How fitting, since Second Life, a piece of software which allows users to move "avatars" representing themselves around in a three-dimensional space and decorate themselves and their virtual land, resembles nothing so much as a failed academic experiment.

Linden Lab, the maker of Second Life, has raised $19 million in venture capital from a star-studded list of backers, including Benchmark Capital, the backers of eBay; eBay founder Pierre Omidyar; Mitch Kapor, the founder of Lotus; and Amazon.com CEO Jeff Bezos. But the last infusion came nearly three years ago. The company charges fees on people and companies who own virtual land in Second Life, and also issues a currency, Linden dollars, used to trade goods in-world. Kapor, the company's chairman, told the Financial Times last year that it was "absolutely in the ballpark of profitability."

Second Life may well be on the verge of profitability. But it is firmly headed into irrelevance. It is impossible to imagine another BusinessWeek cover story like the one it garnered in 2006. Reuters closed its Second Life bureau last year. The former bureau chief, Adam Pasick, told PBS's Mark Glaser that there was no longer a there there:

We were primarily interested in Second Life as a business/commerce/finance phenomenon, covering it like we would any small but fast-growing economy in the real world. The bureau is now closed. Essentially the story we were there to cover has moved on.

His reporter, Eric Krangel, who now writes for Silicon Alley Insider, was more trenchant:

The very things that most appeal to Second Life's hardcore enthusiasts are either boring or creepy for most people: Spending hundreds of hours of effort to make insignificant amounts of money selling virtual clothes, experimenting with changing your gender or species, getting into random conversations with strangers from around the world, or having pseudo-nonymous sex (and let's not kid ourselves, sex is a huge draw into Second Life). As part of walking my 'beat,' I'd get invited by sources to virtual nightclubs, where I'd right-click the dancefloor to send my avatar gyrating as I sat at home at my computer. It was about as fun as watching paint dry.

What's left for Second Life? Community meetings, underattended cultural events, and education. CNN uses its Second Life "island" to hold meetings with volunteer reporters. WGBH threw a virtual concert with a grand total of 70 attendees. And the Modern Language Association, that bastion of English-department wonkery, is pursuing the idea of using it to hold meetings.

Imagine a dry academic conference enlivened with a few space-alien avatars. Deans with mohawks and tight leather pants! Only compared to the life of a university professor might Second Life actually seem exciting. We look forward to the news that Linden Lab has sold itself to an academic consortium. It's where the virtual world belongs.

The notion of a metaverse has long fascinated geeks. The idea of "avatars" — three-dimensional representations of the self rendered in pixels, often fantastical or surreal in nature — wandering through a computer-generated environment has been explored in the science-fiction novels of Neal Stephenson, William Gibson, and Bruce Sterling, among others. The Matrix trilogy introduced the idea at multiplexes from coast to coast.

And yet unreal worlds have never taken off in actual reality. Philip Rosedale, the creator of Second Life, once showed me screens at the headquarters of his company, Linden Lab, which monitored in real time the number of people logging in. They peaked at 50,000, the maximum simultaneous capacity of its servers. That's not a virtual world; that's a midsized town.

Anecdotally, many of Second Life's users are there for virtual sex. (The company has banned gambling, so there's little other reason to go there.) The PG-rated Lively, censored by Google, did not even have that; its only draw was innocuous chat, with the occasional subversive attempt by users at raciness.

No wonder that news organizations, drawn by the visual appeal of the service's 3D graphics, aren't writing stories about Second Life anymore. Reuters, at the height of the frenzy, opened up a bureau; its Second Life correspondent stopped filing copy since September, having left to write for a blog, and the wire service has not replaced him.

The most recent noise to come out of Second Life has been an uproar over price hikes. Second Life users periodically hold colorful protests in the virtual world — probably the most entertaining thing that ever happens there — over this new rule or that new rule. They are likely to become more frequent, as Linden Lab, to survive, focuses on squeezing more revenue out of its existing customers, who pay the company "taxes" on their virtual real estate and convert real money into the company's imaginary currency, Linden dollars.

Online 3D environments are not a fad; millions inhabit them for hours, sometimes days at a time. But they do so in networked videogames like World of Warcraft, where there's a clear purpose to being there — even if it's just having fun and wasting time. Second Life, Lively, and virtual worlds like them amount to glorified chat rooms, and while chatting is a fundamental human activity, it's hard for anyoen to make money on it.

As for Kingdon, moving from Organic, a respected agency, to a much-derided startup, would seem a step down. "I'm interested in the whole notion of social computing in three dimensions," he told the Wall Street Journal. Nonsense; Kingdon is surely interested in money. Linden Lab may not be his meal ticket, but it is backed by Benchmark Capital, the powerful venture firm behind eBay. Kingdon's assignment will surely be to get Linden Lab sold, at which point Benchmark will likely reward him with a more promising CEO job. For that task, and that task alone, a silver-tongued marketer actually may fit the bill.

