Study Suggests Real Life Luxury Item Sales *Improved* By Knockoffs & Noobs -- Also True With Second Life Content?

It's one of Second Life's greatest mysteries: though the sale of virtual items that are cheap knock offs of popular (and more expensive) Second Life brands remains a persistent and painful social problem, the total amount of Linden Dollars spent between users continues increasing. This led me to suspect SL content theft is actually a marginal part of the overall SL economy. However, I may be wrong, because the recent findings of an MIT professor suggest another, and I think better explanation. Put simply:

Maybe Second Life knockoffs actually increase the sales of the original brand.

This at least seems to be the case with real world luxury items, business professor Renee Richardson Gosline learned. After interviewing hundreds of consumers who knowingly bought knockoff luxury goods (fake Guccis, etc.) Professor Gosline found that 46 percent of them ultimately bought the legitimate version within two years. In other words, the act of buying knockoffs doesn't diminish a desire for the real thing, and may even increase it.

Another Gosline study will be instantly recognizable by Second Life's many fashionistas: she discovered that when consumers judge if a luxury product is a knockoff, they generally don't scrutinize the product's quality. No, they do something else:

To identify knockoffs, consumers scrutinize the overall quality of the person using the product!

When looking at real and knockoff luxury bags displayed on store shelves, Gosline found, consumers were not confident they could to discern the legit model, and were less likely to pay more for the product.

But when Gosline showed the same consumers pictures of the bags in use, their confidence level [jumped], and they were willing to pay an average of $783 for the bags. Why? Based on their comments, the people in the survey group were deciding if the person in the photo matched their preconceived notion of who is likely to own such products... In a sense, consumers are not so much rendering a verdict on the bags as deciding if the people measure up.

Whole Second Life blogs, of course, are devoted to savaging poor Second Life fashion choices. And taking these two Gosline conclusions together, I think we have a very plausible explanation for why in-world spending keeps increasing: it's growing not in spite of content theft, but because of it. New users tend to buy cheap, knockoff SL products, but if they remain in-world long enough, they eventually find and purchase the real brand. And this process is greatly helped by the social ridicule around cheap and shoddy knockoff products that noobs generally wear. In both cases, it seems the very existence of knockoffs increases the market for originals.

Assuming of course, this real world economic phenomena applies to Second Life. My strong sense is it does, and Professor Gosline gives us a strong insight in how the virtual economy works too. But I put the question to SL content creators: do you think her findings are applicable to your own consumers? How many former owners of knockoffs came to you looking to purchase the legit version?

Pictured: Facebook page cited by Prof. Gosline as an example of phenomenon she studied. Hat tip: Cory Doctorow at BoingBoing.

Comments

[Isadora Fiddlesticks]

interesting post...i look forward to the comments by the designers and various groups about this latest finding.

[Sioban McMahon]

Just my gut feeling, but I suspect it doesn't work the same way in SL. In RL, you buy the bag from the guy down at the flea market. It has the look, but the clasps don't work as well, the leather starts to wear in funny ways with use, but you like the way this thing looks hanging from your shoulder. I can see how it sets you up for the real thing. In SL, the knock off looks the same and looks are all you have in SL (unless it's scripted, of course). The knockoff won't fall apart as they tend to do in RL. Your need in SL, for the look, is met indefinitely.

[Tenshi Vielle]

What's your agenda?

[CyFishy Traveler]

As Sioban pointed out, a 'knockoff' in SL usually isn't a bad copy of the original--it's an exact copy of the original, so the notion that one would eventually 'move up' to buying the proper version doesn't quite hold water.

However, there may be something to it as long as there is social pressure to reward original content creators for their content. When I discovered that a freebie hair I'd picked up was, in fact, ripped, I made a point of going to the original creator and buying that very design--and ended up getting a few other hairstyles while I was there.

[AnnOtooleInSL]

A "Knock off" of a designer item in SL?

OK first off an RL "designer item" like a Gucci handbag is against the TOS unless you are Gucci because of trademark and copyright infringements. So it is stupid to buy such things since they can be black listed at any moment.

Let's go technical: If a designer has a product made of a sculpt that designer made which is not available for sale and someone creates a "knock off" of it then it is not a "knock off". It is a counterfeit made with copybot. And people that use copybot are not going to be buying the real deal ever.

