Working for the Linden Dollar
November 9, 2007 Leave a comment
It may be a slightly unfair to describe Second Life as a community of people who are trying to make a living by the precarious business of buying each other’s fetish gear, but I’m struggling to see how anybody could hope to make any serious money from in-world commerce. At the current exchange rate (US$1 = L$250) a business would have to be taking in nearly L$300,000 a month to pay its owner the full-time minimum wage, and it would need an annual turnover of tens of millions of Linden dollars to match a professional salary. Fashion items seem to be retailing at anything between L$50 and L$500, so a store would have to sell a lot of shoes to turn a decent profit. It’s true that design and manufacturing costs are practically zero, and retail overheads are low, but that just means that there are effectively no barriers to getting into the market, ensuring plenty of competition and undermining prices. There are thousands of shops offering wares of various types, and every one I have visited so far has offered goods that are rarely distinctive and usually ugly, and has been completely deserted.
Despite this I regularly read stories in the popular media featuring people who claim to be making their livelihood by selling virtual clothes, or shoes, or jewellery, or something, in Second Life. I could just about believe that it was possible to make some money if you had a unique product that could command a premium price – music is probably the best example, possibly art, maybe quality branded clothing if you could deter counterfeiting – but not a decent living, and not by selling the cheap crap that fills most of the stores. I can only conclude that these tales are based on wishful thinking, or perhaps are fabricated with the intention of boosting the virtual land market.
Real-estate speculation might seem a more promising route to riches, but most land packages seems to be on offer for under L$1000 (about US$4), and no one is going to become a virtual Donald Trump doing nickel and dime deals like that. Anyway there is always the risk that your investment could be seriously diluted if Linden Labs decide to plug in a few new servers and create new tranches of land overnight.
So that just leaves the personal services industry, especially that mainstay of online commerce, adult-themed entertainment. There are more than a few strip clubs dotted around the grid, but the few I visited (strictly for research purposes of course) aren’t charging enough to make them lucrative enterprises, even if they can attract the punters, which, when I was there, they were failing to do. I can see a couple of possible flaws in the business model anyway. The level of detail in Second Life, while impressive, is a long way short of photo-realism, and in an industry where image quality is crucial, that makes it hard to compete with established media, let alone real-life venues. The possibilities for interaction and a personalised experience, and the anonymity, might make up for this a bit I guess. The really big problem though is that there are plenty of people around who are more than willing to give the product away for free, so I can’t see why anyone would feel the need to pay for it.
These are first impressions of course. Maybe I’m just too old-fashioned in my outlook, and I’m not really understanding the new paradigm of the Second Life economy. There might be some way to make good money on the grid that I’m overlooking. I’ll try to keep an open mind, but I won’t be quitting my day job any time soon.