The congressionally mandated report, "Virtual Worlds and Kids: Mapping the Risks," calls on operators of virtual worlds to take steps to keep explicit content away from children and teens, and recommends parents become familiar with the virtual worlds their kids visit.

"It is far too easy for children and young teens to access explicit content in some of these virtual worlds," said FTC Chairman Jon Leibowitz. "The time is ripe for these companies to grow up and implement better practices to protect kids."

The FTC examined 27 online virtual worlds including those geared toward young children, teens, and adults. The FTC found at least one instance of either sexually or violently explicit content in 19 of the 27 worlds. The FTC observed a heavy amount of explicit content in five of the virtual worlds studied, a moderate amount in four worlds, and only a low amount in the remaining 10 worlds in which explicit content was found.

Among the 14 virtual worlds in the report that were open to children under age 13, seven featured no explicit content, six contained a low amount of such content, and one contained a moderate amount of content. Almost all of the explicit content found in the child-oriented virtual worlds appeared in the form of text posted in chat rooms, on message boards, or in forums.

The report found a greater amount of explicit content in worlds that were geared toward teens or adults. Twelve of the 13 virtual worlds in this category contained explicit content, with a heavy amount observed in five worlds, a moderate amount in three worlds, and a low amount in four worlds. Half the explicit content found in the teen- and adult-oriented virtual worlds was text-based, while the other half appeared as graphics, occasionally with accompanying audio.
 

It is possible that that will soon change, as the LLmedia API has been released to developers. This API lets developers create plug-ins for the Second Life viewer to bring more media-rendering capabilities to the virtual world. Linden explains on the Second Life Blog:

Currently, Residents who own land have the ability to specify a select set of media types to be used on their parcel through the Land Management settings.  This allows Residents to do interesting things like watch videos, show Web pages to visitors, or just add ambiance to inworld spaces with streaming music.  However, the types of media that could be used inworld has been limited to only those that could be rendered by the set of media rendering engines embedded in the Second Life Viewer, such as Apple QuickTime movies.

The LLMedia API will change this by enabling developers to create media rendering plug-ins for the Second Life Viewer. In the future, by installing these plug-ins, you’ll be able to enjoy a wider range of media inworld, without having to download new Viewers to do so. For example, when a plug-in is developed for rendering an additional video format, you’ll be able to view media in that format inworld after downloading and installing that plug-in, without having to wait for a new version of the Second Life Viewer that includes this rendering engine.

Is this going to create the buzz for Second Life that once existed in the days when it was even getting mentions on NBC’s The Office? I’m not sure I would go that far, but APIs tend to open up lots of room for improvement, and this one appears to be a step in the right direction for usability of the virtual world.

Linden says it’s going to take some time for Second Life to get to where it needs to be, but considers this an "important step" in the right direction.

In fact, half of online kids (age 3-11) will be regular frequenters to virtual worlds by 2013, predicts eMarketer. In its new report, "Kids and Teens: Growing Up Virtual", the research firm estimates that currently 37% of online kids log on to virtual worlds each month. By 2013, that proportion is expected to rise to 50%, or 8.7 million.

Teens, too, have virtual lives. Around 3.7 million teens (12-17), or 18% of the teen population, log on to virtual worlds each month. This is expected to rise to around 25% by 2012.

However, marketers aren’t latching on to this particular medium just yet and advertising hasn’t kept pace with usage, according to eMarketer senior analyst Debra Aho Williamson. "Not surprisingly, the hype and fizzling out of Second Life, combined with the tough economy, have made some marketers skittish for virtual worlds in general."  That said, many of the virtual worlds aimed at kids are of an overtly commercial nature.

Currently, most virtual worlds are creating revenue streams for themselves and, in some cases, their members, via the sale of virtual goods, micro-transactions and subscriptions.

Investment in virtual worlds and related companies, while significant, dropped during 2008, reported Virtual Worlds Management earlier this year. In Q1 08, $184 million was invested but by Q4 this had dropped to $101 million.

"Nineteen youth-oriented properties received over $70.47 million over the course of the year,” said Christopher Sherman, Executive Director, Virtual Worlds Management . “The bulk of that was in Q1 and Q3. As more and more youth worlds came to market over the course of the year, spectators worried that the space was overcrowded. Others have seen it as a sector for opportunity, and it appears as if venture capitalists are still at least somewhat interested."

