Second Life Content Creators Now Likely Making More Money from Second Life Than Second Life's Own Corporate Owner

I was recently talking with the owner of a fairly well-known content brand in Second Life, who shared some jaw-dropping stats with me: 

• 200-250 unique users engage with the brand's content on a daily basis
• And from that usage, the brand earns over $5,000 USD a month

And no, I won't say what kind of content the brand is selling, except to say that no, it's not virtual porn. It's notable in itself that this brand is earning revenue that's equivalent to an upper-middle class income in the US.  

But even more than that, it stresses a point that recently occurred to me -- one that will become more and more important as Sansar goes commercial: Based on what we know, it's likely that Second Life content creators -- most of them grass roots developers and small, 1-5 person outfits -- are now making more money from Second Life than Linden Lab, Second Life's actual owner.

Specifically:

• In 2015, Linden Lab's CEO reported that users were cashing out $60,000,000 yearly from the Second Life economy.
• From what we know based on constant land tier attrition, Linden Lab is probably grossing around $50,000,000 annually in revenue from Second Life (give or take).

Only last month, I estimated the company and its users were earning about equal revenue from SL, but it looks like the latter is doing better. (And grassroots content creators generally don't have to rent an office or help cover expenses like transportation costs, as Linden does!)

It's an unexpected outcome for both the company and the users, and is the flip side to all the customers complaints about Linden Lab's high land tier costs. Overall and in aggregate, the users are getting the better end of the deal.

And as Linden Lab prepares to launch Sansar, the company should probably be concerned about this disparity (if it isn't worried already): For Sansar to succeed, they'll likely need many SL content creators to set up shop in Sansar. But if these creators are already doing quite well in SL, thank you very much, what's their incentive to invest much time and resources into a new, untested world?

Comments

[Nalates Urriah]

The incentive to sell in Sansar is being able to enter a second market with almost no additional cost...

If I can sell my mesh _____ with minimal change... Any Sansar sale is mostly profit.

[Dartagan Shepherd]

Poking my head back in, in between the political bits ;) A couple things to note about Sansar and content creators and the difference between SL and Sansar markets.

Number one, people aren't getting what Sansar "is". I'm kind of boggled by this, but let's clarify.

Sansar is a game engine, nothing more, nothing less. The only difference aside from feature by feature comparisons (which would be extremely premature at this point), is that Linden Lab will be bundling hosting, currency and a custom marketplace. Put a game engine into a walled garden and you get Sansar.

Need more evidence aside from the clues given already? Look at the hiring page on sansar.com and you'll find positions common to any game engine, including, you guessed it, "Senior Game Engine Programmer".

Let's also get to a more modern definition of "game" and "game engine". While they used to be for games as most people think of a game, game development has morphed into anything from an educational tool, to ArchViz, to simulations, sandbox games, etc. Game development and game engines are no longer just for traditional games and it's dated to think in those old terms.

That said, the Sansar marketplace will be like the other game engine marketplaces. Meaning that content creators instead of selling to both region owners and individuals like SL, the customers in Sansar for content will be less for individuals and more for game creators. Or "experience creators" as LL terminology goes.

Because Sansar, like other game engines will probably require compiling and "baking" your game, you're not going to just place something in the world and call it done. You'll have to adjust things, rebuild lighting, compile and then restart your game (most likely).

If you're creating content for Sansar, you're creating content that game developers will be buying ONCE and using it in their game.

Take clothing for example, if you sell clothing to a Sansar creator, you're selling it so that the sansar creator can provide to all their users. It's a single sale.

If you sell clothing in SL, you're selling to individual users.

So the marketplace dynamic for content creators is drastically different.

It would also be in Sansar's best interest to keep content prices from being a race to the bottom and controlling the amount of free stuff. Otherwise content creators making things for Sansar will quickly lose any opportunity of earning a full time income.

[Orca Flotta]

"Second Life content creators -- most of them grass roots developers and small, 1-5 person outfits -- are now making more money from Second Life than Linden Lab, Second Life's actual owner."

Nonsense! Every single content creator/seller in SL doesn't make millions. You can't just take the combined profit of all the hundred thousands of SL content creators (which is indeed higher than LL's) and project it on each individual business owner. I guess most people who build and sell stuff in SL are happy to get some small sales to help covering their tier costs or just for the good feeling of producing something that ppl do actually want and spend money on.

So this Content Creators vs LL comparison is not only morally but methodically and technically WRONG!

"Overall and in aggregate, the users are getting the better end of the deal."

Sorry, I call BS on that as well. Hamlet looks at SL purely from a business user's perspective. Yeah, they might be better off than the lab itself but guess what: Most of us users aren't doing business in SL. We're mere consumers. And as such we have all rights to complain about tier costs being too high.
And even if I would create something worth selling I'd love to have a store, a "real" store on the SL grid. It's much more fun than the aenemic marketplace experience. And as a shopper too I make a point of buying my stuff mostly inworld and not from the mp. And as I argue for years and years already, lower tiers would help in reviving the grid, seeing a new boom of inworld shopping malls and vendors, of funny, elegant, exciting commercial sim designs and so forth.

[Clara Seller]

I like what Orca started here. It's calling out the thought process in the marriage of money and power without intervention from a bigger picture. We've made a religion out of believing that paving the road of temporary profit will always lead us to a better place. Change is always good and the fearful creatures who get crushed in the process deserve it for their lack of power to change as the road demands it. The people, the animals, the water, the air, are all weak because they cannot adapt quickly enough to serve the god of profit.

