U.K. dance music company the Incentive Music Group has set an office in virtual online world of Second Life.

The London-based operation -- run by Nick Halkes who set up XL Records and developed EMI's Positiva Records dance label -- believes Second Life will become a powerful promotional platform and a way of discovering new artists. Halkes also plans to attract and discuss licensing deals with potential partners, offer digital download sales from a dedicated online store and stream artist videos.

"If we're not the first independent to set up an office in Second Life, we're the first to promote and publicize it," Halkes tells Billboard.biz. "There are all sorts of things going on there. It's a fast-moving environment and we hope we can take artists and writers from Second Life and build careers for them in the real world. It will also broaden the reach of our own talent."

Artists who have played virtual concerts on Second Life include Regina Spektor, Duran Duran and Suzanne Vega, while Sony BMG has set up an entire "island" to promote its brand.

The Incentive Music group was launched in 1999 as a joint venture with Ministry of Sound and a third party private investor, registering hits with "Miracle" by Cascada and "Pitching" by Hi-Gate. Incentive Music Publishing is also active with a wide range of clients. Halkes also maintains a long-standing A&R association with Liam Howlett of the Prodigy.

Second Life is a 3-D virtual world with more than seven million registered users and companies worldwide, created by US-based Linden Lab. Its virtual economy is conducted in the Linden Dollar, which is convertible to real currency at special exchanges.