORPGs — is the place to look if you want to make a virtual living online. For one thing, it's often hard to earn much in online games because they often shut down the accounts of those selling in-game items, since such activities are against the rules.

Another major issue with multiplayer game money-making, as opposed to Second Life, is that many foreign businesses have cornered the market on entrepreneurial opportunities using inexpensive labor and cheap overhead. Dibbel says this isn't yet an issue in Second Life. "What's not so easily off-shored is the really creative and culturally specific stuff, and that's what you see in Second Life."

What's also interesting about Second Life, says Dibbel, is that while you can be wildly creative, you don't have to be. The aforementioned Anshe Chung (real name: Ailin Graef), who was the first Second Life entrepreneur with a net worth of more than $1 million, made her cash through virtual real-estate dealings. The German resident has even gone real-world with her talents, starting Anshe Chung Studios, a 3D environment developer with offices in Wuhan, China.

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