Author: Simon Parkin. Translated by Cointime: QDD.

Mark Zuckerberg’s grand vision for online existence has been derided as corporate folly. And those still happily existing in the virtual world launched 20 years ago may be wondering what all the fuss is about…

On November 14, 2006, 5,000 IBM employees gathered in a digital replica of a 15th-century Chinese imperial palace called the Forbidden City. They had come to hear a speech by IBM CEO Sam Palmisano. Palmisano's physical body was in Beijing at the time, but he spent much of his time speaking inside Second Life, an online social world launched three years earlier. Palmisano's neatly trimmed avatar wore tortoise-shell glasses and a custom pinstripe suit. He faced a crowd of digital, animated dolls dressed in the business attire of the time: black heels, pencil-line shirts, and Windsor knot ties. In the back crowd stood a 10-foot-tall IBMer, his digital visage smeared with Gene Simmons-style white makeup and the hair on his shoulders a sonic blue.

It was a historic moment, Bloomberg reported at the time: Palmisano was the first “major league CEO” to hold a company-wide meeting in Second Life, “the most popular of a handful of new-age 3D online virtual worlds”. IBM, like any other resident in Second Life, pays rent to own an in-game “district”, with one district representing 6.5 hectares of digital grass currently rented for $166 (£134) a month. Tenants can build whatever they want on their lawn.

The idea was appealing. You might never own an apartment in a city like New York or London, but in Second Life you could design, build, and live in a mansion. Institutions joined in. Some used their spaces to host art exhibitions and theatrical performances; others built grotesque palaces. The retailer American Apparel opened a virtual store on a private island called Lerappa—“Apparel” spelled backwards—selling clothes for avatars. MIT and Stanford set up schools in Second Life. Someone claiming to represent France’s far-right National Front joined in (their headquarters were the site of a virtual clash with anti-racism protesters in 2007). The world used its own currency—Linden Dollars, which could be withdrawn to local currencies—to build a global economy among users. Transactions and withdrawals were subject to tiny fees, which helped maintain the servers and were a revolutionary and influential business model.

While the world of Second Life was seen by many as basic and its inhabitants eccentric, in retrospect it represented a bold, groundbreaking experiment at a time when Facebook was just a site for rating Harvard students’ charisma. It remains the first and most successful manifestation of the so-called metaverse, a catchy but slightly imprecise term coined by the American writer Neal Stephenson in his 1992 science fiction novel Snow Crash. Definitions vary, but most experts agree that the metaverse is simply the internet turned into a metropolis: an immersive, continuous representation of data and active communities of users. You can walk from an eBay bazaar to a YouTube cinema; or take a virtual Uber from the library of Wikipedia to the twin towers of TikTok and Instagram. No need for a thousand logins and passwords: in this internet theme park, each of us can become the embodiment of a body and a coherent identity.

Second Life didn’t replace the internet in that way. Even at its peak in the late 2000s, it attracted only about a million monthly users, a fraction of the number some online video games have (Fortnite’s makers claim 80 million users on a sustained basis) and nowhere near the number needed to sustain a business like the pre-Facebook. But the dream of a coordinated site and users built on current technology (virtual reality headsets, blockchain, cryptocurrency, etc.) that would open up unprecedented opportunities for virtual landowners, marketers, and advertisers has persisted at the highest levels of Silicon Valley companies, even including Facebook founder Mark Zuckerberg.

Zuckerberg first outlined his vision for the Metaverse in 2021 as the “successor to the mobile internet.” Nick Clegg, Meta’s president of global affairs, said it would take a decade for the project to revolutionize the way we browse the internet. But less than two years and $36 billion later, the project has stalled and achieved little. User numbers for Meta’s first connected world, Horizon Worlds, accessed via a VR headset, have steadily declined over the past year. Most visitors don’t return after the first month, according to internal documents, and a feature in Horizon Worlds that rewards users for creating content brought in just $470 in global revenue in its first year. Zuckerberg recently announced 21,000 layoffs and hinted that all Meta employees might soon be asked to return to physical offices, a highly self-destructive policy as the company works to erase the distinction between the physical and the digital. That vision has faded as the company cuts jobs and investor focus impatiently turns to the possibilities of generative artificial intelligence, which makes fortunes even faster. Nearly every national newspaper has a variation of the article: “What the Hell Is Going On in the Metaverse?”

The message seemed to suggest that as the real world grew bleak, the new digital world offered a place to reconnect.

Yet Second Life—and its more modest vision of an “internet of worlds”—continues to thrive. This month marks its 20th anniversary; a mobile version is due to be released this year, and the virtual world’s developer, Linden Lab, estimates its GDP at $650 million. According to the company, some 1.85 million items are sold annually on Second Life’s marketplace, at an average price of $2 a piece, and 1.6 million transactions are made daily, including tips, services, and currency. New registrations have surged during the pandemic, with nearly a million visitors logging on each month and a number of businesses building viable exchanges for virtual goods and services. Those numbers are a far cry from the world-conquering numbers Zuckerberg needs to justify his sunk costs, but Second Life persists as a profitable and, crucially, populated metaverse.

