The Social

If you're running a business that has a presence in a virtual world, market research firm Gartner thinks you might want to make sure your employees' avatars aren't dressed like Lady Gaga at the VMAs.

"Companies with codes of conduct for other Web activities, such as blogging, should be able to extend those policies into virtual environments," a release Wednesday from Gartner announcing its new report "Avatars in the Enterprise: Six Guidelines to Enable Success" explained. "However, because 3-D environments add the visual dimension, they will need to make sure that their policies also cover dress codes."

That means your avatar might want to lose the sparkly pink torpedo bra, metallic leggings, and giant bat wings. When it's representing your company, that is.

The presence of businesses in virtual worlds like Second Life is nothing new--and has been much derided in recent years. But according to Gartner, it's still on the rise, particularly when it comes to training and virtual meetings. "Avatars are creeping into business environments and will have far reaching implications for enterprises, from policy to dress code, behavior, and computing platform requirements," the release explained. Gartner estimates that 70 percent of enterprises will be regulating the avatars of employees who use virtual worlds for business.

Two years ago, Gartner put out a study detailing the risks and pratfalls of doing business in virtual worlds, among them the difficulty of brand and reputation management. Now it's getting more specific: Gartner now says that employees ought to know how to operate their avatars properly, use the same degrees of discretion and professionalism that they do on social-networking sites, and even keep separate avatars for personal and professional use.

Virtual world Second Life has put in effect some new measures to keep adult content away from users who might not want to run into it. Or fly into it, as avatars might do.

Later this year, parent company Linden Lab will create a standalone "continent" for adult content, and members who don't purchase private "land" will be asked to migrate there if they wish to partake in adult-related activities. Second Life is an 18+ environment already, but stricter age verification policies will be put in place. You'll need a "verified" account, either through credit card information or through Linden Labs' filtering system, to get into the adult "continent."

Members will be asked to start flagging content as adults-only as part of a new content rating system, which will start to roll out in an update to the downloadable Second Life client that will be available next week.

"The people that are on our mainland and in our estate, if they are going to engage with adult content, are being asked to do that in the adult content area," said Cyn Skyberg, vice president of customer relations at Linden Lab. "Private land owners will be asked to tag their searches for adult-related listings so that it goes into the adult filter."

So what does this mean for Second Life, which was briefly a marketers' paradise before swifty falling from grace in the Silicon Valley pecking order? Well, it'll help make it a friendlier environment for some of the new "residents" whom Linden Lab hopes to woo. The company is profitable, due largely in part to the sheer volume of virtual goods and transactions made on the platform by loyal users, and Linden Lab sees corporate and academic institutions as an area for future growth. Keeping porn in its place could be good for P.R.

"A portion of this will be perceived as definitely being more corporate- and educator-friendly because you'll have more control over the things you're experiencing," Skyberg said.

Updated at 6:15 p.m. PDT with correct list of companies that have signed on to test the software.

After it made headlines last week for yet another executive leaving the company, you'd really think things couldn't get much worse for virtual world Second Life and its parent company Linden Lab.

The marketing hype--it's the next Internet!--bottomed out long ago. There was a wave of unflattering press, from virtual terrorism to technical problems to banking scandals. Even the NBC sitcom "The Office" jumped on board, lambasting Second Life with an episode in which Dwight Schrute, the show's archetypal "creepy nerd," professed his addiction.

"I signed up for Second Life about a year ago," Schrute, played by actor Rainn Wilson, explained with his usual dweeby pomposity. "Back then, my life was so great that I literally wanted a second one."

Riding a flying Segway in Second Life.

(Credit: Linden Lab/Screenshot by Caroline McCarthy)

This month's departure of Ginsu Yoon, vice president of corporate development, follows the exits of high-profile executives like chief technology officer Cory Ondrejka and eventually founder and CEO Philip Rosedale. In a post on the Linden Lab blog, Yoon called it "a graduation of sorts for the company and for me...great companies evolve their management around the reality that experienced executives enjoy different stages of company development."

Sunny spin, sure. But this might be one instance where a major executive shake-up could actually be a positive sign.

