More on that later.

Now that Linden Lab has been around for nearly 10 years, and with its product Second Life celebrating its sixth birthday since launching publicly in June 2003, we thought it would be a good idea to take a close look at the report and see how the company’s doing according to the analysts.

First of all, you may be wondering if anyone is still using Second Life at all. The answer is yes, and users are very active on there. During the past 30 days, one million users logged in, according to Second Life’s own statistics. In average time spent per user per week, Second Life in fact trounces all other MMORPGs, including World of Warcraft and Civilization IV. In another testament to the service’s apparent stickiness, the number of hours users spend on Second Life has been increasing steadily and is currently at historic highs, totaling approximately 124 million hours in the first quarter of this year.

More importantly, Next Up says in-world transactions have recovered after a significant drop in September 2007 – when gambling was banned in the virtual world – and has been steadily increasing ever since December 2007.

Which brings us to the valuation, or at least the estimated value Next Up claims Linden Lab is worth after running a couple of calculations. Using publicly-traded online gaming companies as a proxy, Next Up pegs the median enterprise value (EV)/ Revenue multiple for that group at 7.2x off of 2009 revenues. Subsequently applying this self-proclaimed “conservative” multiple of 7x to the estimated revenue of Linden Lab ($100 million for this year), the current target valuation amounts up to $700 million.

That seems like a stretch. In November 2007, the last time we asked ourselves how much Second Life is worth, we came out somewhere between $500 million and $1 billion. The current estimated enterprise value calculated by Next Up falls pretty much right into the middle of that range.

Next Up defends the 7x multiple variable by referring to a two-year-old M&A deal. When Disney acquired Club Penguin for $350 million in cash back in August 2007, it paid out at least a comparable multiple based on Vlub PEnguin’s projected revenue for the year (between $50 and $65 million), despite the fact that it reaches a narrower demographic profile. But things have changed since then: stocks have tanked, valuations have dropped, the IPO market has pretty much dried up and VC-backed liquidity is at a record low. So that implies a major discount, with a valuation between $300 million to $500 million, which is decent but not spectacular, assuming Next Up’s revenue projection is accurate.

Here’s what else Next Up says could have a negative impact on Second Life’s valuation:

- the aging population of its main target markets (U.S. and Europe) and less of a presence in developing nations where its main target audience (people from 13 to 45) is quickly gaining in size.
- limited amount of premium subscriptions (about 1% or 170,000 users)
- possible taxation on virtual monetary transactions in a variety of countries
- cost and complexity of running the technical infrastructure behind the virtual world

If you’re interested in the virtual worlds or Linden Lab in particular, there’s a ton of information and speculation about the market to be found in the report, even if we focus mostly on the financial side of things. To conclude, here are two charts from the report, one on the estimated valuations based off of different calendar years and one on the post-money valuations after the various funding rounds raised by the company.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

Recently, there’s been a growing wave of startups and products appearing that are bringing 3-D virtual worlds to the browser. These include Vivaty, Google’s Lively project, and the Electric Sheep Co.’s WebFlock. And I’ve seen a few stealth companies working the same vein.

None of these are as fully featured or immersive as Second Life, which requires a separate desktop client download. But it may not matter because a good-enough experience available via standard browsers may eventually qwn Second Life. Linden Lab, which operates Second Life, is working with IBM and others to make virtual worlds interoperable with each other. Still, for the most part, they don’t play nicely with the Web.

Last week I caught Linden Lab founder Philip Rosedale on video at Fortune’s Brainstorm conference in Half Moon Bay, and asked him if Second Life is threatened by browser-based virtual worlds. In the video above, he argues that the browser is not yet ready to deliver the type of experience that you can get in Second Life. He does acknowledge that virtual worlds need to be opened up and standardized. But he doesn’t see the browser as a viable alternative to client-based virtual worlds any time soon.

Is he right, or is he in denial?

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

WebFlock worlds are private-label virtual environments targeted at big brands who want to have a 3D presence online that is more accessible than worlds like Second Life, which require a separate software download. Although we’ve seen $345 million invested in virtual-world startups so far this year, there is a definite trend of those worlds moving into the browser. For instance, recently launched virtual-world startup Vivaty is all browser based, and Google is experimenting with Lively, its own browser-based virtual environments.

None of those other efforts, though, are Flash-based. They only work on Windows machines (because they tap into ActiveX). WerFlock worlds are viewable in any browser that supports Flash (i.e., nearly all of them). It supports 3D avatars, chat, virtual currencies, games, and embedded images and videos from YouTube and other parts of the Web.

Verbeck is offering WebFlock as a hosted service to the same types of big brands he creates virtual islands for on Second Life. For instance, his first customer is Showtime’s The L-Word, which already has one of the most popular Second Life islands (created by Electric Sheep). By bringing that same virtual environment to the browser, Showtime thinks it can reach a much bigger portion of its audience.