And, while the world’s largest tech companies continue to seek more intrusive ways to monitor and monetize our online lives, the idea of ​​the metaverse is unlikely to disappear.

Philip Rosedale, the creator of Second Life, claims his vision for an accessible digital utopia long predates Stephenson’s coining of the term “metaverse.” As a child, Rosedale — who left Linden Lab in 2010 and returned to the company as a strategic advisor in January 2022 — built go-karts and gizmos. He installed a parabolic antenna on the roof of his parents’ house that could be adjusted to eavesdrop on the conversations of friends down the street.

Rosedale, 54, still has the look of a teenage genius inventor, with his tinted glasses and cartoonishly droopy gray hair—and he’s also a dreamer. “I used to have dreams of building in space, wearing a space suit, using the tools on my belt to make walls appear and move surfaces,” he says over Zoom from Linden Lab’s offices in San Francisco. “I could build great architectural structures in space. But part of me always felt that was something that could be done inside a computer.”

Rosedale read both science and science fiction, such as Stephen Wolfram’s work on cellular automata in Scientific American, Vernor Vinge’s Where Rainbows End, and William Gibson’s Neuromancer. “I became fascinated with creating a world that had some simple, low-level rules, but that would come to life from those basic elements, just like the real world.” When his wife bought him a copy of Snow Crash in 1992, she told him, “You’re going to like this science fiction book about the same thing you’ve been working on.”

Two years later, Rosedale moved to San Francisco. “Of course, the first thing I wanted to do was use the Internet to create a giant pool of servers that could simulate a giant world,” he says. “But even in the early ’90s, when the Internet was still extremely slow and computers couldn’t render 3D worlds properly, even I wasn’t crazy enough to try to do that.” By the turn of the century, when Rosedale founded Linden Lab, he felt the technology was almost ready.     Persistent online video game worlds were becoming increasingly common (the most famous, World of Warcraft, launched a year after Second Life). Although he hoped that visitors could lay down virtual land and build virtual homes, Rosedale was determined that Second Life would not become a video game full of quests and errands. He wanted creativity to be user-generated rather than pre-set—perhaps a place to try out new identities, tendencies, and modes of escape.     Rosedale kept a close eye on video games, however, which provided inspiration for Second Life’s thriving economy. “EverQuest, which was a well-known online game before World of Warcraft, had an economy,” he says. “People would advertise their wares in a public marketplace with text ads. That’s one of the reasons I’m convinced we need to use open economic systems, because that allows for very complex outcomes.” A marketplace, he imagines, would provide incentives for users “to build weird things” and then sell them to each other. “I’m trying not to get in the way of people being their own narrative and content creators.”

When Second Life launched in 2003, Rosedale’s payment plan for the project was a futuristic one. Initially, Linden Lab charged visitors $9.95 for “basic access” and $9.95 per month thereafter for premium subscriptions (or $6 if paid annually). A year later, the company switched to a real estate model. Anyone could access for free, but those who wanted to own and shape part of the world had to pay. Land renters could do what they wanted with their land: put up billboards, build skyscrapers, dig mines, even run companies. “It turned out to be a great business model,” Rosedale says. “People who bought the land were happy to pay for it because they were hosting other things on it, usually to make money.” Some opened stores filled with digital clothing; others became real estate agents, selling or renting land in desirable locations. In 2006, Businessweek ran a cover story on the first Second Life millionaire.     Linden Lab won’t provide a detailed breakdown of its current revenue, but Second Life generates revenue from multiple sources in its virtual economy: land sales, maintenance, fees for specific transactions, premium subscriptions. The rest of the revenue comes from tiny fees added on every transaction and any user who tries to cash out. “Those are usually single-digit percentages,” Rosedale said. He noted that Second Life has higher revenue per user than YouTube or Facebook, but it doesn’t rely on behavioral targeting and surveillance-driven advertising, which are deeply unethical practices that the public would never accept in the real world.

