Friday, January 22, 2010

8 of 52 - How to make real money in SL - LL publishes Q4 results

Linden Lab revealed their Q4 and year end statistics this week. It inspired me to put all the dollars I've earned this year in a jar and having my alt sprinkle them over me.

LOL, dream on, Cristopher!

(btw, the dollar bill emitter is on sale in my shop for the crazy low price of L$10 if you can find it in the note rain.... will put up a vendor on the wall real soon now...)

Truth is, it's hard to make real money in SL, but a few people manages really well. 50 accounts took more than USD$100.000,- in profit out of SL last year, the top 25 accounts alone more that US$12 million, that is almost half a million dollar apiece. In sum, businesses took US$55 million out of SL.

The most impressive is that these figures represents actual earnings, that is money taken out of SL AFTER tier and ads are paid to Linden Lab (since I don't expect anyone to process credit to PayPal and then use PayPal to pay tier, much easier to just let your dollar sit on your balance and let the lindens draw from that.)

How do you make that kind of money in SL? That is, half a million US a year?

If you sell clothing, lets say outfits for L$400, you have to sell 337.500 sets a year. That is 925 a day, or almost 40 per hour. And that does not cover your tier, which will be a few thousand bucks, because the kind of traffic you need to handle that kind of sale have to be spread on several sims. And not to mention the cost of ads; you need to spend tens of thousands of lindens every week to make it to the top of the search.

And since no women I know will ever buy an outfit worn by 337.499 other women in SL, you have to have, lets say about 350 different outfits, each selling 1000 pieces a year. And btw, you can't expect any outfit to sell much more than a year, fashion moves on, so you need to create at least one new outfit every day.

It's probably more than a full time job, you need a few employees for clothing design, shop design, customer support and so on. This is a big operation!

Or you could make some expensive goods, like the Kama Sutra HUD. The creator claims to have sold 100.000 copies; at L$3750 a piece thats almost USD1.4 million split on a few years. But it takes a lot of creation and marketing skill to come up with such a success. Not many people do, but at least its theoretically possible to manage it on your own.

Some people makes money on land rentals. If you were in the Homestead marked, you may make US$50/month in net profit per sim, IF you have really nice sims and support. Then you would need to have almost 900 sims for rent to make half a million a year.

As these three examples show, its very hard to set up a business doing this kind of money. Which makes me suspect that these avatars are not in the clothing, scripted gadgets or land rental marked. My guess is that they are making money from the business that is powering the web: Sex.

As I understand it, lots of males are very happy to sign off 30 US/month on their CC to watch porn on the net. SL have the added advantage of anonymity; you can pay for your movies and pictures in L$'s.

You actually just need 1400 horny males paying US$30/month to watch the same porn movies also easily available in RL to make halv a million a year. 1400 customers are so much easier to handle than 337.500,-, and you certainly don't need 900 SIMs to handle them either. If 5 percent of your customers are online at any time, you need the capacity to show movies to 70 people at a time, a feat easily handled by lets say 4 sims.

OK, thats my theory. But does it make sense? Is it actually true? Watch this space next week when I hope to do an actual survey of the sex marked in SL, to check if someone has implemented my business idea already:-)

1 comment:

Cristopher Lefavre said...

"After incident, long wisdom. The experience is a good teacher" -

Yahoo! Babel Fish is such a nice tool. And somehow that feels right, like so many other chineese words of wisdom. I hope it will prove right this time too!