Coldwell Banker's Second Life
Don't think the Second Life land rush is over. Now a huge real estate firm is entering the 3D virtual world, as the service's headlong growth continues, reports Fortune's David Kirkpatrick.
NEW YORK (Fortune) -- Real estate deals may be slowing in the real world, but in the three-dimensional online one of Second Life the market remains hot. Now Coldwell Banker, one of the nation's largest real estate brokerage firms, is entering Second Life, aiming to help bring order to the chaotic world of virtual real estate.
Coldwell Banker will open a virtual sales office and start selling virtual land at 9 a.m. on Friday. The company released the information exclusively to Fortune.
It's more evidence that the Second Life naysayers are on the defensive. Despite skepticism, software and system troubles, and extraordinary hype, the three-dimensional virtual world juggernaut continues.
Coldwell Banker has bought extensive tracts of property on the central "mainland" of Second Life. (Most companies own "islands" scattered all over.) It subdivided this digital land into 520 individual houses and living units, half of which it will sell and half it will rent.
Coldwell, which employs over 120,000 real-world sales agents in the United States and operates in a total of 45 countries, isn't in Second Life to make money, says Charlie Young, the company's senior vice president for marketing. "In the end this is about buying and selling homes in the real world," he says. "We're trying to figure out how to reach what we call the 'new consumer'." Executives insist that any profits will be reinvested in Second Life real estate.
"We didn't want to make a play in Second Life just as a pure advertiser," Young explains. Like a few other savvy companies (One example is iVillage, which conducts tours of fun spots of Second Life), Coldwell Banker tried to figure out how to participate in the Second Life community, and "provide real value," in Young's words.
"A small number of land barons mostly control real estate in Second Life," he says, "and we thought we could bring real estate to the masses."
It's true that Second Life real estate transactions are daunting and confusing. Paul Carr, whose book "The Unofficial Tourists' Guide to Second Life" will be published April 19 by St. Martin's Griffin Press, predicts that with Second Life populated almost entirely by casual and newly-arrived users, a trusted brand that stands behind virtual land transactions will be welcomed by many.
Carr says the danger is not so much land barons like Anshe Chung (who famously claimed she had amassed over U.S. $1 million in digital assets in Second Life) as it is "people who offer to sell you the Golden Gate Bridge. For every legitimate real estate broker there are a thousand scammers."
Unlike almost every other big company, Coldwell's offices in the virtual world will be staffed with real people (in the form of avatars of course). They will not only sell virtual real estate, but also answer questions about real world transactions.
The employees will help combat a big problem of Second Life - the loneliness that sets in when you are wandering anywhere other than the sex clubs and new-member gateways. Much of the impressive virtual world landscape, even sections constructed at considerable expense by major corporations, is eerily empty.
Visitors to Coldwell's sales office (in a community called Ranchero) will, if they choose, be flown by helicopter to view available properties. (Coldwell is also selling houses in the Second Life neighborhoods Crowfoot, Elboya, Gorbash and Scurfield.)
Coldwell has designed and built its own houses, which buyers will not be allowed to alter. They will sell for about $20 (U.S.) each, lower than the average for similar properties in Second Life, says Young.
Author Carr cautions Coldwell and any other company that enters this unfamiliar world, though, to beware: "Second Life is a place of extreme reactions. Many feel there should be no commercialism there at all."
Coldwell's properties will appeal to those who want to live in a virtual world that looks like the most banal regions of the real one - suburban tracts filled with uninspired architecture. The one exception, in the Gorbash region, offers modern hillside homes with a view of a dirigible dock, a pirate ship docked in a nearby cove, and the "for sale" signs put up by real estate speculators that endlessly dot Second Life's landscape. And even the suburban tracts lie next to a casino. (Gambling is a hot Second Life activity.)
The service remains a juggernaut. Linden Lab, which operates it, shows higher numbers than ever. Almost 5 million individuals have registered for Second Life since the service began, more than double the number at the turn of the year. And when I went online Wednesday night, almost 29,000 people were in the service at the same time. That figure seldom exceeded 20,000 before January. This growth continued during the last few months even as Linden wrestled with balky software, overloaded servers and extensive system downtime - troubles it seems, at least for now, to have come to grips with.
Coldwell Banker executives were eager to be the first real estate firm in Second Life. They failed when a small Italian firm got there last week. But for better or worse, they will hardly be the last.