Those were the small engagements. Then Reuters got involved, and phase two of journalism’s evolution in Second Life was firmly under way. Last summer, Philip Rosedale met the Reuters CEO, Tom Glocer, at the elite Allen & Company media and technology conference in Sun Valley, Idaho. Glocer heard Rosedale speak about Second Life, and, according to Rosedale, the two brainstormed over lunch about having a Reuters reporter enter that world full-time. One rationale for Reuters was the business angle of Second Life. There was an economy in there. The Linden dollar, the currency of Second Life, was freely transferable to U.S. dollars (as of June 13, the exchange rate was 266 Lindens to every U.S. dollar). A resident who built cool virtual motorcycles could sell them to other residents for Lindens. Then Linden Lab would transfer that “fake” money into real money in the resident’s credit card account. (Money can be transferred either way). As in the real-world economy, someone who makes things that people want or need could turn a profit. People were trying to make careers in this world. (Of the more than 12 million transactions in May in Second Life, some two hundred were for upwards of $2,000.)

Glocer bit, and in August 2006 Adam Pasick, a London-based reporter for Reuters, was assigned the Second Life beat, with a virtual Reuters building and a special feed on Reuters’ Web site to showcase his efforts. “Honestly, it sounded like a career killer,” Pasick told me. “The whole idea sounded faintly ludicrous that we’re going to cover this world that doesn’t quite exist.” The bureau opened in October and Pasick quickly warmed to the concept, finding rich material in the crackdown on casino advertising, profiles of entrepreneurial builders, and protests against the invention that allowed users to copy anything they encountered in the virtual world (Second Life’s own copyright infringement problem). “The more I got used to things in Second Life,” he says, “the more it just felt like another reporting job.”

This infusion of journalists was just one of the migrations altering the Second Life landscape. Businesses were coming, too. Pontiac and BMW bought land and opened virtual shops. Major League Baseball built a stadium where you can sit and watch the All-Star game home-run derby on a giant in-world screen. Sundance Channel built a movie theater that shows the occasional film free. Last summer, I flew into Second Life to sneak through an American Apparel store that was a day away from its grand opening but already well publicized by the clothing company’s PR folks, who were eager to promote this new way of buying virtual versions of the company’s clothing as well as the real-life inspirations.

The spill of real-life brands into Second Life became a major technology/pop culture story of 2006. The New York Times, USA Today, Time, and more than a dozen other major news outlets, including MTV News, found it worthy of coverage. But to Wagner James Au and the other resident journalists in Second Life, this incursion of real-life commercialism and the attendant media attention were a distortion of what is significant in the world. In December 2006, the tech blogger Clay Shirky gave voice to this backlash, first in a post titled “A story too good to check,” and a follow-up called “Naming names: the tech reporters who flack for Second Life.” In the latter, he charged journalists from CNN, Fortune, The New York Times, and USA Today with a willful or sloppy tendency to misread the population count of residents posted on (then topping one million) as a measure of the number of people actually using the world. In the interest of selling editors or readers on the relevance of something—anything—happening in Second Life, he wrote, these reporters failed to mention that the number of residents was arrived at by counting avatars, not the people who have avatars. So Ute Hicks and Marvel Ousley were being counted as two residents, for example, even though both are controlled by Susie Davis. Second Life wasn’t quite as popular as the multimillion statistic suggested.

Stephen Totilo writes about video games for MTV News.