Key figures: Philip Rosedale (Linden Lab founder and CEO), Anshe Chung / Ailin Graef (first virtual-world millionaire), Cory Ondrejka (Linden Lab CTO), Adam Reuters (Reuters’ in-world correspondent)
Summary
Second Life, the persistent 3D virtual world launched by Linden Lab on June 23, 2003, reached peak cultural and corporate prominence in 2007. By mid-year the platform claimed approximately seven million registered accounts, and major multinational corporations and public institutions competed to establish virtual presences within its digital landscape. The surge in corporate investment reflected widespread belief that virtual worlds would become central to entertainment, commerce, education, and business strategy in the coming decades.
The 2007 boom represented a broader technological moment when companies perceived virtual worlds as inevitable platforms. Investment in virtual real estate, branded islands, digital fashion, virtual banking simulations, and in-world concerts attracted household names from technology (IBM, Dell, Cisco, Intel), entertainment (Disney, MTV, Universal), finance (Wells Fargo, ABN AMRO), and media (Reuters, NPR, BBC). Users could purchase virtual land, run businesses, attend concerts and conferences, and conduct social interactions in a fully immersive environment where a customizable avatar represented them.
Background: Origins and Growth
Linden Lab was founded in 1999 by Philip Rosedale, a former CTO of RealNetworks, with the original vision of creating a virtual reality hardware device. The concept evolved into a software-based world, and Second Life formally launched to the public in June 2003. The platform was distinctive for its user-generated-content model: unlike predecessors such as EverQuest or The Sims Online, Second Life gave residents full intellectual property rights to everything they created in-world, enabling a genuine market economy from the platform’s earliest days.
Early growth was modest. By the end of 2004 the platform had fewer than 100,000 registered accounts, and by mid-2005 it had crossed 200,000. The decisive acceleration came in 2006, when media coverage of the platform’s virtual economy and Anshe Chung’s landmark achievement created a feedback loop of attention and adoption. By January 2007, Second Life was adding more than 1 million new registered accounts per month.
The 2007 Corporate Boom
The corporate land rush in Second Life reached its peak between late 2006 and mid-2007. Institutions established virtual presences for several stated reasons: brand visibility, experimental e-commerce, virtual product launches, employee training, and outreach to a tech-savvy demographic.
Notable corporate milestones included:
- IBM made the most substantial enterprise investment, committing an estimated $10 million to Second Life in 2006–2007, building multiple virtual campuses for internal meetings, client presentations, and IT conference simulations. IBM’s virtual presence became a widely cited case study in enterprise adoption of virtual worlds.
- Reuters opened an in-world news bureau in October 2006, assigning a correspondent with the avatar name “Adam Reuters” to report on Second Life events and economy. Reuters also launched an in-world currency exchange so residents could check real-time Linden dollar exchange rates.
- Sweden opened the first-ever virtual embassy — housed in a digital replica of the Swedish Institute’s Stockholm building — in Second Life on May 30, 2007, aiming to provide consular information to Swedish citizens abroad. The Maldives followed with its own virtual embassy.
- CNET, Sun Microsystems, Toyota, Reebok, American Apparel, and Pontiac all established branded islands. American Apparel launched a virtual storefront that mirrored real-world merchandise, accepting Linden dollars.
- Universities including Harvard Law School, MIT, Stanford, and Ohio University established virtual classrooms, hosting seminars and lectures accessible by avatar from anywhere in the world.
By mid-2007, media estimates put the number of organizations with an active Second Life presence above 200, spanning government, education, media, retail, and finance.
The In-World Economy
Second Life’s internal economy was its most distinctive feature and the primary driver of media coverage. The platform’s currency, the Linden dollar (L$), was convertible to U.S. dollars through the Linden Exchange (later LindeX), giving the virtual economy a direct interface with real-world finance.
Key economic metrics from 2006–2007:
- By 2006, reports from Linden Lab indicated that approximately $500,000 changed hands daily in Linden dollar transactions, with the figure growing roughly 15 percent month-on-month.
- In January 2007, Second Life’s economy registered approximately $220 million in annualized resident-to-resident transactions, making it comparable in scale to a small-nation GDP.
