Business Horizons (2009) 52, 563—572                                                                                      ...
564                                                                                  A.M. Kaplan, M. Haenleinhave any appe...
The fairyland of Second Life: Virtual social worlds and how to use them                                    5653. A brief s...
566                                                                                 A.M. Kaplan, M. Haenleinposted and the...
The fairyland of Second Life: Virtual social worlds and how to use them                                           567Since...
568                                                                                      A.M. Kaplan, M. Haenleinbrand nam...
The fairyland of Second Life: Virtual social worlds and how to use them                                       569conducted...
570                                                                                  A.M. Kaplan, M. HaenleinHarvard, Stan...
The fairyland of Second Life: Virtual social worlds and how to use them                                         571   Howe...
572                                                                                                     A.M. Kaplan, M. Ha...
Upcoming SlideShare
Loading in …5
×

Kaplan & Haenlein - The fairyland of second life - virtual social worlds and how to use them

4,029 views

Published on

Virtual social worlds, such as the Internet site Second Life, have acquired a high degree of popularity in the popular and business press. In this article we address the increasing importance of virtual social worlds, and discuss how companies can make use of their potential. We first present how virtual social worlds evolved historically, how they fit into the postmodern paradigm of our time, and how they differ from other social media, such as content communities (e.g., YouTube), social networking sites and blogs (e.g., Facebook), collaborative projects (e.g., Wikipedia), and virtual game worlds (e.g., World of Warcraft).We subsequently present how firms can make use of virtual social worlds in the areas of advertising/communication, virtual product sales (v-Commerce), marketing research, human resources, and internal process management. We also highlight the points companies should pay particular attention to in their activities, the 5Cs of success in virtual social worlds, and the future evolutions that we expect to shape this sector over the next 5—10 years: a trend toward standardization and interoperability, improvements in software usability, increasing interconnection between reality and virtual worlds, establishment of law and order, and the transformation of virtual social worlds to business hubs of the future

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
4,029
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
96
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Kaplan & Haenlein - The fairyland of second life - virtual social worlds and how to use them

  1. 1. Business Horizons (2009) 52, 563—572 www.elsevier.com/locate/bushorThe fairyland of Second Life: Virtual social worldsand how to use themAndreas M. Kaplan *, Michael Haenlein ´ESCP Europe, 79 Avenue de la Republique, F-75011 Paris, France KEYWORDS Abstract Virtual social worlds, such as the Internet site Second Life, have acquired Social media; a high degree of popularity in the popular and business press. In this article we address Virtual worlds; the increasing importance of virtual social worlds, and discuss how companies can Virtual social worlds; make use of their potential. We first present how virtual social worlds evolved Second Life historically, how they fit into the postmodern paradigm of our time, and how they differ from other social media, such as content communities (e.g., YouTube), social networking sites and blogs (e.g., Facebook), collaborative projects (e.g., Wikipedia), and virtual game worlds (e.g., World of Warcraft). We subsequently present how firms can make use of virtual social worlds in the areas of advertising/communication, virtual product sales (v-Commerce), marketing research, human resources, and internal process management. We also highlight the points companies should pay particular attention to in their activities, the 5Cs of success in virtual social worlds, and the future evolutions that we expect to shape this sector over the next 5—10 years: a trend toward standardization and interoperability, improvements in software usability, increasing interconnection between reality and virtual worlds, establish- ment of law and order, and the transformation of virtual social worlds to business hubs of the future. # 2009 Kelley School of Business, Indiana University. All rights reserved.1. A snow crash in the Metaverse century but who mentally spends most of his time in a three-dimensional virtual world called theRoughly 15 years ago, in 1992, United States author Metaverse. He, as well as other people, access thisNeal Stephenson published a novel titled Snow Metaverse using personal computer terminals thatCrash. In this book Stephenson tells the story of a project pictures of a virtual urban environmentprotagonist named Hiroaki Protagonist, who physi- situated on a virtual artificial planet onto goggles.cally lives in Los Angeles during the early 21st Within the Metaverse, everyone appears in the form of personalized avatars; that is, pieces of software that are the audiovisual bodies that people use to * Corresponding author. E-mail addresses: mail@andreaskaplan.eu (A.M. Kaplan), represent themselves and communicate with otherhaenlein@escpeurope.eu (M. Haenlein). people in the Metaverse. These avatars, which may0007-6813/$ — see front matter # 2009 Kelley School of Business, Indiana University. All rights reserved.doi:10.1016/j.bushor.2009.07.002
  2. 2. 564 A.M. Kaplan, M. Haenleinhave any appearance the user desires (except for foundation of our time, which is often referred tolimitations of height ‘‘to prevent people from walk- as the postmodern paradigm; see, for example,ing around a mile high’’), can perform any activities Cova (1996) for an introduction. According to phi-familiar from their real life, such as visiting night losophers such as Jean Baudrillard, Michel Foucault,clubs, making friends, or consuming virtual drugs, and Umberto Eco, the late 1960s and early 1970slike the pseudo-narcotic snow crash. In the 21st represented a turning point in modern philosophycentury the Metaverse is so popular and attractive (Firat, Sherry, & Venkatesh, 1994; Venkatesh, Sherry,that some people even decide to remain continu- & Firat, 1993). Previously, from the eighteenthously connected to it by spending their real life in century onward, the concerted effort of all scien-storage units, surrounded only by the technical tific domains was targeted toward the search forequipment necessary to enter the virtual world. universal laws and absolute truths. This period, When the novel was published the Metaverse was which is best reflected in the philosophy of theconsidered pure fiction, and few readers of Snow rationalist Bertrand Russell or the managementCrash would have believed that a world