Wednesday, July 25, 2007

How Madison Avenue Is Wasting Millions on a Deserted Second Life

How Madison Avenue Is Wasting Millions on a Deserted Second Life

Frank Rose Email07.24.07 | 2:00 AM

Illustration by Eddie Guy

See also

Embedding Ads Into Games Seemed Like a Good Idea

For months, Michael Donnelly had been hearing all about the fantastic opportunities in Second Life.

As worldwide head of interactive marketing at Coca-Cola, Donnelly was fascinated by its commercial potential, the way its users could wander through a computer-generated 3-D environment that mimics the mundane world of the flesh. So one day last fall, he downloaded the Second Life software, created an avatar, and set off in search of other brands like his own. American Apparel, Reebok, Scion — the big ones were easy to find, yet something felt wrong: "There was nobody else around." He teleported over to the Aloft Hotel, a virtual prototype for a real-world chain being developed by the owners of the W. It was deserted, almost creepy. "I felt like I was in The Shining."

Yet Donnelly decided to put money into Second Life anyway. He's no digital naïf: When he joined Coke last summer, the company was being ridiculed for its huffy response to a spate of Web videos showing the soda geysers that erupt when you drop Mentos into Diet Coke. Within weeks, Donnelly had Coke and Mentos sponsoring a contest on Google Video that's gotten more than 5.6 million views. But Second Life was different. "Many places you go, there's still nobody there," he concedes. That's certainly the case with Coke's Virtual Thirst pavilion, where you can long linger without encountering another avatar. "But my job is to invest in things that have never been done before. So Second Life was an obvious decision."

As with Donnelly and Coca-Cola, so with David Stern and the National Basketball Association. Stern, who's been NBA commissioner since 1984, was introduced to Second Life in July 2006, at the annual media and technology retreat hosted by New York investment banker Herbert Allen in Sun Valley, Idaho. Second Life's creator, Philip Rosedale, was one of the presenters, as was Chad Hurley, cofounder of YouTube, another company Stern had never heard of. "My initial impression was, 'Don't people have better things to do with their lives?' Then I said, 'Stupid! You're not the audience.'"

Stern left Sun Valley convinced he'd seen the future, and he was about half right. YouTube has become a powerful tool for pro basketball. The site's NBA channel, launched in February, has already garnered some 14,000 subscribers; users have posted more than 60,000 NBA videos, which have been viewed 23 million times. But over at Second Life, where an elaborate NBA island went up in May, the action has been a bit slower. "I think we've had 1,200 visitors," Stern reports. "People tell us that's very, very good. But I can't say we have very precise expectations. We just want to be there."

Coke and the NBA are hardly alone. Adrift in the uncharted sea that is Web 2.0 — YouTube, MySpace, social networking, user-generated content, virtual worlds — corporate marketers look at Second Life and see something to grab onto. At least 50 major companies have ventured into the virtual world to date, spending millions in the process. IBM has created a massive complex of adjoining islands dedicated to recruitment, employee training, and in-world business meetings. Coldwell Banker has opened a virtual real estate office. Brands like Adidas, H&R Block, and Sears have set up shop. CNET and Reuters have opened virtual bureaus there. It's as if the moon suddenly had oxygen. Nobody wants to miss out.

Ever since BusinessWeek ran a breathless cover story titled "My Virtual Life" more than a year ago, reporters have been heralding Second Life as the here-and-now incarnation of the fictional Metaverse that Neal Stephenson conjured up 15 years ago in Snow Crash. (Wired created a 12-page "Travel Guide" last fall.) Unfortunately, the reality doesn't justify the excitement.

Second Life partisans claim meteoric growth, with the number of "residents," or avatars created, surpassing 7 million in June. There's no question that more and more people are trying Second Life, but that figure turns out to be wildly misleading. For starters, many people make more than one avatar. According to Linden Lab, the company behind Second Life, the number of avatars created by distinct individuals was closer to 4 million. Of those, only about 1 million had logged on in the previous 30 days (the standard measure of Internet traffic), and barely a third of that total had bothered to drop by in the previous week. Most of those who did were from Europe or Asia, leaving a little more than 100,000 Americans per week to be targeted by US marketers.