Verbeck took the same underlying technology Electric Sheep uses to create other virtual environments, called Aspen, and is now applying it to browser-based worlds. He envisions these 3-D worlds as standalone places integrated into different Websites. Connecting them together would make them more interesting.

WebFlock does not come cheap. A ‘basic implementation,” which includes a 3-D space, avatars, and basic features, will cost “under $100,000″ for 12 months. And he is not abandoning his Second Life business entirely, but this new emphasis shows that he sees that the writing is on the wall for virtual worlds that are closed off (or at least hard to get to) from the rest of the Web.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Virtual worlds like Second Life have a silo issue—they are virtual worlds unto themselves. Today, Linden Lab (which operates Second Life) and IBM announced that they have successfully bridged two virtual worlds, with avatars from Second Life successfully “teleporting” to an entirely different metaverse based on an OpenSim server.

The two companies have been working together on the Open Grid Protocol to allow for interoperability between virtual worlds. In a post on the Second Life blog, Hamilton Linden explains:

An open standard for interoperability based on the Open Grid Protocol would allow users to cross freely from one world to another, just as they can go from one Web site to another on the Internet today.

Here’s a video showing the avatars “teleporting” from one world (i.e. set of computer servers) to another:

Interoperability between virtual worlds is fine, and is definitely a step towards breaking down the walled gardens they are increasingly finding themselves in. But ultimately it is the wrong answer. What we really need is interoperability between virtual worlds and the Web.

Otherwise, virtual worlds will remain isolated in their alternate universe. If you can’t link to it from the regular Web (and vice versa), it doesn’t exist. That is why virtual 3D worlds are going to come to the browser. One startup, Vivaty (which launched in public beta earlier today), is already creating these browser-based virtual environments, where each place and object is a regular URL.

These still pale in comparison to what you can do in Second Life, but they will get better. And being connected to the rest of the Web will ensure that they never have any interoperability issues. The Web will just become more 3D over time. Will Second Life join the Web, or will its legacy architecture (built when there was no other choice) prevent it from doing so?

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Vivaty Scenes is launching today in public beta on AIM and in Facebook. These are realistic rooms that act as virtual personal environments—a 3D version of your personal page. You can set the theme, decorate with furniture and other virtual goods, and chat with the avatars of friends who enter your room (they need to install the app as well). The best part is that you can bring in photos from Flickr and Facebook, or videos from YouTube and display them on screens in your room. You can play MP3 songs as well.

The graphics are a cut above what you’d find in pre-teen virtual-world social networks like Club Penguin, Habbo Hotel, or Cyworld. They are more along the lines of Second Life or a Sims videogame. Vivaty is backed by Kleiner Perkins and Mohr Davidow. It raised $9.2 million in August, 2007, and a $200,000 seed round before that. Says CEO Keith McCurdy:

We are enabling full-featured 3D experiences inside a Web browser, instead of a separate application like Second Life. Every virtual environment—we call them scenes—is a URL.

That could be a game-changer if Vivaty’s platform takes off. It is deep linking into the 3D Web. Since they have regular URLs, each 3D scene can be linked to from the regular Web. Even objects within each room can each have their own URL. That is what is exciting about Vivty Scenes. It is extending the Web to 3D environments. Vivaty Scenes work only with AIM and Facebook for now, but they can work with other services such as iGoogle, My Yahoo, or as standalone Web pages.

Here is a demo video that shows what you can do in a Vivaty Scene. Remember, this is all browser-based.

McCurdy used to be the VP of worldwide technology at Electronic Arts, where he started Ultima Online. But he thinks that treating virtual worlds like a big online videogame is a mistake. Making a dig at the parcel approach used by Second Life to distribute and develop virtual land, McCurdy notes:

If you wanted to build the original 2D Web, you wouldn’t build it knowing the exact size of every Webpage. The beauty of the Web is that it is an unknown number of links.

While Vivaty is hosting all the rooms to begin with, its technology is architected to become distributed, like the Web itself. Vivaty Scenes are created using standard Javascript and PHP, and can be hosted on standard Web servers. McCurdy doesn’t want to create another walled garden. He wants to bring the Web into the 3D world.

The way he plans to make money is to become the virtual “cash register” for all the virtual goods he expects will be traded between Vivaty users. He also thinks there are obvious advertising opprotunities, including videos on the in-room screen, posters, and billboards, virtual product placement. It would be similar to videogame advertising, except that it need not be disconnected from ad campaigns on the Web.