like the one principles of the engineer Frederick Taylor, is oftendescribed in the book could indeed ever become referred to as modernism. In the late 1960s, however,reality. Nevertheless, the underlying idea of virtual more and more people began to question theworlds fascinated a lot of people, including United foundations of this movement. Evolutions such asStates programmer Ron Britvich, who used it as an nuclear weapons and environmental pollution ledinspiration for the creation of Alpha World in 1995 to a revolt against the authority reflected in the rules(later renamed Active Worlds), the first widely used of the establishment, and ultimately marked thevirtual world which allows users–—or, more precisely, beginning of postmodernism.their avatars–—to create their own virtual content, Postmodernism is characterized by hostilitysuch as houses, streets, and gardens using pre- toward generalizations and a celebration of skepti-fabricated objects. Since then many other firms cism. In science it has been reflected in develop-have entered the market using the same principles ments such as chaos theory and fractal geometry; inand garnering increasing popularity. Examples the arts it can be seen in street art and the ‘‘happen-include the Finnish Habbo, founded in 2000, which ings’’ of Christo; and in management it has resultedoffers virtual hotel rooms to teenagers that can be in the introduction of flexible work practices andcustomized using virtual furniture, and then used matrix organizations.for chatting and content sharing among avatars. In Today, the basic conditions of postmodernismSeptember 2008 Habbo counted 9.5 million unique correspond to the new view many managers havevisitors, aged between 13 and 18, per month. of their companies, which puts tangible resources, The massively multiplayer online role-playing service delivery, and customer-company value co-game World of Warcraft (MMORPG) can also be creation on top of their agenda (Firat & Venkatesh,counted among this group of applications. World of 1993; Vargo & Lusch, 2004). Hence, it is not surpris-Warcraft has approximately 8.5 million subscribers ing that postmodern ideas have increasingly spreadwho pay up to $15 per month after an initial trial into the business world. One example is the risingperiod to explore the virtual planet of Azeroth while use of hyperrealities, i.e. artificially createdassuming the form of humans, dwarves, orcs, or night settings that appear real to the individuals involvedelves, and to fight monsters or search for treasures. in them, as strategic tools to improve the service Among current trends in the industry is the entry of experience. Hyperrealities are based on ‘‘the ideamajor companies into the market of virtual worlds. In that reality is constructed, and therefore it is possi-July 2008 Google introduced its Google Lively prod- ble to construct things that are more real than real’’uct, a Web-based virtual environment similar to (Venkatesh et al., 1993, p. 221). They are a keyHabbo that runs on Microsoft’s Internet Explorer. reflection of the postmodern philosophy becauseVirtual reality helmets, similar to the goggles de- they do not assume that everyone shares the samescribed in the Snow Crash novel, are already available reality, but instead simulate alternative realities inin the marketplace, offered by consumer electronic which users can perform activities they would becompanies including Canon and Sony. unable or unwilling to do in real life. Places such as Disneyland or Las Vegas were among the first to build seemingly real environments that induce a dream-2. Postmodernism and the concept of like state where consumers tend to spend moneyhyperrealities more generously. Today, the idea has been extended to other tourist attractions (Grayson & Martinec,The success of virtual worlds can be explained by 2004), reality television shows (Rose & Wood, 2005),the fact that they fit well in the philosophical and retail settings.
  3. 3. The fairyland of Second Life: Virtual social worlds and how to use them 5653. A brief story of Second Life The main difference between Second Life and other virtual worlds is that residents hold the copy-The most well known hyperreality is probably the right on all the content they create and are allowedthree-dimensional virtual world Second Life (SL). to sell this content to other users in exchange forSecond Life was founded and managed by the San virtual money known as Linden Dollars (L$). In orderFrancisco-based company Linden Research, Inc., to obtain such money, avatars can either exchangeand has generated a substantial amount of press real life currencies for Linden Dollars via the Secondcoverage; consider, for example, articles in business Life Exchange at a floating exchange rate that ispublications by Enright (2007) and Hemp (2006). approximately stable at L$260 per U.S.$1, or deriveSimilar to other virtual worlds, Second Life users–— virtual income by managing businesses, working incalled ‘‘residents’’–—can enter the virtual environ- stores, or providing entertainment services. Moneyment through a downloadable client program in the that has been earned in such a way can either beform of personalized avatars. kept in one of Second Life’s banks (and earn interest Avatars are not a new concept, and they have payments), or re-exchanged into real life currency.previously been discussed in academic literature, For some users income earned within Second Lifesuch as Holzwarth, Janiszewski, and Neumann even complements their real life salary.(2006) and Wang, Baker, Wagner, and Wakefield The increasing popularity and economic impor-(2007). However, until now the focus of these anal- tance of Second Life–—in April 2008 a totalyses has mainly been on their function as sales of U.S.$8.7 million was exchanged into L$2.3agents in business-to-consumer relationships. While billion–—has also motivated many real life compa-avatars may also fulfill such a role within Second Life nies to start activities within Second Life. Consumer(e.g., when avatars work as sales clerks in virtual corporations, including Telecom Italia, Circuit City,stores), their purpose here is to provide a form of and Toyota, maintain Second Life flagship stores toself-presentation within the virtual environment, sell virtual (digital) equivalents of their Real Lifesimilar to that which has been discussed in the products (e.g., communication services, consumercontext of users’ motivations to create personal electronics, cars) that can be used for avatarwebsites (Schau & Gilly, 2003). In line with consumer enhancement. Others, such as Endemol or Dell,culture theory (Arnould & Thompson, 2005), Second organize virtual reality shows or sponsor events ofLife provides users with the possibility of construct- public interest within Second Life.ing an alternative identity that can either be areplication of their real life self, an enhanced ver-sion with improvements along certain attributes, or 4. Virtual social worlds in comparisona completely different self. Compared to other to other social mediavirtual worlds, users in Second Life face no restric-tions regarding the type of self-presentation that Second Life, or