50 Second Life Avatars Grossed US$100,000+ Each From the SL Economy in 2009!

The Lindens published a massive economic wrap-up of Second Life's virtual economy in 2009 earlier today, but as with most macroeconomic reports, the broad strokes tend to overwhelm. It's impressive that user-to-user transactions of Linden Dollars totaled US$567 million for the year, for instance, but it's difficult to put faces to those numbers. I can visualize fifty faces, however, which is why I'm more struck by the figures given below, under Gross Resident Earnings, which tracks the total amount of US currency Residents cashed out of the system:

• Gross Resident Earnings... totaled US$55 million
• More than 50 accounts earned more than US$100,000 each
• The top 25 accounts, as a group, earned about US$12 million

So last year, fifty avatars (some of whom may be owned by the same individual) processed out US$ in the six figure range -- half of them in the mid six figure range or higher. If I'm doing my envelope math right, these 50 accounts captured over a quarter of the $55 million total gross.

These fifty avatars represent the diamond sharp pinnacle of economic success in Second Life. "In 2009," Linden PR Specialist Peter Linden told me, "there were 1.5 million users active in the economy, meaning they were on one end of a user-to-user L$ transaction of some sort." From that 1.5 million, an average of about 65,000 users had a positive monthly Linden Dollar income every month, he added.

The next couple obvious questions, of course, are: Which avatars, and in what businesses?

Many of those 50 are likely in land rentals and virtual real estate, which means they incur a lot of land purchase and tier expenses that eat into their six figure gross. However, it's also likely that many of that 50 are selling virtual items like clothing, or offering services. Among the top ten Resident earners, a Linden exec said last year, "[include] a company that does events and one that designs virtual goods including shoes." Chief Product Officer Tom Hale (who filed the economic report as T Linden), reported last September that the top merchant in Second Life is making $1 million a year selling virtual sweaters and skirts. For these virtual business people, the margin costs of production are so low (Internet connectivity and computer hardware/software, mostly), that it's accurate to say they're earning close to a six figure income.

Comments

[Arcadia Codesmith]

One of my friends is among the mere 65k with a positive cash flow. She's got there not only by enduring 2-3 years of building up the business, but by innovating to the point where her product is visibly and significantly superior to the best-selling designers in the field.

Even though she's arguably now the single best on the grid at what she does, she still has months or years of marketing and building her brand recognition before she can overtake the usual suspects.

Don't be dazzled by dollar signs. I tried to calculate what percentage of total users 50 people represent, and my calculator broke into scientific notation to represent a number so small.

Playing the lottery may be a more sensible and stable business model.

Do it because you love it. If you want to be rich, go to law school instead.

[Metacam Oh]

Is this supposed to be good news? If in the real world economy 60,000 people out of 1 million made money we'd be all living in Hooverville, thats a terrible numbers especially considering the profits siphoned out by the Lab. EVENTUALLY they will have to lower their prices because those other 940,000 people are spending their time trying to pay off their land tier. Merely the epitome of the pyramid scheme, not good news at all.

[jdtrue]

It will be intresting to see if the number of people that make a profit in SL goes up or down in the next few months with the new fees on SLX. Or even if the drop rate of new members trying SL for the first time props when there are no free or cheep items on SLX then turning in to less buyers latter. Branding don't help any if new people don't stay.....

[Skate Foss]

While I'm very happy for those few successful few, there's alot of others struggling. As the owner of a residental Island, that has been featured twice on SL TV shows, I'm finding the real estate market worsening. After a solid year of 100% occupancy, residents are leaving and new tenants are not exactly ideal.
From my window, I see longtime designers closing their sims and downsizing or just going out of business. I see sim owners that had 30 sims, cutting down to less then 10. These are people that are in SL because they love it, not just here to make a quick buck... The RL economy is here.
The new tenants that now rent on my island have a turn over of less then a week. My sim is a luxury island, with large landscaped private lots, -now I'm forced split empty lots into smaller ones, and even those are hard to rent. Ofcourse I am prepared to weather this storm, but all this hoopla over a rosy economy that alot of us don't see is just insulting.

[Steve]

Let's not forget that the most people in SL are just consumers. Many might have aspirations to make money, but unlike the real world you can't just get a job and sit at a desk 9-5. You have to be your own development team, marketing team, CEO, worker, etc. Making $100k in SL would be nice, but as a percentage you need to relate that more to someone who makes millions (maybe billions) IRL. I would like to see how many people make a more reasonable income, say $30k.

[Sioban McMahon]

It would be interesting to see the list, an SL equivalent of the Fortune 500. We might learn a bit from them.

Responding to Skate regarding land rentals, I have heard several people saying much the same thing. I guess my group is inordinately lucky. Our rentals stay at or near capacity, even now after the economic downturn. Donations to Project Children are still going well and we mail off a check to the RL charity each month. Perhaps SL residents' generosity outweighs their worries about the economy.

[Chenin Anabuki]

I am echoing what Arcadia said. "Do it because you love it". Headlines like this concern me to some degree because people who are not in the know tend to overlook what it takes to reach revenues like that. There is a lot of time, financial investment, and unique talent required before you can be a recognized brand and profitable business in Second Life. It would be unfortunate if the platform attracts another wave of prospectors who believe that all they have to do is have avatars in SL to make money. These will be the same individuals who will be frustrated and feel mis-led when reality sets in. And, they will also more likely be the leading bashers of SL. This scenario has already played out. Let us all learn from SL's short but telling history.

[Sidney Smalls]

What would be interesting to know is how many of these people are land barons. Their expenses are so high that the gross amount isn't a good indicator. If you're selling 100K a year worth of "sweaters and skirts" there's no doubt you're doing well. You're main expenses are a Photoshop license and an Internet connection. But if you're taking in $100K in rent, you're almost certainly paying $90K or more right back to Linden Lab as tier. You could well be starving on $100K gross if it's rental income.

[Sidney Smalls]

Sorry you're->your in the fourth line. That really annoys me.

[Sidney Smalls]

Third line DAMMIT.

[Confused?]

I'm a little confused. Many residents HAVE to cash out to paypal only to put it back into the game to pay their tiers.

You cannot pay tiers in Linden dollars so if you're not paying via credit card this is the only other option.

I'd imagine many many pay their tier bills this way, rather than enjoying the expenditure

[Romeo Arashi]

@Confused? No, you don't have to cash out the U$. You trade L$ to U$ via Lindex and leave the money stay in your Second Life account (without transfer to Paypal). Linden will collect U$ from your account automatic and if you don't have U$ money enough they will charge your credit card or paypal instead.

[Metacam Oh]

Romeo's right Linden will take the tier out of your US balance. If you change your L to US dollars and dont cash out they will just deduct from that balance.

[Confused?]

I see. Does this happen for those who use the Xstreet exchange also?

The money taken out to pay tiers in this way is it counted in these 'cash out' totals?

[Hamlet Au]

No it's not, this $100K figure is the cash gross after SL expenses, check out T. Linden's full post for all the qualifications...

[Punky Pugilist]

I happy for the 50, but I am very unhappy with LL's policy on freebies in XStreet. Without freebies its hard to establish traffic or a brand name. Arcadia did say "do it cause you love it." but lets not forget they drove her out of SL with their inept policies and customer hostility.

[Mel]

You forgot to mention the 50 accounts who made gross 100.000 USD are mainly estate owners, the profit they made when reducing the tier payments to linden is way less. Dont just take the information LL is posting as it is all the time missleading!!