The Wall Street Journal and Second Life

Significant comments were made in the Wall Street Journal recently about the nature of online products and their effect on how we perceive “value” in economic terms. The post’s author, Holly Finn, raises the example of Second Life, which for the uninitiated (myself largely included) is an online community of around one million active members, where the user’s avatar explores a place known as ‘the grid’, socialising and interacting with other users. Kind of a fleshed-out chat client.

Much chatter has been made about the game’s seedier elements, but the more intriguing part of Second Life is in its self-contained economy running on an invented currency, Linden dollars (L$), named after Second Life‘s development house. The founder, Philip Rosedale, estimates that more than $75m in revenue is generated every year, spent entirely on goods (houses, shops, clothing, pets, artwork) that exist only within the game’s boundaries.

Finn makes the point that there is little de facto difference between paying $20 for a tractor in FarmVille or $5/month on renting a piece of land in Second Life, and paying $1,380 for a Bottega Veneta handbag. Neither cost nearly as much to manufacture and distribute, yet the price attached is still met by consumers. Both demonstrate how the value of many things is largely virtual - how much can be charged for the exclusivity of a brand name, an exclusivity partly generated by the amount charged?

Second Life is a logical extension of consumer trends inside a gaming environment. The noteworthy thing here is that the Journal hasn’t treated it as a fluff piece, that there isn’t any condescension involved. It’ll be fascinating to see how the marketplace at large and the computer game industry in particular, where charging for additional downloadable content is already commonplace, reacts to the gradual changing attitudes to virtual property.

Ever bought something that didn’t exist in reality? Let us know in the comments.

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