The Hard Facts About the Second Life® Economy

“It’s not as good as it used to be”

When content creators complain in January about lack of sales, or landowners grumble about “a bad Summer” when plots are left vacant, knowledgeable residents shrug these off as being merely seasonal variations — they know it has always been the case. But naturally enough, the whole perception changes if you happen to time your SL business launch on the wrong moment!

So let’s see for a moment two typical examples:

Scenario #1 — Fashion Princess

Imagine that you’re a RL designer, with lots of talent, creativity, and skills with Photoshop or a similar product. You see the lovely designs being launched every day in SL by the dozens of thousands and tell to yourself: “I can do this too!” Soon you start assembling your ideas, put them to work, and sometime in October, you open up a shop with your new collection.

Spreading like wildfire through your friends, the launch of a new fashion designer in SL catches the attention of the ever watchful media. A fashionista blogger writes about your new shop; Second Style even might feature one or two of your outfits. Suddenly it’s November, and everybody seems to be buying your content! Very happily, you expand your shop, start using Xstreet SL (formerly known as SL Exchange) or OnRez Shop, buy some new plots for more shops, and the money keeps flowing in.

By December, with Christmas looming ahead, you decide to risk even more. Sales are so good now that you buy your own sim for your shop, launch a huge party for all your friends, get one of the top-notch event hosters to do a fashion show on the catwalk, release a whole new “Winter Collection”, and enjoy the success of having your items on the homepage of Second Style for a few days. That’s more than enough: on December you surpass all your expectations, get an immediate return on the invested land, and start considering to go full-time on your SL fashion designer “job”. Things look good.

Then sales in January get cut by a third, without any explanation. Fashionista blogs still talk about you. Your products are still some of the best. People still come over to your shops, but not as often as you’d like. Managing tier becomes a problem after another month, and you decide to step back from SL: selling your island, keeping the scattered shops, trying to see if you can survive on that. Clearly you won’t leave your day job for SL any more; you’ll be more than happy if you can pay for all the costs.

And by March you simply give up. So many people left SL, your friends tell you. No wonder nobody is buying your products any more. So, six months after you’ve started your fantastic business, you think it was “too good to be true” and simply close your shop, offer all content for free, and give up on doing business in SL. But you also make sure that everybody knows why: it wasn’t the drama or the lack of creativity, but just “the collapse of the SL economy in the past months”.

People will write about your meteoric rise and sudden downfall. They will blame SL, of course; your work was superb, your talent unique, your products of exquisite quality. So the problem is that not enough people bought your products. Some people will shift the blame on CopyBot (with which you will naturally agree). But mostly they will say that SL has so little people these days that no business is safe from collapsing.

Scenario #2 — Community baroness

On this scenario, you log in to SL in, say, March. By sheer luck, you avoid the drama and manage to find a nice, peaceful community, perhaps encroached on the mainland with happy neighbours. Being naturally talkative and a good organiser, you suggest them to do a party, and learn that you can hire DJs to liven up the atmosphere. Things go very well! Your friends and neighbours love the idea, and wish that you do more of the same — which you’re happy to oblige. You might be a newbie in SL, but everybody loves your parties, your communication skills, the way you organise things so well, and your friendly and charismatic outlook to live.

As ever so often in SL, some problems happen around your neighbourhood. Either griefers or other drama-lovers start to bother the community. It becomes a pain just to deal with it; Linden Lab obviously ignores Abuse Reports, as they almost always will do. It’s tiring. The solution seems to be to get out of the current land plots and start your own community.

Deciding to invest on your own private sim, you quickly set it up for your friends and neighbours. You manage to attract volunteers to build some basic facilities, then you all go and shop for extra content. Full of creative ideas, you remember what was wrong on your “old” neighbourhood: the dance floor was too tiny, you had no space for the romantic park you always wished to have, and there was an ugly shop next to your plot — but which had lovely products inside. So you design things from scratch, and with a little persuading, even get the old shop owner to move to “your” sim instead.

Things start to get interesting. At the beginning, you wouldn’t earn enough from rents to pay for tier, but that was all right, since you were not “in for the money”, just to create a new, friendly community with your former neighbours. But your parties and events are really good and attract new visitors. They ask for renting plots with you. An SL artist asks if they can do an exhibit there. Your now familiar DJ has a friend who sings lovely Celtic songs live, and he persuades you that you should enter the live music business, since you have such a cool community and a natural talent to organise those things. Soon there is no choice but to add a few extra sims — you never thought things could go so well! And by late June you’re surprised — rentals are paying off, and you don’t need to put any extra money to pay for tier. Instead, in spite of the ultra-low prices you’ve always charged to your friends, the business is really paying for itself. You buy another set of sims, thinking to develop them over the summer, and come up with something new and unexpected.

Then your DJ says he’ll be off during vacations, and apologises but will only manage to get back in September. You shrug it off; there are other DJs, or other singers. Right now, your focus is to handle those new sims and get them ready quickly. Your builders, however — former neighbours as well — are all away. A few are university students, and are busy with their exams and yearly assignments. A lot are mothers travelling with their kids for the summer. So you have no choice but to hire different people — “friends of friends”; with whom you had no contact before. At first it works well, they build some amazingly creative things… just to leave them undone and disappear without a trace. What’s going on? Perhaps you’re paying them too little? But they now refuse to reply to your IMs and emails, and you imagine that they have abandoned SL entirely.

You start to get worried. It’s now July, and you wished to launch a July 4th big party for the Americans in the community. But your DJ and singers are away; you can’t get replacements; and the nice Capitol reconstruction is just a third done, and none of the builders seem to be available. Your best friends, who might even have some building talent, excuse themselves — “we’re going home for the holiday, but good luck with the event! We’ll catch up afterwards”.

The event is a fiasco, and you know it. Worse than that, people that you’ve known for months now suddenly ‘forgot’ to pay for tier. That’s ok, since you’re not really in for the money, but… there are more expenses these days than you thought. After some talks with a few friends, you consider advertising — on Search, Classifieds, on SL-related blogs, even on “ad farms”. Another expense that seems to be worthless: one or two newbies pop up during the American holiday, but they don’t remain around. Everybody seems to love what you’re doing, but they don’t stay.

When finally getting a DJ to play at a “Midsummer Night” party, the disappointment grows. The DJ accepts to work for tips only, and having heard about your reputation on throwing out large parties, he’s confident he can make a nice income that way. But the party is another fiasco: besides a handful of faithful regulars, nobody else comes around. You weep in frustration! What’s going on with SL these days?

As summer progresses, it’s clear that the new sims will never be ready. And, sincerely, are they worth it? Half of the plots are empty all the time, and you never heard back from the tenants. And as you expect, by the end of the month, they don’t pay a thing. Suddenly “not being in for the money” makes you wonder if you haven’t spent too much already in a community that is slowly dying. After some thinking, you put up the new sims for sale — still unbuilt — and hope that one of the big landbarons pick it up cheap. That never happens. They offer you ridiculously low prices and shrug it off saying that the land market is so low that they aren’t investing much in SL these days.

It seems that the days of glory and fun in SL are finally over. When September comes, you give it up. You can still have fun in SL with the handful of very faithful friends you’ve got in SL (and yes, they come back from their holidays and are as frustrated as you are). So it’s time to give up on the fantastic community project and shake your head at SL. People are leaving so fast that no project will remain alive for long these days. It’s better to forget the bold plans and have a tiny plot somewhere in the mainland, don’t spend anything over a few dollars per month — and still enjoy it that way, without the burden of managing a whole community which, frankly, is not worth your time or your money.

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