Then there's the question of what people do when they get there. Once you put in several hours flailing around learning how to function in Second Life, there isn't much to do. That may explain why more than 85 percent of the avatars created have been abandoned. Linden's in-world traffic tally, which factors in both the number of visitors and time spent, shows that the big draws for those who do return are free money and kinky sex. On a random day in June, the most popular location was Money Island (where Linden dollars, the official currency, are given away gratis), with a score of 136,000. Sexy Beach, one of several regions that offer virtual sex shops, dancing, and no-strings hookups, came in at 133,000. The Sears store on IBM's Innovation Island had a traffic score of 281; Coke's Virtual Thirst pavilion, a mere 27. And even when corporate destinations actually draw people, the PR can be less than ideal. Last winter, CNET's in-world correspondent was conducting a live interview with Anshe Chung, an avatar said to have earned more than $1 million on virtual real estate deals, when Chung was assaulted by flying penises in a griefer attack.

One of the things you never see in Second Life is a genuine crowd — largely because the technology makes it impossible. In Stephenson's Metaverse, corporations established their presence along a bustling, almost infinitely long street that residents could cruise at will. Second Life is different. Created by an underfunded startup using a physics engine that's now years out of date, Second Life is made up of thousands of disconnected "regions" (read: processors), most of which remain invisible unless you explicitly search for them by name. Residents can reach these places only by teleporting into the void. And even the popular islands are never crowded, because each processor on Linden Lab's servers can handle a maximum of only 70 avatars at a time; more than that and the service slows to a crawl, some avatars disappear, or the island simply vanishes. "It's really the software's fault," says Andrew Meadows, Linden Lab's senior developer. "Way back when, we used to say, 'This is not going to scale.'"

Blank new world: Desolate corporate headquarters in second life.
Illustrations by Eddie Guy

And yet, so eager are corporate marketers to get in that a small industry has sprung up to help. Business appears to be good — very good. "We have basically not made any sales calls," says Sibley Verbeck, founder and CEO of the Electric Sheep Company, which has built in-world presences for such clients as AOL, Major League Baseball, the NBA, Nissan, Pontiac, and Sony BMG Music. "We would like to. But we can hardly keep up with the Fortune 500 companies that are contacting us."

From an obscure background in computational linguistics, Verbeck has emerged as perhaps the world's leading evangelist for Second Life business opportunities. Dressed in blue jeans and a flannel shirt, his long, dark hair flowing from beneath a wide-brimmed black hat, he looks like a diminutive New Age lumberjack. But Verbeck is also oddly charismatic, with an almost messianic belief in the potential of virtual worlds.

Electric Sheep launched with the mission of promoting Second Life by developing software to make the experience less clunky and off-putting. Bringing in big corporations was a way of generating money and adding new in-world attractions. Marketers weren't interested at first, but that changed after the May 2006 BusinessWeek story and Rosedale's appearance at Sun Valley a couple of months later. "By September, it was crazy," says Giff Constable, an investment banker who joined Electric Sheep after falling in love with Second Life. "A lot of people who missed MySpace said, 'You know what? We shouldn't let that happen again.'"

What do marketers want when they call Electric Sheep? "They don't know," Verbeck says. "Mostly it's 'We've been reading about virtual worlds — is there anything there for us?'" Almost inevitably, the answer is yes. The cost varies greatly: A company can stage an in-world speaking event for as little as $10,000, but hiring Electric Sheep or one of its competitors to create a full-time presence, with a private island and a lot of virtual construction, could run several hundred thousand dollars a year. (Linden Lab leases virtual land to cover its server costs but doesn't take a cut of what companies spend establishing their presence there.) Opt for a really elaborate build, hold frequent events to keep people coming back, and hire an employee or two to keep things running, and the budget could easily hit $500,000 a year.

