How I saved money in Second Life.

At the end of last year I spent some time away from Second Life – almost 4 glorious months in fact.  I did have to go in at least once a week to deal with the store but apart from that nothing.  I discovered that the longer I spent away from it the harder it was to force myself to log in, I was fine once I was in but eager to leave.  During that time I stopped caring about most sl things; search, the marketplace migration, the instability of the platform – even the closure of the business I used for my network vendors had a care factor of virtually zero.   It truly was a beautiful time.  I do enjoy being a virtual goods retailer but Second Life being what it is, everyone needs to come up for air and get some perspective sometimes.

Then just before Christmas I realised just how much I was neglecting it and I thought I should get back into it, so I went back to the workroom and started building.  Since then I’ve surveyed my *cough* empire and was shocked at the reality of how Linden Lab are implementing their objective of streamlining their world.

  • I’ve discovered that search inworld has been optimised once more, in fact they’ve optimised it so much that some of my smaller stores can never be returned in search.  So I’ve taken them out of search, cancelled the classifieds and am in the process of removing them and selling the land.
  • I’ve rediscovered that one of my larger parcels still doesn’t appear in search.  That classified is quite expensive but I’m almost at the stage of pulling the plug on both the parcel listing and the classified. The parcel listing drives traffic more than the classified.  LL won’t refund me for all the money wasted so far and I got tired of live chat telling me to tweak it/wait for the latest update/give it a few more days. 9 months is more than enough time to fix it and they haven’t so I can only assume they don’t want that business.
  • I’m on a version of the rc server code and I’m tired of people IMing me to say that they have an account stuck on the region/haven’t received their purchase from one of my vendors.  I’m also tired of the rolling restarts that seem to be endemic at the moment on that poxy rc.  Do you think I can find out how to get off it?  live help could only suggest I put a ticket in to ask, which of course Linden Lab have promptly ignored.
  • Inworld search is so poorly built that it isn’t even capable of keeping the returns filtered by maturity rating, add that to their inability to get some listings to actually show in search at all and to apply their relevance weightings in a manner that a reasonable person would consider logical. The only thing you can say is that it ticks the fail box.
  • Then there’s the marketplace.  The merchant back end is still at fag packet prototype level and the relevance function is once more embarrassingly bad.  I finally relisted all the items that were corrupted by the migration but now each time I make a change they lose their relevance position and of course don’t have the old xsl data which looks like it is used in the relevance calculation.  

Despite this I spent the last week considering expanding as I’ve run out of prims at the mainstore and need a new full prim region and a couple of homesteads. 

So I did some pros and cons – here’s the list:

Pros

  • I can keep releasing items. 
  • I can make the store more visually attractive and easier for shoppers to find what they are looking for.

Cons

  • I’ll be paying an extra $545 per month on top of the purchase price and there’s no guarantee I’ll see a commensurate increase in sales.  
  • I can’t divide the regions into parcels as smaller regions are penalised in search, so it makes it pointless to try to cleanly target different markets
  • There’s no guarantee Linden Lab won’t stop tinkering with inworld search or the marketplace.  Last year I found out how much of my sales depend on visibility in search and in the marketplace.  I was pretty shocked at the percentage.  The risk of a recurrence of search failing to deliver relevant results is high and the amount of effort required to keep on top of their latest changes via reverse engineering (because God forbid they ever tell us what they’ve done) and then adapt to the change before they change it again is too time consuming for no real return.
  • Concurrency and demand for Lindens is reducing.  Less money and less people means less opportunity for sales.
  • I can’t even be assured that I’ll appear in search.

Now, I really do want to expand, despite the list.  So I went to the land page and there was a button that offered me a human to chat to about it.  

Want Help?

Land specialists can answer
your questions.*

*(Available Wed-Friday 8am-6pm Pacific Time)

As you can see, they’re only available a few days a week but my luck was in as I was looking at the page as these humans were supposedly there.  So I clicked the link, thinking that just maybe the human would say something that might give me the confidence to go ahead and buy – a discount would have been nice but I’ve in SL so long that I know better than that – but I wanted to try – even if they would offer something like actual attention to my tickets and resolution to the search issues I may encounter would have been enough.

Anyway, I clicked on the link and it came back “page not found”.

Sums it up really

So, here’s what I’ve done.

  • I’ve cancelled the parcel listings and the classifieds for the smaller plots that are no longer returned in search. 
  • I’m going to close them and sell the land. I toyed with buying a 1/4 sim on mainland as a sop but the fact they’re all RC is enough to put me off that.
  • I’m not going to expand – Once I can no longer remove prims to make way for the new releases that will be it.

Which means..

  • LL have lost at least $6540 usd plus sinks per year (I was planning on converting the new homesteads to full prims later in the year as part of the growth plan, which would have uppped the overall take – assuming they could do something as simple as upgrading them)
  • I’ve gained many hours in my day as I don’t have to spend all that time setting up the new regions
  • and soon I won’t have to worry about creating anything as there’ll be no room to put it

Pretty well any other B2C outfit would have been all over me at the thought of generating that kind of income, then there’s Linden Lab.  I suppose Linden Lab think they’re creating the new paradigm for self-confessed successful online businesses that in reality are struggling –  Don’t provide service, look amateur, deliver  a shoddy product, pretend the customer doesn’t exist when they ask for help via the support they supposedly pay for and better still, ignore the key drivers for your business and make it as hard as possible for your users to use your service.

