Once upon a time Second Life had a Twitter level of hype. Even those without a cartoon version of themselves couldn’t plead ignorance due to blanket coverage in newspapers and magazines.

Second Life is a virtual world started by the US firm Linden Lab in 2003, in which users design an avatar to live their “second life” online.

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Combat veterans rarely talk about their most searing hidden emotions and thoughts caused by their experiences in battle, a reticence that can lead to post-traumatic stress disorder.

The Institute for Creative Technologies at the University of Southern California in Los Angeles is near completing Coming Home, a virtual world in Second Life that its creators hope will help break down the barriers to PTSD treatment, said Jacquelyn Morie, a project leader at ICT.

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We haven’t heard much recently about so-called virtual worlds such as Second Life, in which you move around with your own avatar. Critics must be hoping they have disappeared up their own ether. Actually, they are booming. The consultancy kzero.co.uk reports that membership of virtual worlds grew by 39 percent in the second quarter of 2009 to an estimated 579 million.

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Virtual worlds have had some real problems. Google (GOOG), for instance, recently shut down an animated environment called Lively only five months after it was announced. And Linden Lab, whose Second Life online community was once front-page news, has neither reached many mainstream consumers nor created an important meeting place for corporate users.

But the San Francisco company is far from backing away. The latest bet: that users will pay real money for things that only exist “in world,” as Second Life fans call it.

Linden Tuesday night announced that it has purchased two small companies–Xstreet SL and OnRez–that act a bit like Amazon.com (AMZN) in providing one-stop shopping for virtual goods from other merchants. One component of their strategy has been to make it easier to buy goods through the Web, not requiring users to enter Second Life to acquire the items they may use there. Financial terms are not being disclosed.

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In what tech pundits at Gartner Research (IT) call the curve of hype and gloom, Linden Lab’s virtual world, Second Life, has officially entered the gloom stage.

In October, Reuters pulled its full-time Second Life reporter Eric Krangel, who had written daily news stories about the virtual world’s economy for a year and a half, out of the virtual world. Krangel, who now blogs at Silicon Alley Insider, wrote that Linden Lab needs to recognize that “Second Life’s reputation is now a liability,” and that hanging out in the virtual world was “like watching paint dry.” In November, Google (GOOG) seemed to echo the bearish mood toward virtual worlds when it shut down its own online microcosm, Lively.

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Google (GOOG) has shut down Lively, a service where people log on to chat and explore 3D virtual spaces, after a few short months. The MBAs of Silicon Valley have a pat phrase for the arrival of a competitor on the scene: They say it “validates their space.” What does it say, then, that Lively is gone? It means that Second Life, the best known of these unreal universes, is doomed, too.

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.

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A Nashville blues musician named Von Johin has been signed to a record label, thanks to his free performances on alternate computer universe Second Life. Von Johin is believed to be the first artist signed to a contract thanks to performances in a virtual world. Aside from his steady schedule of touring small real-life venues, Von Johin also plays a weekly virtual concert on Second Life, which brought him to the attention of scouts from Reality Entertainment, who signed the bluesman after seeing his following online.

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Second Life may be getting more real by the day. In a post on the Second Life blog on Monday, Jack Linden describes the Linden Lab plan to better regulate the Mainland, the section of virtual land that’s managed directly by Linden Lab itself. With the implementation of a Department of Public Works, Second Life residents were alerted to a Linden Lab that wants to be more involved and regulate more of the user experience.

The new plan is still vague, but seems to center on the concept of zoning. One of the most frequent user complaints is the proliferation of ad farms in-world where a virtual world parcel is filled with nothing but ads for other in-world businesses, and the post suggests that Linden Lab will take steps to control what is viewed by many in Second Life to be akin to an adult bookstore moving in next door.

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Here’s the metaverse mystery of the week: This strange new private island with a very familiar name recently emerged on the server grid of virtual world Second Life. Spotted yesterday by Second Life blogger Tateru Nino (and confirmed when I checked the world’s dynamic map today), we have to assume it’s an official Nintendo property. When someone buys a virtual island from Linden Lab, they also get to name it. Given Linden’s DMCA enforcement policy, it’s unlikely they’d let just anyone dub an island “Nintendo.”

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Shortly after Will Wright released yet another version of his SimCity in the mid 1990s, I was visiting Maxis’ studios and chatting with Will about evolutionary system and self-generating software. SimCity was a city that built itself according to a few rules–which the player tweaked and tried to maximize. It was the ultimate nerd god-game, the nerd playing god. Will offered to give me a peek preview of his next project. SimCity was so cool, I was expecting something even more generative, more ambitious, more god-like–something like Spore.

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On April 17, 2008, the U.S. Patent & Trademark Office published Apple’s patent application titled Enhancing Online Shopping Atmosphere. Apple’s patent generally relates to improving the experiences that online-shoppers may have at an online Apple Store, sometime in the future. While Apple points to the obvious advantages of shopping online, such as being continuously open for business 24/7, allowing consumers to quickly use search functions to find multiple items and of course the best of all, never having to leave the house to shop. However, Apple acknowledges that they have a long way to go before delivering a more interactive experience that could match that found in the real world.

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