Joseph Jaffe, the marketing consultant who advised Coke on its in-world presence, dismisses the notion that such efforts might not be worthwhile. "The learning is now," Jaffe says. "You are a pioneer, and with that comes first-mover advantage" — that chestnut from the Web 1.0 boom. And the paltry numbers? "This is not about reach anymore. This is about connecting. It's about establishing meaningful, impactful conversations. So when people ask, 'Why Second Life?' I ask 'Why not?'"

Jaffe logs on to show off Coke's Virtual Thirst pavilion, which was created by Millions of Us, a Bay Area company that does in-world builds. He's a close match for his avatar, Divo Dapto, a trim little figure clad in roll-up jeans and a red-on-white Virtual Thirst T-shirt. "You never know who you're going to meet," Jaffe says as Dapto soars toward the Virtual Thirst pavilion.

The Coke build is expansive, elaborate, and of course empty. But Coca-Cola has a plan. It's sponsoring a contest to create a Virtual Thirst vending machine that it hopes will become ubiquitous in Second Life, just as Coke machines are everywhere in real life. Jaffe professes to be overwhelmed by the number of entries, which he characterizes as "well north of 100."

Suddenly, another avatar materializes. "Ah, there you go," Jaffe exclaims. "Someone's just arrived! I think she's from Japan." As he speaks, Dapto starts air-typing in the weird way that Second Life avatars do, trying to chat up the new Japanese girl. She looks around, then teleports someplace else.

You might wonder what Coke is doing in such a place. "It had a lot to do with hype," admits Michael Donnelly.

Still, despite isolated reports of corporate dissatisfaction with Second Life, the influx continues. Electric Sheep claims to be turning away business. IBM has set up a virtual worlds business unit. Millions of Us, which has also built corporate presences for Intel, Microsoft, Sun, and — full disclosure — Wired, is constructing a virtual Hollywood Hills for show business companies.

What's behind this stampede is not that hard to divine. "A terror has gripped corporate America," says Joseph Plummer, chief research officer at the Advertising Research Foundation, an industry think tank. Plummer has been around Madison Avenue since the early '60s, when modern advertising techniques materialized. "The simple model they all grew up with" — the 30-second spot, delivered through the mass reach of television — "is no longer working. And there are two types of people out there: a small group that's experimenting thoughtfully, and a large group that's trying the next thing to come through the door." Second Life appeals to the latter — the ones who are afraid of missing out, who don't consider half a million dollars to be a lot of money, and who haven't figured out (or don't want to admit) that Second Life is less than the bold new frontier it appears to be.

"For people who've grown up in analog, Second Life is not that hard to understand," says Rishad Tobaccowala, CEO of Denuo, a consulting arm of the global ad giant Publicis Groupe. "I have a store in the real world; I have a store in the virtual world." In contrast, the kind of digital marketing that actually works requires a conceptual leap. Successful online marketing is targeted and specific, like direct mail — but it's direct mail in a fun house, where the recipients can easily seize control of what the mail says, where it goes next, and how it gets there. You need to know how to buy up keywords to maximize search returns, how to make the most of recommendation engines, how to use the viral potential of Web video, how to monitor what's being said in blogs and message boards, how not to blow it by trying to be deceptive. Building a corporate pavilion in Second Life doesn't require any of these things. It's simple and it's obvious.

Virtual worlds will evolve, of course. It's easy to imagine targeted in-world advertising, for example, or a 3-D version of MySpace. Although it won't comment officially, IBM is understood to be working to create a "virtual universe" by building software that will allow avatars to leap from Second Life to World of Warcraft as easily as we now move from Google to Yahoo. The Internet will eventually be full of such 3-D environments; Second Life might even be one of them. But in the meantime, it's just slurping up corporate dollars and delivering little in return.

"Companies say, 'It's an experiment' — but what are they learning?" Tobaccowala asks. "Basically, they're learning how to create an avatar and walk around in Second Life." Which is fine if that's what you want to do. Just don't expect to sell a lot of Coke.

Contributing editor Frank Rose ( wrote about Leslie Moonves, CEO of CBS, in issue 15.06.