The big money, though, could be in branded scenes and Websites. For instance, today Target is launching its own Vivaty-powered Facebook application called the Target and Coke Zero Virtual Dorm Room. It’s a back-to-college thing where students can play around with furnishing and decorating their own rooms. The gallery of virtual items features products that can be found at Target, of course.

This sorts of virtual-world advertising hasn’t worked that well because it was disconnected from the regular Web and people’s social networks. Vivaty hopes to prove that, given the right context, this kind of branding can thrive. We’ll see.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

The Sims Online was generally regarded to be a failure for EA, with the company unable to turn the success of The Sims franchise into an online hit. The service wasn’t helped by a complete lack of customizable features (outside of the usual Sims customization tools) and EA charged for access.

The new (but now never to be launched) EA-Land was to be EA’s second shot of success, and promised Second Life style customization and land ownership, with a free client and free to use service.

EA didn’t provide a full explanation for the shutdown, only saying that “The lifetime of the game has drawn to an end, and now we will be focusing on new ideas and other innovative concepts in the games arena.”

Paying users of the Sims Online are being offered a $15 gift voucher and three months premium access to Pogo.

The Sims Online/ EA-Land joins the TechCrunch Deadpool.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

HiPiHi, China’s answer to Second Life has opened its doors to the public with a beta test that includes free features. We first wrote about HiPiHi in August 2007 when the company called for the establishment of virtual world standards and interoperability.

German’s are famed for their ability to clone sites, but the Chinese aren’t far behind; HiPiHi looks and feels like Second Life, at least in the demonstration video (in Mandarin above). HiPiHi is available in Chinese and English, and name registration supports both character sets. The service is free to use and register, and like Second Life users can rent land and create their own items.

According to the Second Life Herald, HiPiHi is working with Intel and IBM towards building the platform architecture so that it “is more open, highly scalable and truly inter-operable, in order to lay the groundwork for the mainstreaming of virtual worlds.”

PC only, and although the service is available in English, the download page isn’t.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

EA-Land is the new, free Sims Online (TSO). The 12 different cities from TSO are being moved to EA-Land and the game area is being expanded to be “100 times bigger than the previous size of any city.” Existing TSO users will be able to purchase land in EA-Land before the new (reincarnated) world is open to the public with paying TSO users becoming “EA-Land subscribers” in a similar fashion to the way Linden Lab charges for land in Second Life.

Users of EA-Land will have the ability to upload custom content and (more importantly) buy these customizations from other players. Sounding a lot like Second Life? It gets better:

We heard from the community that the economy was broken in TSO. That was true, too many users were billionaires, and the goal of the game was mostly about extracting money from Maxis. I can now say with satisfaction that we have fixed the economy on EA-Land. This took many features, from establishing a real estate market, where users can easily buy or sell lots to one another, and a dynamic object pricing market where the prices of objects purchased from maxis is based on supply and demand, enabling stores and entrepreneurs to earn a living. We also enabled users to buy simoleans directly from Maxis. While there is no need for users to do so in the game (we give subscribers simoleans every week), it can help new users build their dream house faster with a simple paypal transaction secured by us.

There is one significant difference though to Second Life: EA-Land won’t become the wild west as EA will be “approving all of the content [so] this user content is safe to be viewed by everyone.”

Second Life fans will point out that TSO/ EA-Land has a lot of difference to Second Life in terms of capabilities, and that is true. And yet really basic 2D service such as Club Penguin and Habbo Hotel have millions of users compared to Second Life’s 100-200,000 regular users over a 60 day period. As much as I hate the name, free is a great selling point and EA-Land has the potential of catering to users who want something more from their online words than the basic services, without the hassles of Second Life.

(in part via GigaOm)

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Banking and associated services have become popular in Second Life over the last two years, with many offering ponzi style interest schemes that usually sounded too good to be true. Ginko Financial was the best known failure amongst Second Life banks, owing 200 million Linden ($750,000) to depositors when it declared itself insolvent in August 2007.

In a post on the Second Life blog, Ken Linden said that as well as not being able to provide protection to Second Life users with these banks running, their legality under law is also questionable. The decision is unlikely to affect virtual stock exchanges but may affect groups such as Second Life credit card provider Metacard, who also previously offered bank services as well.

Second Life banks are experiencing a run on their funds as customers seek to get their money before the ban comes in place. Companies such as JT Financial have been inundated by customers wanting to know what is going on. Screen shot of the JT Financial crisis meeting below.

Banking joins bestiality and gambling on the banned in Second Life list.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

The Electric Sheep Company

The Electric Sheep Company is best known recently for its work in creating the CSI:NY build in Second Life. The company offers its own Second Life browser “OnRez”, and provides services to companies looking to establish a presence in Second Life.

