Perhaps you’ve been listening to Rupert Murdoch’s Boyer Lectures? He has an awful voice but he says a lot of sensible things – as you can imagine, he has the benefit of an unusually wide perspective. His dislike of elites and authority mark him as an Australian; his enthusiasm for change explains why he lives where he does.

Rupert was optimistic about newspapers. He understands that newspapers are a brand, that they are about trust and that their oxygen is the reader. Using that brand, he argues, News Corp will deliver relevant information in whatever technology format is appropriate. Spot on.

Much hand-wringing by journalists nonetheless about the death of journalism now that the Rivers of Gold (classified advertising), are flowing to the Internet. The old newspaper business model said, we will provide the reader with journalism and companies will pay for advertising so they can access those readers. But readers now search Internet databases; a far better system for the classifieds buyer. Simultaneously, the Internet is competing with newspapers for eyeballs. What is to be done?

What newspapers have is credibility, so they should look to use this competitive advantage in subject areas which are perceived as valuable. Where credibility is currently lacking.

This is most feasible in areas where newspapers have not traditionally trodden. Take Search Engine Optimisation for example; a subject close to my economic heart. The web is full of SEO experts, all giving away free content and trying to up-sell you into subscriptions. The problem is, you don’t buy a subscription unless you have a high level of trust. You with me? Would I pay $100 a year for the opinion of one expert? Hmmm. Would I pay $500 for a subscription to the Wall Street Journal’s Best in SEO? If it has 20 contributors and a WSJ banner, I probably would.

Would people pay $100 for a subscription to the Sydney Morning Herald’s Guide to Selling on the Internet? Many would. Would business people pay $500 for the New York Times’ Internet Networking subscription? Yes. The Economist’s Web Marketing? The Guardian’s Internet Relationships? The Mirror’s Best Bargains?

Newspapers should be looking at the e-book market and turning some of those products into premium, branded subscriptions. They should develop new products which deliver expert content in technical and specialist areas. You can’t justify charging for ‘news’ or ‘opinion’ or ‘business’ because they are established as free info but anything new is fair game. Industry specific subscriptions will also work if the content is extensive.

Your mainstream publication then carries normal articles plus pointers to Subscription Only articles, both on the web and in printed form. Newspaper management are not used to new products. They’re used to the monolithic publication. But the splintering of news into specialist subscription publications is a logical response to losing your advertisers. In effect, the newspaper could become the Editor of the Internet.

Starting with a cricket theme, we are giving viewers the chance to evict television personalities, programs and executives.

As the graph says, SMS your victim’s number or enter it on the web at m.smspoll.net

Cruel. But fair.

One vote only! By the way, SMS votes are at your normal SMS rates, not at premium rates. This is how we roll.

Like many who spend time in Second Life I have virtual friends, virtual business partners and at least one virtual lover. These people live in Europe and the US and are walled off from my real life friends and business partners. That wall has a new crack in it.

New World Notes reports on a brilliant piece of development that portends one of the most disruptive impacts in the history of human experience. A science-fiction turned reality that will horrify some and delight others. Me, for instance.

A Georgia Tech Masters student, Tobias Lang has integrated Second Life and real video; well big deal I hear you say. Stick with me.

From New World Notes: “They’ve also taken a headset display and mounted it with a video camera and a tracking sensor. The sensor monitors the wearer’s motion and position, while the display feeds Second Life video into the headset. The result? Life-size SL avatars that seem to be standing in front of the headset wearer.”

We’re not talking about cartoon characters here. These are real people who normally communicate with each other using virtual worlds. Worlds which give them youthful avatars, a range of spectacular clothing and animations that let them fly, levitate, blow smoke out of their ears and dance like Fred Astaire.

Let’s assume this technology can be made to work in real time; bandwidth & processing issues.

It means that by wearing a headset, (you’ll feel like a geek but you’ll get over it) you’ll be able to bring your virtual friends into your home, your office and your car. They’ll be able to talk to you in real time of course; they already do that in Second Life.

