The virtual residents of Second Life do $1.7 million in business every day. As online worlds expand, 3D entrepreneurs are establishing a lucrative new business model.
Most people would have considered it impossible to make money from a virtual world – but this was before the online 3D environment of Second Life was created in 2003. Here, cyber-land is bought and sold, markets selling virtual goods thrive and a new currency has been created – one that can be exchanged for US dollars). In just a few years, Second Life has enabled entrepreneurs to get rich, even become real-life millionaires.
One of the first people to hit the headlines for making his fortune from Second Life was the self-styled cybersex porn mogul Kevin Alderman, aka Stroker Serpentine. He took his first entrepreneurial steps into the game three years ago: “I didn’t know how to build things, so [selling] sunglasses seemed an easy option. But I quickly noticed there wasn’t much around allowing real interaction.” By this, Alderman means internet sex, an activity in which 40 per cent of Second Life’s resident population now engage, according to his 3,000-strong research group.
To capitalise on these lusty in-world passions, Alderman developed SexGen, a scripted, menu-driven animation system that enables two or more avatars to engage in a colourful array of virtual couplings. “We made a sex bed and they came!” he laughs. And that was just the beginning. In March 2007, he sold his virtual Amsterdam sim for $50,000. The annual turnover of his adult entertainment empire, Eros LLC, now exceeds six figures.
What’s interesting about Alderman’s success from a computer graphics business perspective is that he had no professional background in 3D production. Nor did virtual property developer Ailin Graef, aka Anshe Chung, the first Second Life resident to become a millionaire through profits earned entirely in the virtual world. Nor former Norfolk factory worker Chris Mead, who quit his job to become a stay-at-home dad and now earns over $90,000 selling PG-rated couple animations. In fact, all of the top five developers responsible for creating content for Second Life are newcomers to the 3D industry.
So why have 3D professionals been slow to take up the challenge? Low poly counts and limited texture resolutions have meant that, for some, Second Life is artistically unappealing – a fad, perhaps, or a world for game geeks that serves no useful real-world purpose. But with over 8.2 million residents, and a population rising exponentially, what’s clear is not only that it offers abundant business opportunities, but also that it’s redefining the web as we know it. 25 million users are predicted to enter the world by March 2008. Many are comparing the early days of Second Life to those of the web in 1993. “Virtual worlds are here to stay,” says Chris Carella, creative director at the Electric Sheep Company. “They’re a new emerging medium, and we’re only just starting to scratch the surface of what we can do.”
Developed by San Francisco-based Linden Research Labs in 2003, Second Life is built, owned and inhabited entirely by its residents. Unlike the massive multiplayer online role-playing games that preceded it, Second Life lacks a narrative structure. SL users, known as residents, are free to do as they wish – whether that’s starting a business, taking a job, attending a rock concert, getting involved in a political protest or interacting with strangers from afar.
In this three-dimensional MySpace of the future, anyone who’s anyone is developing a virtual presence – from individuals and educational establishments through major corporations, like Nike and IBM, wanting to attract new customers. Business opportunities in virtual worlds are nothing new, and have been on the rise since 2004, when an island in the MMORPG Project Entropia made headlines by selling for $26,500. With annual global virtual asset trading now estimated at somewhere between $650 million and $1.5 billion, and an impressive $1.7 million traded daily on average in Second Life, it’s not hard to understand why 3D content developers want a piece of the action.
With abundant opportunities, how can the 3D professional best go about earning an income in Second Life? Depending on the kind of account you have and when you created it, you may already be earning an automatic weekly stipend of between 50 and 300 Linden Dollars (L$, the in-world official currency). Given that the exchange rate averages around L$266 to the dollar and virtual T-shirts retail at around L$5, the stipend is enough to buy a decent change of clothes, but isn’t quite going to allow you to pack in your day job. The most straightforward way of earning your second income is by taking a virtual job. Opportunities abound for gigs as a dancer, bouncer or events host, but as with real life, skilled work brings better pay.
BRINGING IN THE PROFESSIONALS
That’s good news for professional 3D artists. Contracting as a modeller, texture artist or scripter can earn between $25 and $60 per hour, according to Brian Regan, COO of digital industry recruitment agency Semper International. Hourly rates still fluctuate wildly, and have yet to be established. “One of the issues is that around 60 per cent of SL residents are from outside the US, and try to charge higher rates that they think the US economy can bear.” Postings for contractors are plentiful on the SL forums. Alternatively contact Semper International directly. They’re currently recruiting a couple of people every month for jobs creating Second Life content.
“There’s a real need for 3D artists in Second Life,” observes SL resident artist Scott Kildall, a former C++ programmer. “Right now, there are a lot of hacks out there and the economy is undervalued. It’s hard to find quality builders who will make custom models and environments. More and more corporations and non-profits are moving in. They have money and will hire out good 3D artists to make their presence known.” If contracting isn’t for you, or the rates are unappealing, what about taking up a staff post with one of the major content developers? You might even be able to work from home. Although it’s based in New York, the Electric Sheep Company employs 12 artists who work remotely from around the US. Most were found because of their impressive folio of work created within Second Life.
For those who aren’t looking to swap their full-time VFX or games studio job for the equivalent daily grind working for an SL developer, why not start off your own business? “If you’re creative, technical and good at dealing with customers, starting out on your own can be very rewarding,” says Catherine Winters, co-author of Second Life: The Official Guide. The largest consumer market in Second Life is for clothing. “People spend hundreds of dollars on having a well-designed avatar,” notes Winters. “It’s a way of personalising the experience. In Second Life, you create a much greater affinity with your avatar than say you would in World of WarCraft. People soon start abbreviating their avatar to “me”. They really build this strong emotional connection. It’s also interesting that the longer people spend in-world the more likely their avatar is to start looking like themselves.”