While the CSI:NY Second Life experiment has generally be regarded as a success by most, Electric Sheep Company was caught when some of the ridiculously high number of expected signups through the cross promotion did not materialize, causing much of the CSI:NY build to be closed down shortly after launching. Adding to this, according to Massively was the decision by AOL Pointe and Pontiac to cease operations in Second Life, both of who were Electric Sheep Company clients.

It would be easy to suggest that Electric Sheep Company’s failure here may be indicative of a broader downturn in Second Life; however, the more likely scenario is simply that this is a company that added too many staff in the expectation of ongoing and future work that didn’t happen, and they would be far from the first startup to be caught in this situation. Compound this with a highly competitive market and unfortunately for 22 people at the Electric Sheep Company, Christmas this year wont involve dreams of electric sheep.

Update: via the first commenter, Virtual World News has more, including an interview with the Electric Sheep Company where they state they’ll be moving into other virtual platforms including Metaplace, Multiverse and Icarus.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Estonia for those not aware of the country is a former Soviet Republic that this year is celebrating 90th anniversary of its initial independence, before it was invaded and occupied by the Soviet Union in 1940. It’s bordered by Russia to its East and Latvia to the South, and became a member of the European Union in 2004, the same year it became an American ally by joining NATO.

Estonia established an embassy in Second Life on the basis that Second Life was as progressive as its own society. The goals of the embassy are to promote Estonia among small groups of professional individuals by hosting discussions and lectures with people who not be able to travel to Estonia, and perhaps more interestingly, to act as a conduit for information to countries where Estonia has no representation (literally a virtual embassy).

The embassy itself is an interesting build that’s hard to describe in words. The post-modernist architecture hosts a variety of levels that includes art work and meeting spaces. During my time at the embassy I was impressed to note that it was manned by a “Estonia Republic” representative. I didn’t ask for a visa or particular information about Estonia, but I’m sure that I could have.

The embassy can be visited here (SLURL).

In related news, those keen on the environment can participate in a virtual Bali conference, the current major conference being held to discuss the post Kyoto environmental treaty. The space is hosted by the Nature Publishing Group and includes speakers such as Tara LaForce of Imperial College in London, Simon Buckle of the Grantham Institute for Climate Change and George Monbiot, British enviro-nazi and enemy of Jeremy Clarkson of Top Gear fame. Those interested can TP directly to the NPG island here (SLURL)

The news zone, where a traditional Estonian “Eesti hagija” dog welcomes you to the Embassy

The architecture is hard to place

Estonian Artwork

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

The following from my notes of the interview, the answers may be paraphrased at times but the core answers are per my notes. I’d hoped to record it but the initial Skype call was unusable.

DR: There’s been a lot of talk about open source in virtual worlds, with talk of everything from virtual world interoperability, open standards and web based browsing. What’s Linden Lab doing to open up its doors?

CC: Firstly we’ve opened up our client. As a direct result of this we are seeing new and innovative ways of connecting to Second Life. There are already a number of browser based clients in development, and more recently we saw a custom browser built specifically for the CSI:NY program. We’ve also started to provide API’s that hook into Second Life; registration is one area that provides Second Life registration capabilities to other sites, for example Telstra in Australia now provides registration from its Bigpond/ SL page.

DR: What about the Second Life world itself? Obviously the sale of server space is the bread and butter of Linden Lab’s business model; will you consider opening this up as well in future?

CC: Eventually we want to open up everything, every aspect of Second Life, but it’s a massive undertaking and it’s not something we can do overnight.

DR: Talking of servers, there has been rumors that we might start seeing Second Life game servers in other countries, specifically there was a rumor that Telstra in Australia would be hosting them. True or not true?

CC: We currently have around 6000 servers and they are all based in the United States. We are aware of the lag caused by people connecting from a distance, so we are looking at placing servers in other countries.

DR: stability is an ongoing problem for users of Second Life, and lately this seems to have gotten worse. Why? and what’s Linden Lab doing about it

CC: Our biggest focus at the moment is on stability and scalability. We’ve undergone incredible growth over the last 6 months and this has presented a huge challenge for Linden Lab. Stability is the key. Second Life and our backend is entirely unique so there is nothing else like it so it’s not a something that has a simple solution.

DR: We’ve seen companies such as IBM, Cisco and others use Second Life as a virtual meetspace, holding events, virtual recruiting etc.. and yet it’s always struck me as odd that a sim in Second Life can only handle 50-60 people at a time. What’s Linden Lab doing to address this aspect of the Second Life experience?

CC: We’re currently exploring ways of increasing concurrency on a server. This is related to our overall goals of stability and scalability, and like them Second Life in unique so it’s not easy to just provide it.

DR: Second Life has had its fair share of headlines this year for the wrong reasons. Gambling and age play come to mind. You’ve cracked down on gambling, but still there are stories relating age play in the press. What’s Linden Lab doing?