Rosedale said it's unclear which company first purchased land in Second Life: "You know, people just used their credit cards. It was direct-to-consumer." However, he remembers the first notable acquisition. “We put an island up for auction.” Rivers Run Red, a London-based marketing and content development company, purchased the island for about $1,600. "It seemed like a lot of money at the time," Rosedale recalled. "I remember when people found out it was a real company, they were so angry. Everybody was furious." (In 2008, Rivers Run Red partnered with Linden Lab to launch Immersive Workspaces 2.0, a new software-based software in Second Life. The idea of ​​virtual meeting rooms customized to customers' specific needs now seems eerily accurate and is another key area of ​​Zuckerberg's Meta.) Incentivizing real-life businesses to enter the metaverse and turn their online stores into polygonal buildings is an idea that Zuckerberg started with. It also seems key in today's vision. Meta demonstrates its vision in a 2022 Super Bowl ad using a mascot dog who is forced out of work due to restaurant closures but can suddenly be reunited with former colleagues in the Metaverse, a virtual high street, His old workplace magically reopened. The message seems to be that, as the real world becomes increasingly bleak and alienating, new digital worlds accessed through VR headsets offer a place to reconnect with old friends and revive bankrupt businesses. However, for every true believer, there are 50 naysayers who think every metaverse is a joke, or at least a solution to a problem.

To the generation of digital natives who grew up with the internet, Second Life is a joke: a game like World of Warcraft, but with poor graphics and no purpose. Why would you want to hang out there, building white picket fences with bald men posing as furries (there are 18,000 items for sale under the label "Furries" in the Second Life store) instead of swinging a broadsword through the hills of Azeroth on a quest to defeat giant cave trolls?

Unlike the sprawling interconnected video games of the time, with their arcane rules and Dungeons & Dragons-like feel, Second Life was beloved by mainstream journalists who could more easily communicate its appeal, reporting humane and sometimes salacious stories to an audience that didn’t play the games. Even someone completely offline could understand a headline in the Daily Mail: “Mother of Four Splits with Pole Dancer in Online Game ‘Second Life’”. No one was calling Second Life a metaverse at the time; it was just another online space where mildly kinky people found community — though through its crude graphics, the sexual stimuli common in online spaces were presented in explicitly digital forms.

Yet Second Life has never quite shaken off those slightly seedy and miserable associations. During lockdown, however, when many people were craving social connection, visitor numbers began to grow again. According to Wagner James Au, who spent three years embedded as a journalist in virtual worlds and wrote a book, Creating a Meaningful Metaverse, chronicling the rise, fall and resurgence of Second Life, the game’s user demographic now skews middle-aged, and around 20% of users have a disability that makes real-world interaction difficult.

While other projects have shrunk or shut down, Au believes Second Life has endured because of its ability to foster human creativity. “The power and freedom of its creation tools encourage sub-communities to grow, thrive, and persist within the virtual world,” he says. It’s also not seen as a copycat: “Strong and fair creator economies are rare among metaverse platforms. But Second Life creators make roughly as much as Linden Lab does.”

Most people initially join Second Life out of curiosity or boredom, but as Fabrizio Au Rasselas, better known as Aufwie, told me, there are as many reasons to stay as there are residents. Aufwie, a musician now living in Birmingham, first visited Second Life when he was 12. After being bullied at school, he had trouble making friends and socializing. Second Life provided him with a safe environment where he could socialize by his own rules, and music became his selective break. “I would just go to some virtual land where microphones were allowed and start playing guitar and singing until someone approached, and then we would start talking.” Typically, Aufwie’s performances would attract the attention of a small crowd, so one of his friends encouraged him to host a formal concert, building a small stage on her land for him to perform on. The duo chose a date and time and handed out flyers beforehand. When 50 people showed up, Aufwie’s computer struggled to render the crowd on the screen: “I was forced to log out briefly, which gave me some time to process what was happening.”

Then, during the pandemic lockdown, Aufwie attended a Second Life concert hosted by another user, Skye Galaxy, which inspired him to professionalize. He has now performed at least 300 times in Second Life and continues to receive bookings from users around the world to perform at their virtual events.

In the virtual world, you actually have neighbors, and they have different personalities and come from different backgrounds.

Although the growth of new Second Life users has slowed since the lockdown, it remains the largest non-video game virtual space occupied mainly by adults. Yet it has never grown to the inevitable size that Rosedale once believed it would. In 2006, he famously said something that has gained notoriety among Second Life players: “In many ways, we think it’s a better platform than the real world.”

Many longtime Second Life users agree, to some degree. A YouTuber named Draxtor has chronicled the stories of Second Life creators who choose to spend much of their time in virtual worlds, where they can find social connections or physical freedoms unavailable in the real world. Others, like Erik Mondrian, a former graduate student at CalArts, have found a place for self-expression in Second Life. Mondrian has created a series of sentimental films that showcase Second Life structures and places, accompanied by poetic readings, part of a long tradition of creating artwork in and outside virtual worlds. He remembers the date he opened his account: March 23, 2005. He selected his real name, choosing “Mondrian,” the name of one of his favorite artists, from a drop-down list of options. (He told me that he legally changed his name to Erik Mondrian in 2017.)

In the 18 years since he first opened an account, he has come and gone from Second Life. "Even after the occasional long absence, there are two things that keep bringing me back: the people and the worlds; I have a strong attraction to places in all their forms and I want to see the amazing virtual spaces that people have created and continue to create."

