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Chapter #11. Marketing Strategies for the New Economy. Second Life. Three-dimensional virtual world owned and run by it’s “residents” Developed by Linden Lab 110 employees Based out of San Francisco Opened to the public in 2003 Currently has 4,031,269 members

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Chapter 11

Chapter #11

Marketing Strategies for the New Economy

Second life

What is it

  • Three-dimensional virtual world owned and run by it’s “residents”

  • Developed by Linden Lab

    • 110 employees

    • Based out of San Francisco

  • Opened to the public in 2003

  • Currently has 4,031,269 members

  • Stated as the "next phase of the Internet's evolution"

  • mixture of fantasy and reality

    • Brand Marketing

    • Concerts, Meetings, etc.

What is it?

What is it? “residents”

  • The World

    • stores, beaches, golf courses, bars, ski areas, high-rise office buildings, fantastical anime cities, medieval role-playing regions

    • Meet people

    • Own “land”

  • The Creations

    • Personal Avatars made by fellow “residents”

    • Can build literally anything

    • Able to trade, buy, sell

  • The Marketplace

    • The Linden Dollar

      • 247.5 Linden Dollars per US Dollar

    • LindenX

Bad beginnings
Bad Beginnings “residents”

  • Began June 2003

  • Started with nothing there, it was left to the users to create (however only 1000 users returned every month)

  • Linden Labs almost discontinued Second Life, but the users that were on Secondlife were so creative and passionate, Linden Labs Investors decided to keep financing

  • In 2004 they re-launched Second Life, where users could own their own content, which fostered creativitiy and encouraged users to come back

Growth graph
Growth Graph “residents”

  • Growth since 2004

  • Users who return regularly

    = .3 million or about


  • New Accounts as of

    Jan 16= 2.6 million

The rise of popularity
The Rise of Popularity “residents”

  • Has become a phenomenon

  • Free for casual use

  • 334,000 regular visitors

  • 2.6 million have checked it out

  • In mid January the number of people “checking it out” was increasing by 20,000 a day.

  • Growth due to online ownership and ability to buy and sell goods and services online to other users.

In the future
In The Future… “residents”

  • In two years experts expect Second Life to be huge- probably as large as the entire gaming community is today

  • Check out the website:

Business supporters
Business Supporters “residents”

  • Venue for which thousands of ancillary businesses can sprout

  • Backers of Second Life

    • Mitch Kapor, Creator of Lotus 1-2-3 (spreadsheet)

    • eBay founder Pierre Omidyar

    • Amazon CEO: Jeff Bezos

    • Microsoft chief technology architect: Ray Ozzie

Potential business applications
Potential Business “residents”Applications

  • “We all use teleconferences…but in Second Life we gather and mingle before the meeting, and when it finishes, some people stop and talk again. We start to form social networks and the kinds of bonds you make in real life." - Hughes

Examples “residents”

  • Resident Anshe Chung

    • Accumulated a real life net worth of more than $1 million

    • She Employs 30 people in China who build things and otherwise improve the land she buys and develops for resale

  • Another developed Tringo (cross of tetris and Bingo)- became so popular now is licensed for Nintendo’s Game Boy advance

  • All innovations in Second Life by its users give the users ALL intellectual Property rights of those inovations

Current business use
Current Business Use “residents”

  • Daily spending (by users) is around $600,000 in Second Life, making GDP about $220 million

  • Where does the Money go?

    • Nike, Sony BMG, Toyota, Sun, Starwood and many other user created and owned businesses in Second Life

  • IBM has:

    • built stores for Circuit City and Sears

    • Allowing customers and Second Life users, for example, to design kitchens with all Sears appliances

  • Linden Lab counts 65 companies that have sprung up inside Second Life serve real-world business customers.

  • CTO Cory Ondrejka says about 350 people work full-time for such companies, and there are at least $10 million worth of such projects underway (currently)

Future growth
Future Growth “residents”

  • Linden intends to make the Programming code available to all users (HTML and HTTP)

  • “CEO Rosedale hopes that other companies' virtual worlds will interoperate with Second Life”

  • Example quote:

    • Say IBM uses our code to build its own intranet version that's somewhat different from Second Life," he says. "A user may say 'Wow, this virtual thing IBM has built is pretty cool. Now I want to go to the mainland.' And we have another customer."

  • Long-term opportunities for Linden

    • lucrative services necessary to keep all these linked virtual worlds functioning smoothly

  • We can recreate Google's business in this environment

High speed internet
High Speed Internet “residents”

  • 2006 40% of UK Households have broad brand connection by 2010 70% of US house holds

  • Gain experience (5 years) spend less time reading newspapers (24%) and watching TV (23%)

  • 9% of UK retail spending on line. In US 1/3 shop on-line

Top online retailers “residents”




HP Home/home office

Office max

Sears/Land’s End/Kmart


Sony Style

Top Online Retailers

Threats or opportunities of the new economy
Threats or Opportunities of the new economy “residents”

  • Syndication of Information

    • Originator, Syndicator, Distributor

    • RSS

  • Increasing returns to scale of network products

  • Customization

    • Collaborative filtering

    • Rules-based personalization

    • Customization

Radiohead “residents”

  • Sustainable advantage?

  • Privacy

  • Clickstreams

  • Versioning

    • Time

    • Convenience

    • Comprehensiveness

    • Manipulation

    • Community

    • Support

Doing research on line
Doing research “residents”on-line

  • Shorter (less is more)

  • Open ended questions at the end

  • Do not ask questions of everyone that only brand users can answer

  • Keep respondents engaged

  • Indicate progress is made i.e. 70% complete

  • Hershey moved product development research on-line

Product promotion brand building
Product Promotion & Brand building “residents”

  • Internet search

    • Paid Inclusion v search engine optimization

  • E-mail Marketing

  • Viral e-mail

    • Replaced by Youtube

  • Blogs

  • Promotional sites

  • Banner Advertising

    • Click-stream

Conducting transaction delivering digital products
Conducting transaction “residents”Delivering Digital products

  • Dynamic pricing

  • Digitalsignatures

  • Digital deliveries

    • Music, books, movies, education

Customer service and support
Customer Service and Support “residents”

  • Making transactions easier

  • Retaining customers

  • Co-production (not just self-help)

  • Product Return and Disposal (Dell secondary market)

  • Web 2.0

Dot com treatment treatment “residents”

  • Jewelry

  • Checks

  • Telecom

  • Hotels

  • Real estate brokerage

  • Software (open source)