Nearly two decades have elapsed since Second Life—a multi-player role-playing video game that is considered the first iteration of the metaverse—was launched. The game, in which users create avatars and live out a ‘second life’ in its virtual world, had 1.1 million monthly annual users at its peak in 2007, before falling out of fashion.
Second Life’s residents operate much like humans in the real world: They can watch movies, start families, purchase property, buy and sell goods, get jobs and earn money. The game also includes a functioning economy, with its own currency that can be bought with and sold for fiat currency.
One Second Life user, Ailin Graef, operated an in-game persona known as Anshe Chung, who in the mid-2000s became a formidable virtual landlord and Second Life’s first millionaire through buying, developing, then renting or reselling virtual land. At the time, her holdings in the virtual world were equivalent to over $1 million in the real world, too.
Now, with the metaverse making a comeback, so too is the virtual economy. Companies are letting individuals create and own avatars that can apply for jobs and build careers in the metaverse—and earn real money for their owners.
A new project created by Singapore-based OWNFT World, plans to release 6,888 avatar non-fungible tokens (NFTs) built on the Ethereum blockchain later this month. Each user can pitch its avatar NFT—which will cost 0.18 ETH ($514) each—for starring in virtual fashion shows, music videos, and animated series. The project, called ‘Guardians of Fashion,’ or GOF, has teamed up with Warner Music Group alongside streaming networks and fashion brands to produce the videos and shows.
When an avatar is cast in a show or video, its owner receives a portion of the revenue via GOF community tokens, which can be swapped for other digital assets like stablecoins, a class of cryptocurrencies that are pegged to a ‘stable’ reserve asset like the U.S. dollar, through a decentralized exchange.
GOF’s vision is to create an NFT project that serves as a passive-income generating asset for its owners, rather than a piece of digital art that has “no lifecycle following purchase, other than to sit and hopefully acquire value,” says GOF project director Eu Wing Leong.
Digital avatars building careers and making money has long been possible, as we saw in the case of Second Life landlord Anshe Chung. In the early aughts, big brands like Amazon and American Apparel flocked to establish a presence in Second Life—similar to how brands like Disney, Nike, and Gucci are rushing to make a mark in today’s metaverse platforms.
But what’s different today is the recent rise, and mainstreaming of, digital influencers on social media—whether human, or created by humans, experts say. Today’s hyper-social and influencer-friendly world means that people using online avatars to make money could grow—in particular, using such avatars to work as online influencers to generate passive income, says Melanie Subin, director of the Future Today Institute, a research consultancy that helps businesses measure future risk and opportunity.
Digital characters like Lil Miquela—the first computer-generated social influencer (with a 3.1 million Instagram following), ushered the concept into the mainstream, says Allen. The avatar generated an estimated $10 million to $12 million for its creators via paid promotions with brands in 2020.
Catherine Allen, CEO of immersive technology research consultancy Limina Immersive, agrees that NFT avatars will initially be used in entertainment in the metaverse, like mascots for e-sports matches or musicians hosting their own shows. Companies like Encore have set up platforms whereby musicians can perform in the metaverse via augmented reality (AR) and earn income from AR-backed virtual gigs, says Allen.
Genies, an avatar agency that debuted in 2016, has “represented celebrity avatars for years,” adds Subin. Last month, announced that its avatar NFT marketplace—that lets users create their own avatars, and customize them with NFT accessories—was open to everyone, and that all creators will have full ownership of their avatar with commercialization rights to use how they like. “This is a strong signal of what we can expect to see moving forward,” with users retaining control and ownership over their avatars, but companies providing services to help make money from the digital characters, says Subin.
Still, such a use case for online avatars won’t fully replace in-person interactions, similar to how Second Life remained a niche world during its heyday 15 years ago, Subin says. She predicts that in the next few years, the upper- and middle-income people in their late 20s and 30s will become the primary buyers and drivers of avatar NFTs.
Yet Second Life for its part, may get a shot at its own second life. Linden Lab, the developer behind the game, said the number of users of its game and the in-game economy they create spiked during the COVID-19 pandemic, with in-game GDP surging 30% to 40%, Ebbe Altberg, CEO of Linden Lab told Quartz a year ago. In 2020, residents of Second Life earned, then cashed out, $73 million through buying and selling in the virtual world.
Fortune’s upcoming Brainstorm Design conference is going to dive into how businesses are building experiences in the metaverse. Apply to attend the event on May 23-24 in New York.
