Debunking 5 Business Myths about Second Life

71 Comments

NBA IslandRecently Forbes featured a widely-cited article (reg. req.) on marketing in Second Life that was so spectacularly incorrect, it inspired me to whip up this reference guide, as the errors there keep cropping up elsewhere. As someone who worked for Linden Lab, consults on and is writing a book about Second Life, I have an obvious personal and professional interest in the topic. But what follows isn’t metaverse boosterism; it may very well be that Second Life is over-hyped or ill-conceived for business purposes. Even if so, however, it’s not due to the five provably bogus claims. [digg=http://digg.com/gaming_news/Top_Five_Second_Life_Myths_Exploded]

Myth 1: Second Life is Huge– or Second Life is Small

IBM Island in SLThese are two misapprehensions based on the same mistake: not carefully checking the very latest demographic figures. Reporters continue citing the “Total Residents” (currently 7.9 million) listed on the homepage as if they’re active unique users. But that number includes defunct and secondary accounts, among other detritus. Alternately, some reporters glance at the front page’s “Online Now” stat– currently around 40-48,000 at peak times– and assume that’s a more accurate tally of total active users. (Forbes’ article manages to make both errors, with out-of-date statistics, no less.) A better reference is posted monthly by the company’s demographer on their blog, and includes an industry standard of unique monthly active users. As of June, that number was closer to 500,000: about medium-sized for an online world.

Myth 2: Nobody visits SL Marketing Sites

While it’s true that “homegrown” content generates far more enthusiasm, traffic to the top real world promotional sites is actually competitive with other forms of Internet advertising. During June, about 400,000 Residents logged in each week. In a typical seven day span that month, according to my Second Life blog’s demographer, the five most popular locales generated anywhere from roughly 1200 to 10,000 visits. (The top ten earned over total 40,000 visits.) Therefore, each of the top five sites garnered a .8 to 2% visit rate. Typical click through for a traditional banner ad on the Web is generally estimated at .5 to 1%. (And that’s not even counting T-Mobile, which is actually paying SL users to visit their popular island party spot.)

Myth 3: Real World Advertisers are Linden Lab’s Main Revenue Source

Not by a long shot. About a hundred real world for-profit companies maintain an SL island, most for marketing purposes; some own several islands, so let’s be generous and estimate 500 advertising-related islands. By last month, however, Linden had sold 8336 islands, most to private individuals. So corporate advertising is roughly 6 percent of the existing isles– hardly a central cash flow. (That’s not even counting the vast acreage of Linden-controlled continents, which have little or no corporate leaseholders.)

Myth 4: Corporate Sites are Helpless in the face of Protesters and Sabotage

Much as a conflict between idealists and exploitative capitalists in the metaverse would be an exciting story, that hasn’t observably happened to mass effect since 2004, when the world was vastly smaller. Lacking evidence of such a clash, mainstream journalists latch onto reports that corporate sites were recently attacked by something called “the Second Life Liberation Army”– without realizing that the erstwhile “army” was largely just a whimsical roleplaying group of around a hundred members, not anti-corporate per se, and most of all, not causing any permanent damage.

Related to this, most “sabotage”, such as it is, involves impermanent special effects which could have been prevented entirely, had the landowners used the available land management controls which regulate unauthorized content creation on their property. (That includes notorious cases like flying penises besieging CNET’s office, or the defacing of Senator Edwards’ unofficial SL campaign HQ.) Some reporters miss this detail. That’s like a real world shopkeeper leaving his store unwatched and unlocked with the alarm disabled, then after the place gets trashed and looted overnight, subsequent news reports blame his landlord. Sometimes sabotage is even asserted where there is none– as with widely disseminated reports of a “nuke” that supposedly destroyed Australia’s ABC island– which later turned out to be a non-malign server crash.

Myth 5: It’s Mostly a Sex Haven Full of Weirdos

Another myth that persists despite dearth of evidence. (But then, that didn’t stop people from claiming the exact same thing about the wider Internet, during its first commercial rise.) In terms of land mass, Linden Lab reports that just 18% of the world has been designated to have “Mature” content; explicit sexual activity is relegated to a subset of that percentage.