virtual worlds in general, are partcan be created, which leads to the situation where of a larger group of Internet-based applicationsavatars can appear in any possible form and surround known as social media. This term is used to describethemselves by any objects of their liking; the sky is Internet-based applications that help consumersthe limit. share opinions, insights, experiences, and perspec- Communication between avatars is most often tives. Social media can take many forms, includingconducted in written format, either through chat or content communities (e.g., YouTube), social net-instant messaging, although a voice-chat option working sites or blogs (e.g., Facebook), and collab-was introduced in August 2007. To move from one orative projects (e.g., Wikipedia). All theselocation within Second Life to another, avatars can applications have content that is created, updated,walk, fly, teleport, or ride vehicles such as cars, and maintained through them by individual Internetsubmarines, or hot-air balloons. Residents also have users and provided to other users, often free ofthe option to purchase real estate within the virtual charge in an altruistic manner. This makes socialworld, ranging from small lots (512 m2) to whole media different from traditional web pages, such asregions and private islands, where they can build www.amazon.com or www.google.com, which arehouses for their avatar to live in that can subse- often run and managed by companies, frequentlyquently be equipped with items of furniture and with a commercial purpose in mind.appliances. Avatar interaction within Second Life is Within social media, virtual worlds have threelargely driven by sub-cultures that mirror either characteristics that differentiate them from otherreal life settings, such as shopping malls and night- applications. First, virtual worlds allow users to in-clubs, or fictional or historical situations, like an- teract with others in real time. While content oncient Rome. pages like YouTube, Facebook, or Wikipedia is usually
  4. 4. 566 A.M. Kaplan, M. Haenleinposted and then consumed by others with a time we see five different ways in which companiesdelay, a conversation within Second Life is identical can make use of this special form of social media.to one in real life, with the exception that it is not These are advertising/communication, virtualconducted in a face-to-face format. Second, virtual product sales (v-Commerce), marketing research,worlds allow users to create fully customized virtual human resource management, and internal processself-presentations in the form of avatars. Although a management. We will now discuss each of theseYouTube user may be able to create some form of an applications in more detail.image within the community by carefully choosingthe types of video messages posted, avatar custom- 5.1. Advertising/Communicationization within virtual worlds tends to be far moreflexible. If desired, a Second Life resident can, for Communication is probably the most widely appliedexample, create an avatar that very closely resem- business use of virtual social worlds, and there arebles the real appearance of the associated user, or four different ways in which companies can leverageof a very different person. Finally, while content the advertising potential of applications like Secondcommunities, blogs, and collaborative sites are Life. First, they can set up virtual flagship storestwo-dimensional (i.e., focused on content sharing), (similar to real life flagship stores; see Kozinetsavatars within virtual worlds have the possibility et al., 2002) to present digital equivalents of theirof exploring their virtual environment in three real life products. The Japanese automotive com-dimensions. In many virtual worlds, the basic rules pany Toyota, for example, runs a store in Second Lifeof physics continue to hold, which makes navigation in which it shows virtual editions of the Scion xBwithin them very similar to what one is used to in the model.real world. Second, communication can be conducted by Within the group of virtual worlds, it is again buying advertising space in virtual malls or radionecessary to differentiate between two different stations (comparable to online banners; see Man-forms, namely virtual game worlds and virtual social chanda, Dube, Goh, & Chintagunta, 2006). Compa-worlds. In virtual game worlds users are usually nies such as MetaAdverse, the advertising networkrequired to follow strict rules that govern their on Second Life, rent out virtual billboards to firmsbehavior. In Sony’s EverQuest world, for example, and then track who views those billboards to provideone needs to be a wizard to perform magic or a cleric information to advertisers, similar to the data ob-to heal others. No matter how hard the user may try, tained in the context of traditional TV or onlinea wizard avatar will always be a terrible fighter advertising. Canada’s IMAX Corporation used thiscompared to a warrior avatar, for instance. Addi- approach by advertising the fifth part of the Harrytionally, virtual game worlds often do not allow one Potter saga, Harry Potter and the Order of theto engage in economic activities with other users Phoenix, within Second Life and managed to contactwithin the world, including the sale and purchase of 15,000 unique visitors. Besides being effective, suchcontent. Instead, such activities are conducted us- virtual communication is substantially cheaper thaning means from outside the world, such as the online more traditional means of online advertising. Aauction house eBay. Nevertheless, virtual game billboard with 200,000 impressions can, for exam-worlds have also reached the interest of academics; ple, be set up for about 8,000 Linden Dollars (rough-for example, in medical research where they have ly U.S.$30), which translates into cost-per-thousandbeen used to analyze the spread of diseases (Lofgren of U.S.$.15, compared to cost between $1 and $8& Fefferman, 2007). per thousand clicks on Google’s Ad Words, depend- Virtual social worlds such as Second Life, on the ing on the type of keyword used.other hand, do not pose any restrictions on the way A third way of advertising is the sponsoring ofavatars can behave or interact. This flexibility, and events in virtual worlds, as done by the Britishespecially the resulting ability to conduct business Guardian newspaper together with the semiconduc-with other users, makes virtual social worlds differ- tor producer Intel when they supported the Secondent from other social media and particularly inter- Fest, a virtual music festival. Finally, companiesesting for corporate use. should not forget the positive impact their activities within virtual social worlds can have on real life press coverage. Conducting any form of activity5. Corporate opportunities within within Second Life may be the best way to getvirtual social worlds positive coverage in the business press these days. Nevertheless, and despite these possibilities,Based on our research in the area of virtual social companies should also not forget that advertisingworlds in general and Second Life in particular, in virtual social worlds is not without limits.