CC: Linden Lab has always had a policy against any activity in Second Life that is illegal. Linden Lab’s has cooperated and is cooperating with authorities in a number of countries.

DR: Someone once said to me that Second Life’s biggest strength is also its biggest weakness, and that’s Linden Lab’s libertarian hands-off governance of in-world activity. Only in the last week has there has been yet another attack on Second Life financial institutions with L$3m reportedly stolen from one bank. Griefing is also on the rise, and has been known to interrupt many a meeting. Will Linden Lab step in, and if not, why not?

CC: We don’t encourage this sort of activity and we do have ways to reporting it. We’ve recently improved our community department who is able to deal with complaints of this nature. We are also going to introduce tighter registration requirements

DR: Are you able to elaborate on the registration requirements: credit card, drivers license, something like that?

CC: We have users in over 100 different countries and each country has different forms of identification. We’re still working on the best way of implementing verification that is inclusive of all legitimate signups no matter where they live.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

We noted at the time of the acquisition that the technology would bring “better clouds and wind” to Second Life, but this was in retrospect an understatement. Having tested the new client, it not only brings photo realistic clouds to Second Life, it also introduces realistic water, and more importantly far improved shadow and time related graphical representations.

One of the most common criticisms of Second Life is that the in-world 3D rendering is poor; I’ve been supportive of the concept of the Second Life metaverse in the past, but I’ve always thought we were seeing the 1.0 version of a virtual world without having yet seen the 2.0 version, or the really amazing universally accepted virtual world that will gain much wider acceptance. Windlight takes Second Life to about 1.8. The same user generated buildings are still there, but suddenly they have been improved by their environmental surroundings. Water ripples with the reflection of surrounding buildings while a sunset casts realistic shadows and lighting on the buildings below.

The client is rated “first look” which translates to Alpha release, so it’s far from perfect. Testing on a MacPro resulted in regular crashes, although it was stable on a Macbook Pro. Second Life fans and observers can download the client here.

The photos below don’t capture the full effect, you need to download the client and fly around for that, but they do demonstrate some of the visual improvements with the new client.

Daytime:

Sunset

Sunrise

Crunch Network: CrunchBase the free database of technology companies, people, and investors

UK authorities may soon be entering Second Life as part of a crack down on virtual pedophilia following the above report being shown on Sky News.

The report investigates an area in Second Life called “Wonderland” where users dressed as children offer virtual prostitution in a space designed to mimic a kids playground.

Someone recently said to me at a conference that Second Life’s greatest strength is also its greatest weakness: pure uncensored freedom; they are completely right. No self respecting person could argue that the staging of virtual pedophilia is anything but sick and should have no place within Second Life, and yet libertarian governance has been the key driver of the Second Life success story . The whole thing is yet another tarnish on a space where some really great things are happening, a space that is slowly finding a much wider acceptance in the broader community. The quicker Linden Lab cracks down on these sickos, the better for the many Second Life fans out there who preach the Second Life gospel where ever they go.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

The episode will see Mac Taylor (Gary Sinise) entering Second Life to pursue a killer who has killed a Second Life user in a case of virtual stalking gone too far.

CSI:NY fans will be encouraged to join Second Life and investigate the case by following a link on the CBS website. CSI:NY will have three options for CSI-related inworld activities. The first option will allow viewers to walk around virtual New York buildings and visit a CSI lab and play forensic games.

The second option consists of a game called “Murder by Zuiker,” a unique murder plot which can be solved by users finding clues. The 100 people who come closest to solving the murder will win virtual gifts.

The big tie-in gives new users the ability to become CSI investigators, complete with field kit and tools, and are given a chance to interview suspects and to solve the murder featured in the actual CSI:NY episode. The episode itself will apparently end in a cliff-hanger with the solution not revealed until February.

The CSI:NY episode also sees the launch of the Electric Sheep Company’s OnRez Second Life client, the first major independent Second Life client launched since Linden Lab moved to provide open access to their virtual world in January.

Some reports suggest that Second Life could see one million new user signups following the CSI:NY episode going to air, however it will be more interesting to see how many of the new users will stick around.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Of late our coverage has started to change. The initial rush of “build it and they’ll come” corporatism has given way to something with more useful substance. Companies including IBM, Cisco and Amazon are now using Second Life as a corporate collaboration space, and conferences such as the Metanomics Series are bringing serious discussions on the benefits of virtual worlds to the virtual space.

Voice came to Second Life in early August, and although it wasn’t widely popular, particularly with old-time Second Life users, it radically changed Second Life in terms of functionality.