Monday, July 23, 2007

Intel Loses its Will to Viiv

July 23, 2007,  9:48 am

Intel Loses its Will to Viiv

There were two things wrong with Intel’s Viiv brand: First, it was almost impossible to figure out what it meant. And second, what it did mean wasn’t worth much and was hardly related to chips.

Recognizing this after a year and half, Intel has decided to stop advertising the brand and relegate it to tiny stickers attached to some computers, Cnet reports.

Viiv was an attempt to create a premium brand for home computers optimized for home entertainment, especially video playback. The problem with this concept was the Viiv’s features were actually in software that was supposed to be installed on the computer; therewasn’t really anything different about the chips.

Of course, Microsoft, has been promoting its home entertainment software, with modest success, as Windows Media Center edition, and, more recently, the more expensive versions of Windows Vista. So it wasn’t at all clear that the Viiv software—which people didn’t really understand anyway—got people anything that they couldn’t get elsewhere.

Intel liked to compare Viiv with its highly successful Centrino brand for portable computers. But Centrino was different. It actually meant something related to Intel. These were chips in the laptop that used less power and had built in wireless network capabilities. As a brand it had a little adventure to it. It sounded like a subatomic particle from Italy.

Now Intel is putting all of its effort behind its main desktop chip brand, Core. A second generation will be called Core 2.

Core doesn’t do much for me. It sounds too much like something that is boring but good for you, as in Core Curriculum.

But Intel has a plan to spice this up. Starting early next year, according to Cnet, some computers will have stickers that boast of this chip: “Core 2 with Viiv.” We’ll see if anyone can figure that out.


Friday, July 13, 2007

Virtualization WrapUp from Alarm:Clock

Virtualization Roundup: Moka5, RapidApp and VirtualLogix


On top of the impending IPO from virtualization leader VMWare, there has been a flurry of other deals in virtualization. Driving these deals are big expectations for the market. Virtualization services are expected to turn into a $11.7B market by 2011, more than double its current level, according to a study just released by IDC. The market is in transition from using virtualization software solely in high-end and mainframe computers to making it available for lower-cost systems running x86 and x64 servers.

Stanford University spin-out Moka5 has raised $15M in a Series B round led by investor Highland Capital Partners, with Khosla Ventures returning. The virtual computing company was founded in 2005 and is branding is product the moka5 LivePCs which allows you to run a virtual computer - an operating system and a set of applications. You can use LivePCs on your desktop, or you can take them with you on a portable USB drive. You can create and share your own LivePCs or use the public LivePCs created by others in our LivePC Library.

Sunnyvale-based VirtualLogix has raised $16M in a 2nd round of funding for its embedded virtualization software aimed at iPods, cell phones, and watches. Esprit Capital Partners led the round, with Intel Capital and previous investors Atlas Venture and Index Ventures. VirtualLogix has raised $28M to date.

Virtualization consulting firm RapidApp was bought by GlassHouse Technologies. There was no word on how much GlassHouse paid.


Monday, July 09, 2007

Steve Jobs' Greatest Presentation

Steve Jobs' Greatest Presentation

Our communications coach mines Jobs' introduction of the iPhone to offer five lessons for making an unforgettable pitch

After a gorgeous afternoon of golf a few days ago, my nephew seemed anxious to get home, even skipping out on my invitation to dinner. He's a graduating high school senior, so I assumed he wanted to hang out with friends. I was partly correct. He wanted to hang out with friends in line for the new iPhone.

Leave it to Apple (AAPL) Chief Executive Steve Jobs to create a frenzy that gripped every gadget fan in the country. The hype, however, started with what I consider Jobs' best presentation to date—the introduction of the iPhone at the annual Macworld trade show in January.

After watching and analyzing the presentation, I thought about five ways to distill Jobs' speaking techniques to help anyone craft and deliver a persuasive pitch.

1. Build Tension

A good novelist doesn't lay out the entire plot and conclusion on the first page of the book. He builds up to it. Jobs begins his presentation by reviewing the "revolutionary" products Apple has introduced. According to Jobs, "every once in a while a revolutionary product comes along that changes everything…Apple has been fortunate to introduce a few things into the world." Jobs continues by describing the 1984 launch of the Macintosh as an event that "changed the entire computer industry." The same goes for the introduction of the first iPod in 2001, a product that he says "changed the entire music industry."