Why do they do this?  Are they really so ignorant of the underlying drivers for their world?

The Economic Truth of Earning Income in Second Life

 For most of Second Life’s existence, Linden Lab has pushed the idea of users of the service being able to make money from their labours. This line is apparently being pushed again from the appearance of articles extolling the financial opportunities in Second Life[1].

Linden Lab benefits directly by the various fees and costs imposed on transferring money in and out of Second Life, the cost of subscriptions and tier.  They also indirectly benefit from their customer base, for without the imagination and hard work of their customers Second Life would be a sterile, barren ground with minimal attractions for the casual consumer.  As one of the few virtual worlds to have become financially successful they have discovered a business model where not only do their customers pay them in many different ways to be able to create and sell their wares for the “fun” of a minimal return but Linden Lab also use the products created and the supposed financial success of these people as the basis of their marketing to attract more people to use the service. 

So, in these economic times the chance to make money becomes more of a selling point to some than the entertainment aspects of the game. This is not a bad thing in itself, as one of the strengths of Second Life is the appeal it has to many differing interests. Strictly speaking, you can make money from Second Life, the chance of it being anything approaching a decent return for the labour, time and skills learning time invested is another matter all together. 

For the purpose of this analysis I’m assuming that people who read these promotional articles infer that Second Life can provide a usable real life USD income and I’m using US figures for the comparison.

The current US federal minimum wage is $7.25 ph[2].  Assuming a 40 hour week over a 12 month period this averages $1256.66 per month.  Of the economically active in the US the number of people earning $100,000 or more is 13,215,000 or 6.24%[3].

Second life is different in that in the US 68% of adults earn an income[4]. In comparison, the number of unique users logged in during the 30 days preceding 1 Mar 2010 was 1,083,856[5]. Of those, 68948 or 6.36% of people earned 1L or more of income[6].  Obviously Second Life is primarily an entertainment platform and so the need to generate income is not the imperative it is outside Second Life and the primary focus of income generation is to service the various entertainment needs of the customers of the service[i].

In February 2010, 68948 people had a Positive Monthly Linden Flow (PMLF)[ii].  As the chart below shows, only 1.64% earned approximately the minimum wage or above.

  Total Unique Users with PMLF  Number of Unique Users with PMLF and earning over $1,000 USD per month  % of total PMLF 
Sep-09 66805 1201 1.79
Oct-09 68608 1269 1.84
Nov-09 66815 1197 1.79
Dec-09 69633 1258 1.80
Jan-10 72137 1314 1.82
Feb-10 68948 1136 1.64

And only 25 people earn more than $100,000 per annum ($8,333 per month), which is 0.0036% of all those with a PMLF, compare that to the figure of 6.24% mentioned earlier for those in the physical US economy.

Looking at the figures again, a consistent 83% of those with a PMLF earn less than $50 per month.  This figure rises to 89% when increasing the threshold to $100 per month.

  Total Unique Users with PMLF  Number of Unique Users with PMLF and earning under $50 USD per month  % of total PMLF 
Sep-09 66805 55816 83.55
Oct-09 68608 57422 83.69
Nov-09 66815 55812 83.53
Dec-09 69633 58490 83.99
Jan-09 72137 60633 84.05
Feb-09 68948 57549 83.46

These figures are gross they do not include any expenditure required to maintain the Second Life presence required to generate this income[iii].

The conclusion so starkly drawn is that there is truth in the statement that you can earn money in Second Life but the chances of it being even a partial income replacement is significantly smaller than participating in a real economy and the need for you to spend more than 40 hours a week to do so is extremely likely.

As always – if it looks too good to be true, it usually is.  As a rule of thumb in Second Life, the only person who financially benefits is Linden Lab.  Don’t be fooled by the marketing.


[1] washingtonpost.com

Second Life Financials/Future, VLENZ No 164, March 08, 2010 Virtual Life Education New Zealand

 [2] US Dept of Labour http://www.dol.gov/dol/topic/wages/minimumwage.htm

[3] Wikipedia http://en.wikipedia.org/wiki/Personal_income_in_the_United_States

[4] US Bureau of Labor statistics Mar 5 2010    http://www.bls.gov/news.release/empsit.nr0.htm

[5]  logged in users:  LL data http://s3.amazonaws.com/static-secondlife-com/reports/marketplace_stats/2010-03-01/logged_in_users.xls

[6]  in world business profits: LL data http://s3.amazonaws.com/static-secondlife-com/reports/marketplace_stats/2010-03-08/in_world_business_profits.xls


[i] LL does not identify the types of income received by those with a PMLF.  Looking at the range of income generating activities, the assumption is that this group will include amongst others; gamblers, adult personal service providers, consumer retail, content component generation and sales (subcontractors hired to produce bespoke scripts or other build components and those component makers of textures, scripts and sculpts who sell premade packs), currency traders, rental land owners and land traders.

 [ii] A definition of how PMLF is derived is not provided by Linden Lab.  Due to the breakdown of income data I believe it is the income received by the account during the month rather than from transfer from Lindens to USD or paypal withdrawals.  However this is calculated, it does not account for any account subscription or land costs paid directly to LL in USD nor does it include any USD or Linden payments to private landlords.

[iii] Anecdotal evidence suggests that the majority of those with a PMLF do not make a return for their labour.  For most customers it subsidises, or just covers, their tier payments.

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