Lately I’ve discovered the benefits of voice in Second Life in its ability to be used as a spontaneous web meetup space. Last Saturday night I noticed that Australia’s answer to Robert Scoble (in a good way) Microsoft’s Nick Hodge was in Second Life chatting to The Podcast Network’s Cameron Reilly via Twitter. I jumped into Second Life to join the conversation, making it the three of us. I Twittered my presence and provided a link. Within 30 minutes three had blown out to around 15 people, or 20 different people over 3 hours. With voice in Second Life we discussed a variety of topics, from Second Life itself, to Web 2.0, politics and the environment.

The natural comparison is to the conference facility on Skype, but as a long term Skype user who built a startup that relied on Skype I’ve long known that any more than 4-5 people on a Skype conference call is a recipe for unusable. Second Life on the other hand never skipped a beat at 15-20 people. The visualizations and point of reference speech (SL delivers audio from the point of reference, so if the avatar is to your left you hear the voice from the left of your headset) made for a workable meetspace.

The ability to join and discuss anything in Second Life delivers something between a Barcamp or Podcamp, and a discussion at your local bar (or pub) amongst friends. I’ve read elsewhere suggestions that people who spend time in Second Life are sad; to that I can only respond: married with children. Whilst my wife was catching the latest episodes of America’s Next Top Model (streamed over the home network on a Zensonic Z500…which is probably pretty geeky) and my son was asleep I participated in a virtual recreation of many a good blog meetup or barcamp, and better still it was spontaneous. Over time more will see these benefits in Second Life and other virtual worlds as a useful meetspace. No longer is it necessary to hold a discussion in person in a real world meeting venue when you can have the same discussion via Second Life, at no cost and with virtual reach.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

The initial focus of the joint effort will be the ability to allow users to use a single virtual persona (or Avatar) across multiple virtual platforms, with seamless interworld transactions to be considered later.

Discussions and efforts surrounding standards and interoperability are in vogue this year, as the marketplace for virtual worlds has matured. Chinese Second Life clone HiPiHi announced its intention to lead a push towards standards based virtual worlds in August, and TechCrunch 40 presenting company Metaplace offers interoperability between user generated worlds on its DIY virtual world platform.

IBM has been highly active in the virtual worlds space, both as a user of platforms such as Second Life as a conference and business communications tool, and as a creator with its Active Worlds chat platform. IBM’s Italian employee’s went on strike within Second Life in late September.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

Guest speaker for today’s session was Sandra Kearney, IBM’s head of 3D Development. Kearney spoke from Sage Hall, Cornell in front of live audience, with a live stream being delivered to both Second Life and IBM’s Active Worlds chat platform.

One of the inherent problems with Second Life today is the limitations on attendance; an entire island or sim (Second Life for server) can only handle a maximum of approximately 78 users at one time. Conference attendees could participate at two locations in Second Life, but it was a first in, best dressed affair, so to attend I had to teleport in 45 minutes before the conference session started. 30 minutes prior to start and the main conference facility of Metaversed Island was at capacity, and unlike a TechCrunch 40 conference, you couldn’t sneak into the back of the room and stand against a wall; once full users simply couldn’t teleport into the facility.

The conference location itself mimicked a real life conference: chairs, lectern, stage and video screen.

The discussion itself was interesting to those following the virtual world space as it focused on the evolving role of virtual worlds and covered the move towards open source and interoperable virtual worlds. Metaplace, a TechCrunch 40 presenter has launched a product that is promising to provide interoperability, and Chinese Second Life clone HipiHo is currently attempting to form an industry working group to work on standards to allow this. Linden Lab has also been making noises in this direction for some time.

From a viewing perspective, it was not unlike a regular conference; the video quality on the live stream from Cornell was watchable and participating in the session live provides a superior experience to watching the recorded video of the event later.

The first question from the audience came from me and I asked Kearney what she thought of Paul Twomey’s suggestion that the future of global commerce is in virtual worlds. She didn’t agree, saying that ultimately nothing will replace face to face, however there was scope for virtual worlds to provide an alternative when face to face isn’t an option.

Overall I think the format works. IBM is already holding meetings and doing other staff/ communications activities in Second Life, and others are including Cisco and Amazon are also using Second Life for business meetings. It won’t replace a top end teleconference setup, but it works as a more affordable alternative.

A short video clip below show the layout of the conference. I couldn’t voice over it and run the audio from the presentation at the same time, so there was some one speaking during the clip, even if it’s not recorded.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

BidSL allows any Second Life resident to put an item up for auction by renting an available auction device. The user can choose the number of days that the auction will run, and set a minimum bid as well. Items offered can be both virtual items (Second Life goods) or real world items.

The cost of running an auction is charged at a set rate usually around L$1-5, and sellers do not pay a percentage of the sale.

To place a bid on the item, a bidder right-clicks and pays the auction device the amount they wish to bid. If the person is outbid, the amount paid for the earlier bid is instantly refunded.