- The top tier of Second Life entrepreneurs — virtual architects, clothing designers, animation creators, and land barons — earned incomes that rivaled or exceeded real-world salaries.
The most prominent figure was Anshe Chung, the avatar of Chinese-German entrepreneur Ailin Graef. She appeared on the cover of BusinessWeek on May 1, 2006, under the headline “Virtual World, Real Money,” having become the first person publicly documented to achieve a net worth exceeding one million U.S. dollars through virtual-world activity alone. Graef had started in Second Life with a $10 investment in 2004 and built a virtual real estate empire encompassing more than 550 acres of virtual land, employing dozens of real-world staff in a Wuhan, China office to manage her holdings. Her story became emblematic of Second Life’s ambitions and catalyzed the 2007 media cycle around virtual commerce.
Cultural and Social Dimensions
Beyond economics, Second Life functioned as a social and artistic space that attracted communities across a wide spectrum. Virtual concerts by real artists—including Suzanne Vega, who performed in Second Life in 2006—introduced live performance in avatar form. In-world clubs, discussion groups, and political organizations flourished. During 2007, several U.S. presidential candidates including John Edwards, Barack Obama, and Hillary Clinton established virtual campaign headquarters in Second Life.
The platform also attracted significant media attention for less flattering reasons. Tabloid coverage of in-world relationships, gambling operations (which Linden Lab banned in July 2007 under pressure from U.S. financial regulators), and virtual crime (including virtual theft and fraud) introduced Second Life to a broader public skeptical of virtual-world claims. Griefers—users who deliberately disrupted events and spaces—became a running problem; a widely publicized griefing attack on a CNET interview with Anshe Chung in December 2006, in which her avatar was bombarded with flying pornographic images, was broadcast live and became widely circulated news.
Challenges and Plateau
Despite the 2007 boom in registrations and media attention, Second Life faced structural challenges that limited its practical reach:
- Registered vs. active users: Of the approximately seven million accounts claimed by mid-2007, Linden Lab’s own data suggested that only around 700,000 to 1 million users logged in within any given 30-day period. Many corporate investments found limited actual foot traffic in their virtual locations.
- Technical barriers: Second Life required a dedicated software client, broadband internet, and substantial graphics processing power — barriers that excluded a significant portion of interested users in 2007. The platform’s interface was widely described as unintuitive, and crash rates frustrated new users.
- The corporate exodus: By late 2008, many corporations quietly abandoned their Second Life presences, finding that the investment of maintaining a virtual island — which rented for approximately $295 per month — did not justify the minimal visitor traffic. Reuters withdrew its in-world correspondent in late 2008 and closed its bureau, a move publicly confirmed in early 2009.
The platform’s growth plateau coincided with the rise of more accessible social media platforms — Facebook in particular opened its registration to all users in September 2006 and reached 50 million users by October 2007, offering social connection without Second Life’s technical demands. The Facebook Platform launch in May 2007, which opened the social network to third-party developers, drew the attention and investment that had been flowing to virtual worlds.
Significance
Second Life exemplified 2007’s optimism about the metaverse and virtual commerce, predating by nearly two decades the renewed metaverse enthusiasm of the early 2020s. At its peak, the platform demonstrated that millions of users would populate immersive digital spaces, that real commerce and genuine employment could occur in virtual environments, and that corporations would invest meaningfully in virtual brand presence.
The platform’s rise and plateau also illustrated persistent challenges in translating technological possibility into mainstream adoption: the gap between registered accounts and active users, between corporate presence and visitor traffic, and between early-adopter enthusiasm and mass-market accessibility. These patterns would recur in subsequent virtual-world ventures and in the metaverse investments of the 2020s.
The 2007 Second Life phenomenon occurred simultaneously with fundamental shifts in how media was consumed and distributed — including the iPhone launch in January 2007 and the rapid growth of YouTube — all of which were reshaping the digital landscape in ways that ultimately disadvantaged persistent virtual worlds requiring dedicated desktop clients.
Sources
- Second Life — Wikipedia
- Businesses and organizations in Second Life — Wikipedia
- Virtual World, Real Money — BusinessWeek, May 1, 2006 — Anshe Chung cover story documenting the first virtual-world millionaire.
- Linden Lab — Wikipedia
- Anshe Chung — Wikipedia