As for “weirdo”, if the Web has taught us anything, that’s a vastly subjective term. Most of the animus in SL’s case, however, is directed against “furries”, Residents who roleplay as anthropomorphic cartoon characters. According to internal estimates by a veteran leader of the community, however, the SL furry population is now about 30,000— just 6% of the current active user base, or 1.6% of those who’ve been in-world over the last two months. Oddly enough, this particular myth is mostly promulgated by gamers and the gaming press. Which I have to say, is a distinctly ironic kind of geek bigotry. (i.e., “Furries are creepy– unlike me, I’m a level 34 Night Elf Druid.”)

Again, none of this is to say Second Life is the most ideal virtual world platform for business, certainly not for all purposes. For one thing, it’s not anywhere near the largest online world to allow outside marketing (the kid-oriented Habbo Hotel and Gaia Online, to name just two, are larger.) And Time Magazine’s recent diss of SL, for example, is mostly fair (if arguably short-sighted.) Ultimately, my real bias is against careless reporting from respected publications which consider Second Life worthy of coverage– but somehow, don’t feel obliged to apply traditional standards of accuracy, when doing so.

Update, 7/16: The Los Angeles Times, by the way, just rehashed 4 out of 5 of the above myths.

71 Comments

jasmine_Anadyr

The adults at play stuff is boring, why even argue about it. If it offends you the teen grid is pretty much free of it I understand.

The business stuff is much more interesting. I spend quite a bit of time online, mostly playing, that is the point. I have business meetings at work, at home I play a bit more.

Now I’ve been to a number of commercial sims but mostly I see write-ups of events that have already happened (IBM Tennis) and having been inworld at the time I didn’t even know it was there. I would probably have visited if I did. Reuters and the Australian Broadcasting Authority I have spent quite some time at. But when I get there you either have to interest me, or sell me something.

How important are click through rates, if at the end you aren’t even trying to sell me something. And the marketers seem to forget I land with money (linden dollar thingys) I can use there on the spot if you impress me. Probably not much more than $80 or $90 dollars US but still money.

I have already made the point that business needs to advertise to get in-world people to their advertisment but surely at some point you want to sell me something.

I suspect both myself and others are willing to buy. When you have something at the end rather than just a 3D advert perhaps it will make more sense.

Final disclaimer if you already have a place for me to come and buy real world stockings or jeans or whatever and I don’t know about it, I don’t consider it my problme.

Beachnobo

I love how so many publications are doubting SL’s potential for business and barely anyone takes the time to point out that maybe the companies active in SL didn’t use the right approach for this platform

Frans

“…most of the most frequently visited sites on any given day are strip clubs and the like, followed by casinos.”
How is that different from the internet at all?

Gwyneth Llewelyn

In marketing, it’s all about unique user counts, not one person pretending to be 10 different avatars.

I’ve heard that claim so often that it becomes a trifle boring — as if marketeers have any idea from where those millions of visits, all from the very same IP address (a corporate or campus firewall/proxy), come from :)

In fact, the number of different avatars per person is far below what “common sense” tells us; Linden Lab, who uses a combination of IP address and Ethernet MAC address to try to figure out how many users use alternate accounts, estimates that there are just a million and a half of those — or, put into other words, only one out of three users ever bothers to get a second avatar.

So why does everybody get this feeling that everybody has “dozens of avatars”? There is actually an easy explanation: retention rate in SL is very low, around 10% or so, and 1.5 million avatars for half a million “active users” per day — so, the ratio is now reversed, ie. on average, every active user has three alternative avatars.

Playing with numbers… just playing with numbers :)

Dirk Singer

The whole “only 18% of SL is used for sex” is ludicrous. It’s like saying prisons in the US aren’t a problem since they only account for 0.0001% (or whatever) of the building space used. (Clear Head)

It’s not ludicrous at all – it is completely valid when looking at where the Internet itself was ten years ago.

