Secrets to Success in Second Life®

I’m have been accused of being an “intellectual” because I have a blog and actually use a spell checker to verify my ortography 🙂

So, to make sure nobody takes me seriously, I have become suddenly inspired by reading yet another Dilbert book by Scott Adams, and, blatantly copying his style, here go a few intelligent tips for making your Second Life® more enjoyable:

Gwyn’s Tips for Success in Second Life®

1. Be the first to have a brand new idea.

It’s not difficult. Second Life is, after all, brand new. Whether you suddenly found an exploit or a way to trick the SL platform to work in a different way as intended, explore that idea immediately, create a new product, and sell it in-world. Excellent examples are things like the invisible avatars, the tiny avatars, animation overriders, GOM, e-Commerce websites that deliver items in-world, or primmed hair. Others, like the old ROAM system by Francis Chung, are an alternative to something that is broken – the teleport system that so often fails. And since Search is so often broken recently, it comes as no surprise that people are all eager to create their own 3rd party search engines — Second 411 and SL Query being good examples.
Imagination and creativity are crucial, but so is tinkering with SL for hours after hours. Sometimes a brand new idea is just waiting around the corner, and the first one to explore it, will become famous.

Sometimes “filling a niche” also suddenly gives birth to an amazing new market. When people understood that the SL default skins are really low-res (deliberately?), they started to create high-res skins instead. Some, like Second Skin, even replace the default ones directly on your hard disk. I mean, it was not a radically new idea — it should have been obvious — but it exploited an opportunity. Similarly, when Event support was dropped by Linden Lab last January, Tringo was invented, and this was so far the best example of something created in SL that managed to be sold in the “real world”. Even today, after years of Tringo having been invented, a huge proportion of all the entertainment events are Tringo-related.

2. Get lots of spare time.

Who cares if you have a good “first” idea, when you don’t have any time to pursue that idea? Remember, it takes time to design, implement, test and market a product in Second Life. It takes a lot of time. Nobody cares if you’re the second person to explore a new idea — only the first one will succeed. Even if you can actually deploy a better product faster, if you’re the second one, you’ll just be a “competitor”.

You cannot imagine how important this is. For instance, in 2004, when I started tweaking with some programming (I’m by no means a professional programmer, but I can google for tips and manuals as fast as anybody!), I came across XML-RPC, a way to call external applications from inside Second Life. I was utterly flabbergasted with that technology. Apparently, it was something quite new, just implemented by LL, and (almost) nobody was using it. After a few tests with the way things worked, I got a very rough prototype working and even had someone to help me with it.

We were too slow. A few months ago, SL Exchange, then Gigas/SecondServer, and SL Boutique were launched, and they quickly dominated the market. Gigas/SecondServer has seen few developments lately, but new things have been popping up every month or so. The number of 3rd party web sites grows as Second Life also grows; as always, having time to quickly deploy something is crucial. If you don’t have time to fully dedicate yourself to such a project, forget it. You’ll be quickly swallowed by someone who has the time for it.

3. Know your market.

Every week or so someone sends me a very friendly IM and asks for a quick chat. They’ve read about Second Life, how people are now really making millions of US dollars per year out of it, and want a share of the profits. They’re willing to spend their time, invest some money, and reap the benefits. And they need some tips on how to address this market.

These are individual entrepreneurs — not billion-dollar-corporations. People like you and me who have read blogs, or a feed from Reuters, or caught with C|Net or Wired on the business aspects of Second Life. They enter our synthetic world and feel lost. Where is the SL’s equivalent of the Wall Street Journal? Where do people talk about business opportunities? Where does one get access to vital market statistics? And finally — how much should one spend in advertising, and where to advertise?

If one is willing to ask these questions, half of your work is already done. The first thing to do is to spend a few weeks around, talking to people, and mostly getting lost in the SLogosphere. I’ve now added on my “Links” bar a few good starting points — magazines, e-Commerce sites, famous bloggers. I’m pretty sure that if something is worth of your attention, it’ll be covered by one of those sites, or at least you’ll get some links from there.

Armed with the theoretical knowledge, it’s time to watch things as they really work in-world. This means observation. If you want to enter the very profitable and highly competitive fashion market, you’ll have to watch for the shops and malls. What do people like to wear? Do they follow any fashion at all? How does a brand get recognition? How well do classifieds work? How do the shop owners handle refunds? What things do they do to keep a steady flow of returning customers? Is “being nice” enough? Do they sponsor events? What sources of marketing and advertising do they use?

