German startup Club Cooee has launched its 3D instant messaging service in private beta, and it doesn’t disappoint. The service is a hybrid between traditional instant messengers like AIM and 3D social networks like Second Life, allowing users to converse in chat bubbles while using their 3D avatars to express emotions, and can also share photos and links visually. TechCrunch readers can grab one of 500 invites to the private beta here.

The application is very sleek, sporting an intuitive interface and quick, good looking graphics. Each user can customize the appearance of their 3D avatar to their liking by modifying both their physical appearance and purchasing in-game outfits using Club Cooee credits. Players can converse either in private chats or as groups, and can meet in a number of public rooms designed to look like virtual restaurants and meeting places. Each player is also given a room that they can spruce up using a variety of in-game items, like televisions (which will be able to show YouTube videos) and furniture.

To monetize, the site will allow users to buy extra credits to purchase virtual goods, and will also offer premium services for a fee. Founder Alexander Jorias says that the service is also planning to generate revenue with a number of B2B partners, and that little, if any money will come from standard advertising.

While its execution is impressive, Club Cooee will have a few factors working against it. For one, there’s no way to converse over the network when you don’t have the client installed – you can’t message users via text messages, nor can you talk to them in a web interface like meebo. The windowless application may also confuse some users at first, as it can be easy to accidentally click on a desktop icon or file while interacting with the Club Cooee client. And finally, it’s Windows only at the moment (though a Mac version is promised).

Club Cooee will also be facing quite a bit of competition. There is no shortage of virtual worlds, with available offerings like Second Life, Small Worlds, Journeys (covered here), and a number of kid-friendly worlds (Google’s attempt, Lively, is shutting its doors this month).