After laying the groundwork, Jobs builds up to the new device by teasing the audience: "Today, we are introducing three revolutionary products. The first is a wide-screen iPod with touch controls. The second is a revolutionary new mobile phone. And the third is a breakthrough Internet communications device." Jobs continues to build tension. He repeats the three devices several times then says, "Are you getting it? These are not three separate devices. This is one device…today Apple is going to reinvent the phone!" The crowd goes wild.

Jobs conducts a presentation like a symphony, with ebbs and flows, buildups and climaxes. It leaves his listeners wildly excited. The takeaway? Build up to something unexpected in your presentations.

2. Stick to One Theme Per Slide

A brilliant designer once told me that effective presentation slides only have one message per slide. One slide, one key point. When Jobs introduced the "three revolutionary products" in the description above, he didn't show one slide with three devices. When he spoke about each feature (a widescreen iPod, a mobile phone, and an Internet communicator), a slide would appear with an image of each feature.

Jobs also makes the slides highly visual. At no place in his presentation does the audience see slides with bullet points or mind-numbing data. An image is all he needs. The simplicity of the slides keeps the audience's attention on the speaker, where it should be. Images are memorable, and more important, can complement the speaker. Too much text on a slide distracts from the speaker's words. Prepare slides that are visually stimulating and focused on one key point.

3. Add Pizzazz to Your Delivery

Jobs modulates his vocal delivery to build up the excitement. When he opens his presentation by describing the revolutionary products Apple created in the past, his volume is low and he speaks slowly, almost in a reverential tone. His volume continues to build until his line, "Today Apple is going to reinvent the phone." Be an electrifying speaker by varying the speed at which you speak and by raising and lowering your voice at the appropriate times.

4. Practice

Jobs makes presentations look effortless because he takes nothing for granted. Jobs is known to rehearse demonstrations for hours prior to launch events. I can name many high-profile chief executives who decide to wing it. It shows. It always amazes me that many business leaders spend tens of thousands of dollars on designing presentations, but next to no time actually rehearsing. I usually get the call after the speaker bombs. Don't lose your audience. Rehearse a presentation out loud until you've nailed it.

5. Be Honest and Show Enthusiasm

If you believe that your particular product or service will change the world, then say so. Have fun with the content. During the iPhone launch, Jobs uses many adjectives to describe the new product, including "remarkable," "revolutionary," and "cool." He jokes that the touch-screen features of the phone "work like magic…and boy have we patented it."

I think speakers are so afraid of over-hyping a product that they go to the opposite extreme and make their presentations boring. If you're passionate about a product, service, or company, let your listeners know. Give yourself permission to loosen up, have fun, and express your enthusiasm!

Now please don't say, "This sounds great, Carmine, but I'm not as charismatic as Steve Jobs." Well guess what—Jobs worked at it and is far more engaging today as a presenter than he was many years ago. We all have room to grow and to improve the way we pitch ourselves and our products. Good luck!

Carmine Gallo is a Pleasanton, Calif. communications coach and author of the upcoming book, Fire Them Up! (John Wiley & Sons; September, 2007).


Second open Linux phone goes on sale

Second open Linux phone goes on sale

By David Meyer

Story last modified Mon Jul 09 11:43:03 PDT 2007

Another fully open-source-based phone went on sale on Monday, offering developers the chance to build their own mobile Linux applications.

The Neo1973 is the first mobile phone to be designed to run the open-source operating system OpenMoko. Officially launched to developers on Monday, it is the second fully accessible Linux phone to be made available after Trolltech released its Greenphone last year.

The touch-screen GSM phone, made by First International Computer, boasts Bluetooth 2.0, integrated assisted GPS, microSD-based expandable storage and a Samsung Electronics processor. For $300, applications developers can buy a base kit, including the phone and its standard accessories, while the advanced kit--a so-called "Hacker's Dream Box" costing $450--also includes a debug board and cable, tools and a ruggedized case.

