SL and Money: Is It Worth It?

As technically a new user to Second Life (SL), I’ve been trying to learn new things about how the program functions and how someone can easily figure things out without having to buy an expansion guide (see previous post for my suggestions). One reoccurring theme I keep hearing about is the concept of making money through SL. Considering how the program works, it seems like a great idea. However, I couldn’t help but to think, “To start up an online company that targets specifically SL users… Is it worth it?” After some more thought, I came to the conclusion that in the short term, commerce through SL would be a great way to make some extra profit. However, in the long run, there wouldn’t be a feasible reason to continue doing it.

The basic idea of commerce in SL involves users having a product, like a created object, and selling it for in-program currency. Then, that money can be changed into actual U.S. dollars sent via a PayPal account. Knowing how the system works, I was skeptical at first.

Then I watched a video about it. During the Google Tech Talk video, “Glimpse Inside a Metaverse: The Virtual World of Second Life,” Philip Rosedale, founder and CEO of Linden Labs, talks about the different e-commerce aspects of SL. At one point, he says:

“Users buy and sell objects […] from each other at a rate, at this point, of about five million dollars U.S. a month. And that’s climbing like 25% a month. There’s about four million transactions. The average transaction size is like around a dollar.”

Five million dollars a month? That’s a lot of money being exchanged between users for, essentially, an online game. He also mentioned in the video about the growth of an e-commerce in game by talking about an international user creating a popgun and selling it to users for $5. Even selling a handful of these guns would make a user gain a nice profit.

There’s even a new service given by Linden Labs called, “Second Life Grid,” that is dedicated to information and placement of e-commerce, business, educational, and development expansion throughout the SL program. Their resource page contains a lot of examples on how the grid can help new users and how it has worked for companies to showcase what they have to offer both in world and in real life.

While this idea looks all gold on paper, and no matter how people look at the SL engine, the reality is that it still looks, feels, and acts more like a game than a community. Granted, it’s something different and amazing to see what people can do in a world devoted to user-created media, but it is still an entertainment platform that, unfortunately, may not keep its hype up for too long.

Laura Tiffany has written a great article for Entrepreneur.com about having a business in SL, and even though she mentions how the 2.3 million users spend money in game, she does mention how the future of commerce in SL is uncertain:

“But the bottom line for entrepreneurs is, will Second Life really pan out? Or is it just hype, since the majority of people have never ventured virtually or even heard of it? Possibly both. After all, there are a lot of people who could care less about blogging, but it’s now a well-established publishing and marketing tool that’s here to stay. The audience for blogs may not be universal, but it’s big enough that some writers […] are bringing in a nice, full-time chunk of change for crafting their thoughts for the world.”

Blogs are another entertainment piece that’s out on the web. Focusing away from journalistic blogs, people who write online and whom are popular usually have a following. However, if the popularity of a particular writer fades, their blog views will decrease as people visit less, and with less people coming to the site there’s less people to spend their money. Plus, blogs are of easier access than certain online worlds, because a user only needs a basic web browser to view someone’s blog, making a universally easy way for anyone to continue reading a blog without technical issues or knowledge.

The same concept can be applied to SL. Not only is SL hard to adapt to if you’re a new user, but by the time a user really understands SL completely, they too can create content and join into the market, thereby avoiding having to purchase much of anything at all. Therefore, e-commerce within the virtual world can work well if those new to it can easily benefit from it. If, and only if, SL can keep attracting people to continually using their service, then maybe in the long run SL can be profitable enough for anyone to make some money from it.

Still, the semester has just started for my SL Adventures, and maybe I’ll rethink how I feel when I better understand this virtual world. Until then, I’m not thoroughly convinced.

Resources:

Google Tech Talk. “Glimpse Inside a Metaverse: The Virtual World of Second Life.” http://video.google.com/videoplay?docid=-5182759758975402950

Second Life. “Resources | Second Life Grid.” http://secondlifegrid.net/resources

Tiffany, Laura. “Starting a Second Life Business.” http://www.entrepreneur.com/startingabusiness/businessideas/article172768.html

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~ by Cliff Huizenga on September 3, 2007.

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