Introduction to Operating in Second Life

Tom Hood, CPA.CITPJuly 25, 2007

Second Life Basics

• Internet-based virtual universe simulating real life

• Users create all content• Users retain intellectual property rights to

content• June 2006 – 300,000 accounts• June 2007 – 7,100,000 accounts• 30% from US• Average age of user = 30 with 35% over 35

Why be there?• Next generation of internet (web 2.0 or 3.0) 3-D Web – expression of the new art and science of collaboration – cut costs,

innovate faster, and co-create with customers and partners

• Virtual worlds are one of the five innovations that will change the way we live over the next five years (Irving Wladawsky-Berger, VP for Technology Strategies, IBM)

• Gartner, Inc. reports (April 24, 2007) – by 2011, 80% of internet users will be involved in some type of

virtual world– Companies should not ignore the growing phenomenon of virtual

words as they will have a significant impact on business during the next five years

• $’s -- April, 2007 –- $7.2M USD exchanged- $6.5M USD Total User Account balances – up $1M over March, 2007

Why Be There?

• It’s social• Immersive space is very sticky; i.e., people get

to experience your brand• Companies can create all of the concepts that a

brand stands for in a virtual world without the limitations of real world constraints which can then feedback into the real world for change and possibilities.

• Length time users spend interacting with a brand is much longer than other advertising mediums

• Adidas• Dell• Toyota• Sun Microsystems• Penguin• American Apparel• IBM• Starwood• Reuters• CNET Networks• Yankee Stadium• Harvard (and 200+ educational institutions)• H&R Block• MACPA

Who’s there

“The real value of second life for Cisco is the opportunity for spontaneous customer interaction….

I bump into customers and partners multiple times a day in Second Life. In 11 years at Cisco, walking through the parkng lot in San Jose, I never get people come up to me and say, I’m a Cisco customer, have a second?” Chistian Renaud, Chief Architect - Cisco

What are they doing?

• Customer education & training• Employee onboarding (IBM orients all of their

international employees using Second Life)• Customer feedback on products (Starwood

hotels built a prototype hotel in SL)• Meetings• Presentations using powerpoint, streaming audio

& video

What it takes to get in

• Robust computer graphics capability• High speed internet connection• Download software• User Accounts • Customized avatars with appropriate group affiliations• Office space (can rent)• Office furnishings • Knowledge of advertising and marketing opportunities • Knowledge of virtual commerce processes• Knowledge of devices to enhance office space such as a

notecard giver; website link, etc.

Professions in Second Life

Offices of the Second Life Bar Association boasts 165 members

Visit them on-line at http://www.slba.info

"Instead of trying to practice purely virtual law," says this Business 2.0 article, "Lieberman has taken a hybrid approach, using Second Life as a meet-and-greet area for new clients, who then take their real-world legal needs offline. And since he took in $7,000 in fees in the first two weeks after hanging up his virtual shingle, he's optimistic.” CPASuccess.com

Virtual Law presentation in SL

Presented by the Business Communicators of Second Life group, virtual lawyer, Benjamin Noble, addresses a crowd of avatars in an interactive session on virtual IP.

First CPA Firm in Second LifeKAWG&F’s Involvement

• September 2006 – branch office opened• Focusing on companies providing services

in both real life (RL) and Second Life (SL) as well as companies operating solely in SL

• To date, have worked on small, exploratory projects and have started working with a company putting together an in-world IPO.

KAWG&F Offices (first CPA firm)

Berk (danish accounting firm)

Even H & R Block is in SL!

CPA Island

CPA Island

Scenes from CPA Island

Real Time video feeds

Integration with web – real link to macpa.org

Integration with web – real link to

blogs…

Integration with web – real time

RSS feeds

Scenes from CPA Island

Scenes from CPA Island

Five Laws for Participating in Virtual Words

1. Virtual worlds are not games, but neither are they a parallel universe (yet)

2. Behind every avatar is a real person – there are unwritten rules and expectations for behavior and the culture is developing

3. Be relevant and add value; i.e., “don’t sell to me, play with me”

4. Brand protection comes from really understanding the environment before participating

5. This is a long haul – killer app has yet to emerge and market pressures will lead to merging of current virtual worlds to support free transfer of assets and avatars with the use of a single, universal client.

Courtesy of Arlene Ciroula & Byron Patrick – KAWG&F

Taxation Issues

• US Congress, Joint Economic Committee looking at public policy questions virtual economies raise – taxes, barter exchanges, property and wealth

• Question is whether the government should reach inside virtual worlds to impose a real-world tax on the land, homes, and other owned digital property

• Recommendation expected by August, 2007• Per a representative of KPMG (UK): “…expect within 12

to 18 months this is going to stop being a fringe issue and become and issue of concern…”

Credits

This powerpoint was developed in collaboration with Arlene Ciroula & Byron

Patrick of KAWG&F

SL: Chili Carson & Bean Wollongong

For more information…• Join the SLACPA (in world) Second Life

Association of CPAs• Visit CPA Island• Contact Rocky Maddaloni (in world)