  5. 5. The fairyland of Second Life: Virtual social worlds and how to use them 567Since February 2008, Linden Research, for example, and increase up to $200,000 for a highly professionalhas prohibited any advertising that impairs a and interactive island.neighbor’s view. Why? To avoid Second Life residents Firms should be aware that these investments areencountering a loss in the real estate value of their unlikely to be recovered by actual sales madevirtual property, of course. through v-Commerce, at least in the short-term. Although several hundred thousand visitors may visit5.2. Virtual product sales (v-Commerce) stores, the actual conversion rate of visitors into buyers is only around 5%, and the mean transactionBesides advertising, virtual social worlds also offer volume is still reasonably low. Based on our analyses,the possibility of e-Commerce; or, in this virtual about a third of all residents spent less than 100channel, v-Commerce. One common way of doing Linden Dollars per week (about U.S.$.40), and onlyso is to sell digital versions of existing real life prod- 20% have regular weekly consumption in excess ofucts and services. Telecom Italia, who launched four 1,000 Linden Dollars. Besides these monetary as-different islands in Second Life in July 2007, for pects, companies also need to be careful when con-example offers a product called the ‘‘First Life Com- ducting v-Commerce not to artificially raisemunicator,’’ which enables avatars to call each other expectations regarding their real life products thatand to exchange text messages. Similarly, the subsequently may be impossible to fulfill. OfferingDutch media company Endemol expanded its Big virtual shoes, for example, in 1,000 different colorsBrother reality show into Second Life by inviting 15 might make consumers believe that the same choiceresidents to spend one month in a glass-walled virtual also exists in the firm’s real life outlets. If this is nothouse. the case, this could also induce feelings of dissatis- Another approach is to propose services that faction, disappointment, or even anger. In addition,bridge the virtual and the real world. The world’s initial expectations about sales that can be achievedlargest logistics company, Deutsche Post World Net, through this channel should be reasonably lowoffers virtual cards to Second Life residents, which because the low price levels within Second Lifeare subsequently delivered as real postcards all (e.g., approximately L$287 or U.S.$1 for a digitalaround the world. An alternative approach taken suit) make it unlikely that substantial money can beby the United States consumer electronics retailer earned within virtual worlds, at least in the short run.Circuit City consists of using its Second Life flagshipstore to sell real life items that are subsequently 5.3. Marketing researchshipped to the user’s home. Here, the possibility ofvirtually experiencing products prior to purchase is Another interesting opportunity is to use virtuallikely to lead to more favorable attitudes and higher social worlds for marketing research purposes.purchase intentions due to higher object interactiv- One way of doing so is to rely on Second Life as aity (Schlosser, 2003, 2006). This specific form of tool to conduct standard marketing research proj-v-Commerce could therefore overcome some ects at a lower cost. According to the French marketof the disadvantages associated with traditional research firm Reperes, one of the leading providers `e-Commerce, such as lack of appropriate product within this domain, the cost for a virtual qualitativepresentation, especially for fashion and design focus group are about 33% lower, and quantitativeitems (Keeney, 1999), or insufficient social interac- surveys can be conducted at half the cost of ation (Wang et al., 2007). comparable real life project. Using Second Life for such a purpose obviously Another way is to leverage the higher degree ofrequires setting up an official corporate presence interactivity and impressiveness that such mediumswithin the virtual world. Several cost items must be offer, which leads to possibilities that go far beyondconsidered in that context. First, the company those known from more traditional approaches ofneeds to hold a Premium Membership (about online research as, for example, netnography; i.e.U.S.$70/year), as free accounts are not allowed the systematic analysis of online communitiesto own land within the world. Second, it needs to (Kozinets, 2002). Whenever firms make decisionspurchase an island to set up its presence. A private about new product introductions, for example, theyregion of 65,536 m2 is currently priced at also face the choice between running a lengthy andU.S.$1,000 plus a $295 monthly maintenance fee. expensive test market analysis and introducing theThird, it needs to build its actual flagship store. The product right away with an increased risk of failure.cost for this task, which is comparable to the pro- Test marketing within virtual social worlds mightgramming of a traditional webpage, heavily depends be a way to solve this dilemma. When the hospitalityon the type of layout desired. It can be as low as company Starwood Hotels & Resorts consideredseveral hundred dollars for a very simple presence, launching a new range of design hotels under the
