Taking on the product-placement ad model, new San Francisco-based company Doppelganger has launched a virtual world, The Lounge, that blends the appeal of a nightclub with the advertising exposure of a billboard, writes Business 2.0 (via MediaBuyerPlanner). Interscope Records music label is among the first to have signed up to have Doppelganger build a virtual club within The Lounge for its Pussycat Dolls band, creating one big advertisement for the band and an opportunity to showcase ads for other products.

"The Lounge has interesting advertising potential," said Mike McGuire, Gartner media analyst. "Doppelganger's effort to tie the real world metaphors to a virtual world is very clever. From the perspective of music labels and bands, it's a very attractive opportunity to engage the MySpace crowd."

Building a service around social networking and instant messaging, founder Andrew Littlefield - a former BEA Systems engineer - hopes to attract the MySpace crowd by focusing on music and expanding social connections.