Second Life issues mirror 'first life'

There's an old expression from the North of England: "Where there's muck, there's brass."

There's an old expression from the North of England: "Where there's muck, there's brass."

It means that there's money to be made in dirty jobs. In 2007, the cutting-edge companies that have set up shop in Second Life, the happening 3-D virtual world, will soon discover that "where's there's brass, there's muck."

According to Second Life's home page in early December, at the time of writing this, more than $600,000 changed hands in real-money transactions every 24 hours, so there's brass in there somewhere. Indeed, now that Second Life has its very own self-proclaimed millionaire, Anshe Chung, who has turned her Second Life property investments into a real-world fortune, can lawsuits and reputation terrorists be far behind?

News reports of "criminal activity" in Second Life have become almost routine. The Wall Street Journal recently reported on a wave of mischief in which Second Life inhabitants with a little know-how send newbie avatars spinning into mid-air or freeze them in place. Meanwhile, says The Guardian, other malicious denizens are creating annoying spam called "grey goo" that gums up the site's servers.

So far, so normal, for any Web site based on user-generated content, and you might argue this is just a case of caveat avatar. As for Linden Lab, the site's parent, it will certainly be working on ways to limit infringements on intellectual property and activities that impair Second Life for its users. The developing field of cyberspace law also will need to take some new twists to accommodate avatar identity theft, cyber-bullying by avatar, and even how to deal with restrictive covenants stopping you from buying a condo in that exclusive Second Life community.

But what about the real-world companies that have proudly and loudly put their best cutting-edge foot forward and are paying real money for commercial real estate in Second Life?

If Sony BMG hosts a Second Life Audioslave concert, will it have a crisis management plan when the virtual mosh pit turns into real-world mayhem?

BusinessWeek has already reported that IBM kicked avatars off its island in preparation for CEO Samuel Palmisano's Second Life debut in fall 2006.
Will Starwood Hotels and Resorts' security team engage in avatar-profiling to keep its high-class hostelries clear of undesirables?

Will Reebok be sued by real-world owners of anti-globalization avatars that chain themselves to its virtual store?

The lawyers will go where the big money is, but that doesn't mean online mom and pops don't face the same risks. The budding Bono your bouncer kicked out of your indie Second Life club may come back tomorrow with a lawsuit. And be careful where you walk your virtual pooch.

While it's hard to imagine how you could slip and fall outside a virtual storefront, there are already civil lawsuits filed in Second Life based on business disputes, and there is little question that the deep pockets of established global companies will attract the predictable range of litigation and other reputational challenges.

So what are the new rules for managing issues in the virtual Wild West? Same as the rules for managing issues in "first life": Know what you stand for and whom you're dealing with. Be alert to changing cultural norms, and be sensitive to stakeholder concerns. When you mess up, say so, and fix the problem. In the meantime, get your in-house counsel logged on to lobby for tort reform in the metaverse. It's never too soon to start, and do sign up for the Second Life Bar Association.

Peter Hirsch is a partner and head of global corporate affairs at Porter Novelli.

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