  6. 6. 568 A.M. Kaplan, M. Haenleinbrand name ‘‘Aloft,’’ it decided to first build the replacement for such. But even if recruiting contin-hotel virtually within Second Life to obtain a better ues to be conducted in a traditional way, virtual socialunderstanding of which features might be important worlds can help to create awareness for offlinefor users. According to Brian McGuinness, a Star- events. The French retailer Auchan, for example,wood VP, this led to several design changes, includ- used advertising space in Second Life to promoteing the decision to build radios in the guest rooms’ its ‘‘Rencontres de Talents’’ program of recruitingshowers. visits to 30 towns and cities across France in 2007. Other companies take advantage of the opportu-nity to directly leverage the creative potential of 5.5. Internal process managementvirtual world residents by involving them in the de-sign and customization process of their products from Finally, corporations can also make use of virtualthe start, similar to the use of lead users in traditional social worlds by using them as a platform for orga-new product development projects (Urban & Von nizing internal meetings and knowledge exchange.Hippel, 1988; Von Hippel, 1978). The citizens of Paris, Cisco offers its employees custom avatar creationfor example, recently participated through Second tools and maintains two corporate islands for inter-Life in the creation of a new park to be constructed on nal use, and has established a virtual ‘‘code oftop of the Les Halles shopping mall in 2012; the conduct.’’ Similarly IBM, one of the biggest land-blueprint proposed by the architect charged with owners within Second Life with 24 islands, uses theproject implementation originally resulted in pro- world extensively for internal purposes. The Crownetests from residents. Note, however, that tastes Plaza hotel chain, owned by the InterContinentaland preferences in virtual worlds may not be the Hotels Group, even allows companies to book virtualsame as in a real setting. Avatars in the form of meeting rooms in its Second Life Crowne Plaza in thedangerous dragons, beautiful elves, or creative hip- very same way as they can rent space in Crownepies may like some designs that the reticent bank Plaza outlets in the United States, Great Britain, orclerk who stands behind them in real life would never Switzerland.consider buying. Therefore, each new idea generated For years companies have hoped to savewithin virtual worlds needs to be subject to a thor- money and time by making more extensive useough reality test before actually being implemented. of video- and phone-conferencing systems, but the extremely limited ways of interaction offered5.4. Human resource management by such media have been significant obstacles to their broad use. However, today it seems thatBesides the aforementioned marketing purposes, vir- physical meetings might soon become obsolete.tual social worlds can also be used in the context of HR Why travel 12 hours across the globe if you canmanagement and recruiting. Service providers such meet your business partner from the comfort ofas the United States-based TMP Worldwide Advertis- your living room within Second Life?ing & Communications regularly organize recruiting But it must not be forgotten that there are alsoevents for their clients within Second Life. On challenges involved when moving from real to virtual.average, 750 job seekers request interviews at each Some of these are of a legal nature. As highlighted byevent, 200 of which are actually scheduled and 150 Hewlett Packard’s Chief Seer Philip McKinney, forfinally conducted. For some firms, such as T-Mobile, example, it is far from obvious who owns a producteBay, or Verizon, recruiting in such media ensures that has been developed in virtual collaborationaccess to particularly creative and technologically within someone in another country. Other problemsadvanced candidates. Others, such as L’Oreal or Bain revolve around the issues of trust and user friendli-& Company, might decide to be present in the hope ness. Do you really want your CEO to negotiate thethat this leads to a positive image and increased merger of your company with a potential partner inattractiveness among potential recruits. another country using virtual worlds? In addition, Yet in some settings virtual recruiting may not be when do you think your assistant will be capable ofso beneficial for the company after all. Potential navigating and setting up meetings in Second Lifeapplicants with high potential who may not neces- with the same ease as using the phone?sarily be technology freaks, for example, might pre-fer a company that offers more traditional ways ofgetting in touch with them because using virtual 6. The 5Cs of success in virtual socialworlds could be perceived as too complicated. Firms worldscan also never be sure who actually stands behind anavatar. Virtual recruiting can, therefore, only be seen In one of our first projects in the area of virtualas a complement to existing activities, and not as a social worlds (Kaplan & Haenlein, 2009) we
  7. 7. The fairyland of Second Life: Virtual social worlds and how to use them 569conducted a series of in-depth interviews with Market research companies specialized in SecondSecond Life residents to better understand the Life, such as the French Reperes, pay L$250-10,000 `benefits consumers obtain from using such media. (U.S.$1-40) per completed survey. For some avatars,The results show that there are basically four key such activities become so lucrative they can usemotivations for spending time in-world: the desire them to complement their real life income. Accord-to build personal relationships, the wish to earn ing to Mark D. Kingdon, CEO of Linden Research,money, the search for diversion, and the need to there are about 17,000 Second Life residents wholearn. Additionally, our respondents highlighted generate a positive cash flow from their in-worldthat for them Second Life is not merely a computer activities, and 500 who earn more than U.S.$1,000game, but an extension of their real life, and that per month.they expect companies to understand that and totake them and their Second Life activities seriously. 