Like many other activities, creating art in Second Life is either a direct analogue of reality or an implausible flight of fancy. It's all up to you, and in the digital world there are plenty of examples of both.
Everything's Art in Second Life
It could be argued that everything you do in Second Life is a form of artistic expression - from choosing the body type, hair color, facial features and other characteristics of your avatar to the clothes you wear in the virtual world. Using "Linden Dollars" (the form of currency in Second Life) you can purchase new clothing, or simply add new textures to clothing you already have.
Movement may not always represent performing arts, but it can - many people spend time choreographing specific movement phrases, whether for a dance night at a virtual disco or just as an elaborate way to express an emotion to a friend. There is a burgeoning economy in the area of avatar decoration, and whether purchasing or creating your own exquisite graphics, the fact is that Second Life demands personal expression from everyone who participates.
Creating Art in Second Life's Art World
However, that's not what most people think of when they think of art - it's the equivalent of getting out of bed, combing your hair and getting dressed - hardly worthy of the Smithsonian. But there is a very active community of real (or "First Life") artists who are taking advantage of Second Life's virtual community to show off their work.
There are basically two methods for creating art in Second Life; importing and internal creation.
Importing Real-World Art
One of the best-known artists in Second Life is "Filthy Fluno," whose avatar is a large African-American man with glasses, a gigantic afro, and flamboyant clothes. Filthy Fluno has many works of art in Second Life, many of which are for sale. You can buy his art and then move it to your own virtual home in Second Life.Users can also send a little real-world cash to the Munroe Gallery in Lexington, Massachusetts and receive the same work of art in tangible form, courtesy of artist and curator Jeffrey Lipsky (who is white). Lipsky creates his works the old-fashioned way, using pastels and other media, before scanning or photographing them and putting them into the virtual realm.
Many other artists have done the same - whether it's as simple as scanning public-domain art or their own works and displaying them online in Second Life. There are many galleries and newsgroups dedicated to art in the virtual realm, and like any social networking tool it is a good way for one person to get their work seen by many.
Creating Impossible Dreams
Another method of making art in Second Life has no analogue in real life, because it ignores or recreates laws of physics in order to make kinetic sculptures and performance pieces. One of these virtual sculptors is StarAx Statosky, who held his first "retrospective" in Second Life at the Aho Art Museum. While his sculptures are not in the same category as a Rodin or even a Koontz, they are admired by other Second Lifers for his digital skills the same as if he were wielding hammer and chisel.
StarAx used tools that were originally designed to enable members of Second Life to build homes, but instead he used them to build sculptures, and then applied the near-magical controls over the computer environment to make them into exciting experiences. Likewise, performers in Second Life may use a mixture of the real world - such as a recreation of the Globe Theatre painstakingly crafted out of the SL digital tools - and then include a flying Hamlet in their production.
Documenting Second Life Art
Because it is digital, though, the works are by nature ephemeral (StarAx was a victim of an updated version of the software, for example, which caused many of his artworks to stop working). Richard Minsky is an artist and founder of the Center for Book Arts in New York who has undertaken the task of both documenting the art in Second Life in a dead-tree magazine as well as bringing a serious critical and theoretical viewpoint to the growing art movement. His blog, SL-Art News, covers both types of art mentioned above as well as artistic events such as "Burning Life", the Second Life equivalent of Burning Man.
With real-world agencies like Reuters establishing bureaus and monolithic companies such as IBM purchasing Second Life art, there is a real market for the aspiring artist to establish themselves in this virtual community.