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RETURN ON TECHNOLOGY: Ignore virtual worlds at your company's peril

December 10, 2007

This month, a 17-year-old boy in the Netherlands was arrested and charged with stealing furniture that doesn't really exist, from a hotel that can't be visited. He perpetrated his crime completely online, in a social networking Web site known as "Habbo Hotel."

By scamming other residents of Habbo Hotel, he obtained passwords that let him lift the virtual furniture out of others' rooms, and into his own. In Habbo Hotel, you have to buy furniture with real money, so the stolen goods have a "street value" of 4,000 euros, or roughly $6,000.

The youngster ran afoul of laws against fraud and theft of passwords, but it's by no means clear if such "crimes" committed entirely online would have the same penalties. Let's say he was playing a game called "VirtiWorld," where players paid no fee for access, but could buy things after interacting in that world with others, an entirely virtual world using made-up forms of exchange. A young miscreant then found his stash and took it away, all in virtual terms. No cash was misappropriated, no actual goods are gone, no fraud. Lawyers are still arguing over that scenario.

Why should business owners care? Two reasons. The first is that virtual worlds like Second Life are becoming attractive places to set up entrepreneurial businesses. Residents of Second Life can make items and sell them for virtual cash, called "Linden" dollars, which can be redeemed for actual U.S. dollars. The exchange rate isn't very good, about 150 to 300 Linden dollars per U.S. dollar on any given day, but the Second Life GDP is said to be growing. It's estimated that the GDP of Second Life will be $500 million by the end of this month.

Second Life is lucrative enough that it's starting to spawn theft. For example, the World Stock Exchange in Second Life recently got hit for about $3 million in Linden dollars, about $12,000 in U.S. funds. The big question is whether the funds are actually property, and if the "theft" is punishable by law. Without legal rights, is doing business in something like Second Life worth the risk?

The second reason is even more speculative. Observers of the Web have dubbed today's networking sites "Web 2.0," which is generally thought to be distinguished by an emphasis on social networking and user-generated content. Web 2.0 sites provide only the structural framework. MySpace and Facebook are examples. Many of those same observers are projecting ahead as to what "Web 3.0" will look like, and some think it may look a lot like Second Life: 3-D, user-configurable, and with enough computing power to permit social interaction in real time.

Corporations are definitely taking note of Second Life. H&R Block, Best Buy, Cisco Systems, Reuters and IBM all have virtual offices, and product placements are popping up all over. GM's Pontiac brand, for example, can be seen on the sides of buildings. IBM has been particularly aggressive in pioneering new uses for its Second Life branch offices, exploring areas like training and brainstorming. It's possible that tomorrow's most progressive Web companies will be doing business in 3-D, not in Flash on flat 2-D Web sites.

Even apart from the financial or organizational challenges of Second Life are the cultural ones. The online world doesn't take its cultural cues from Adam Smith, but from academia, where online collaboration was born. Academia prizes openness and sharing, while the business world relies on secrecy and acquisitiveness. These two cultures collide regularly online. Some companies have gone so far as to forbid others from linking to their Web pages without permission, which is anathema to the Web community.

Titanic battles are being fought in the courts over copyrights, trademarks and patents on the Web. If a resident of Second Life carved your corporate logo on the door of his virtual house, is he violating your trademark? The same fight took place early in the years of the Web, as cybersquatters latched onto domain names like "sony.com" and "generalmotors.com," before Google made the issue nearly moot, by making search more important than domain names.

To see what Web 3.0 may hold, you can check out Second Life for yourself. It's free, but potentially addictive. Experience it firsthand at secondlife.com. A basic membership is free, but to do more than wander the landscape you'll have to pay for the privilege.

As you explore, don't just dismiss everything you see as unreal. Instead, in light of the fact that you'll probably soon be able to buy goods and services, hold meetings, and conclude deals in such a place, ask yourself what "real" means here. We accept that email and Web site forms are "real," even though they're no more tangible than the people in Second Life. But where do our world and Second Life begin and end? And how will business cross over?



Altom is an independent local technology consultant. His column appears every other week. Listen to his column via podcast at www.ibj.com. He can be reached at timaltom@sbcglobal.net.
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