6.3. Consider innovativenessThis translates into five points that companiesshould pay particular attention to, which we call A key motivation for spending time in Second Life isthe 5Cs of success in virtual social worlds. to have fun. Therefore companies need to propose new and exciting opportunities every day to keep6.1. Catch traffic the interest of avatars because boring and uninven- tive presences risk being severely punished. TheFor many users Second Life is not an individualistic Italian fashion label Armani, for example, nearlyexperience, but instead a place to get to know faced a boycott within Second Life because itspeople and meet friends. Companies therefore need virtual flagship store, which was essentially a dupli-to ensure a sufficient amount of traffic on their cate of a real outlet in Milan, was perceived asislands to avoid feeling empty and deserted. Today, lacking interactivity and as not adapted to thethe majority of corporate presences within Second virtual world. This is consistent with findingsLife seem to suffer from a lack of interest, but there generated in the context of traditional webpageare several strategies that companies can use to design where it has been shown that perceivedsolve this problem. One is to give away freebies; i.e. interactivity drives attitude toward the site andfree virtual products and services. Usually freebies usage (Song & Zinkhan, 2008).are small items like clothing or scripts that add Because Second Life is a hyperreal virtual world,certain features to your avatar. But companies such avatars expect firms to do things that go beyondas GM’s Pontiac division gave away free land on their reality. Take Coca-Cola, for instance. In August 2007Motorati island. Another solution is to create a the soft drink giant invited 100 selected Second Lifepermanent social atmosphere, as done by the TV residents, including one avatar representing theshow The L Word that maintains ‘‘The L Word Dance rock star Avril Lavigne, to its virtual Coke cinemaClub,’’ or to organize games and contests. At the for the premiere of Happiness Factory — The Movie,foot of the Intel tower Second Life residents have, a virtual complement to the launch of Coke’s newfor example, the opportunity to plant virtual ‘‘Happiness Factor’’ advertising campaign in realsunflowers, and for each sunflower Intel donates life. Given that few Second Life users would everU.S.$1 to the Conservation International Foundation. have the chance to participate in a similar event in real life, activities like this are likely to be the most6.2. Compensate presence successful.Unfortunately, even a second life does not come for 6.4. Create a learning environmentfree and, as in real life, one needs money in order tohave fun in a virtual social world. Therefore, the But virtual social worlds are not only about havingwish to earn sufficient funds is at the top of many fun and diversion. For many users they are also aavatars’ list of priorities, and companies should try place to learn and have new experiences. The pos-to satisfy this desire. One popular way of doing so is sibilities for companies who would like to provideto pay Second Life residents for ‘‘camping’’ on your such a learning environment are endless. Computerisland. Set up some virtual benches, offer to pay manufacturer Dell recreated a giant computer on itsL$2-3 (U.S.$.10) for 10 minutes of sitting on these island, which avatars can enter to see how such abenches, and see how avatars queue up to be pres- machine really works. The retail bank Wells Fargoent on your island. This may also help to solve the built a place called Stagecoach Island, on whichissue of limited traffic on your corporate presence. avatars can earn Linden Dollars by answering finan- Another solution is to compensate residents for cial questions, thereby teaching them the basics oftheir participation in marketing research projects. managing their real money. Business schools such as
  8. 8. 570 A.M. Kaplan, M. HaenleinHarvard, Stanford, or INSEAD even use Second Life Several developments going in this direction areto enhance interactivity in their distance learning already visible today. In January 2007 Linden Labprograms. And if nothing else really comes to mind, made the source code for the Second Life Viewerjust build a virtual Eiffel Tower and offer avatars the available to everyone, allowing each Internet userunique experience of parachuting from it right into to modify and improve the main gateway to theyour flagship store. virtual world. In July 2008, 18 months later, Linden Lab and IBM showed that avatars could be trans-6.5. Care about avatars ferred from the Second Life grid to an OpenSim virtual world server. In the future, this will allowLast but not least, firms need to understand that for the traveling of avatars from one virtual world toits residents Second Life is more than a mere com- another, and is likely lead to the fact that peopleputer game–—it is an extension of their real life. Our will maintain and customize only one avatar, similarresearch clearly shows that with increasing usage to the use of one main email account today.frequency and consumption intensity, Second Lifeavatars show behavior similar to that shown by peo- 7.2. Improvement in software usabilityple in real life situations. Therefore, companies needto take the virtual world, and their activities within Do you remember how you checked email in theit, seriously in order to be taken seriously themselves. early 1990s? You had to have an acoustic coupler, aThere are many companies that have failed in Second dial-in number from a university or governmentLife because they did not respect this simple rule. organization, a fairly powerful computer, and ex-Firms such as AOL, Mercedes-Benz, American Appar- tensive technical knowledge to make everythingel, and Sears, all of which are known for their mar- work together. Until America OnLine entered theketing success in real life and were among the first to market with its user-friendly ‘‘connection manag-enter Second Life, have since left the virtual social er,’’ access to the Internet was limited to tech-world. Most likely they did not succeed because they nology geeks or their friends. Today, such distantwere unable to manage and update their virtual memories reappear when one tries to connect topresences at regular intervals. If you consider Second Second Life for the first time. In-world navigationLife merely as a new temporal advertising outlet is difficult to learn, avatar customization can takerather than as an integrated communication channel, hours, and the hardware requirements for an en-avatars will soon realize and punish you accordingly. joyable game experience