In the so-called "mass market" phase of the Neo1973, a new version of the phone will go on sale in some retail stores later this year, adding 3D graphics acceleration, a beefed-up processor and 802.11b/g Wi-Fi to its specification list.

Mobile Linux is slowly gaining traction, with two industry groups--the LiMo Foundation and the LiPS Forum--banding together operators and manufacturers to organize standards. Some manufacturers, such as Motorola, already base the operating systems for some consumer handsets on Linux, but the mobile open-source movement has, however, been criticized by some for being too fragmented to be effective in the higher-end smart phone arena--the market being targeted by the Neo1973 and Greenphone.

David Meyer of ZDNet UK reported from London.


Thursday, July 05, 2007

Catching Cheaters with Their Own Computers

Technology Review - Published by MIT

Tuesday, July 03, 2007

Catching Cheaters with Their Own Computers

Anti-cheating hardware could keep online game players honest.

By Erica Naone

Researchers at Intel are working on a system that could make it much harder to cheat at online games. Unlike current software-based anti-cheating technology, Intel's Fair Online Gaming System would be built into a player's computer, in a combination of hardware, firmware, and software.

Since the early days of video games, players have cheated. Some players tried altering the game's programming, for example, to give themselves benefits such as infinite lives or infinite ammunition. When large groups of people began playing shared games online, these cheats--which seemed harmless in single-player games--became a cause for concern, especially since many of them allow players to make devastating attacks on others.

Too many cheaters in an online game can destroy the group atmosphere that makes online gaming fun, says Mia Consalvo, an associate professor at Ohio University who researches cheating in video games. Although game developers and third-party specialists are always working to combat cheaters, the problem has continued. Some cheaters simply want to wield more power, while others are lured by prize money offered in tournaments.

Gamers can opt to play on servers that block those who haven't installed anti-cheating software. Such software scans a player's computer and alerts other players if it detects cheats. But anti-cheating software can only catch cheats once they become known: like antivirus software, it works by scanning for things that look like known cheats, and the list of cheats requires constant updating.

Intel's researchers say that their system would work without needing updates. By watching at the hardware level for cheating strategies, the system should be able to detect current and future cheats, says Intel research scientist Travis Schluessler.

For example, the system would go after input-based cheats, in which a hacker feeds the game different information than he enters through the keyboard and mouse. A cheater playing a shooting game might use an input-based cheat known as an aimbot, for example, to point his guns automatically, leaving him free to fire rapidly, and with deadly accuracy. Schluessler says that the Fair Online Gaming system's chip set would catch an aimbot by receiving and comparing data streams from the player's keyboard and mouse with data streams from what the game processes. The system would recognize that the information wasn't the same and alert administrators to the cheat. In tests, Schluessler says, the system ran without slowing the play of a game.

In addition to input-based cheats, Schluessler says that the system would go after network-data cheats that extract hidden information from a game's network, such as the location of other players, and display it to the cheater. Intel's system would also target cheats that attempt to disable anti-cheating software. Schluessler says the goal isn't to replace anti-cheating software but to strengthen and augment it.

Tony Ray, president of Even Balance, which makes the anti-cheating software PunkBuster, says this type of system could go a long way toward addressing continuing problems with cheaters. "There are a couple of things that can only be done properly with hardware," he says. "These are things we expend considerable effort in addressing with software ... Having real-time hardware verification that PunkBuster has not been compromised in memory after loading would go a long way toward thwarting even the best private hack authors."

Although he's optimistic about the power of the system, Schluessler doesn't expect it to prevent cheats altogether. "The fact that the system relies on hardware makes it more difficult for hackers to circumvent it," he says. "This does not mean it is crack-proof." What Schluessler does expect is that it would force cheaters to modify their hardware, rather than just writing software code. This increases the expense of cheating, and ties it to a physical change to a computer, rather than to a bit of code that can be easily distributed over the Internet.