Finally, talk to the consumers — do an “old-style” street market analysis. Ask people where they do their shopping, and why. Look at their profiles to have an idea on how long ago they have been in Second Life, and ask them questions to see if their habits have changed with their “maturity” in SL. How much do they spend on average? Do they only buy things with L$ earned in-world, or are they willing to use a currency exchange like LindeX to convert US$ into L$? Also — what kind of 3rd party sites do they visit regularly?

4. Build your in-world presence.

It’s now time to start some spending — uh, “investment”. If you’re very new at Second Life, but eager to try out a new business in-world, you’ll need very likely to invest in two things: virtual space and a web site. Do them as professionally as you can. The time is over for people who bought their first 512 m2 plot of First Land, added a few prims and a basic Linden chair, and expected people to flock to your business. Things are much harder these days on our virtual country with 2 million inhabitants. If you’re serious about your business, you’re also have to show that you’re serious.

Good 3D content design is as expensive as good web design — it needs talented professionals. In some cases, you can get away with a young (in terms of SL) and unknown builder that might do most of the work for free or for very low rates, just to list you as part of your portfolio. Finding them, of course, is no easy task. Sites like SL Job Finder, SL Developers or even SL Profiles often list requests for talented professionals, or they offer their services there. But usually the best way to get access to cheap labour is to be in-world and talk to people; watching other success cases in certain areas of business, and discreetly right-clicking on their buildings to see who has created them. If all else fails — go to the professionals. Linden Lab lists some of them on their site. Be prepared, though — these are professional companies working for “real life” wages, and they will deal with you like a web designing company will deal with any other RL customer: working under a contract and invoices. This, naturally, does not come cheap. But it’s the way to go if you’re really serious about it.

5. Advertise.

When you have your business set up and running, it’s time to bring people in. This is where most of the newcomers to Second Life fail to understand how it “works”. So, where is the mass media? There is none. Who reads the newspapers? Just a tiny percentage. Can I put billboards all over the place? You can — but you’ll get bankrupt quickly enough if you really mean to put them all over the place (Second Life is really too big).

How do you get in touch with your customers?

This is actually the hardest part of Second Life. You can definitely spend quite a bit on advertising. Around US$300 will be able to keep an ad on the Classifieds tab at the very top of the list for two weeks. Advertising on the Search Places tab is way cheaper (just L$30/week!) but it doesn’t work all the time. And advertising on the Second Life media — the above-mentioned 3rd party sites — is not exactly cheap. And how many people will see your ads? A few of those sites are now getting around 30,000 unique visitors per month. It’s not bad, but not so good either — my own lousy blog had, in November, according to Google Analytics, 3,730 visits and 7,801 page views (my own provider’s built-in statistics lists 100,000 hits per month! — one of them is blatantly lying, and I’ll trust Google Analytics more…). So this is not “good enough”.

There are no real “advertising agencies” in SL. There was something similar in late 2004/early 2005 called MetaAdverse. What happened to them is anyone’s guess. It used to be simpler to target prime locations for placing in-world ads, when the world was divided into telehub areas served centrally, and you could plan ahead by setting up billboards where the whole traffic was. This is not true any more in this age of point-to-point teleporting; and I guess that any business of in-world advertising based on “location” is sadly gone forever.

There are other ways to advertise, though. Second 411, for instance, has a HUD to allow you to make queries from in-world, without the hassle of having to open a browser. The HUD is free, and you can advertise there. infoNet, the internal terminal-based “web”, was even used by Linden Lab to inform the residents and also allowed advertising.

All these, however, seem to have just a limited effect. Most of the services and products are still offered on word-of-mouth marketing. And one great way to start the ball rolling is hosting high quality events that attract lots of people — if you host them regularly, at a good location, giving out prizes or money, and do it at different times of the day to appeal to the whole timezone-impaired population of Second Life.
One very curious side-effect of this is having the big businesses sponsor conferences with top keynote speakers MillionsOfUs and the Electric Sheep Company have been doing this with some success. The trick is always the same: generate huge events, attract the attention of the SL media (which will announce you “for free” as part of a press release or an interview, thus without requiring advertising), and get several residents to come to your event and talk about it to friends.