are substantial. Yet, as with all other technological innovations, we ex- pect substantial and rapid improvements in this7. Future evolutions on the horizon area over time. Ultimately, this will result in virtual worlds becoming an integral part of tomor-Virtual worlds are a highly dynamic area, and it seems row’s life, potentially similar to the importance ofthat every day another key player is announcing some mobile phones in today’s society, although ankind of breakthrough industry-changing news. evolution envisioned in Stephenson’s Snow CrashHowever, where the big lines of future development can hopefully be avoided. Given the huge poten-are concerned, we see five different directions that tial of three-dimensional virtual worlds comparedare likely to be particularly important in years to to the traditional two-dimensional World Widecome, and which we will now discuss in more detail. Web, some experts even assume that corporate presences within applications like Second Life will7.1. Evolution toward standardization and take over the role of traditional Internet pages ininteroperability 5—10 years’ time.Social media are all about user participation and 7.3. Interconnection between reality andinvolvement. Therefore, it is unlikely that virtual virtual worldsworlds will remain as they currently are: managedby a few companies using proprietary software and We expect over the next few years that innovationprotocols. Instead, we expect a evolution similar to and creativity will lead to virtual worlds that morethe one that transformed the Internet from a hand- and more resemble what we are used to seeing inful of interconnected military computers to the reality. Today, the graphical capabilities of worldsWorld Wide Web: a transition toward open source, like Second Life are still rather limited, andstandardization, and, ultimately, a connection although avatars and virtual cities resemble realbetween all single individual virtual worlds that people and locations, they still look very differenttransforms them into one big Metaverse. compared to their real life counterparts.
  9. 9. The fairyland of Second Life: Virtual social worlds and how to use them 571 However, the boundaries between virtual and the business hubs of the future. Whether throughreal are already getting more and more blurred, v-Commerce, advertising, or other business func-and this trend is likely to continue in future. The tions, there is little doubt that the increasing growthsearch engine giant Google is, for example, rumored of virtual asset trade within virtual worlds will evolveto be planning to transform its Google Earth product beyond its gaming roots toward being the main con-into a virtual world which offers avatars the possi- tact channels for companies. Of course, there are stillbility of walking through a three-dimensional equiv- plenty of steps in between before this might reallyalent of San Francisco, Tokyo, or Paris. Combine this happen. However, there are already several signswith the idea that avatars can closely resemble real visible that indicate this direction. Linden Lab, forlife people, in the same way that characters in example, is dropping hints that they might allowmodern video games are only barely distinguishable enterprise programmers to connect their own virtualfrom actors in Hollywood movies, and it becomes far world servers to the official Second Life grid. Thisfrom easy to define the difference between real and would imply that companies would be able to hostvirtual. Or, to put it differently, if a user spends and manage their own islands, but still be part of the12 hours per day working and meeting friends in a Second Life environment. Technically, this is veryvirtual social world, is it still possible to say what is similar to the way corporate Internet activities arevirtual and what is real? managed nowadays.7.4. Establishment of law and order invirtual worlds 8. Virtual kills the Internet star?The more important virtual worlds become in eco- In 1979, the British New Wave group The Bugglesnomic terms, the more likely it will be that people released a song titled Video Killed the Radio Star,will see the need to have them governed by the telling the story of a famous radio singer whosesame legal rules and ethical norms as their everyday career is cut short by the increasing importancelife. The first steps in this direction are already of television. This song reflected a major changevisible today. In July 2007 Linden Lab, in reply to in the media landscape at that time: the addition ofan FBI investigation, announced a ban on in-world visuals to audio signals. In the very same spirit, wegambling, and forbade all wagering on games of think that virtual social worlds add another dimen-chance or games that rely on the outcome of real sion to the Internet as we know it today. In particu-life organized sporting events when they provide a lar, the future evolutions outlined above are likelypayout in either Linden Dollars or a real life curren- to radically change the World Wide Web we are nowcy. Among others, this ban resulted in the collapse of familiar with. After all, it has long been shown thata major virtual bank called ‘‘Ginko Financial,’’ human beings are more efficient in processing andwhich led to severe liquidity problems for the rest navigating three-dimensional spaces than two-of the virtual banks, and halved the size of Second dimensional representations. Why limit yourselfLife’s economy. and your company to a traditional webpage if As a consequence, Linden Lab started to regulate you can maintain a virtual island within a three-the virtual banking industry in January 2008, and dimensional virtual social world?prohibited the offering of interest or any direct Obviously, there are also some factors that mightreturn on investment by all companies who were slow down or even hinder such an evolution. Amongunable to provide proof of an applicable government the most important ones is the massive amount ofregistration statement or financial institution char- energy consumed by applications like