One of our missions is to understand the new media from a realist perspective.  It is our general view that we are in the early stages of a communications revolution that will have effects on economics, culture and society and that the revolution will be as dynamic and as dramatic as that created by the invention of the printing press - so far, so cliched (yawn!).  It is equally our view that, in the short term, the effects and its importance are often exaggerated through hype and hysteria.

Take virtual worlds as just one instance.  We have studied and participated in this phenomenon for well over a year.  It precisely falls into the category of potentially revolutionary phenomenon whose short term promise has been exaggerated far beyond what the facts will bear.  The concept comes out of fiction and fun - Neal Stephenson's science fiction novel Snow Crash - and it first emerged in the public consciousness as the massive growth of trans-global gaming.  Alternative mini-economies allow some serious small-scale arbitrage to go on between the in-world and ex-world communities.  Some games - like World of Warcraft - have ex-world economics thrust upon them and others - like Entropia - were designed with economics and trading intrinsic to their appeal.

In terms of total users, MMOG's [massive multiple online games] such as WoW are still way ahead of 'true' virtual worlds where choice is more immediately in the hands of the user because rules and regulations are kept to a minimum.  Social pressures - including some completely hysterical panic about terrorist use of such tools, fears of tax evasion from the authorities, moral panics about online paedophilia and some of the extreme but admittedly safe behaviour of participants - have resulted in creeping regulation of the first, most anarchic and still largest offer on the market, Second Life.  Such pressures have also encouraged Chinese entrepreneurs to threaten us with a highly sanitised state-of-the-art version (which has still to appear outside Beta) Hipihi.

Actual participation, however, shows us why this technology is both over-hyped and yet potentially revolutionary.  Second Life claims 9.4 million residents but there are probably only 30,000 to 40,000 persons actually gaming at any one time (maybe up to 50,000 on a good day).  The turnover is high and there may be diminishing total community returns from the fact that waves initially come in from publicity campaigns that increasingly extend the resident base away from English speakers into many smaller language communities (who can only communicate with each other).  One is soon aware (if one returns periodically after long gaps) that there is a small core group of residents who are Western otaku or who are using it for therapeutic purposes and whose probable spending power, therefore, is closer to the bottom rather than the top end of the economic range.  Many others are more transient.

If you visit any corporate site that has not been promoted almost that day in RL (Real World), it is virtually empty.  Indeed, great tracts of SL (Second Life) are empty.  Places that were once attractive and full can suddenly cease to be interesting when the owner decides to revamp something originally done for love to catch commercial traffic that may then never arrive.  Being a news hound, I dropped into Reuters last week, one of the most promoted sites, and all I found was one flying executive moving around modules and not much else.  Maybe I was unlucky.  This is certainly not an argument against virtual worlds, only a caution against seeing this first stage of their existence as being anything more than experimental.

So what sustains our faith in the revolutionary potential of virtual worlds.  Second Life's problem lies in its anarchy.  It followed the same path as all other major technological revolutions using the new communications - permission for vice.  By being anarchic, it allowed sub-cultures of violent gaming, sexual extremity (BDSM was big in SL), gender transformation and online gambling to emerge, with virtual hookers and all sorts of other strange things emerging out of the undergrowth.  We have written on this elsewhere in surprisingly positive terms but regulation was inevitable as the darker recesses of human nature presented some very real threats to the vulnerable.  Second Life is not the place to have one's positive view of human nature confirmed.  Around and alongside this 'vice', much more conventional gaming, fantasy role play, SIMS-like play, creative design and community building developed.  Finally, based on their number-crunching, corporates and even Governments (famously, there is a Swedish Embassy inside SL) turned up. 

But SL is confusing at least five different tasks - psychotherapy, gaming, community building, sales promotion and public relations - and, as my first boss said, if you sell two things, you sell neither.  Other than HiPiHi (which still does not actually exist in the market), no major competitor to SL has emerged. It is our suspicion that the tool will only become revolutionary when it learns to concentrate on function, much as Web 2.0 products such as Facebook have done, rather than on offering a general platform.  Virtual worlds are not like simple telephony or e-mail. They have to deal with multiple identity within open societies.  People are guarded.  They will want to restrict access (to themselves) to a community such as friends or associates (as Facebook does) or they will want anonymity - or they will want a platform where there are guarantees exerted by the platform owners on what and who they are facing. 

In other words, if they are not offered the protection of anonymity, people want the protection of regulation - and anonymity is only useful if you are gaming or engaged in a learning or psychotherapeutic project.  Anonymity means that allegiance to the platform is more likely going to be psychologically shallow and temporary or, quite frankly, disturbed and addictive.

The long term revolutionary potential, on the other hand, is already seen in the pure gaming projects and in the construction of associated gaming economies with real life effects.  The struggle between the US Administration and online gambling is only the beginning of a clash between the tax authorities and anarcho-libertarians.  The opportunities for evasion and complexity created by these tools are a political issue.  The psychotherapeutic and mental health aspects of virtual worlds, assuming that they can escape po-faced nannies and avoid moral panics, might transform culture in ways yet to be predicted.  Virtual worlds may become cost-effective alternatives for corporate conferencing and internal group communication that may make an enormous difference over time in reducing global energy consumption.  There may be other applications and other consequences, but weakening state authority, changing (for good or ill) general mental health and mass culture, and potentially positive environmental effects are fairly good bets for change when the next generation of virtual worlds emerges.