True to its reputation as a haven for utopian dreamers, Second Life's original executive team wasn't entirely in touch with the business side of things. "I describe it as sort of like being in a Berkeley commune and if the kitchen catches on fire you have to take a vote before you put it out," said Wagner James Au, author of "The Making of Second Life: Notes from the New World," who was employed as a contractor at Linden Lab in 2006.

Philip Rosedale's replacement, announced just over a year ago, was digital-strategies veteran Mark Kingdon. Critics took this as a move that Linden Lab meant business, and the sands shifted internally as well.

"It's got less of that start-up feel," Au said of Linden Lab, which now employs more than 300 people. "The big shift in corporate culture happened after Philip left, and after he stepped down as CEO and then took a chairman role."

Linden Lab representatives do not disclose financials, but they say that Second Life is profitable. Mark Kingdon explained in an interview with CNET News that he estimates user-to-user monetary transactions in Second Life may hit $450 million in 2009, up from $350 million. "(Revenue) comes from land maintenance fees, fees from the 'Lindex,' which is where people trade our micropayment currency, and also from the sales of Linden Dollars themselves," Kingdon said, "and some other sources like in-world advertising and e-commerce, where we recently made a couple of acquisitions."

Herein lies the heart of the matter. Second Life might have earned a reputation as a nexus of odd subcultures, but its primary sources of revenue--a virtual currency, micropayments, an array of virtual goods--fit right into the social Web's business model du jour. Facebook, for example, has been ramping up the focus on its virtual gift application, and is testing a new product in which members can purchase credits simply as street-cred points that they can dole out to their friends.

The system is there in Second Life, and in spite of what the media has concluded, it seems to be alive and humming, even if it's still relying on virtual-world enthusiasts rather than blue-chip marketers. More importantly, what Linden Lab seems to finally be recognizing is that Second Life needs some permanent institutions before it can hope for an influx of people.

Corporate participation is key
The burgeoning space known as "Enterprise 2.0" may turn out to be Second Life's real cash cow. While many marketing campaigns that went into the virtual world have since pulled out or lie fallow, IBM, which has had a presence in Second Life since late 2006, hasn't given up. There are more than 50 IBM regions, or "sims," in Second Life now, including sales and marketing centers, and IBM has been working with Linden Lab to develop and test a behind-the-firewall environment for workplace collaboration and training. Intel, Northrop Grumman, and the U.S. Naval Undersea Warfare Center have also signed on to test the software.

"Businesses are finding great value in collaborative tools and virtual learning, and I think it's going to be an incredibly powerful platform," Kingdon said. Having a more business-savvy executive team--which recently added veterans of Adobe, Pixar, and Intuit to its ranks--is key.

The corporate participation is crucial because you can't just throw individuals into Second Life the way you can into a social network or a role-playing game that has clear aims and instructions.

"It's like trying to learn World of Warcraft and Photoshop at the same time," Wagner James Au said, adding that Second Life's once crash-prone software is "slowly getting better" as new development goes on. "You go in and there's generally a bizarre menagerie of creatures, and it's just kind of overwhelming for people and there's not any specific goal. That's kind of the whole design of Second Life: you want this free-form world where you can do anything. But it's sort of that paralysis of choice that economists talk about. When you have way too many choices, a lot of people just kind of get frozen."

Au, who continues to keep close tabs on Second Life at the blog New World Notes, estimates its current active user count to be 650,000, and said that it's finally starting to grow again after a period of stagnation. Over half of its users are now outside the U.S.

"We had really terrific active user growth that started nicely in the middle of last year," CEO Mark Kingdon said. "In the last week of March, users spent more than ten million hours in Second Life, and that's up from six and a half million in the same week a year ago."

The organized groups slowly gravitating toward Second Life as a platform aren't restricted to companies, though. "There's a mini-MMO within Second Life called Bloodlines that's like a vampire role-playing game. It's got, like, 40 to 60,000 users in it," Au said. "It's gotten complaints, because to advance as a vampire you have to infect other people so they've been showing up in (virtual) shopping malls and fashion shows and started biting people."

Dwight Schrute had better watch his back--or neck.

