A first look at the very famous SecondLife (www.secondlife.com) without knowing much about it through blogs, news and articles would certainly give one an impression of a nice entertainment site to hang out. But wait, a few links on the homepage itself would give an idea that this is something much more serious than just "nice entertainment". Lets take for example the figure for USD spent in last 24 hours on the site and the amount right now as I write this article is 1,584,698! Now that’s serious business, ain’t it!

Emergence of web apps earlier saw online games that allowed extremely large number of users to play games online with each other. And then came the 3D virtual environment arena - something like SecondLife - a place where you can hang out, meet people and do a variety of things such as buy-sell land, build your houses, palaces and things, talk to other people and do activities - right from erotica to educational stuff! Such a seemless environment is certainty to attract large number of web junkies - total registered users as of now stand close to reaching 6,000,000

Now lets look at the business part of this entire entertainment machine. SecondLife world runs on the currency Linden dollars. There’s an entire world of stuff that can be purchased inside the virtual world - then used for various activities (such as beds inside houses to live!). These items can even be traded to other users at rates agreed upon between the two. However, to purchase initial currency, one needs to spend USD. Not only that, you can convert back your L$’s to US$’s. Infact, there’s an exchange rate maintained between L$ and US$ with opening, closing, highs and lows figures just as normal currency exchange market!

The website’s economy section lists an entire page on Business Opportunities for players inside SecondLife. You can be a dancer where your avatar can dance to earn money from visitors. You can arrange parties in your halls where you can invite others to join at certain fees. You can even be an XML coder to help code various components inside SecondLife! What’s more - SecondLife even assigns Intellectual Property rights for user created clothing, design, etc to ensure user earns from his creation. Many companies are getting into SecondLife for advertising. For example, Coldwell Banker, a real-estate brokerage firm has entered SecondLife purchasing lands there and getting involved in real-estate deals! And yes, those land prices also keep on varying so there’s a "real" real-estate business going in there. There have even been instances of people being recruited because of their scripting and designing skills inside SecondLife - and they were contacted from within SecondLife!

Every agency right from Business Week, CNN Money, InformationWeek to Mercury News have covered SecondLife in past.

Linden Labs, the creators of SecondLife would certainly have made big money since every USD that is currently used in the form of L$ is currently sitting in their bank accounts but aspects such as land rates in SecondLife, exchange rates of L$ to US$, managing the user base would certainly be the impacting factors in the companies revenues so it would be interesting to analyze how Linden Labs maintains all these factors to favour itself yet keep them natural enough for the excitement to stay on.

PS: This article is not complete and (hopefully!) I will come back with more information on SecondLife competitors, revenue models feasible in virtual world environments, historical earnings and business of Linden Labs.