BidSL also offers a franchise program that offers the franchisee the “full use of the BidSL resources, benefit of our advertising/marketing campaigns, and complete technical assistance and advice.” The franchisee is given a capable auction unit, logo and advertising materials, and even a copy of the BidSL building if they desire. BidSL in return asks for 5% (or a minimum of L$1) of the rent received from the auction units.

I wasn’t online for their official launch at Metaversed’s First Friday, but I did get a chance to tour the facility. It’s new, so there isn’t much to look at, unless you’re in the market for a cross bred unicorn. See the video below. I can’t see millions flocking to use the service, but in a long tail economy it will likely find fans.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

So how exactly does a virtual relay work? Much like its real-world counterpart, the virtual relay is a cooperative all night relay around a track. However, the virtual event has the added benefit of being more accessible than the all night real world relay with some whimsical scenery. Like the traditional event, donations were either solicited before the run started or through a variety of games played on the track. Over 1,700 people participated worldwide.

This year’s custom-built track was inspired by action-adventure films. The track featured a variety of scene,s including a graveyard, forest complete with bandits, water slide, and an underwater length of the track. You can see Flickr stream of them here (photo credit).

Readers interested in more Second Life non profits should check out NPSL.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

The report describes in detail various griefer operations as being terrorist attacks and goes on to say that:

On the darker side, there are also weapons armouries in SL where people can get access to guns, including automatic weapons and AK47s. Searches of the SL website show there are three jihadi terrorists registered and two elite jihadist terrorist groups.

The fear factor is so thick, it can’t be easily paraphrased

With the game taking such a sinister turn, terrorism experts are warning that SL attacks have ramifications for the real world. Just as September 11 terrorists practised flying planes on simulators in preparation for their deadly assault on US buildings, law enforcement agencies believe some of those behind the Second Life attacks are home-grown Australian jihadists who are rehearsing for strikes against real targets. Terrorist organisations al-Qaeda and Jemaah Islamiah traditionally sent potential jihadists to train in military camps in Pakistan, Afghanistan and Southeast Asia. But due to increased surveillance and intelligence-gathering, they are swapping some military training to online camps to evade detection and avoid prosecution.

The terrorists must get broadband in their caves now.

Rohan Gunaratna, author of Inside al-Qaeda, says it is a new phenomena that, until now, has not been openly discussed outside the intelligence community….”They are rehearsing their operations in Second Life because they don’t have the opportunity to rehearse in the real world”

Be alert, but not alarmed

“Community representatives are relied on to report suspicious or inappropriate behaviour to the owners or the SL authorities, just as in the real world.”

Crunch Network: CrunchBase the free database of technology companies, people, and investors

The FBI investigation commenced in April and was considering the legality of online gambling within the virtual world. The US Government prohibits most forms of online gambling.

It was unclear at the time of writing whether the FBI would take the matter further, including the possible arrest of Linden Lab directors or the prosecution of individual users.

Casinos and gambling have been a prominent part of the Second Life metaverse over the last 2-3 years. Linden Lab will take a financial hit from the decision as casino owners cancel virtual land ownership agreements; top tier casinos contribute large sums in monthly fees to Linden Lab.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

An update to Second Life’s client server will coincide with a 6 hour outage from 6am-12 noon PST Wednesday and Second Life users are not happy. According to a post at Gamer.Blorge Second Life entrepreneurs are particularly unhappy with the downtime, after all, if you’re trying to make a living from Second Life this downtime affects the bottom line.

Proving that Second Life is indeed a reincarnation of the Wild West, the Australian Broadcasting Commission (ABC) was literally blown off the face of Second Life Tuesday by “miscreants” according to The Sydney Morning Herald. ABC Island featured a number of venues where visitors could listen and dance to music, attend talks and watch videos of selected ABC programs before it was reduced to something more like Hiroshima circa 1945.

Sadly, this type of attack is not new. The self styled Second Life Liberation Army have previously attacked Reebok and American Apparel stores in Second Life and stormed the stage at the January 2007 meeting of the World Economic Forum in Second Life.

The then there is the various police investigations in a number of countries. The FBI recently started investigating Second Life for illegal online gambling. Police in Britain, Belgium and the Netherlands are investigating whether virtual rape in Second Life constitutes an offense, and German Police are investigating pedophilia on a service where virtual “age play” and bestiality are widespread.

Is a perfect storm brewing, virtual or otherwise? I guess there is always Entropia Universe.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Once the acquisition is complete, Linden Lab plans to open source the technology and integrate it into Second Life, bringing a new level of realism to the Second Life metaverse.

WindLight uses algorithms that imitate the ways in which light is affected by real-world atmospheric factors like dust and moisture, enabling the nuances of sunlight, clouds, water and weather to be accurately simulated in real-time. Nimble uses advanced physics models to realistically simulate clouds.