Linden Lab, the parent company of virtual world Second Life, has quietly snapped up two companies that had built e-commerce marketplaces on its platform. The two start-ups, Xstreet SL and OnRez, will be combined into the "Xstreet SL platform," a sort of Craigslist-eBay hybrid for the trade of Second Life virtual goods.

Financial terms of the deals were not disclosed.

It's a revenue stream for Linden Lab, which will take a cut of each sale. And, the company says, virtual goods are a $1.5 billion industry. Though a vicious marketing hype-backlash cycle has painted Second Life as an also-ran, $360 million in Second Life goods were bought and sold in 2008, believe it or not, and there are currently 680,000 items up for sale on Xstreet SL.

Based on the Web rather than in-world, the newly acquired marketplace is part of an ongoing strategy at Linden Lab to recapture mass interest by giving members and prospective members an opportunity to "shop" outside of the Second Life environment.

"Having a Web marketplace to browse and search is a great way to find new designers, keep up with the latest creations, or just find that perfect gift/texture/dress/home/weapon/couch," a post on the Linden Lab blog explained. "Our goal is to make the Web marketplace a wonderful complement to in-world shopping and a great benefit for all residents."

Perhaps part of the thinking is that by giving Second Life more of an official Web-based presence, the marketing will take care of itself. That's possible. But reversals in fortune are rare on the Web, where even a successful product can't stay stagnant for too long before an enterprising rival eclipses it.

Worth noting: virtual goods have been banned from auction giant eBay for nearly two years now, but Second Life goods were exempted because of Linden Lab's argument that the virtual world does not count as a game (and the ban specifically targeted gaming items).

Second Life also has reason to take some of its financial activity out of the virtual world: resident-created banks were effectively banned after a series of scams and scandals last year.

Second Life creator Linden Lab has selected digital-strategy veteran Mark Kingdon as its new CEO, following Philip Rosedale's resignation from the post last month. Rosedale will remain chairman of the company's board.

"Our search for the leader of Linden Lab demanded both tremendous business skills and a deep understanding and passion for Second Life and where it is going. Mark is the perfect choice," Rosedale said in a statement, acknowledging that Linden Lab's new chief needed to know how to run a business, not just come up with cool ideas.

Kingdon comes equipped with an MBA from the University of Pennsylvania's Wharton School of Business, as well as more than a half decade's worth of experience running digital-ad agency Organic.

Kingdon will take over the CEO post on May 15.

Hiring a "business guy" to helm Linden Lab, rather than someone with a background in social networking or gaming, may be a sign that the company wants to achieve some corporate momentum and eventually go public.

But before that, the company needs to get its act together. Second Life hasn't lived up to the breathless marketing hype of a year or two ago, and its chief technology officer left in December amid reported disputes.

Linden Lab's management is likely counting on Kingdon to sort things out.

"His management style, unwavering leadership in the face of great challenges, and approach to team-building exactly matches Linden's needs," Rosedale said in the release. "He is a passionate believer in the potential of virtual worlds to change the world, and I look forward to working by his side while we watch it happen."

3DConnexion's SpaceNavigator mouse.

(Credit: CNET Networks)

It might not be a Wiimote, but it's still got that whole "immersive" thing going on.

Linden Lab, publisher of virtual world Second Life, announced Thursday that its members can use some officially-sanctioned new toys to navigate the metaverse. Logitech's 3DConnexion line of 3D mice can now navigate through Second Life, as a result of Linden Lab's decision to make its code open-source last year.

Second Life members can now use 3DConnexion's SpaceNavigator ($59, or $99 for a premium edition), SpaceExplorer ($299), and SpacePilot ($399) mice to control their avatars, fly, and build objects in-world. They can, of course, also perform more mundane two-dimensional functions, like tweak settings and preferences.

Both Mac and Windows operating systems will be able to handle the 3D mice, and according to Logitech representatives, Linux users should be able to use them, too.

The devices, the first to be made available to Second Life through a partnership with Linden Lab, are not yet compatible with other virtual worlds and 3D multiplayer games like There.com or World of Warcraft. The Logitech representatives, however, said that they will explore other gaming and virtual world opportunities after using Second Life as a first step.

Currently, the SpaceNavigator and its pricier brethren are used for design and modeling software as well as 3D applications like Google Earth.

