Surprising SL Economy Survey: While Most Creators Get a Better Revenue Split Than Competing Platforms, Most Pay Linden Lab a Lot

Of all the metaverse platforms active on the Internet today, Second Life by far offers the best overall revenue share to user creators on the platform. As a whole, the creator community makes about as much revenue from Second Life as the company itself, and 1,600 user creators earn over $10,000 a year -- a higher number than ROBLOX, even though ROBLOX has vastly more users.

Speaking of which, ROBLOX takes an eye-punching 70% cut of revenue from its creators, while recent entry Core boasted that its cut is only... 50%. By contrast, an SL creator could sell goods and services in the virtual world, and only pay the 5% fee for cashing out Linden Dollars into US dollars.

But the story of Second Life's economy is more complicated than that.

To get a clearer picture, I recently surveyed SL content creators on two questions: How much of their revenue is absorbed by Linden Lab through additional costs, for listing products on the web-based Marketplace, for renting virtual storefront land from Linden Lab, and so on -- and how that translated into real dollars.

Here's the results:

In a survey of 88 creators, the plurality stated that Linden Lab's average revenue take as being 30%. However, another 30% pegged Linden Lab's cut to be 40% or higher. Still, a strong majority pay Linden Lab 30% or less.

The story gets even more complicated when you ask creators to translate that revenue cut into real dollars paid to Linden Lab:

With 90 creators responding, the plurality (37%) stated that they pay Linden Lab over $200 a month. What's more, a solid 55% of creators pay Linden Lab over $100/month on average.

This shouldn't be a surprise, given that SL private island tier runs over $200/month, and many creators opt to have one or more of those, so they can have full control over their customers' experience. But then again, that's a striking contrast to what creators on, say, ROBLOX and Core, pay for hosting costs. (Generally under $20/month, I believe.)

If this survey scales to the broader SL economy, it helps explain why it feels to be in statis, with the biggest SL brands holding the lion's share of revenue, and very few new brands able to get a decent market share. (I can't recall hearing of a new SL brand to gain substantial traction in years.) With the cost of market entrance so high, it's difficult for newcomers to break in.

Recommendation:

• Linden Lab should consider more ways to help out new creators, and creators below a certain revenue rate -- similar to how Epic and Steam charge a lower commission to indie game developers, compared to the big studios/publishers.
• SL creators should strongly consider expanding their brand beyond Second Life, so they have new revenue streams -- and some extra leverage with Linden Lab.

Your thoughts, readers?

Comments

[Adeon Writer]

SL consumers are cheap as heck. If you don't sell your work for pennies, they won't sell at all.

[omegletv]

Thanks for sharing good information...

[Moanna]

I've been trying to learn because I want to enter this market. To create something good, we spend on courses (I paid 600$ Reais), programs (avastar, marvelous, brushes, molds) and other things that need to be purchased (image services, tables, furniture, parts, equipment, all quoted in dollar in Brazil). It's very difficult to find support... I still analyze it from a different angle, because I'm Brazilian. My country has a very undervalued currency. So imagine that we have to pay '4.7' times more for a linden... If the cost for a breeder is 200$ per month, here in Brazil it becomes 940$ Reais. For those who already have a recipe within the platform, it's ok because they already receive it in dollars. But for a designer starting out this is a lot of money because here in the country the minimum wage is 1,212$ Reais. Not to mention that we pay a lot in taxes to the government, it is known that Brazil has a much higher tax burden. We also have a hard time finding support from other designers and buying items needed to fit in costs a lot. Having an encouraging policy for new designers would be very beneficial <3

[Chic Aeon]

IMO it is important when looking at these charts to realize that creators CHOOSE many of the costs they pay. True, there are the Marketplace cuts and the linden dollar to USD conversion charges and the processing to Paypal fees ....

BUT

Creators do not NEED to be premium. That is a choice that adds up to about
$10 a month depending on payment timing and taxes. There are many creators that have NEVER been Premium.

Creators don't NEED to have a full sim (homestead, 20K or 30K). Even those making buildings can have house rezzers if needed OR stack their builds in the sky. The only people that I can think of that must have a stand along region would be the sim surround makers.

When I was making my highest income a few years ago (around that $900 a month mark so just barely in the "money makers" mentioned in this article) I had a shop on a 4096. I paid a total of $5 a month tier. That isn't possible any longer with the increase in fees, but still WAY less than the numbers quoted. And this included having building demos with no rezzer.

So much of those cost listed are CHOSEN in one way or another. It may be ego (and a lot of times it is just that); it may be the idea that perception is a big part of marketing. But the costs are still choices.

With the downturn in the economy and the rising inflation (they called that "stagflation" in the 1970s I believe) it will be interesting to see if there is a shift in expenditures among the folks that make our world.

[Siobhan Ginger]

It's more than just costs for creators.

I run a small -- VERY small -- club on the mainland. We're pretty unique, and a beautiful location.

But for venue owners it's the same deal. The costs for a private island are so sky-high that you have to bring in revenue from rentals/shopping/etc. -- and the high-tier fees favor the established players, making it REALLY difficult to break in -- even if you have a concept that's nearly unique.

[Nodoka Hanamura]

The reality is that in SL these costs could easily be lowered through one's own initiative. Downsize your store. You don't need a full goddamn sim to run a SL store. Hell, you don't even need a physical SL presence. It looks nice, but you don't need one.

If this were other platforms that take a larger cut, I assure you that if you were using their services, you would be earning much less than on SL.

[Onyx Leathers]

Linden Lab takes 10% of every sale on Marketplace. When you cash out do not expect the same rate of the value of the Linden dollar as when you buy Lindens. Also tilia takes an administration fee based on the amount. Paypal also takes a fee.

You do not need to be premium and you do not need a in world store.