Back in 1997, around 17% of net searches were porn related and the Internet wasn’t seen as a mainstream pastime (http://www.firstmonday.org/issues/issue11_9/spink/)

Today, that proportion is under one in twenty. Similarly the most active group of Internet users today are 18-34 year old women, as opposed to men with personality disorders sitting in their basements.

Assuming virtual worlds are here to stay (and I believe they are), a similar shift will almost certainly happen.

David Berkowitz

There’s a lot of great info here. As to point #5 though, I’d argue it isn’t the size of the land mass that matters – it’s how it’s used. And most of the most frequently visited sites on any given day are strip clubs and the like, followed by casinos.

Dave Fasti, MBA

You need to revisit your spin of “Myth 2,” because it doesn’t jive with the numbers posted that you link to.

First, you fail to differentiate between SL-created marketing enterprises and real-world businesses. Real world businesses do horrible traffic numbers in SL. Look at the numbers:

Back in May (you know, when we weren’t experiencing the summer slowdown), companies like IBM and the Weather Channel were doing 4,000-5,000 “visits” per week (16,000 – 20,000/month). That’s a wonderful 0.03-0.04% click-through rate (based on May traffic estimates of 507,000 active avatars logged in). Yes, that’s not great.

Keep in mind, if you’re in the bottom of this tracking top-10, you’re only doing 4-5,000 visits/month.

There are over 100 real-world companies marketing in SL. So if you’re not even in the top 10, your rates are far, far worse (e.g., you’re getting a few hundred visits a month).

And while it’s nice marketing spin to claim 7.9 million registrations, only 5.3 are unique (64%). That means 26% of the total registrations on SL are people registering more than one avatar and account (because, you know, it’s fun to mess with others as different people).

In marketing, it’s all about unique user counts, not one person pretending to be 10 different avatars.

Steve

Topic: Second Life is to online communities as the Segwey is to personal transportation.

Discuss.

luciftias

“Why isn’t “Mature listings” off by default?”

It is, actually.

OH SNAP!

rikomatic

You forgot one: SLers are geeky, socially maladjusted, middle-aged boys living in their mom’s basement.

First off: SL is full of women. Seriously, most of the people I hang out with in-world are women — real life females. I forget the demographics, but there’s a very high ratio of female residents.

Second: I’ve been to a number of real world meet-ups of SLers. Sure there are lots of geeks in the house, but also artists, business-people, intellectuals, musicians and whatever.

Its really impossible to generalize when the user base and their motivations for being in SL are so diverse. Which in the end is part of what makes marketing in SL full of so much potential IMO.

Economic Mip

Well Second Life deserves most of the criticism it gets, and I have certainly experienced the “blame the victim” in various ways. (“It’s not SL, its your computer”), Its your fault for getting attacked by griefers, didn’t you realize this university* is a hang out for them, and that they have every right to design a virtual furry death camp ten sims from the US Holocaust Museum, on servers we plan to move to Germany? (Explain that last example away Hamlet, I dare you).

Sim: Woodbury University

Clear Head

Wagner, that’s the kind of “blaming the user” (like “blaming the victim”) that is just more spin. Second Lifers are famous for this. “It’s not Second Life’s prolbme, you’re just dumb.” Great way to make people feel stupid instead of fixing a dumb setting. Why isn’t “Mature listings” off by default?

Wagner James Au

… and if he had simply deselected “Show Mature-rated listings” before hitting Search, none of those would have come up.

directorblue

Uhm, sorry. I saw a demo by a Fortune 500 company about the corporate “usefulness” of Second Life. The poor chap happened to do a search for a common consumer term… and ended up on a result that displayed incredible porn on the results sidebar.

Demo over.

Andrew

Furries are weird and I’m not an elf druid, and 6% is still a huge percentage vs real world figures. ewww.

Clear Head

Hmm, I see Au’s frantic spinning continues. Even brushing past his ridiculous characterization of Forbes article as being “spectacularly incorrect,” his statements that the top five’s visitation rate is significant is kind of absurd. The numbers he gives for the top areas are poor even if you roll them all together by the visitation standards of a mediocre website. He goes on to compare this 1-2% of the population for a 0.5-1% click-through rate on ads. This is spurious, unless every time someone visited one of those top ten sites someone got paid (which I’m pretty sure didn’t happen).