A few months back you couldn’t escape media coverage of the brave new virtual world of Second Life. Major brands were building virtual HQ’s, holding virtual meetings and developing virtual marketing campaigns. Coca-Cola, IBM and even the NBA was making its second home there.

However, all’s quiet on the Second Life media front nowadays, and many have long been watching what they believe to be the demise of the once-hyped world. But is it really on the virtual scrapheap?

Not according to Linden Lab chief executive Mark Kingdon. "You read those stories; as CEO I have to shake my head," he said. "The reality is that Second Life continues to grow; every second someone joins. Second Life is hopping."

So what are the virtual world’s current stats? According to recent reports:

- There are more than 15,000 merchants selling virtual goods.

- Over US$1.3 million worth of transactions take place each day.

- In January this year, residents spent 41.5 million hours immersed in Second Life compared with 28.3 million in January, 2008.

- The virtual world boasts over 15 million registered users.

- On average, 70,000 people are logged on to Second Life at any one time.

- The number of active users has risen 25% since September, 2008.

Just last week, Second Life’s blog announced plans to clean up the virtual streets by moving adult content and activity onto its own continent.  While estimates show that just 2%-4% of activity in Second Life would be construed as too sexy for minors, the move will mean residents can feel more comfortable about their environment, safe in the knowledge they won’t be tripping over avatars shooting-up or engaging in lewd sex acts. According to a report in the Washington Post, the “adult continent” will require age verification before it can be accessed. 

Perhaps, despite the lack of hype and media-coverage, there is still life left in the virtual world yet.

Land mass in Second Life has also seen a fair amount of growth, growing by 23% to just under 2 billion square meters:

Resident-to-resident transactions matched the previous high of $102 million:

And the volume on the LindeX (virtual currency exchange) was higher than ever as well:

Linden Lab is sadly expecting a slowdown in land growth in the fourth quarter, perhaps as people realize that first life problems might trump those of the virtual world. Or perhaps we should all just start living in virtual worlds.

The virtual world will feature games, avatars, and social networking connected to the series.

The network is also expected to launch Monkey World, a social networking and massive multiplayer game that is an original concept that is not associated with any of its current franchises.

Nickelodeon is also creating a virtual world around its Neopets site called World of Neopia, and will add a paid option to Nicktropolis, the virtual world that is split into sections based on Nickelodeon television shows and other properties. SpongBob, Monkey World and Neopia will also have paid layers when the launch in 2009.

Nicktropolis brings in around 1.5 million visitors per month, and the paid feature will not affect that traffic because it charges only for extra features like personalization.

Another Viacom division, Paramount Digital Entertainment is using social networking application VooZoo to allow user of the virtual world There.com to share short clips from movies and TV shows. There.com users can buy the clips for $1.

MTV Networks is also offering clips from its shows to There.com users and on its virtual world, vMTV. The VooZoo app will be available in the second quarter in vMTV.
 

The site is currently in beta and is available to try for free. The site will become a subscription based service later this quarter and fees will be $9.95 a month, or $79 a year. The site is ad free and focuses on children ages 3 to 6. A discount to use the service is being offered if you contribute to your local public television station.

The PBS Kids Play curriculum includes skill areas in math, science, language, literacy, creativity, health development, and social studies. Most navigation on the site is text free so children who are too young to read will be able to find their way around the virtual world.

The site offers a progress chart that allows parents to keep updated on how their children are doing. The chart shows how a child is progressing through the curriculum, including how far the child has advanced in each subject area.

It takes about two minutes to get started on the site and it can be customized for up to 4 children.

"We’ve taken a comprehensive approach to children’s learning in order to address the whole child," said Ben Grimley, Senior Director of Interactive Businesses at PBS.

In this case, it’s the arrest of a 17-year-old and the questioning of four 15-year-old accomplices.

They’re crime: Stealing virtual furniture and putting it in their own virtual pads at the Habbo Hotel.

Just like in Second Life, Habbo has its own virtual economy, and the furniture was worth nearly $6,000, according to a Reuters report.

It’s not far-fetched to think that the teens, like many others, had a hard time wrapping their minds around facing consequences based on virtual crimes – it’s like your wife accusing you of cheating for having a raunchy dream.