Today, Rosedale admits that he was naive in thinking Second Life would become ubiquitous. "Of course, I shouted from the rooftops that I was very excited about what was happening," he says. "I thought everyone would like to have an avatar and live out a portion of their life in a place like Second Life, or would like to interview, shop, socialize with people or just have fun in Second Life the way we do now. We would roam and explore this world together. Looking back, that didn't happen."

Part of the problem is that Rosedale overestimated the difficulty some people would have in fashioning an on-screen avatar. "I used to have a utopian belief that most people would be comfortable moving their avatar selves into digital reality," he says. "But it turns out that's not the case. Most people choose only one embodiment that's tied to their physical body, and that's their physical body. The difficulty of maintaining a second identity is huge, and the number of people willing to do that is smaller than I thought in 2006. As a result, I don't think the metaverse can grow in a way that's large enough to support Facebook's business and keep it viable. They need billions of people to do that."

https://youtu.be/KsKUA0ReeX8

On a more positive note, Rosedale said he was pleased to see that Second Life users were mostly getting along. "It's not divisive or polarizing," he said. "Obviously I'm biased, but there's a lot of independent research that proves it. Second Life is living up to the dream we had about the internet at the beginning, which was that it would be a civil, interesting, thoughtful place where people, if they have differences, rise above those differences and find new common ground."

That, he argues, is why building virtual worlds in three dimensions has a non-gimmicky advantage over traditional social networks. "In a virtual world, you actually have neighbors," he says. "They have different personalities and come from different backgrounds, so people are forced to interact frequently with people who are different from them." Compared to Facebook groups, which gather like-minded people and encourage self-polarization, Second Life forces users to interact with a wide variety of users.

If it seems as if Rosedale has essentially invented the revolutionary concept of “a village,” he’s quick to point out that the benefit of virtuality is that there’s no threat of physical confrontation in disputes; this can encourage bottom-up civility and relieve the burden of traditional top-down moderation techniques employed by social media giants. “If someone is having an extreme gathering in Second Life, others will stop by and challenge it because it’s happening in the same physical space. That’s much healthier than the echo chambers and hard boundaries we see on social media.”

To Rosedale, Second Life is a testament to the fundamental virtues of human nature. "The fact is, we are almost always kind," he says. "We are social, we are cooperative. The main reason we interact with each other, even with strangers, is to help them. So it's shocking to me that through commercial motivations, we actually create these illusions in the social media environment that manipulate people into bullying each other, when that's not their natural instinct."

Rosedale believes that the ubiquitous metaverse, whether crafted by Zuckerberg or someone else, has the opportunity to become a friendlier, less intrusive online environment. But he worries that most companies working on such a project are missing a fundamental component to lasting success: People are creators as well as consumers. “There’s no evidence yet that people want to have a purely consumer entertainment experience in a social virtual world,” he says. “I don’t think there’s evidence in human history that you can get a billion people to sit there and chill and watch something. You can’t achieve the level of usage that metaverse brands want to achieve through a non-engaged consumer experience.”

In Snow Crash, the appeal of the metaverse is inextricably linked to the climate crisis. As the real world in the novel becomes increasingly uninhabitable, humans retreat more into virtual space to avoid heat waves and floods, and to gain a greater degree of freedom to explore without having to rely on air travel. However, some argue that a valid criticism of virtual worlds is that they draw humanity's attention away from social and environmental issues that threaten the planet. Critics say these reassuring playgrounds are not a solution, but a factor.

Here, Rosedale seems to support Meta's vision for a world of virtual meetings. "One of the biggest issues we have with the impact on the environment is travel. When Metaverse technology develops to the point where we can conduct meetings as avatars, that's going to have a huge positive impact." Similarly, if we start expressing our tastes more in the digital realm than in reality, the cost of making and "shipping" virtual goods will be negligible. "If you only stay in a room and only use your computer from now on, your carbon footprint will be significantly lower than if you just leave your chair," Rosedale says. "I get really angry when people complain that Second Life avatars use energy. Of course they use energy, but they only use 1% of the energy that you do."

Rosedale suggests that by certain criteria it is preferable for humans to live primarily in the digital realm, an idea shared by investors eager to extract capital from digital real estate (which is currently much cheaper than real estate). Whatever the motivation, the quest to build a ubiquitous virtual world of rentable plots of land and a functional economy will always be an enduring goal, even if Facebook’s failed efforts show it to be an expensive and unattainable task.

Second Life's continued existence proves that the success of the metaverse, no matter what its configuration, can only be built on the human qualities of social interaction and self-expression. "I'm certainly not as excited now as I was when I started to wander Second Life," Aufwie said. "But I'm still grateful for this apparently eternal pioneering metaverse that allows me to express myself, make friends, learn and share ideas, and all the good things that are inherent in human nature."