Developing content within the virtual world is pretty straightforward, particularly for those well versed in 3D. “What’s great is that you can very quickly pick up the tools and they’re fairly robust,” says Winters. “Having familiarity with texture- painting gives a huge advantage, as without great textures, objects in Second Life don’t tend to look that great.” Until the advent of the recently launched sculpted prim, it was generally quicker to model within Second Life, but now models with baked-in, prelit textures can be exported from Maya and other packages, opening up the world to 3D professionals. (See the comprehensive SL Wiki for more.)
Once you’ve textured your model, and possibly animated it within Maya, Blender or Poser, you can duplicate it and sell as many copies as you want. Then it’s just a question of choosing how you want to sell the items. There are a number of virtual marketplaces including the SL Boutique and SL Exchange, or you could set up your own virtual shop, in-world. Bear in mind you’ll have to choose a suitable plot, purchase the land, pay monthly maintenance fees (from $5 up), and build the shop yourself.
”Most merchants use SL Exchange in addition to having locations in Second Life to increase their exposure,” says Jay Geeseman, aka Apotheus Silverman, founder of SL Exchange. Items are listed for free, and a small commission is taken from sales. May 2007 saw 140,000 items and L$40 million traded in the marketplace. “There’s a big push toward highly usable environments, and a relative lack of professional quality items that could be used to provide or enhance such environments. Good products exist, but mostly they show an overall lack of that professional quality we are used to having with other software.” The business model for selling consumer goods in Second Life is through micro-payments. Given that an average T-shirt retails at just a few Linden dollars, you’ll have to shift several thousand before you start making a reasonable income. Uniqueness adds value, so creating one-off customised scripts or personalised avatars is a good way of increasing your turnover.
The big money lies in developing virtual shop-fronts and environments for the corporate market. If you’re considering this, remember Second Life is primarily a social space. “The major design challenge is in understanding how people will use a space. That’s why we create people-centric projects,” explains Carella. ”In many ways a virtual world is like a TV channel or a blog. People tune in to see fresh content. In Second Life we create that through events, having musicians play live, trivia nights, etc.”
Events aside, for architects and industrial designers Second Life is proving its worth in virtual prototyping. Real-life architect Jon Brouchoud runs Wisconsin-based Crescendo Design with his wife. They use Second Life to allow clients to explore their designs for new houses. Clients can give feedback on the feel of the space, landscaping, even the paint colours and furnishings. “It was a little challenging at first, having our clients learn how to use their avatars. But as most of our clients are young and tech-savvy, they tend to think Second Life is cool and want to engage with it.”
Second Life offers ample opportunities, many of which have yet to be conceived. Established 3D studios have been slow to respond to the potential, but that’s changing. Framestore CFC has been investigating Second Life and other alternative worlds for some time. “Our in-house design team are looking into creating a Framestore CFC island on Second Life to showcase their abilities,” says Amy Smith, recruitment and HR officer. The project is still in its early stages, but the London-based VFX and animation studio has plans for a recruitment presence to tap into the huge amount of talent that exists within the Second Life world. Across the pond, VFX studios are taking a similar view – these are early days, but progress in Second Life and alternative worlds is being carefully monitored. “We don’t conduct interviews within Second Life as of yet, although I’m sure it will happen in the future,” says Diane St. Clair, executive director of Digital Production at Sony Pictures Imageworks.
Until the major film and games studios jump on the bandwagon, the gates are wide open for CG artists to establish themselves on the frontiers of 3D. While the roads are still uncharted, there are business opportunities here, ripe for the picking. If you want that second paycheck, now’s the time to get on board. “Find an untapped niche market and expand. Don’t try and reinvent the wheel,” advises Kevin Alderman. “Making money in Second Life is like making money in the real world,” adds SL Exchange’s Jay Geeseman. “It takes a great idea, a well thought- out business plan, and the will to make it happen. There is plenty of money to be made, and as Second Life’s technology and economy continue to improve, things are only going to get better.”
The Ten Commandments of Second Life
Considering going it alone in Second Life? Here are our top ten tips for starting and succeeding with your own business in a virtual world
1 Research your new marketplace. Spending time getting to understand Second Life is vital. Talk to other residents about services or goods they might need, or how existing products could be improved.
2 Look carefully at what opportunities might have opened up with the latest release of Second Life. The recent release of sculpted prims, for example, means a new market for sculpted modelled designs.
3 Play to your strengths. If you have never been any good at creating organic models, launching yourself as a bespoke avatar designer probably isn’t your best bet.
4 Check out the competition. List the strengths and weaknesses of other competitor products, and consider why SL residents will buy from you instead of the existing vendors in the market.
5 Plan carefully what you’re going to need to launch your new business. Can you set up alone, or are you going to need to recruit staff and hire workstations?
6 Avoid unnecessary financial costs. It’s better to be paid in L$ than through PayPal, which will charge you for every transaction. Similarly, remember that converting money to and from L$ will incur fees.
7 Bear in mind that some products will cost less to make than others. Sound files, textures and animations all cost L$10 per upload.
8 Consider whether you’ll need to buy land and build your own shop to sell your goods in SL. If so, factor the expense into your budget.
9 Setting up a venture in Second Life is just like starting any business. UK residents who are keen to take it seriously can sign up for free mentoring and inexpensive business courses at www.businesslink.gov.uk.
10 Price your product according to the marketplace. Make sure you cover your overheads, then thoroughly research the pricing of the competition, before you decide.
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