How hard is it to set something like this up? Well, things like Tringo games, yard sales, quizzes, or live music shows are always popular and gather dozens of thousands of people — they are usually easy to set up (live music can be a bit more tricky) and appeal to everybody. Conferences have a much more limited audience — but the attract the whole of the SL media, which means extra promotion for free. Trading off between the two extremes will define the style of your business and the type of reputation you wish to have.

It’s also a good idea to give freebies away — that are useful items — specially if you’re entering a competitive market with established businesses. If you want to enter the fashion market, it’s a good idea to have a whole package of freebies for new users — they’ll be able to pick them from common places like New Citizen’s Inc. or Yadni’s Junkyard — and hopefully they’ll remember your brand. But you can also cross-brand items: the popular clothes store Pixel Dolls used this strategy to offer Francis Chung’s “Dominus Shadow” car. Not everybody who likes cars likes clothes; offering a line of clothes with the same brand as a car name allowed both businesses to capitalise on a common brand. This is rather an exception, although it was a very successfully employed one. Real Life companies like the Canadian telecom Telus do similar things by using a cute device shaped like one of their mobile phones that can be used to tell others that you’re busy taking a call. So these strategies allow people to go for one item that they find interesting enough and raise market awareness.

But you should not expect a “mature” economy. With hundreds of thousands of creative content developers, only a very tiny part of them are truly professional and know the rules of the market. Many are still on the trial-and-error phase: see what works and exploit a niche market. If it doesn’t, you can always give away your things as freebies.

6. Have a business plan and an exit strategy.

How serious are you about your RL businesses? If your answer is “serious enough”, you should be familiar with drawing up a business plan and knowing when it’s not worthwhile to continue. People with more than enough free time on their hands can afford to try something out in their spare time in Second Life, see if it works, and if it doesn’t, give it up and move on to something else. Most of the media coverage focuses on the cases where this worked out well enough — we’re all familiar with Anshe Chung’s success story, first by designing clothes, then by running a network of shops to sell her own clothes, then picking up the required tricks of the SL real estate business, and now managing 550 private islands or so and close to ten thousand customers (of land and malls) and having her offices in China. She managed that mostly by being able to “spend enough time” for free at the beginning. Once her business “stuck on the right track”, there seemed to be no limits to what she could achieve.

Others are not so lucky. If you enter a specific market in SL, either with strong competition or a niche market that is unexplored, how much should you plan to invest, in both money and time? Make a clear and honest estimate of what your goals are. If it doesn’t work out, leave it — Second Life is still in its infancy, and changing your business is much easier than in real life (ie. your offices for offering accountancy services in SL can easily be changed to become a mega-mall or a nightclub). Many incredibly interesting projects disappeared just because their owners did not know when to stop — until it was too late. Strangely enough, it was others that picked up good ideas and, having a more solid business plan, were able to capitalise on a “failed” project and make it grow.

This is not uncommon in the real world, either. But it “smells” of the Internet bubble in the dot-com era, where people simply threw money at “good” ideas and expected them to work. More often than not, sustainable ideas were hard to find, but people simply did not know the difference — all they knew was that they had to “buy in” into the “next best idea”.

We’ve learned since then. A great idea that might work in Second Life needs financial soundness. Replicating some models of RL do not work well all the time. A good example is the whole entertainment area — people do not want to pay to get entertainment. They expect clubs and games to be for free — or rather, these days, they even expect to be paid to attend your club. So how do you make enough money to pay for rent? It’s up to your imagination. Most clubs offer other services, or have vendors for products inside their clubs, to be able to pay the rent — they offer content creators a “busy” place with lots of traffic every day (or every hour) as an alternative to the ubiquitous malls, and they provide entertainment around the clock to make sure there are always people around. So the club is just a pretext to drive people to sales. Contrast that to RL, where people expect to be charged when they enter a club. Some business models are totally different in SL, and a crafty entrepreneur has to learn to adapt to the differences.
Last but not least, a word of advice. Never trust people who tell you the way to “easy money” in Second Life. If it were so easy, all you needed to do is to follow a simple step-by-step instruction manual and “get rich soon”. This, obviously enough, includes yours truly — if I really followed my own advice, I wouldn’t be here blogging for a few cents earned through Google AdSense 🙂 Obviously enough, the ones who did, indeed, become successfull in Second Life will not tell you their secrets…

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