Alliance, an online game developed by Windward Mark Interactive does not form part of the acquisition.

original image credit Tim Bray

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

To date there are two leading online spaces. World of Warcraft has been an unrivaled success, bringing Dungeon and Dragons style fantasy role playing to an audience in excess of 8 million. At the opposing end is Second Life with its embrace of capitalism and intellectual property rights.

What happened if you combined both?

Enter Entropia Universe.

Set in a Sci-Fi future players assume the roles of colonists who must develop the untamed planet of Calypso. Game play is open across a number of different fields. Players who prefer a World of Warcraft style experience can undertake quests and join in groups to hunt and fight monsters. Mining is an option for those who don’t like swinging a sword. Moving towards a more Second Life experience, players are able to own and run shops, manufacture goods, own land and build on that land, as well as being able to trade, buy, sell and create goods and services.

The addition that makes Entropia Universe a direct competitor to Second Life though is money. Like Second Life, the in-world currency in Entropia Universe can be converted to US dollars. Unlike the Linden dollar that continues to decline in value, the Entropia Universe PED can be traded at a fixed exchange rate of 10 PED to $1 USD.

Players are able to buy PED’s to use in-world or can transfer PED’s made in-world, out.

But there’s more to Entropia Universe than just the ability to transfer cash in and out. A MasterCard branded ATM Cash Card is available to players which allow direct withdrawal of funds earned in-world. Banking is also taken seriously, unlike the unregulated wild west of Second Life with it’s various in-world ponzi schemes. Entropia Universe recently sold 5 banking licenses for the amazing sum of $404,000 USD.

It all sounds great on paper, but how does it actually play?

Signing up is free, though personal details are not optional. Whilst you could probably enter false information, Entropia Universe does want to know who you are.

If Entropia Universe was to be judged alone on its installation procedures, there would be a lot less than the over 500,000 registered users. It’s awful. The Windows only client is over 1GB in size and can only be downloaded from the one server using FTP. If you eventually mange to connect to the server, and it took me a several hours, you then have to wait an awfully long time for the download. Best I could get initially on a 2mb Cable connection was 20kbs download speed with an estimated time to download of 17 hours! In part it could have been a timing issue. I tried to download during the middle of the day European time (where the company is located). TechCrunch writer Nick Gonzalez reported a 4 hour download from the US during the European night.

A full sleep later I finally had it.

Login is simple although settings should be watched. I had regular issues staying connected until I dropped by internet speed settings to a much lower figure than my actual internet speed.

Users/ players must setup an avatar with a bewildering array of options. Entropia Universe claims that they have the best avatars in the business and it’s a fair claim. Much nicer looking than Second Life with more customization options than you’ll probably ever want to use.

In-world is good. I wouldn’t call it excellent but it’s definitely a slicker look and feel than Second Life. Moving around is easy enough, and once short-cuts and mouse options are learnt it’s a pleasurable interface to use.

I took a tour of Calypso Island and teleported to a number of other locations as well. The non-user created areas look professional, but in some ways, compared to Second Life, it felt a little boring. Second Life would have to be 99% ugly but it’s the raw passion of the user generated buildings that give it appeal.

The graphics engine behind Entropia Universe purrs. Even with relatively low settings the experience was seamless, and despite entering areas with large gatherings of people there were zero lag issues, a constant negative in Second Life.

I’d need to spend more time in-world to get a better feeling for all the possibilities Entropia Universe provides. You can’t fly around and teleport at will in Entropia Universe like you can in Second Life so things do take a bit longer, and yet flying is not a feature you come to expect in virtual worlds if you’re not an existing Second Life user.

Is Entropia Universe a better Second Life?

It depends on what you like. With a retention rate of 16% for Second Life amongst US users, it’s clear that many don’t enjoy what Second Life has to offer, despite the hype. One criticism I hear regularly about Second Life is that it’s aimless; it’s not a game so there is nothing really to do other than enjoy virtual sex and play Tringo. Now before I am shouted down by a legion of Second Life groupies, I do see Second Life’s appeal as a creative and social space, but not everyone wants to get online and build virtual strip clubs or interrupt interviews with flying penises.

Entropia Universe offers the best of both Second Life and World of Warcraft style virtual worlds. The creativity and capitalism of Second Life can be experienced along with solid game play and decent graphics. If they can fix the issues with downloading the client (hint: bittorrent) and you don’t mind downloading a 1gb file it’s definitely worth a look. If it builds members so the social aspect becomes stronger, we could well be looking at a better Second Life, and already one that will appeal to a much more broader audience.

Crunch Network: CrunchBase the free database of technology companies, people, and investors