Following the lead of Adidas, Toyota and Reuters, CNET reports Vodafone is the latest big brand to announce a presence in Second Life - the ever popular virtual world. But why? Well, Vodafone say one reason is to “find out how you can carry on a conversation you started in the virtual world out in the mobile world through your avatar” so ultimately they hope to create genuine revenue stream through this new world.

Just a year ago, this would have seemed a crazy idea, but amazingly people seem to be flocking to Second Life in droves. Paying real money to do so. Just this past week Linden Labs , the creators, announced they will be upping the cost of islands from $1250 USD to $1675 with monthly maintenance fees rising from $195 to $295 much to the annoyance of some members. To add insult to injury, Linden Labs are also talking about charging for customer support to support “ongoing investments in developing and maintaining the underlying technology”. Whilst this isn’t too suprising, after all they have to make money, it may risk putting off new members and does create a financial divide between members which I would have thought was against the original concept of equality in a virtual environment.

But just like the real world, for those individuals aka avatars having a difficult time buying their first property, they can rent a property instead, which can be a nice income for existing property owners. Even so, the island price hikes are likely to impact these individuals too as the increased island prices will just be passed down. Perhaps this will create an opportunity for virtual mortgage lenders!

But in an (almost applaudable) move, the Taxman has seen an opportunity to pounce. In the USA (the real one) a member of the House stated “the law has fallen (behind) because you can have a virtual asset and virtual capital gains, but there’s no mechanism by which you’re taxed on this stuff”. You can see why it is appealing to the taxman to get involved when hearing that recent estimates state that residents contribute around US$350,000 a day on average, or a rate of $130 million a year by using the virtual currency known as “Linden Dollars.”, (they even had ATMs!). I would like to know who the taxman would chase for the payments though - do avatar bailiffs exist? Some in the US are against such a move though, for example Senator Saxton, for one believes such a move would be a mistake.

As with YouTube a few months back, Second Life suddenly seems to have entered the public consciousness, even though it’s been around for quite a while. Perhaps this is because the growing consensus is that Second Life is more than a fad. Established magazines from Marketing Week to Business Week all offer a positive insight into the world. Even the BBC covered Second Life back in September quite appropriately using an avatar newscaster to present the story. I expect this coverage will only increase now that brands are more involved.

As with the Californian Goldrush back in 1840’s & 50’s, the people making the money aren’t the gold diggers but the ones selling the shovels and supplies. Not surprisingly there are already businesses offering specialised virtual services. Agencies like Millions of Us, The Electric Sheep Co and Rivers Run Red all aim to help businesses capture the ‘power‘ of the virtual world.

But beware. If you are thinking of setting up a new virtual office on the premise of positive early adopter PR, then beware the word ‘first’. Following a post on the Marketing Technology blog I decided to visit the Crayon virtual office which I have to say is very impressive (I even considered getting a bottle of Coke from the virtual dispenser!), but afterwards found out Crayon had been criticised for further commercialising or ‘MySpace-ing’ this precious virtual environment. Their use of the word ‘first‘ seems to hit a raw nerve for “people who have put in years of very uncorporate hard work building a new online world.”

So what’s to come? Whatever the nice inhabitants of Second Life think (of which I am now one - Dricon Orbit is the name), it is clear that commercialism is there to stay - the main question is in what form and how will that impact the ‘real world’…

That’s me at the Reuters office