Alternate Universe

It's 1 a.m., and the "Dublin" nightclub is packed. Women in trendy ball gowns and men in miniskirts dance to Bon Jovi. Simon Stevens spins his wheelchair across the room, then leaps up and starts dancing, a move he can execute only here in Second Life, a 3-D virtual world that Stevens roams on his PC screen, using an avatar—a graphic rendering of himself, liberated from his cerebral palsy. "I flourish in Second Life," says the 33-year-old, who heads a disability-consulting firm called Enable Enterprises, out of his home in England. "It's no game—it's a serious tool."

Rhonda Lillie and Paul Hawkins live thousands of miles apart—she in California, he in Wales—and until this week, had never met face to face. But they've been dating for more than two years—in Second Life. The detachment of meeting through their avatars allowed them to open up to one another in a way they might never have done in the real world. "We felt like we could go in and really be ourselves," Lillie says.

Anshe Chung is a virtual land baroness with a real-life fortune. The woman behind the Anshe avatar is Ailin Graef, a former language teacher living near Frankfurt, Germany. Three years ago she started buying and developing virtual land in Second Life to see whether its virtual economy could sustain a real life. Turns out it can: Chung became Second Life's first millionaire in 2006. Her business, Anshe Chung Studios, with a staff of 60, buys virtual property and builds homes or other structures that it rents or sells to other denizens of Second Life.

When San Franciscosoftware developer Philip Rosedale dreamed up the idea for Second Life in 1998, he never imagined that it might have such an impact on the world at large. Just as Google sexed up the way we search, and instant messaging altered the way we interact, Second Life is fast becoming the next red-hot tool on the Internet.

The numbers tell the story. Rosedale launched Second Life in 2001, but it got off to a slow start, reaching only 1.5 million registered users in 2006. In the past year, membership has soared to more than 8 million users—2 million having signed on in the last two months alone. This hypergrowth, driven mainly by word of mouth, is now attracting competitors. South Korea's Cyworld started out as a social-networking site, but has evolved into a two-dimensional equivalent of Second Life, claiming 20 million registered users from Asia to Latin America. Richard Branson's Virgin recently announced plans to create its own 3-D community called A World of My Own. By 2011, four of every five people who use the Internet will actively participate in Second Life or some similar medium, according to Gartner Research, which recently did a study looking at the investment potential of virtual worlds. If Gartner is to be believed (and it is one of the most respected research firms in the field) this means 1.6 billion—out of a total 2 billion Internet users—will have found new lives online.

The power of Second Life lies in its utility for the gamut of human activities. It's a potent medium for socializing—it provides people with a way to express, explore and experiment with identity, vent their frustrations, reveal alter egos. The likes of MySpace and Facebook have already created online communities, but they lack the three-dimensional potential for interaction that Second Life provides. The people who are coming to this online universe aren't just socializing, however. They're also doing business, collaborating on research, teaching courses, dating and even having sex. More than 45 multinational companies, including the likes of American Apparel, IBM, General Motors and Dell are beginning to use the medium for customer service, sales and marketing. Many people are coupling the Second Life chat technology with Skype, the popular audio Internet software, so they can talk out loud while interacting inside the virtual world. Or they use live streaming video to talk and see each other in real life (sitting in front of a computer screen), as well as through their avatars inside Second Life. "The unique thing about Second Life is that it's immersive," says Michael Rowe, head of IBM's digital convergence team. "There's a huge opportunity here, just as in the early days of the Internet."