Did I mention that the average avatar is built like a supermodel and is anatomically correct?

If as I suspect, a visiting avatar turns out to be more effective at selling you a bank loan than a telephone call or a video conference, a very large amount of business is going to be done in your own lounge room. A virtual salesman will sit on your couch, demonstrate the products and answer your questions.

Girlfriend coming round for dinner? Invite over a virtual string quartet to serenade you in 3D.

Family distributed around the world? If you can handle the time differences you can still have a meal together … *wonders about eating with a headset on*

Not an entirely bad thing; travel by avatar instead of dragging a ton of steel, rubber and gas with you.

I was wrong when I wrote two years ago that Second Life would be as influential as the Internet. Its social impact will surpass the Internet and require the development of a new etiquette to manage the real/virtual divide.

And I wouldn’t be writing it off as a business ap just yet. Here’s Tobias doing proof of concept:

Melbourne IT is a dreadful business. The leading Australian domain name registrar charge substantially more than their international competitors. More for domains. More for hosting. More for promotion. Pay SEVEN times as much for a .com or a .com.au through Melbourne IT. That would be easier to swallow if their service was better than their competitors.

The following piece of advice appears on the Melbourne IT Delegation page: ‘Please enter either only hostnames (e.g. ns1.melbourneit.com.au) for each nameserver.’ Just a little confused I rang their “24/7 Customer Support”. After listening to a fair number of advertising messages I hit all the right buttons and waited. And waited. “I’m sorry there was no answer… If you know the extension of the person you are dialling… ”

Held on for half an hour, gave up, went home. Transferring the domain to GoDaddy or Name Scout at the next opportunity.

Gartner’s prediction that 80% of internet users will be in virtual worlds within four years is already bouncing around the blogosphere. Don’t percentages lend a lovely credibility to a forecast? Would you believe them if they said 79%?

Their advice to clients: investigate and experiment with, but limit substantial financial investments until the environments stabilize and mature. Good advice, if somewhat obvious. Almost all corporate investments will be in the range of $20,000 – $100,000. That buys you a lot of Second Life and it’s not going to break the bank of any Gartner client.

Gartner has ‘identified five laws’ for companies entering virtual worlds. It’s clear on reading them that Gartner don’t actually have a working definition for what constitutes a law, however there is sound thinking in what Steve Prentice says. Which is to say, I agree with him. Here are my thoughts on his five laws.

1. Yes, it is a mistake to approach Second Life as a sales channel.
2. Yes, if you’re a big name, you’re going to be a target. Look what some wits did with the clothing given away to promote the movie 300. (Link via New World Notes).
3. Yes, it is a mistake to approach Second Life as a sales channel. Evidently this law applies twice. I see Second Life as an interactive 3D advertising channel, as an interactive entertainment medium and as a global micro-economy.
4. Yes, if you’re a big name, you’re going to be a target. Three laws were never going to be enough.
5. Yes, there may well be a merging of virtual worlds into open-sourced environments with a single, universal client. That process will be driven by Linden Lab and Second Life will be the underlying platform for all virtual worlds. Here’s why:

Virtual worlds rely on sophisticated user content. The users (animators, graphic artists, programmers, entrepreneurs) are already embedded in Second Life; they’ve invested a lot of time in learning how it all works and they’re not going to want to leave behind their social networks and their body of work.

When these people take their content into other environments, there will need to be rules that govern ownership and transfer of ownership. Those rules will be the Second Life “permissions”. Other virtual worlds will need to conform to these. It makes Linden Lab the legislature for virtual world economies going forward.

Here are my five laws by the way:

1. Establish a presence
2. Involve your own employees
3. Focus on the collaboration side
4. Involve your own employees
5. Focus on the collaboration side
6. Work with really smart consultants

My Second Life Development company, Inside This World, recently attended the International Technology Expo (ITE). The product we were demonstrating, the Holodeck, was joint winner of the People’s Choice award for best technology. Over sixty companies exhibited.

