The L.A. Times published a piece on Second Life this weekend that was quickly picked up through syndication.  I read it.  It was powerful.  I think it could be the first nail in Second Life’s coffin. 

The numbers surrounding Second Life (user growth, user demands, opportunity to sell in world) have been in question for years.  Maybe this was the first “nail”, but all good things get questioned.  Nevertheless, these questions have turned into reactions:

Four years after Second Life launched, some marketers are second-guessing the money and time they’ve put into it.

“There’s not a compelling reason to stay,” said Brian McGuinness, vice president of Aloft, a brand of Starwood Hotels that is closing its Second Life shop.

The Times interviewed Peter Ludlow from University of Toronto:

Ludlow isn’t impressed. He said most firms were more interested in the publicity they received from their ties with Second Life than in the digital world itself. “It was a way to brand themselves as being leading-edge,” he said.Angry avatars have taken virtual action. Reebok weathered a nuclear bomb attack and customers were shot outside the American Apparel store. Avatars are creating fantasy knockoffs of brand-name products too.

And then there is this dinger:

Between May and June, the population of active avatars declined 2.5%, and the volume of U.S. money exchanged within the world fell from a high of $7.3 million in March to $6.8 million in June.

Many of my fellow marketers are still strong advocates of Second Life, but since day one I have questioned this walled garden.  I have never understood why I couldn’t use their technology like any other web-based software - take Flash for instance - and apply it to my own URL. 

Linden Labs, the web already exists.  Making it 3-dimensional is brilliant.  Just don’t try to build a new web.  That’s like trying to replicate the cosmos.

And why Linden dollars?  The currency market is already too complicated. 

It is not too late for SL to fix this problem.   This past January they announced they would open source their code, but they still have not made it truly accessible. 

To be clear, I can gain access to the source code for SL, but radtollett.com will never be its own island.  I won’t be able to build my temple to the almight praline and host it on my home-based server.  You, a praline worshiper, won’t be able to teleport from radtollett.com’s island of buttery, nutty goodness to, say, andyhunter.com’s island of graffiti artists. 

Rather, I will be forced to work within Second Life’s proprietary system, and my temple to the almighty praline will come with property taxes from Linden Labs.  Why not just tear down the property tax model?  Let me run with it, baby.  LL can get the money off software upgrades and service like everybody else.

This is something they have surely thought of, but the idea of throwing out their entire business model and profit scheme is a bit daunting, I’m sure. 

In the meantime, we’re going to see more companies follow American Apparel and Aloft.  Corporate doors will be shut.  People will not have access.

How ironic.