Second Life.ter. Apparently such legislation does not come with- The American writer and IT expert Nicholas Carrout problems in an environment that operates calculated, for example, that the average Secondoutside any legal boundaries existing in the real Life resident consumes roughly 1,800 kilowatt hoursworld. But improvements in law and order will be of energy per year. This is only 25% less than thea necessary step toward improving institutional 2,500 kilowatt hours the average human consumestrust, and toward transforming virtual worlds into annually in real life, and about 1.8 times as much asa relevant economic channel for corporate use. the 1,000 kilowatt hours consumed by citizens in developing countries. In light of rising energy costs7.5. Transformation of virtual social and increasing awareness of ecological questionsworlds to business hubs of the future and environmental sustainability, this might sub- stantially slow the evolution of virtual worlds inAll these changes combined will transform virtual the future. Other problems that add to this issuesocial worlds from exotic forms of diversion into are the tremendous legal problems involved in
  10. 10. 572 A.M. Kaplan, M. Haenleinregulating a completely new world and the lack of Hemp, P. (2006). Avatar-based marketing. Harvard Business Re-experience that firms have in this area, given that view, 84(6), 48—57. Holzwarth, M., Janiszewski, C., & Neumann, M. M. (2006). Thethe requirements for a presence in virtual worlds influence of avatars on online consumer shopping behavior.might be quite different from those of traditional Journal of Marketing, 70(4), 19—36.web pages. Kaplan, A. M., & Haenlein, M. (2009). Consumers, companies, and In any case, and whatever the importance you virtual social worlds: A qualitative analysis of Second Life.yourself give to virtual social worlds, it is certainly a Advances in Consumer Research, 36, 873. Keeney, R. L. (1999). The value of Internet commerce to thewise strategy to be prepared for the increasing customer. Management Science, 45(4), 533—542.importance of such applications in the future, and Kozinets, R. V. (2002). The field behind the screen: Using netno-to be building sufficient expertise in your organiza- graphy for marketing research in online communities. Journaltion today in preparation for tomorrow. If not, your of Marketing Research, 39(1), 61—72. Kozinets, R. V., Sherry, J. F., DeBerry-Spence, B., Duhachek, A.,company may face the same issues as the newspaper Nuttavuthisit, K., & Storm, D. (2002). Themed flagship brandindustry today, which has been facing devastating stores in the new millennium: Theory, practice, prospects.declines in the number of readers and advertising Journal of Retailing, 78(1), 17—29.revenue for several years in a row due to a lack Lofgren, E. T., & Fefferman, N. H. (2007). The untapped potentialof preparation for the upcoming importance of the of virtual game worlds to shed light on real world epidemics.Internet. According to author Philip Meyer, the The Lancet Infectious Diseases, 7(9), 625—629. Manchanda, P., Dube, J.-P., Goh, K. Y., & Chintagunta, P. K.ubiquitous availability of news on the World (2006). The effect of banner advertising on InternetWide Web will lead to the fact that in about 30 purchasing. Journal of Marketing Research, 43(1), 98—years’ time (around 2040), the newspaper industry 108.will disappear from the landscape. Rose, R. L., & Wood, S. L. (2005). Paradox and the consumption of In a worst-case scenario, virtual social worlds are authenticity through reality television. Journal of Consumer Research, 32(2), 284—296.just another form of media that your company can Schau, H. J., & Gilly, M. C. (2003). We are what we post? Self-use in the short term to reach a segment of highly presentation in personal web space. Journal of Consumercreative and technologically advanced users. But Research, 30(3), 385—404.they may also be the start of a whole new area of Schlosser, A. E. (2003). Experiencing products in the virtual world: The role of goal and imagery in influencing attitudes versusretailing and dealing with your customers. purchase intentions. Journal of Consumer Research, 30(2), 184—198. Schlosser, A. E. (2006). Learning through virtual product experi- ence: The role of imagery on true versus false memories.References Journal of Consumer Research, 33(3), 377—383. Song, J. H., & Zinkhan, G. M. (2008). Determinants of perceivedArnould, E. J., & Thompson, C. J. (2005). Consumer Culture web site interactivity. Journal of Marketing, 72(2), Theory (CCT): Twenty years of research. Journal of Consumer 99—113. Research, 31(4), 868—882. Urban, G. L., & Von Hippel, E. (1988). Lead user analysis for theCova, B. (1996). The postmodern explained to managers: Impli- development of new industrial products. Management Sci- cations for marketing. Business Horizons, 39(6), 15—23. ence, 34(5), 569—582.Enright, A. (2007). How the second half lives. Marketing News, Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant 41(3), 12—14. logic for marketing. Journal of Marketing, 68(1), 1—17.Firat, A. F., Sherry, J. F. J., & Venkatesh, A. (1994). Postmodern- Venkatesh, A., Sherry, J. F. J., & Firat, A. F. (1993). Postmodern- ism, marketing, and the consumer. International Journal of ism and the marketing imaginary. International Journal of Research in Marketing, 11(4), 311—316. Research in Marketing, 10(3), 215—223.Firat, A. F., & Venkatesh, A. (1993). Postmodernity: The age of Von Hippel, E. (1978). Successful industrial products from cus- marketing. International Journal of Research in Marketing, tomer ideas: Presentation of a new customer-active paradigm 10(3), 227—249. with evidence and implications. Journal of Marketing, 42(1),Grayson, K., & Martinec, R. (2004). Consumer perceptions of 39—49. iconicity and indexicality and their influence on assessments Wang, L. C., Baker, J., Wagner, J. A., & Wakefield, K. (2007). of authentic market offerings. Journal of Consumer Research, Can a retail web site be social? Journal of Marketing, 71(3), 31(2), 296—312. 143—157.

×