Second Life, end of an era

News from the end of last week that Philip Rosedale, the Linden Lab CEO and main driving force behind LL's creation, Second Life, is to step down.

What you think about this really depends where you stand with regards Second Life's development.

For me the balance sheet is as follows:

Thanks to Philip Rosedale, Second Life is a fascinating, innovative and completely unique environment. The free reign residents have to create more or less anything they please (within the bounds of what's technologically possible) sets it apart from other worlds in this space.

On a personal level I'm constantly amazed at some of the things that have been built there. I also find the questions around reality and human identity that arise from "internal emigration" into a computer-generated environment extremely thought provoking.

Meanwhile on a professional level I recognise that under Rosedale's direction, Second Life has become a place that engenders real loyalty among its regular (more on that in a minute) residents.

SL has the highest log-in hours out of any social network. And as a marketer I know that those are hours taken largely at the expense of traditional media. I need to follow these consumers into their chosen world.

Then there are the many serious applications of Second Life. From education, to b2b collaboration, to even medicine.

And what's on the minus side of the balance sheet? One word - numbers.

At time of writing there are no more than 600,000 human beings worldwide who come into Second Life on a regular basis.

I say 'only' because certainly during the tail end of 2006 and for most of 2007, SL received acres of free publicity that most brands would have given their right arms for.

For example over the summer I prepared a report on Second Life for a major UK retailer which showed that SL had received 500 odd press mentions in Britain for the first six months of 2007. That's just the UK. So 600k globally isn't that high, especially as that figure has remained stagnant for the past few months.

Those 600,000 people also need to be measured against the 12 million + accounts that exist.

True, hidden within that figure is the fact that many residents maintain multiple avatars (called 'alts' by Second Life residents), but for any other entertainment company (and I'd argue Linden Labs could be considered as such) there'd be an outcry over a 80-90% churn rate - the proportion of people who log in but never return after their first day or two.

Now my guess is that the majority of Second Life residents are perfectly happy with the way things are and don't necessarily want millions of newcomers coming on-board. After all the initial reaction to the gold rush of brands in early 2007 wasn't overly positive and when some left with their tails between their legs, the feeling among many could be summed up as 'good riddance.'

But at the end of the day Linden Lab is a commercial entity. Yes, it's a fairly benign one on the scale of things, but it still seeks to grow and make money.

A few months back, there were some fanciful figures being banded about showing that Linden Lab was supposedly worth $5 billion. Fanciful when you consider that last week AOL shelled out $850 million for Bebo (which according to Nielson Online had five million monthly unique users in the UK alone).

That Gartner report from last year saying that by 2011, 80% of regular Internet users would have a virtual identity has been quoted extensively (including here).

But Gartner also made the point that a lot of those users may well be in a virtual world that hasn't been created yet. And there was some debate whether Second Life would prove to be to virtual worlds what the early AOL and Compuserve were to ISPs and the Internet.

Clearly, Linden Lab can't afford that to happen. Especially in light of some of the developments coming out of MindArk, owners of Entropia Universe.

As Wagner James Au says in his analysis, which is well worth reading, a more experienced and managerial CEO may well change all this, and for the better.

Update: Chris Nuttall writing in the Financial Times, also talks about Linden Lab becoming more professional with an eye on a public listing.

Corey Bridges, co-founder of virtual-world builder Multiverse, is quoted in the article predicting that with the right changes Second Life, "can have a long and interesting future as a large Petri dish for user-generated content.”