• by Ross Fadner , December 29, 2006

Virtual world Second Life is facing the same problems as any rapidly growing community. Questions of economic policy, population control, property ownership, human rights - or rather, avatar rights  - and even crime are all coming to the fore, but the game's creator, Linden Lab, is leaving it to the community to figure these issues out.

With more than 1.9 million members (nearly the population of Houston) and nearly $700,000 real dollars spent each day by its members, Second Life is growing up. In late November, virtual real estate mogul Anshe Chung announced she had become the game's first real-life millionaire by developing and selling virtual property.

Recently, property and, by extension, copyright protection became Second Life's first real-world ownership issue. CopyBot, a program developed by a member that enables users to copy items in the game, resulted in widespread protests from merchants who claimed their wares were being stolen. The program's creator maintains that CopyBot wasn't designed to abet copyright infringement, but does copyright law even apply in the virtual world?

Last fall, after the introduction of CopyBot, there was a massive sell-off of the Linden Dollar (Second Life's currency) on the LindeX Exchange (its stock market). Luckily, Linden Lab came to the rescue this time, declaring that anyone using the program to steal content would be banned from the game. After that, the currency returned to normal levels of 270-280 Lindens per U.S. dollar.

However, residents of Second Life remain worried. One successful storeowner, whose virtual establishment handled upwards of $650 a day, closed up shop in protest of what she called a lack of sufficient action by Second Life's owners to protect merchants.

Philip Rosedale, the CEO of Linden Lab, says he's wary of overpolicing Second Life. To address issues such as CopyBot in the future, he says, the game's developers are working on a kind of patent system that would enable original content creators to be identified. But this is only a short-term solution. "Longer term, Second Life is going to have to develop its own law or its own standards of behavior," he says, which would mean police and a Better Business Bureau-type entity, among other things.

The copyright controversy doesn't mean much for SL marketers, says Sibley Verbeck, the CEO of Electric Sheep. When American Apparel opens a virtual store, it's not because it expects to make money (a wardrobe costs as little as $1); rather, it's a marketing tactic. The stakes aren't as high as they would be for merchants because Second Life isn't a business venture for them.

However, as a marketing vehicle, SL has been effective for brands such as CNET Networks, Wired magazine, Reuters, Warner Bros., Sony, and Starwood Hotels.