Then in SL there is always the possibility the "original designer item" is priced lower than the "knock off". So it can be... complicated.

Therefore there is no direct correlation possible IMHO.

[Kesseret]

Are knockoffs, by law, considered copyright infringement? That's the heart of this matter and last I checked: "Under U.S. law, a company can't copyright a design, but it can register elements of that design as trademarks. "
For example: the Burberry pattern and my alma maters tartan is another example) and using those is infringing on their copyright.

However creating a bag that is similar to a Prada bag (not using specific design elements that are protected under copyright)is a knockoff. There's knockoffs of SL resident created items in SL now and there's no doubt there's knockoffs of RL designer items in SL as well.

Personally I think this study is pretty accurate above. Knockoffs in the meatspace world do tend to encourage buyers to purchase the real thing. It's something the RIAA has yet to learn.

It's been clearly established that meatspace marketing and business practices don't all work in a virtual world (some do, before anyone lists some) so this study may not work in Second Life. Exactly what are you defining as knockoffs? Items that are infringing on another resident or a RL copyright? That's not a knockoff that's copyright infringement.

We pass along the social interaction from real life into Second Life. That's where you get the ridicule of newb clothing, herd mentality, whatever you want to call it. But it's pretty clear that amongst the residents I am around they won't buy items infringing on another resident's copyright but I'm sure they've bought knockoffs- even without knowing.

My 2L, even as jumbled as they are.

[Angie Mornington]

First of all I think it is highly irresponsible of you to even suggest that content theft in ANY way helps the rest of the SL economy. That's just stupid. Secondly, why are you even comparing RL knockoffs to STOLEN SL content? There is a big difference. I can spot a Prada knockoff because it is just that, a KNOCKOFF. The thieves in SL are not sitting at their computers creating shoddy knockoffs, they are DIRECTLY copying original content from the creator. Again, big difference. When it comes to the creators in SL having their earnings directly affected by content theft, you don't write an entire piece on a bunch of half-assed "maybe's". A RL study is not worth discussing at the expense of SL creators, they deserve better than that. Content creators are the ones that make SL the beautiful place it is and they will be a large and important part of SL's future. This piece does content creators a disservice and does not help the fight against content theft.

[Arcadia Codesmith]

So it seems there are a couple instances where the suggestion might hold some validity; if one designer is picking up "inspiration" from another, trying to emulate their designs manually but not executing as well; or if the customer eventually replaces a stolen copy with the real thing to soothe their conscience.

I suspect both eventualities are uncommon. We've seen how aggressive some theives are in rationalizing their crimes. And in most cases where multiple designers release extremely similar but not copybot-identical products, they're more likely to be ripping off the same RL design than each other.

If you want a factor that really drives the increase in sales, I'd look at improvements in retail architecture since the advent of high-prim lots. The more tastefully opulant the store, the more customers expect and are willing to pay for the same merchandise.

Just a hypothesis. I leave the research to somebody who needs a thesis topic.

[Takashi Alekseev]

According to Ellen Goldstein, chairperson of the accessories design department at the Fashion Institute of Technology in New York City, fakes do harm the real brand. “It hurts the worth of the brand terribly; it cheapens the brand,” she says.

Goldstein goes on to explain, “People assume that this is a form of flattery, but the brands don’t. It’s stealing and it cuts back on authentic brands’ sales considerably.”

Tim Trainer, president of the International AntiCounterfeiting Coalition in Washington DC dismisses the theory that knock-off brands offer a type of free advertising and promotion for legitimate brands. “Counterfeiters trade off the backs of legitimate brands. They let the real brands pay for the marketing, advertising, develop the designs, and then they profit off of it.”

http://www.brandchannel.com/features_effect.asp?pf_id=187

I believe this phenomenon applies directly to SL content creators also.

[Ace Albion]

When someone counterfeits a Rolex watch, or a Prada bag, people see Rolex, Prada- The branding persists, owning the genuine article is still an aspiration.

When Lolhax McRipper in SL rips off your item, that item is spread around SL as the content creation of Lolhax McRipper. People flock to Lolhax McRipper's store or freebie warehouse or xstreet page. They don't flock to yours, because they never heard of you, and right clicking that ripped content mentions nothing about you, the original creator.