Then he tries to brush off as “impermanent” and “preventable” the various acts of sabotage that have happened to corporate sites — apparently ignoring things like the many grid-killing attacks, or the embarrassment caused to CNet and the Edwards campaign, among others.

The whole “only 18% of SL is used for sex” is ludicrous. It’s like saying prisons in the US aren’t a problem since they only account for 0.0001% (or whatever) of the building space used. Take a look at the amount of people and amount of time spent in furry sex, age-play sex, BDSM, and things even stranger than that, and then see how it looks. It’s a whole lot more than 18%, that’s for sure.

Spin spin spin. A political operative couldn’t do any better.

The most honest statement in this article is the second one, where he says he has a personal and professional interest in making it look good. No kidding.

Marc "MSGiro Grosso" G

I love the quote from the Lenovo VP. “Nothing to do but get laid”. Geeez, what have been you doing during your adventures in SL sir? Somebody check his desk for the book on Gor. I’ve been a member of SL for over a year and I have yet to see a location where my av could have sex, because there’s enough to keep me busy elsewhere plus I prefer cheatcode porn in Grand Theft Auto. ;)

Thanks WJA for picking up on this. The author was looking for an angle and needed some shock value to add to it. Not surprised.

Marc

Sean

I researched SL to death for my company and noticed many of these same inaccuracies. While my long term view of SL might be a little less optimistic, I do agree that the mainstream press is terribly and consistently wrong on so many levels when it comes to SL.

I also feel that ‘Myth 2’ doesn’t make and apples to apples comparison. A destination in SL doesn’t relate to banner CTR at all.

A more accurate way to put it is a top SL destination has an X% reach across the total SL population, like how MySpace might have a reach of Y% of the total internet population. Now, a semi-popular long-tail site might get 100K pageviews a month and still have a 0.001% reach. Apply the same ratio to SL and…you get the picture. Imagine a reach of 0.1% of 500K uniques, not a very impressive number.

Brian

I keep hearing about Second Life. I may have to actually check it out, as it’s sounding more and more like a viable… er… thing (it’s not really a game, is it?), and less like a white hot and then ice cold fad. (I’ve been waiting for the announcement declaring it dead for a while now…)

I still don’t get it, though.

pauldwaite

“Ultimately, my real bias is against careless reporting from respected publications which consider Second Life worthy of coverage– but somehow, don’t feel obliged to apply traditional standards of accuracy, when doing so.”

I wish I could find publications that make accuracy their priority, instead of story-telling. I guess accuracy doesn’t sell as well, cos people like stories.

“Yes, damn those mean old gamers and their prejudices against people who want to have sex with animals.”

I thought furries wanted to dress up in animal costumes and have sex with other people in animal costumes? Actually having sex with an animal is an entirely different kettle of fish, believe me.

Robin

Yes, damn those mean old gamers and their prejudices against people who want to have sex with animals.

Jesse Kopelman

“Mostly a Sex Haven Full of Weirdos”

Isn’t this the virtual world that we all wish someone would actually create . . ?

Tech Tools

I love the whole concept of Second Life and the ideas and possibilities that it brings about, being (or trying to be) so much more than a game.
It fascinates me to no end.
I love the internet.

Eric Rice

“Furries are creepy– unlike me, I’m a level 34 Night Elf Druid.”

ahhahahahahahahah Hamlet wins the internet today.

Spud

I have spent a bit of time in Second Life and personally I wasn’t that impressed. I think they are heading in the right direction it just needs a lot more work. If I was a business I certainly wouldn’t be investing heavily in a Second Life prescence (at least not just yet).

Liam

Right now, in the middle of a (summer) work day, 107,608 people are playing Half-Life & mods based on that 9-year-old game. 86,613 are playing Half-Life 2 and mods. See http://archive.gamespy.com/stats/

The future of mass online gaming may not look anything like Second Life. As John Carmack predicted a decade ago, it may just be people with game engines on their PCs interacting remotely.

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