A nice acknowledgement of our scripting skills (pats Loki Clifton on back). We are also extremely strong in architecture, lay claim to some marketing knowledge and have an experienced machinima team.

We recently signed our second multinational client and are working with a third in the entertainment industry.

Contemplating a move to a larger city. Perth is about as interesting as cold fish and chips. It’s ironic but real life meetings seem even more important in cementing virtual world business relationships.

Okay, the Four Corners program. I don’t understand why all the Current Affairs programs in the world don’t share the same footage on Second Life. In case you’re planning to make your own, here is the format to use:

Send in a journalist who has no experience in the environment
Get him or her to report on how they put their avatar together
Interview the same people in Second Life that everyone else interviews
Talk about Anshe Chung because she made a million dollars
Talk about money a lot, and tax
Show dancing (people like colour and movement)
Show the same real-life companies who’ve gone into Second Life that everyone else shows
Interview people who spend 12 hours a day online and present them as typical
Interview Ted Castranova about the economics of virtual worlds
Interview Philip Rosedale, the founder of the business
Interview Clay Shirky, because he’s a professional critic of Second Life
Mix in footage from World of Warcraft without explaining that it’s not Second Life
Cover every controversy you can in as little detail as possible

This is not to say the 4 Corners doco was poorly researched; it was fine. But the pressure to present diverse, fast-moving analysis means a confusing picture and no depth. Quality investigative reporting of the type 4 Corners has sometimes delivered in the past requires more.

Second Life gives us a platform we can use to examine, re-define and experiment with identity, relationships, cooperation, economics, community, governance, communication and institutions. It looks like we’ll have to wait until each media outlet has done several ‘what is Second Life’ stories until they deliver any serious examination of these opportunities.

Inside This World has just completed a Second Life proposal to a company suggesting they follow the IBM model. IBM have committed a heresy, building their own multi-island facility using their own employees*. The result is a messy and incomplete build which challenges the orthodoxy of Second Life and threatens to succeed and set some precedents.

The beginnings of corporatisation in Second Life followed the agency-client model made famous by J Walter Thompson, Ogilvy & Mather and Leo Burnett and BBDO; that is to say, the client needs an image and by virtue of its introspection and inherent lack of creativity is unqualified to construct it. An agency is a specialist in strategic thought. They are custodians of the Menorah of creativity and the sacred maps of the media landscape.

In the tradition of this model, Second Life developers have brought many significant corporates into Second Life, influencing their strategy by virtue of their specialist knowledge of the Second Life culture and using their creative skills to produce slick, impressive looking buildings.

Readers of this blog know that I have been critical of some of these, arguing that there has been perhaps too much emphasis on a pretty shopfront and a press release and not enough on working out exactly what they’re doing here.

I spoke to a couple of the people involved in building the IBM environment and what was striking was their pride in their achievement. There was a real sense of ownership of the project and I’m telling you right now, this will be a thriving community. These people have a stake. On IBM 7, (okay they need an agency to give them a hand with the island-naming) there is a virtual community comprising IBM employees and ex-employees. It’s called Greater IBM.

This is a very sensible inititiative with or without Second Life as it extends the reach of the corporation among a very powerful alumni but it is an absolutely perfect application of Second Life, which generates sympatico like it’s going out of style. All that is necessary for this to succeed is to provide some social activity and allow people the space to collaborate on projects; doesn’t matter much what they are. I notice a machinima competition already exists.

So for companies such as IBM who understand the concept of a virtual community, are committed to a long term presence and have people with a relatively advanced skill set (my client has the same situation) this is a far better approach than an island handed over by a developer with a set of keys. Who has a stake? The developer has been paid (“call us if you need anything”) and the company don’t have the skills to evolve the facility. The buildings sit there like mausoleums but a Second Life site needs new content to an even greater extent than the web. You need new products/events/attractions/traffic to make people return.

If the IBM approach is as successful as I think, where does this leave the developer community? Will they cater for the less sophisticated companies? It’s a moot issue currently. Because of the Second Life growth rate all developers are in demand and for a couple more years there will be enough companies wanting impressive edifices to keep those with professional design credentials employed. I think that for some clients though, there is already sense in developers guiding, mentoring, consulting and training rather than developing, implementing and handing over.