And teenagers being teenagers are especially likely to misunderstand the concept of consequences, real world or virtual. Sulake, the parent company of Habbo Hotel boasts 80 million users, all trading in virtual currency that can be traded for "real" money.

But one thing’s for certain, the Dutch police aren’t wasting time debating lofty concepts like metaphysical jurisdiction. These teenagers are facing real penalties. 

Who Has ‘Metaphysical Jurisdiction’ In Second Life?

See, I warned you.

This conversation comes courtesy of the Association of Internet Researchers‘ annual conference, which happened recently. Virtual worlds were a focal point at the meeting, as people are investing real time, energy, and money in creating and maintaining virtual worlds and virtual economies.

Thus, it begs the question as to whether virtual worlds need real-world regulation, or if they are capable of self-regulating via a type of free market economy and existence. But to answer that question, other questions about the nature of virtual worlds and the people who have an existence in them must be answered.

It’s not too late to get out, by the way, before we get into some really mind-bending stuff.

The gods of these worlds are by no means collectively imagined, nor are they anthropomorphic or democratic. Lawyers don’t deal in world-gods, so they label them differently: the virtual world providers. An example would be Linden Labs, which runs Second Life.

So, before we can get into the nature of the virtual world and the virtual people within it, we first must understand the nature of the creator/provider. The provider has the power to delete anything and everything that exists in the virtual world. As it is not in the interest of the provider to delete everything that exists, the provider holds a power it will not yield.

However, the provider can and has motivation to pick and choose on a singular basis what does exist, including avatars, currencies, and other objects. It is debatable as to whether the provider is held in check or self-regulated by a democratic process – i.e., too much tyranny unmakes existence as avatars choose not to exist in such an environment – or if the provider exists as a sort of benevolent dictator, maintaining an equilibrium that keeps avatars happy and motivated enough that existence proves fruitful.

A reasonable person might think it was a combination of both, but the model only applies to proprietary software-driven virtual worlds where all is controlled and maintained by mono- or even polytheistic entities. Some argue, though, that even if virtual existence were governed by open source – i.e., the avatars creating in concert their reality – " it still wouldn’t solve the normative determination of what’s fair to do to players."

Still with me? Good.

But what if a third party, an evil within, a devilish presence, runs amok as a hacker with the power to strip away virtual assets that could be ascribed value in the real world. Who is accountable? The hacker thief, of course, is primarily responsible, and punishment rests with the provider, who, ironically, created a world where the hacker thief could exist in the first place.

And if so, what responsibility does the provider bear for the allowable existence of the hacker-thief? Some might say the provider is absolved of all responsibility via the end-user license agreement, a document all within the virtual world have access to, but less than one percent have read. The avatars should have known better than to make risky investments in a mostly perception-based world.

Shouldn’t there be, then, some other arbitrator in this equation – a power higher than the virtual world provider to resolve how much responsibility, if any, the provider has to its avatar subjects? And if there is a higher power, who regulates him?

Ahem.

Eric Goldman, who bears direct responsibility for the above virtually metaphysical exploration, says (paraphrased) "that’s just life." His take on whether virtual worlds should be regulated:

• no evidence of market failure. Investments still growing rapidly
• We can rely on existing consumer protection laws (such as false advertising) [to] provide substantial protection for any [virtual world] provider deception

If only it were that simple in the real world.        

Over at GigaOM they note that at the first Virtual worlds Conference last March in New York there were only nine worlds featured. At the conference in San Jose thirty worlds will be in attendance. They make a good point that many of the virtual worlds are not well known and will most likely remain in obscurity.

There are some virtual worlds aimed at children that have gained traction including Zwinktopia, Gaia Online, Habbo Hotel, Club Penguin and Whyville. So even while a handful of virtual worlds succeed what will become of those that are left behind?

Wagner James Au writes, "If the last boom’s trajectory of hubris and greed is followed, most of these are destined for obscurity- or acquisition by their wiser superiors. While kid-oriented MMOs have the most active users and thus seem like the safest bet they’re also fragile ecosystems that can fall apart with too much outside interference and commercialism."

So will established virtual worlds and start-ups be able to make money and have wide appeal at the same time? CEO of iEntry and publisher of WebProNews Rich Ord said," It seems that as they try to monetize they also try to become mainstream, which of course is the kiss of death for all things trendy."