1. The big empty. Linden Lab makes money from land sales, a business model which all but guaranteed vast tracts without users. That, in turn, worked against Rosedale's dreams of attracting advertisers. Far too late, he realized that Second Life needed a search feature, so users could migrate to popular spots, where advertisers could target them. Most people logged off bored. As it is, only 600,000 of 13 million registered users visit regularly.
2. Refusal to fix what's broken. Second Life doesn't work well. Nothing about the experience is intuitive nor "fun." Instead of addressing obvious bugs, Rosedale evangelized Second Life as a grid-computing platform.
3. Calling in the Feds. Gambling was tolerated in Second Life — until Rosedale brought on a government crackdown. He invited the FBI to tour the world on multiple occasions in some misguided effort to prove his virtual world was clean=cut. The result? Stings which banished the second-most popular activity after sex.
4. Publicizing misleading stats. Rosedale always had impressive numbers at the ready. 830 residents earn $1,000 a month? Most reporters ate it up, forgetting that Rosedale was saying only 1 in 1,000 residents manage to earn a five-figure annual income from his world.
5. Regulation. After a few bank runs and underage orgies, Rosedale backed away from his anti-regulation stance. Second Life banks now need real-world charters and users must give up anonymity so Linden Lab can police Second Life's sex parlors. The rules are draining what little fun there was.

Philip, we'll miss you.

(Photo by Lane Hartwell)

Since so many of the virtual world's lending institutions are private enterprises, they've gotten away with breaking shady promises, like 200 percent interest rates. (Honestly, who would think that deal was legit?) Linden Lab, the maker of Second Life, has finally decided to clean up this problem, like its gambling infestation, by simply banning all Second Life banks, hoping to avoid runs like that on Ginko Financial last August. Anyone looking to run a virtual financial institution will now need to possess a real-world charter — another bit of regulation Philip Rosedale pledged to avoid. If only this were enough to pop Second Life's bubbly fictional economy. Sadly, there are more than enough clever virtual shysters entrepreneurs to keep the farce going.

A surfeit of self-expression: San Francisco may not have furries actively roaming its streets, but you'd be hard pressed to find another community so accepting of trannies, facial piercings, fauxhawks, and assless chaps. Oh wait — this June, San Francisco will have furries actively roaming its streets. See? Just like Second Life.

Toleration for public sex: Second Life has always been plagued by a seedy, fornicating underbelly. San Franciscans simply need visit SoMa.

City of lost souls: Anyone who visits San Francisco's Civic Center has witnessed the crazies, drug addicts, alcoholics and other afflicted. On Second Life, they just don't stink.

Statistical self-delusion: San Franciscans believe they're the center of the universe, though the city they live in isn't even the largest in the Bay Area. The same can be said of Second Lifers, who can't believe that the other 99.7 percent of the world doesn't want to join their party.

A plague of wantrepreneurs: When Anshe Chung became the first Second Life millionaire, she started a gold rush, though one mostly without the gold. People have flocked to the virtual world in the hopes of striking it rich, just as countless misguided startuppers race to South Park in hopes of running into a venture capitalist.

A ghost town much of the time: With a population of 744,000, it's hard to argue that San Francisco is a big empty, but if you've tried to find a restaurant open after 10 p.m., you might start to believe it. Much like Second Life, whose residents are all too fleeting in their visits.

A sense of impending doom: There's no escaping it. Some day all those Second Lifers will wake up from their bad dream and realize the whole experience is just some terrible pyramid scheme. It will crumble into ruin — just like San Francisco after the Big One strikes.

Of course, Kirkpatrick is easily hypnotized. The Fortune scribe eagerly regurgitates statistics fed to him by Rosedale. Why has the hubbub in the U.S. died down? "75 percent of users are international." It has nothing to do with Second Life's unappealing ghost town appearance to marketers and new users alike. Even dedicated Second Life marketing agency Electric Sheep is slashing staff and focusing on other virtual worlds.

Numbers meant to impress fall flat when you realize that usage numbers show only a small, dedicated core of users that's far from critical mass: "A year ago, the service hosted about 26,000 at the busiest times. Today, as many as 58,000 people can." Rosedale boasts that Second Life is comprised of 98 terabytes of data whereas the infinitely more popular World of Warcraft is only a few gigabytes. But I bet Linden Lab would trade its terabytes for 9 million paying subscribers.

Rosedale "vows" to make Second Life a "stable public utility," Kirkpatrick simperingly writes. A utility? Wouldn't that imply, well, use? (Photo by Lane Hartwell)

Rosedale's first order of business with the BBC is to dispel rumors that Ondrejka was fired because of a shift in the company's direction. Then he blathers on, unstopped, about the untapped potential of virtual worlds, "how we're at the early stages of something very big." (Right. Because we all want to be able to turn to our neighboring virtual Amazon.com browser and ask for purchasing advice.) Thanks to the Beeb. Without your bully pulpit, Rosedale would be left talking to tens, if not dozens of users in a Second Life amphitheater. (Photo by Lane Hartwell)