Maintaining high tier and the Marketplace are dumb decisions that ignore the bigger picture and constantly require new levels of creative dumbness by profit religion fanatics to justify the decay they've brought. The bigger picture predicted this a long time ago.

[Kouki]

I agree with Orca Flotta. I think it's just that the title of the article is a bit misleading, that can make someone outside of SL believe that every creator in SL is making a ton of money.

In reality, myself as a creator as well as many others in the content-creator community can relate to this:
Even with daily sales, I only make enough to afford my virtual land rent, and like one video game per month. It's also very unstable as "income", so I do not count it as income since there were months where I would make up to USD$300 in the past, but then some months especially nowadays where I will make closer to USD$25 a month.

Essentially, most content creators that I know are doing it to be able to self-sustain their SL activities and maybe make just a little extra for small things like other games, clothes, affording a bigger parcel/sim in SL, etc.

If anything, they should take "content creators" in this article and re-label it as "big content creators", or "for-profit content creators".
I think anyone making over living-wage amounts of profit each month in SL is doing it as a job and not just as a hobby, because you have to cater to others as a business, offer good customer support, advertise, etc.
There's a big difference between a content creator who's making things just for profit, and one who is making things just for hobby, and even those who are in-between or lean one way or the other.
But this is kind of like saying citizens of the USA make more than politicians, just because a few rich non-politician citizens exist.

[Mandy]

Orca is misguided. All Hamlet said was that store owners make more than the SL government. He is correct there! A certain creator has been having a sale for two days and both her sims have been full for two days. When she does a new release, her sims are packed full for at least a day or more, and most of her customers are buying fatpacks at 1200L a shot. Yes, there are a lot of creators who don't make much at all, but a few make tons of Lindens. They make far more than $5000 a month. But it is like that in RL too. Some businesses make tons and others don't. There is one clothing creator in SL that uses all templates, but she charges low prices and has a color change hud with each item. I think she makes a lot, in a similar way that Walmart makes a lot. Her store is always busy, but not super crowded. They do a good, steady volume. Either way, there are people who make tons of Lindens a month, far more than $5000, and even more who make much less.There are several business models to follow. LL needs to change course and slowly reduce land fees while raising their take on money exchanges. Something like a VAT would be more favorable for them, I think. If they do this over time, the pain wont be noticeable and they will see their income grow.

[Carlos Loff]

Income is one thing - Profit or "gain per effort" is a compkete different thing - LL may be making less income but as everybody notices and complaints they simply have to keep the servers on, yet creators invest much time and effort to have money in exchange, but nevertheless it is a revealing sign - LL just wants the cow to keep milking for a while - I deeply believe they will regret it and Sansar will have a VERY VERY SLOW evolution and they will have to get back to SL somehow

[Tizzy Canucci]

Interesting, but doesn't mean anything. The way you use 'making money' sounds like you mean turnover, and that's not profit. You can run around taking lots of money, but if you don't make a profit you'll be out of business. Conversely, taking less money with lower costs is more profitable. You can't conclude that because someone *takes* more money that they are getting a better deal.

Retailers often *take* more than manufacturers - if a manufacturer has a mark up over costs of 100% and the retailer adds a 100% mark up, the retailer makes more in absolute terms - but that's before costs. It's comparing apples and pears. Unless you know costs, takings are all but irrelevant.

In UK, some businesses, like the gift trade, expect 100% mark up, book trade expect 30% to 60% (depending whether outright sale or sale or return), and grocery trade works on margins of 5-10% (which is why they diversify into everything else).

[Desmond Shang]

Hamlet, I think you have to ask if that 60 millions cashout is before, or after, SL expenses such as land tier. I suspect that it is before expenses. Not sure.

The people who do well in SL business, can do just as well in flat out real life business. Perhaps it's simply that not all of them realise this, or have unique situations such as already wealthy and retired, or live in a desolate lighthouse on a windswept isle, and so forth.

The big threat to business on the grid is the same as anywhere else: opportunity cost. Yes, a business school MBA might make you into the most powerful lemonade stand baron that your suburban neighbourhood has ever seen. But if that takes up your day, you probably aren't getting the most out of your skills. It could be a great sideline though. At least until the future comes along and changes things; eventually all platforms go the way of MySpace and AOL.

Of course, with hard work, an online content business of almost any sort can be adapted, even as entire platforms change. But on average, a small 'real world' business is a lot easier to do, will have far greater returns, and a lot more staying power. I'm not saying everyone should ditch their grid business. But I am saying: there is a huge opportunity cost expense of doing it, as opposed to any number of other options.

* * * * *

Where a grid business really shines, is in globalisation of business markets.

Which is typically a profane, impolite thing to bring up at a cocktail party in the 'first world,' but it can be an absolute lifesaver to those who aren't here sipping a martini and discussing their investment portfolio. Imagine making 5k USD a month while living in say, Burma, where 100 USD a month is good money.

[Mendoza]

As a content creator, I find it is difficult to sell for massive profits, and my product sales are not enough to sustain my SL expenses, but they do help offset the cost. I enjoy creating things, so for me, it is a creative outlet. It would be nice to be earning substantial profit though.