Last week, Google released Lively, its own system for building virtual online environments. Unlike recent forays into virtual worlds by IBM and Sun, which concentrated on the technology’s business potential, Lively seems to be aimed at the consumer market. It also has a number of features that may make it more attractive to first-time users than popular virtual worlds like Second Life. Nonetheless, some industry insiders question whether Google approached Lively as a business initiative or just one interesting project among many.

Sibley Verbeck, CEO of the Electric Sheep Company, a virtual-world service and software provider, welcomes the credibility that the Google brand brings to the industry: “There is no question [that Lively] is a very positive thing. Whenever a major, innovative company makes some kind of bet, it gives validity to the industry.” But, he adds, “from my perspective with experience inside the industry, I do not see any evidence that it was built based on use cases. When I look at the feature set for what is needed by any virtual world, it is missing features.”

That type of response may not be surprising considering Lively’s origins. It was originally one of Google’s “20 percent” projects: the company’s engineers spend one day a week on projects that interest them, unrelated to their day jobs. But in an e-mail, Niniane Wang, an engineering manager at Google who chartered and led Lively’s development, says, “I would like to set the record straight that this started out as a 20 percent project but turned into a full-time project, with a dedicated team that put in a lot of hard work.”

Unlike Second Life, Lively is not a continuous virtual environment in which users can acquire land and property. Rather, it’s a system for building customized virtual rooms that other users’ avatars can visit. But again unlike Second Life, it doesn’t require the user to launch a separate application in order to enter a virtual space. Links to rooms can be embedded in ordinary Web pages; clicking the link will launch the Lively plug-in inside a browser window (or prompt the user to install it, if he or she hasn’t already done so). Within a Lively room, you can add picture frames that display images from the Web, and Google provides tools for integrating content from other sites that it owns, such as the Picasa photo-sharing site and YouTube.

Another feature that seems aimed at users unfamiliar with virtual worlds is Lively’s navigation system: you just drag your avatar around with your mouse. But while the system may be easier to learn to use, it’s less versatile than the keyboard shortcuts common to video games and most other virtual worlds.

The most telling difference between Lively and other virtual worlds, however, may be that it does not yet permit users to create their own content. In game worlds such as World of Warcraft, all of the content (mountains, trees, sofas, swords, pictures, lights, pathways, and the like) is created by professional designers. In worlds such as Second Life, all of the content is created by “residents,” or users.

Developer content is of very high quality, but developers typically struggle to keep up with user demand for new content. Resident-created content can be amateurish and even offensive, but it easily keeps up with demand. Google has attempted to find a middle ground between the two, partnering with professional virtual-world companies such as RiversRunRed and Millions-of-Us, which provide content.

“I think Google has been wise to limit the extent of custom content creation to a select group of developers–for the time being,” Justin Bovington, CEO of RiversRunRed, wrote in an e-mail. “Many brands have experienced pollution and even counterfeit of their brands in other 3-D worlds or environments–not to mention the questionable material that users put forth that led to a tarnished image for Second Life.”

Lively’s approach can be limiting, however. Second Life features about 20 plants created by its parent company Linden Lab, for instance, but there are thousands of plants created by Second Life residents. A quick tour of Lively turned up only 11 plants. Users also have recourse to only 11 different avatars, although their hair and clothes can be customized.

Mark Young, who does design work for Google, hinted on his blog that the company is working to allow user-created content. Wang added, “We plan to let users create their own content, but we don’t have any details to announce at this time. It’s definitely a feature that users are clamoring for.”

Since Lively is a system for creating 3-D chat spaces, it competes more directly with startups like IMUV, Vivaty, and Vside than it does with Second Life. Nonetheless, whenever a company the size of Google enters a new market, it demands attention. In a statement, Mark Kingdon, CEO of Linden Lab, said, “Google’s entry is strong validation for the development of virtual worlds.” He went on, however, to emphasize Second Life’s advantages: its immersiveness and its working internal economy. “In Second Life, unlike any other virtual world, the economy is the experience,” Kingdon said. “Users are highly motivated to create and transact in Second Life to the tune of almost a million dollars a day in user-to-user transactions.”