Some players have expressed concern that anti-cheat systems invade their privacy by sending information about their computers over the Internet. Ray says that this is a necessary evil for any anti-cheat system. "Privacy and security are at odds in many aspects of life these days," he says. Players who want to be sure they're playing in a fair environment, he adds, must choose to trust that their privacy will be respected. Schluessler says that those who don't like the Intel system would always be free to turn it off and play on an unregulated server.

While there are no plans yet to make the system available to consumers, Schluessler says that this is his ultimate goal.

Copyright Technology Review 2007.


Second Life Avatar Sued for Copyright Infringement

Second Life Avatar Sued for Copyright Infringement

Written by Wagner James Au
Wednesday, July 4, 2007 at 2:10 AM PT | 9 comments

stroker-serpentine.jpgRight in time for the July 4th holiday week (after all, what’s more American than demanding your day in court?), businessman Kevin Alderman and his lawyer have just filed suit against someone who goes by the name Volkov Catteneo, for copyright infringement.

This would be just one IP dispute in thousands handled by US courts every day, except for two unique features: the contention is over a virtual sex bed which doesn’t exist, and the named defendant also doesn’t exist. As such, the suit will establish an enormous precedent in the new realm of virtual world law, however it shakes out.

I should back up and explain those last three sentences.

Linden Lab, the company which provides Second Life’s virtual land (i.e. server grid) and means to explore it (i.e. interface software and currency) has since late 2003 allowed its users to retain the underlying intellectual property rights to all objects and programs created in the world with its internal building and scripting tools.

This policy unleashed enormous user-created innovation, and enabled thousands of users to make a living with their virtual content creation. Alderman, known in Second Life as Stroker Serpentine (pictured) is one of SL’s leading entrepreneurs; his SL-based adult entertainment industry has become so successful, he recently sold his X-rated Amsterdam island in Second Life to a real world Dutch media firm for $50,000 very real dollars.

For the last fours years, this IP rights policy has been working more less as designed, but those who follow the virtual world business have been waiting for the other shoe to drop: what happens when one avatar tries to sue another avatar for copyright infringement in an actual court?

It finally has: Alderman/Serpentine believes Catteno is selling unauthorized copies of his SexGen bed, a piece of furniture with special embedded animations that enable players to more or less recreate an adult film with their avatars. Alderman sells his version for the L$ equivalent of USD$45, and they’ve helped make his fortune. Catteno is selling his alleged knockoff for a third that price, undercutting him.

But who does Kevin Alderman sue? Since SL users have no obligation to reveal their real life identity to other players, all the relevant data exists only on Linden’s servers and files. This is why Alderman is threatening to subpoena Linden Lab for this data, so he can bring the real person behind Catteno to trial.

I contacted Stroker Serpentine in Second Life and asked why he chose going to trial. Volkov Catteneo’s account was created in February 2007, while Stroker is a longtime and well-loved player. Why not just voice his complaint about Catteno to the SL community, so they can ostracize him and his allegedly infringing beds?

Stroker tells me he did try that method in another case, but ironically, it backfired. “[T]he last time this happened I confronted the individual about it and requested that they cease and desist…,” he says, “I was made out to be a bully and dragged through the [SL community] forums.” Linden Lab has a system for letting users file DMCA suits against each other; Stroker tried that twice, but wasn’t happy with how Linden responded. So he found a law firm specializing in copyright/trademark disputes. “We weighed all alternatives and listened to a lot of advice. So here we are.”

Trouble is, Catteno tells Reuters he doesn’t have any real world data on file with Linden Lab. (A plausible claim; since ‘06, it’s no longer necessary to register a credit card or other identifying data with Linden Lab.) I imagine the company could supply Alderman and his lawyer’s with Catteno’s IP address, and let them deal with it from there. Or if it goes forward in court, perhaps the judge will review the case, decide it’s fundamentally nuts, and toss it. Then again, the court might let it go to trial, as it did with another user lawsuit against Linden Lab, and what happens then is anyone’s guess. Numerous companies which depend on user-created content are waiting to see. In any case, may the best avatar win.

Update, 9:00am: For the legally minded, Reuters’ SL reporters (who broke this story) have put the actual legal form in .pdf at this link.