Making a major corporate announcement in Second Life is either a tremendous public relations coup or an act of consummate foolishness, depending on who you ask.
At its pavilion in Second Life, Sun Microsystems has set up a regular exhibit of video kiosks showing recent events and technologies ‘so customers, media, analysts and investors can learn about Sun anytime,’says Fiona Gallagher, Sun’s senior brand and advertising manager and Second Life project lead. There
are plans for other corporate events in Second Life in
the future, including ones for analysts and investors.
Even though Hewlett-Packard, Adidas Reebok and Verizon all have a presence in Second Life, many IR professionals still don’t know that this ‘world’ exists. For the uninitiated, Second Life is one of a growing number of MMORPGs, or massively multiplayer online role-playing games. Second Life has over 9 mn registered accounts, although typically much smaller numbers – something in the 25,000 to 45,000 range – are logged in at any given time.
Commerce is flourishing in Second Life; it has its own currency – the Linden dollar, named after creator company Linden Lab – that can be exchanged for real money at the rate of L$270 for $1. Second Life also boasts several stock markets, which saw more than $1.19 mn exchange hands in a recent 24-hour period.
Account holders design animated avatars that move through the virtual world as if in a cartoon. Although Second Life clearly could become an avenue for staging interactive earnings calls, one-on-one investor meetings and product launches, the jury’s still out. Should IROs assume a virtual identity, suit up an avatar and begin performing traditional IR functions in a virtual realm, or is this still the stuff of science fiction?
Earnings releases
As the so-called social media develop, companies must assume investors are getting information from more than just mainstream media. When Cisco Systems engineers found they were bumping into their Fortune 100 customers in Second Life, the company decided to take a closer look, recalls Jeanette Gibson, Cisco’s director of corporate communications and new media. This led to Cisco making a wealth of investor information available in Second Life, including earnings releases.
Today Cisco owns four public islands in Second Life. Buying an island, notes Gibson, is relatively inexpensive at roughly $1,600, plus a monthly licensing fee of $300. The network computing firm eagerly embraced podcasting and corporate blogging, and sees Second Life as an intriguing new media outlet. ‘New media help companies to be more open and transparent,’ says Gibson.
Advocates of Second Life applaud the entry of public firms. ‘It would be a crying shame if Cisco weren’t there,’ says Stevan Lieberman, a partner at Greenberg & Lieberman, a Washington, DCbased law firm that has found two clients in Second Life. ‘If you’re a computer company, you should be on Second Life and as many other virtual worlds as possible.’
That said, most companies are proceeding cautiously. ‘Second Life is very new from an IR standpoint,’ explains Laura Graves, a director of investor relations at Cisco. ‘We’re still in the evaluation stage of which types of investors are in there. Certainly, there would probably be more individual investors than the larger buy-side folks.
Second Life is interesting, but one difficulty is that you don’t know whether the users are actual owners of the company, or what their ownership status is.’ Graves sums up Cisco’s current IR strategy in Second Life thus: ‘We have the earnings call, we have the webcast, we have an IR voicemail line. This is just another channel.’
Pros and cons
Once a media darling, Second Life has recently come under attack. Some detractors decry the difficulty of navigating this realm (the software still has bugs), while others are wary of the sometimes risqué content that flourishes there. In July, Time magazine named Second Life one of the five worst websites in cyberspace, though InformationWeek suggested the truth probably lies ‘somewhere in between last year’s hype and this year’s backlash.’
‘Today Second Life is better suited for product launches where complicated graphics and three dimensions are much more helpful than in financial presentations,’ says Richard Torrenzano, chairman and chief executive of the Torrenzano Group, a Manhattan-based consultancy specializing in corporate and financial communications.
‘If you’re Apple and have an iPhone to market, this would probably be a great platform for a product launch. Most quarterly investor calls are fairly straightforward, however. They involve strategic and financial information. Technology is a fantastic enhancer, but it doesn’t replace people sitting in a room, asking management members questions, and seeing how they react.’
Second Life is only one of many virtual worlds popping up in cyberspace, and companies haven’t yet settled on which to colonize. Chuck Hamilton, director of IBM’s Center for Advanced Learning, is enthusiastic about Second Life, where IBM has established a very real corporate presence. But IBM is also investigating other virtual worlds like Multiverse.org, ProtonMedia and Forterra, Hamilton points out.
Although the terminology of ‘virtual realms’ and ‘new worlds’ immediately attracts attention, it also tends to obscure the fact that Second Life and similar websites really represent nothing more than a development of the corporate websites of today. Or, as Lieberman concludes: ‘Second Life is just a three-dimensional web page with access to those who are on the cutting edge of the internet.’
The new economy begs for rules
Sick of splitting hairs over how this quarter’s earnings were calculated? Consider practicing IR in Second Life, where the rules of IR remain pretty much wide open. You will face competition, however. Cadence Juran, CEO of Crescendo, a Second Life strategic communications firm, has already secured four major accounts in Second Life. Operating in cyberspace under an assumed name, Juran also represents one of Second Life’s three major exchanges, and in September helped organize the virtual world’s answer to IR magazine’s own awards ceremonies: a ‘black and white gala’ called the Investor Royale.
Juran, a public relations professional in real life who prefers to remain anonymous, earns $1,500-$2,000 a month in Second Life, typically spending less than three hours a day there during the work week. ‘Because you’re not aware of the avatar’s real experience, there’s a level of teaching you have to lay out when dealing with new investors in Second Life,’ Juran says. ‘They may not know a high-risk company.’
It is a working, albeit virtual, market, but there are some developmental issues. ‘The biggest challenge firms in Second Life face is that there are no reporting regulations or audited financial reports,’ says Robert Bloomfield, an accounting professor at Cornell University’s business school. ‘So it’s very difficult to get the confidence of your investors.’
Second Life boasts three separate stock exchanges doing robust business: the World Stock Exchange (WSE), Second Life Capital Exchange (SLCE) and the International Stock Exchange (ISE). In the unregulated, Wild West atmosphere of Second Life, new stock exchanges can be started by anyone at any time, observes Bloomfield.
No economy worth its salt could operate for long without a major scandal, and Second Life cleared this milestone in July. The WSE temporarily suspended trading following a run on Ginko Financial, one of Second Life’s major banks. Soon after, the Second Life Exchange Commission (SLEC) was created out of a desire to help monitor the financial markets.
When it comes to IR, Bloomfield – who calls himself Professor Buyers Sellers, an expert in ‘metanomics’, in the virtual world – thinks Second Life may ultimately have the greatest value as a proving ground for new ideas. He’s particularly interested in how new regulations could be tested in Second Life before they’re unleashed on our real-world economy.
‘In Second Life, it’s still a fact that if A is going to give B money in exchange for the promise that B will put it to good use and give it back plus some, you need institutions that will foster confidence and practice reliable reporting of financial performance,’ says Bloomfield. ‘The rules of economics don’t stop operating.’
