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Second Life Mints First Millionaire

As in the real world, real estate proves a key to wealth amassed by Ailin Graef's avatar, Anshe Chung.

The first in-world millionaire has emerged in Second Life, but not without criticism from residents that some business owners have been given an unfair advantage.

Second Life, the massive multiplayer online world, allows users to log on through the Internet and create 3-D computer-generated identities. Anshe Chung, the in-world identity of Ailin Graef, has become the first avatar to earn $1 million from profits entirely earned inside the world that San Francisco-based Linden Lab has synthetically created.

Virtual property is controlled solely by Linden Lab and is sold through the company's land store, through online auctions, or for a set price between users. While businesses, such as





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, are earning revenue by selling fabricated goods or advertising in the virtual world, business people like Chung have become virtual landlords.

The Anshe Chung avatar was created in Second Life during March 2004, shortly after Linden Lab introduced the virtual world. Graef, who prefers to have her accomplishments attributed to her avatar's name, began purchasing virtual real-estate from Linden Lab and other users, and then developed it for resale to other in-world residents. (The transactions were made in Linden, the accepted currency in the Second Life world, which can be exchanged for U.S. dollars.)

However, there have been virtual speed bumps that Graef and her company, Anshe Chung Studios, have faced.

Caveat Emptor: Buyer Beware

Earlier this month, Linden Lab CEO Philip Rosedale faced harsh criticism from residents of the virtual world over price hikes for private islands. Linden Lab said that the one-time purchase cost of a private island would rise to $1,675 from $1,250. In addition, owners would be assessed a monthly land maintenance fee of $295, up from $195.

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In other words, new signups after Nov. 15 face an annual cost, including the one-time island purchase fee, of $5,215. That means new virtual land buyers will pay 45.2% more per year than previous subscribers.

"After November 15, the land market changed," said Chung during a Second Life press conference. "We

experienced a big boom in Second Life. This has pushed value of my assets above $1 million. The net value is the net value of

the Anshe Chung avatar as resident of one virtual world."

Over the past month, Second Life's population has jumped by nearly 30% to 1.67 million, and it appears these residents want their own little slice of the virtual world to call their own. Linden Lab has added 286 private islands thus far in November, an increase of only 14.2% from the end of October. As prices have been raised, residents that want to have their own land but can't afford an island are now renting virtual space from businesses like Chung's.

While the price increases drew considerable ire from users, Rosedale garnered more criticism after admitting that he had consulted land designers and long-time users, rumored to include Ansche Chung Studios, in an effort to get feedback previous to announcing the higher costs to all residents.

Some residents said that by leaking the information early, Rosedale effectively tipped off land designers and enabled them to profit from that information. This led to users pointing fingers at companies which they believed benefited from the information.

Linden Lab kept selling private islands at the previous price for two weeks after the information was released to the public and before prices were actually raised.

"I am used to virtual witch hunts," said Chung, adding that it didn't affect her business at all. "This one was kind of harmless."

Advantage or no advantage, it is remarkable that Graef was able to have her Chung avatar build a company into $1 million from a single initial investment of less than $10.

Building a Virtual Empire

Graef, who was born and raised in China and currently resides in Germany, started the company with her husband Guntram Graef, who now serves as CEO of Ansche Chung Studios. The Chung avatar paid $9.95 to become a premium member of Second Life, earning Chung a small plot of virtual land. Chung then began purchasing small parcels of virtual real estate, subdivided each and developed them for rental and resale.

"We move very huge volumes," said Chung. "That is how relatively small margins help us grow fast."

Two years after her jump into the virtual world, Graef believes other virtual world entrepreneurs could find the same level of success that she has achieved.

"There is still much opportunity for people who are innovative and creative," said Chung. "The nature of virtual economy is that it is hard to maintain margin when you do something that everybody does. You compete on a global level. But when you are innovative you have even more opportunity than in real world."

Robert Holden is staff reporter Robert Holmes. He reports often from Second Life.