Philip Rosedale, CEO of Second Life creator Linden Lab and founder of the virtual world, announced Friday that he will step down from his post.

He assured Second Life enthusiasts that he would remain on full-time at the company as chairman of the board.

Rosedale, known in Second Life by his avatar's name Philip Linden, did not provide a concrete date for his change in role, only saying that the company has "decided to search for a new CEO."

(Credit: James Martin/CNET News.com)

He continued: "This is a decision driven by my desire to best grow SL and match my job to both our needs and my passions. We don't have a specific timeline, and I don't expect my job to change while we are looking for someone."

It sounds like the company is looking for a veteran business professional rather than a futurist visionary. "I feel that the most important contributions I have made and will continue to make to Second Life are related to building both the product and the company through my direct contributions to vision, strategy, and design," Rosedale wrote in a post on the official Second Life blog.

"As we grow, the role of our CEO will increasingly be to hire and grow the right team--to lead and help the company scale--to thousands of people and tens of millions of users of Second Life."

Corporate upheaval at Linden Lab has been going on for some time now. In December, Chief Technology Officer Cory Ondrejka left the company, and leaked e-mails seemed to indicate that Rosedale had fired him over creative differences.

Second Life, meanwhile, has been going through some rough patches outside of the boardroom. A series of banking scandals earlier this year led the virtual world to effectively ban in-world banks. Issues with vandalism and political radicalism briefly shook the community, and it has still failed to rebound from the backlash that followed in the wake of breathless media hype about virtual worlds.

These days, when you hear about Second Life in the mainstream media, it's coming from dweeby Dwight Schrute on The Office. Linden Lab likely hopes to pull in a CEO who can change that.

Do virtual shopping damage with real cash--it all starts here.

(Credit: Zwinky)

Teen-oriented virtual world Zwinky has expanded its e-commerce operations so that members can use real-world cash to pay for virtual goods. Starting Monday, credit cards and PayPal accounts can be used to purchase the in-game "ZBucks" currency, which members could heretofore only earn by visiting certain in-world locations and winning games. The cash will then go on new "ZCard" shopping cards which members will be able to use at the in-world retail hub, the--wait for it--Zwinchester Mall, which contains stores like the Z-Loft trendy furniture outlet and "Like Dat," a boutique branded with the identity of the rapper 50 Cent.

For an idea of the exchange rate, 5,000 "ZBucks" will cost you $19.99.

Real-to-virtual economies are not uncommon in virtual worlds like Eve Online and Second Life. But Zwinky, which is owned by InterActiveCorp (IAC) and has a head count of more than 9 million members (that's accounts, not active users) who have already assembled more than 10 million virtual outfits through trips to the in-world mall, has not actually created a currency exchange--it does not appear that there are any plans to allow members to switch ZBucks back into real dollars. In that respect it's more like the Disney-owned kiddie space Club Penguin, but considering Zwinky's older youth demographic, it'll more likely be the teens than the parents who are doing the buying.

I'm guessing that reactions to the "ZCard" will either go in one of two directions--it'll ultimately be held up as a smart strategy to help young people learn about being economical, or as yet another factor in the material corruption of digital-age youth. Which one, I'm still not sure.

CHICAGO--In Second Life, avatars can fly with the push of a button. Maybe that's why it seems like the virtual world's enthusiasts sometimes have trouble staying grounded.

At this weekend's Second Life Community Convention, Philip Rosedale--founder of Second Life creator Linden Lab--ambitiously declared as he often does that "this is something that everybody on Earth is going to use," that the virtual world will be "bigger than the Web."

But minutes earlier, Rosedale had been jokingly boasting over PowerPoint graphs showing the extent of Second Life's with server lag time, maintenance both planned and unplanned, and glitches that occasionally make users' virtual inventories disappear. "Second Life is still very early and very small," he said, hinting at his disapproval of the media buzz that swarmed the virtual world several months ago. "Everyone in the media (jumps ahead) a lot more than the people here," he said, gesturing to the audience of loyal metaverse residents. "Everybody wants to jump ahead and say, 'Oh my God, the future's alive!'...It's the natural myopia of emerging systems like this."

Read the rest of the CNET News.com story here.