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Mon Jan 29 2007 22:20:49

Could eBay Be Planning a Second Life?

By: Ina Steiner

Does eBay see Linden dollar signs? The company has banned the sale of virtual game items, but made an exception for items from Second Life, owned by Linden Lab. Second Life (SL) is a 3D virtual world that anyone can join, and participants (called avatars) buy and sell virtual goods using a virtual currency called Linden dollars. Users can purchase virtual Linden dollars with real money (including PayPal) - and then use those Linden dollars to buy virtual goods, such as clothing, furniture, buildings and land.

eBay says it "pioneers communities built on commerce, sustained by trust and inspired by opportunity." Does the SL virtual world, also called a metaverse, inspire opportunity for eBay? I can only speculate, but eBay founder Pierre Omidyar was impressed enough with SL to have invested "real" money in the project. And there is precedent for eBay to follow Pierre: eBay invested in MeetUp, a social networking site backed by eBay's founder.

At the time, an eBay executive was quoted as saying, "Meetup.com and eBay share a focus on using the Internet to connect people and create communities."

It's not a stretch to think eBay would be interested in ecommerce in a virtual world - or Microsoft, Google and Yahoo, for that matter. Companies have already been brainstorming on how to market to Second Life participants. The Berkman Center for Internet & Society at Harvard Law School held a two-hour panel discussion in Second Life in June entitled "Avatar-based Marketing: What's the Future of Real-Life Companies Marketing to Second Life Avatars?"

Besides marketing to avatars, there's real money to be made on SL, though it's impossible to say how big the opportunity is, and how sustainable it could be. According to a January 22, 2007 article in Fortune magazine, "In December, Linden Lab estimated that 17,000 residents had positive cash flow in Linden dollars, with about 450 generating monthly income in excess of $1,000 (that's U.S.)"

Second Life Avatar

eBay called attention to Second Life when it was reported by Slashdot on Friday that eBay had banned virtual game items, a post that was followed up by a Cnet article on Monday stating that eBay was making an exception for Second Life.

When asked if other virtual worlds would also be exempted from the ban on virtual items, eBay spokesperson Hani Durzy told AuctionBytes that Second Life is the only one he would get specific about. He said eBay is familiar with Linden Lab, as it is a member of the PayPal Developers Network.

When asked, Durzy said Omidyar had nothing to do with eBay's decision to exempt SL. Pierre is Chairman of the Board and is not involved in the day-to-day operations at eBay; the decision was made at a policy team level, Durzy said.

As for Omidyar, this is what he had to say when his organization invested in Second Life in 2004:

"Second Life has a vibrant community where content creators and consumers reinforce one another. Better experiences attract more users, which further attracts entrepreneurial developers to enrich the experience. Opportunities abound and value is determined by the community."

Sound familiar?

PS: While it's always fun to speculate about acquisitions, it may not be necessary to own the platform in order to play the game. Thoughts, anyone? I'm also interested in who has ventured into Second Life,...