Seriously, there's money in this?

A surprising amount. Though one can participate on SL indefinitely with a free account and without spending any money on goodies within the game. Linden Lab posts weekly SL economic stats on its home page. Analysing those numbers, writer/analyst Tristan Louis suggests that the 35% to 40% of SL residents who logged into the system during a recent 60-day period spent an average of US$50 to US$60 per week -- that's real-world U.S. dollars -- in Second Life. Louis estimates that per-day spending in Second Life is just north of US$115,000, and it's rising.

Who's making that money?

Linden offers premium accounts, which provide for property and a small Linden Dollar stipend, and leases land for development. Owning a patch of terrain (land or sea; some of SL's most impressive constructs are underwater) gives regular residents a place to keep their stuff as well as a place for SL friends to check in, leave messages and so forth. There are charges for uploading items or material and for placing in-world classifieds.

The fancy commerce, however, is based on in-world sales of goods, services, games and so forth. Many users spend money to upgrade their avatar's wardrobe, buy unusual objects and develop their (un)real estate. Would-be retailers can even build their own stores or even rent mall space for their offerings.

Second Life now even has its first "paper millionaire." Ailin Graef (known in SL as Anshe Chung) is believed to have accumulated the equivalent of over US$1 million on the site. Graef and her avatar are both real estate developers.

Are there problems? Security issues?

Rapid growth -- Linden claims that new sign-ups are growing the world by around 38% each month -- has led to both server instability (last month's launch party for In The Grid, an online magazine reporting on and in SL, was postponed due to server problems) and interest from the usual malware contingent. Nights and weekends tend to be busy, and users with slower machines may find the experience to be much less than pleasant.

In November, hackers developed a program that places spinning gold rings throughout SL. Pretty, but in fact a form of "grey goo" that slowed down the servers and prevented residents from logging on. The attack was defanged within the day, but concerns remain that SL has the potential to be a rough neighbourhood. (The possibilities for sheer weirdness have not escaped troublemakers, either; it's not uncommon for Second Life events to be disrupted by griefers.)

On the client side, Second Life requires its own software, and that software requires that certain ports (443/TCP, 12035/UDP, 12036/UDP and 13000-13050/UDP) be opened on your firewall.

More broadly, Second Life is treading new intellectual property ground, which has raised issues of ownership, copyright and even personality rights. Lawyer Mark Bragg has been suing Linden Lab for nearly two years over a questionable land deal. Lawrence Lessig's recently released new edition of Code uses Second Life activity to illustrate various thorny IP issues.

A recent griefing incident at an SL event held by Ailin Graef/Anshe Chung led to Graef's real-life legal representatives making copyright violation claims against journalists covering the attack. And a hack called CopyBot struck at the heart of the economic system, allowing users to duplicate any SL goods without paying creators for them.

Some SL residents chafe at the amount of control Linden Lab retains over Second Life. Substantial changes to the environment are often unilaterally imposed, and some business owners have planned for conditions in SL that changed without warning and with no recompense. (This writer is unaware of any form of insurance that would cover, say, massive terra re-forming in SL.) Also, SL requires proprietary software, and upgrades are mandatory, though free.

Meanwhile, ownership leads to commerce leads to taxation -- maybe. A congressional committee has been examining the issues incumbent on taxing virtual economies. That report is pending, but at least one committee member is opposed to taxing SL revenues.

As with the Net at large, questions involving jurisdiction, identity and the ability to detect and investigate illegal activity are apt to arise as Second LIfe progresses.

Where can I find out more?

Linden Lab does an extensive FAQ for potential residents, and, of course, you can always sign up and try it for yourself, though many new residents spent more time fighting the navigation and attempting to interact than actually exploring. Turns out being able to fly isn't as much fun when you can't control it.

Also, Sybex Publishing has just released Second Life: The Official Guide, which offers information on the Second Life economy and on the scripting language used to create objects there, as well as basic guidance on SL events, culture and navigation skills.