IBM’s new Virtual World division will be doing Second Life development for their industry partners; Circuit City are an early sign-up. IBM’s stated goal is “to be a recognized leader in virtual world solution development”. I think the approach they have taken to their own islands shows that they are on track and it will be interesting to see the degree to which they apply their own approach to other companies’ projects.

* I note that Aimee Weber is assisting IBM with the House of Horizons project, which is not yet public.

Having now conducted a number of tours of real life businesses in Second Life I suggest to you that the medium is not working as advertised. I’m talking in particular about trying to sell real life goods.

Here are the traffic numbers in avatar minutes/week:
Adidas 1,122
American Apparel 2,588
Dell Factory 577
Warner Bros’ listening loft for Regina Spektor 62
Sony 128
Average: 650 per week ~ 900

The poor traffic numbers are in spite of the fact that these companies have used their PR infrastructure to generate tremendous free kicks from the media, who seem obsessed with the real/virtual transition. The media however are largely missing the point which is the unpredictable phenomenon of a virtual world for adults. This is a little harder to report.

Contrast the real life traffic figures from leading in-world companies:
Ricx Jewellery 22,260
Xcite (virtual sex equipment) 59,011
Ice Dragon (casino) 75,695
ETD (hair) 17,294
Vindi Vindaloo (clothing) 5,579
Average: per week ~ 36,000 or 40 times the volume of the real-life businesses.

The failure of real life companies to spark interest in their venues is partly flawed strategies and partly the nature of the medium. Let me make the point visually. Here is a pair of shoes that Adidas are marketing in Second Life.

And here’s the in-world competition:

Ladies! Cast your vote!

The people in Second Life are having an immersive experience. One of those self-expression things. They are not in Second Life hankering for the real world. Developers need to (a) understand that and (b) explain it to their clients. The opportunity for businesses is to tap into the creativity of Second Life and take that into the real world, NOT THE OTHER WAY AROUND.

I just included Dell on the tour. They allow you to configure a computer in Second Life. But only one model is available and you still need to go to the web to complete the sale. Why not just use the web? Just because you can do something in Second Life does not mean you should do it. The web is a better tool for database applications and I am not convinced that Second Life is destined to be the web’s front end.

Businesses should consider the possibility that Second Life’s principal value might not be to help them sell more widgets but to help them communicate powerfully, especially amongst remotely located employees. Instead of second rate virtual shopfronts they should be building virtual offices and virtual communities.

Glutton for punishment? See my previous article on GM and IBM.

The blog of one of IBM’s virtual world evangelists, Irving Wladawsky-Berger (some call him Irving Berger, not sure why) reveals an deep understanding of the potential of this platform. IBM are exploring Second Life as a way of conducting remote meetings and are developing ways of using it as part of an induction program for new employees. A colleague recently met Irving in London and told me that in the IBM office, about twenty people were on-line in Second Life. It might look like The Sims, but Second Life is pushing the envelope in the human-machine interface and in e-commerce.

Irving draws comparisons between the beginnings of the internet and Second Life and that is correct. What is not correct is the Channel 4 description of Second Life as the latest internet phenomenon. That makes it sound like another web site. You cannot compare MySpace and Second Life. Second Life is a new platform.

Also on the ball, somebody at General Motors or perhaps at their agency Leo Burnett, who have themselves recently entered Second Life. This press release touting Pontiac’s soon to be Motorati Island shows a very good understanding of the platform. Rather than mimic their real-life products, like Toyota and American Apparel, GM are allowing the residents to create car-lovers’ content. This will generate involvement and some buzz.

And that is the point. Was talking to some conservative business friends of mine who are not in Second Life. They asked how Second Life people will feel about corporations putting advertising billboards up all over Second Life. No, that’s not what’s going to happen fellas. This is not a passive medium. It’s interactive. Something that GM and IBM have already grasped.