[Pixel Dunst]

"SL doesn’t have the cheap knockoff guy selling lower quality copies of original SL designs – thats where this article fails.

The guy selling ‘knockoffs’ is actually selling originals which are the exact same item."

I think this argument says it all there is to say.

[Hamlet Au]

But even an exact SL knockoff doesn't have the original creator's name listed on it, and in cases where someone figures out how to put the original creator's name on the knockoff, you still generally have the original creator running around SL complaining that it's a knockoff.

[Fogwoman Gray]

I would think this is the difference between copybotting, which would certainly harm the original creator. And creating "knockoffs" which might not. My experience has been with clothing to things like airships. Famous creator X makes a very distinctively and originally designed airship or dress. Soon many others are creating similar airships or dresses. Someone getting too close to the original design is going to get jumped for "copying" the original - but the quality of the new item will show, whether in the scripting or the seams. Rather like the freebie skin one wears until having the experience and money to get a good skin.
I find this interesting, but as I do not sell contnent in SL can afford to take an academic view. I know others cannot!

[Doreen Garrigus]

I have to agree with Hamlet here. I do think knockoffs (not copybotted items)in SL increase desire for the real thing---the dress that moves just so in the wind, the vehicle with exactly the right details, rather than those items that are almost right. People can identify quality.

Now, with regard to copybotted items: even if the item itself is absolutely identical to something a good, conscientious designer is selling, it will not be the same. Reputable designers have one thing copybotters don't have.

You have good customer service. If it's not right, you fix it. That just the way business works, right? If someone notices something about the texture doesn't line up quite right, you go back to your original files (you have those because you actually made the item) tweak them, reupload, and replace. You don't want a misaligned seam associated with your line.

Copybotters don't have those files, can't fix the seam, won't respond to IMs, and make their customers mad.

[Ordinal Malaprop]

Most people do not release things with misaligned seams. Not ones worth copybotting, in any case.

[fleur de mal]

Hmm interesting;

There are content creators who use theft of their goods to their advantage, by posting all over forums about it, free marketing and drawing attention to their product.

I am of the belief that the people who accept copybotted items are people who would not buy it anyway. So yeah, possibly they get some mileage out of it.

[Doreen Garrigus]

Ordinal---I was generalizing. I'm sorry if I offended. I was not meaning to suggest that anybody was making inferior products, just that if there are any problems with the product, the real creator can and will fix it, while the copybotter can't or won't.

I believe this is an important point that needs to be emphasized. You---legitimate content creators---produce items that are, in fact, of higher quality than the stuff the copybotters distribute, simply because you made them. Your name, your ethics, and your way of doing business are all part of your product. That's worth something.

[Ace Albion]

"I am of the belief that the people who accept copybotted items are people who would not buy it anyway."

People are buying ripped content, completely unaware that they are doing so. They just happen to be at a store that they found before they found the one making genuine, original work.

[Arcadia Codesmith]

Customer service as a value add doesn't offset the damage caused by theft. Neither does any "free publicity" resulting from reporting a theft. There's no silver lining here that doesn't come with a thick coat of tarnish.

[fleur de mal]

@Arcadia Codesmith

I beg to differ, I think creators unequivocally benefit from the free publicity. I have seen people post and say, I am going to 'soandso's" store to buy the products. Right after they've posted how they've been ripped. I've seen it often or I've even seen people saying they will donates $L to the victims. People who would otherwise have never heard of these stores now have it in their faces.

[Arcadian Vanalten]

See, I agree with Ace. I know what I like pretty much when I see it, and I'm not shy about buying it when I find it, be the discovery by accident, referral, or the Inspect Item trick. Further, I wouldn't knowingly buy from a counterfeiter, BUT...I suspect few counterfeiters identify themselves as such. Heck, any of us could well have inventories sporting a few ripped items and never have a clue that it wasn't legit.

I'm NOT a dedicated fashionista. I don't follow the umpty zillion fashion blogs (I get my fill of psychopathology and hysterics during my RL work, thanks XD), so if in my meanderings, I happen across a store I like, I may not know the entire inventory was ripped a wk before from JaneQ CoolerThanYou's fall collection.