It's interesting to watch the press continue to try to understand Second Life, and explain it to their readers. While the salacious coverage has been muted, there are still regular articles that attempt to understand the business aspects of Second Life, with most coverage implying that Second Life is somehow on the path to extinction.

Whether that is true or not, time will tell. However, since Second Life continues to grow its user base, and the media is struggling to understand the new and improved value proposition of Second Life, it seems like a good time to review some of what's being said and do a bit of analysis on the coverage.

First up, we have a report which is still stuck on Second Life as a marketing platform:

SECOND Life, the virtual world phenomenon of the past two years, may have passed its use-by date as a mass marketing tool.

Two years ago, brands such as Telstra, IBM and the ABC joined the online game that allowed people to meet as digital "avatars" in the world created by Linden Labs.

Second Life came with its own currency, people could buy land, and money earned in the game could even be converted to real currency.

There is nothing new in the above statements. Second Life was sold to big enterprises as the next gen marketing platform by a few consulting firms who made huge piles of cash from the ignorance of enterprise execs to the reality of Second Life. Once those execs wised up, the party was over for the consulting firms, but not for Second Life. The article doesn't call this out specifically, but does concede that Second Life is moving in a different direction:

"What is happening is that the numbers of people who are going into Second Life regularly is coming off in terms of repeat users," he said.

While Second Life as a marketing portal may have already seen its day, Mr Abrahams said its value remained being a place for big companies to hold virtual meetings and lectures.

"I think where that value comes in is it being used as an educational tool," he said.

Mr Abrahams noted that during its early success, Linden Labs was boasting GDP for the Second Life universe of $500 million — an amount that has dwindled significantly since in-world casinos have been banned.

"You just can't make a good mass marketing business case in terms of the numbers of people in the game at any one time," he said.

There are two key things in the above section. First, repeat users are growing Second Life. While this is not a bad thing for some business opportunities, it's not ideal for broadcast styled marketing. Second, education is acknowledged as having a value prop in SL. As for the GDP statement and casino ban, it's all a red herring. What matters is are there valid business opportunities in Second Life, and can those scale and be repeated? If we accept that education is a valid business area, then the answer would be yes.

Next up is a report that covers some of the new competition to Second Life. Now the interesting question that is implied by this article is the following: if Second Life is such a bad idea, why are there many competitors appearing in the market sector which SL occupies?

The competition will make things tough for Linden Lab, said Christian Renaud, head of the analyst firm Technology Intelligence Group, which advises enterprises on emerging technology. "It's hard enough to fight in one market against entrenched competition -- especially against companies that are well-heeled, like Google -- much less in three or four directions," Renaud said. "They're already struggling with what they've been doing."

Linden Lab CEO Mark Kingdon said he doesn't see browser-based virtual worlds as a threat. "This is a huge and developing space," he said. "In some ways, those services can be gateways to Second Life," Kingdon said. "Whenever Google enters a market, it's an incredible validation for the market that Google is interested in."

Kingdon has it correct. This is a huge and developing space, which makes all the hand-wringing and predictions about the demise of Second Life seem a bit silly. What is interesting in all of this is that SL is still viewed as the gold standard when the media discusses the virtual worlds market space. That's not to say that a new virtual worlds killer app can't appear and assume the mantle of being the top dog, but so far it hasn't happened.

Which brings us to the final article. In an article titled The Participation Economy, Second Life is mentioned, but in passing.

...what's more indicative of an interactive channel than an invitation to participate? And to what else can the stunning rise of social media, user-generated media, and Web 2.0 in general be attributed to other than users who are impelled or inspired in some way to participate with online content?

...

Of course, participation isn't the easiest thing to measure. It doesn't always occur where you can quantify it relatively easily, such as on your own Web site. Moreover, the quality of different levels of participation varies wildly. Registering as a user in Second Life, for example, is a very different level of participation from becoming an active member of the virtual world. And among active users, levels of participation vary greatly, from hardcore addicts to the occasional day-tripping tourist.

If participation is to be measured, then, how can the quality rather than just the quantity of participation be gauged? Participation includes all sorts of metrics already in play on the Web; engagement is just the beginning. Interaction and behavior also figure into the equation.

How users can participate online is limitless.

This gets to the heart of the matter. The core value of Second Life is that it is 100% end user driven, and participation is required in everything from designing and building the world to exploring and interacting with it. Second Life represents a view of a true virtual participation economy, one that is global, 24x7, and is useful for everything from real world business to user built gaming to fantasy role play and everything in between.

The issue is that the media has been trying to define SL in terms of single concepts such as being a "marketing solution" or being a "game." As long as these descriptions continue to be used, most of the media will miss the real value proposition behind Second Life, and the key thing that needs to be in any viable competitor, and that is that it needs to be an end user designed world. It needs to be a 100% virtual participation economy. SL is that platform, and is still the best in the 3d realm. Others will appear, especially as OpenSim begins to ramp up. But let's understand the true value prop. It's the 100% participation model

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