The End of Freebies?
The sale of digital content in Second Life and the freebie economy
Second Life has a totally different model, and it’s no wonder so many great content creators have flocked to it. Since you can effectively protect your content (or not-so-effectively these days, but that’s another story), a creator can set a price tag on their content and make sure that they are the only legitimate source of content. Similar to the ‘net, content is sold very cheaply — mostly because the price structure, as said earlier, has been tagged to the average buying power of residents. You might have noticed that only a fraction of SL residents are actually Premium users — roughly 80k or so. Others regularly exchange US$ for L$ on the LindeX instead, possibly some 50k, which would add neatly to the magic number that LL quoted as being the “hard-core residents”, about 133,000, who are the most active participants in the economy (and not surprisingly, it’s a number quite within my own predictions last year.
To recap what I claimed (and which apparently remains quite true):
Based on my own perception of the numbers, I boldly claim that the number of people willing to spend money in SL is about hundred thousand, and this number hasn’t changed since at least early 2007.
The second bold claim is perhaps even more surprising. The number of service providers (content creators, event hosters, and land managers) is about hundred thousand. This basically means that about one in ten active users is a producer of content, while the remaining are pure consumers.
And the third bold claim is definitely shocking. This number will NOT change in the immediate future. Unless, of course, things change dramatically (which is always possible), but the change will be only a positive one, ie. more users in this group, not less.
The fourth claim is perhaps not so surprising then: The number of informed people in Second Life (those that read and write blogs or e-zines, participate actively in SL-related issues, work for RL companies providing content and services in SL, etc.) is about a hundred thousand.
And the fifth should not come as a surprise either: They are exactly the same people.
What this means is that the market for digital content is not “huge” but it’s definitely the size of a small city. And within this “city”, you can enforce digital content transactions as defined by the content creator (again, to a degree; assuming that LL keeps content theft to a tolerable minimum).
Now this doesn’t mean that all content creators are avidly pushing expensive content to us residents. In fact, this is hardly the case. Motivated by all sorts of reasons, a huge amount of content in Second Life is for free or almost for free.
We can analyse a few reasons why there is so much free content in SL. One comes from the mindset: many content creators come from a legacy culture where 3D content is routinely offered for free (or very cheaply) online, so they do the same in SL — in the hopes of attracting the attention of companies or organisations willing to hire them. The other is purely ideological: Stallmanians will definitely repeat the mantra “information has to be free” and will spread free content around to create a world where everything is for free as quickly as possible. Some motivations are not so tied to political views: content might get distributed for free because it might be of little worth, or eventually have some worth to others but not for ourselves. I can give myself as an example: I hate the way flexiskirts never “fold” properly when sitting down, but that’s something very easy to do with a few lines of code. So in the attempt of pushing content creators to do all their skirts work like that, two years ago I’ve published this script for free. It’s worthless to me, since I don’t create skirts (I wish I knew how!), but I hope that this script, if sufficiently widespread, might become useful (it never happened but it was a nice try 
).
There is also a reason for giving things away as a promotion (almost all in-world content creators will have a set of freebies to attract potential new customers) or because something suddenly lost its value — some clothes that went out of fashion, some product or item that was superceded by much more advanced technology and is now worthless and unable to compete. All this generates a huge amount of freebies that flood the market; these days, full-blown fashion sites show how you can look great without spending a single L$ (or just a handful of L$).
The point is, if we have 15 or 17 million registered users, or 1.2 million “active” ones (whatever that means), the few that are willing to pay something (even if not much!) for content are just a tiny fraction of that, those 100k or 133k residents that are the “hard core users”. The rest will need free content. And that’s what they’re getting. Every year, more and more freebies accumulate. They never go away and just pile up.
This made Dusan Writer claim that, ultimately, all content will be free in Second Life, and that this is its natural course. He might very well be right. But that will, of course, be the end of professional-looking, high-quality content in SL, as content creators are here to make a business out of selling content (even if it’s just for half a US$ dollar apiece). We’ll be just like the Google 3D Warehouse — millions of items, all of them created by amateurs, and here and there a few that actually look too good to be true for being for free, because very likely they are just copied meshes from professional designers…
It certainly looks like it. Or not?
11 Responses
On a point of order, I think what Linden Lab have toyed with more closely resembles economic anarchy than economic libertarianism. As one of the resident mad-dog libertarians, I'd point out that our preferred laissez-faire capitalism requires the ability to prosecute fraud and some sort of instrumentality for contract enforcement – even the anarcho-capitalists admit that – and those are two things which Linden Lab has always declined to provide.
Frankly, as I occasionally do business inside SL, I'd love to see the necessary instruments of laissez-faire capitalism in there, but no sign yet!
I was at that conference as well, and it was indeed curious to observe that academia – fiercely protective of their own IP and copyrights – apparently is rather unconcerned about those in other situations…
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If you're interested in the list of alternatives to XStreetSL I recently completed a review of most of them. There is at least one new one that's been added since I wrote it. You can read it at http://eloisepasteur.net/blog/index.php?/archives…
See, Eloise, we ought to have finished our own
Thanks for the link!…
Your number of freebies sold vs payed content is similar to mine.
After the announcement I was curious, so I went through my last few months of xStreet sales. I have about 40 items listed, including 2 freebies. I sold 130 items that cost between L$20 and L$1400. My freebies sold 1200 times.
Moon wrote,
"it was indeed curious to observe that academia – fiercely protective of their own IP and copyrights – apparently is rather unconcerned about those in other situations"
Perhaps you can provide an example of our protectionism in the Ivory Tower?
Don't confuse universities' heavy-handed "branding" of mascots or university-held research trademarks with academia's "gift economy" for scholarship. These are two completely different enterprises.
Faculty exist in a "Freebie culture" in our scholarly lives: you work with others' ideas, but you cite and help recognize good work. If you get caught plagiarizing scholarship, that's another matter. I think it can even lead to revocation of tenure at my university.
This is very different from being "fiercely protective," isn't it?
As for SL? I'll keep giving away whatever content I make in-world. I really don't need XstreetSL to do that. I also pay out-of-pocket for great content to creators I support, and I give them credit in our builds and at my blog. I encourage others to shop with them.
So for those who wish to make money in SL, I wish you all success. I don't think we academics are competing for Linden Dollars, however, if I release tools or other content to help educators and students.
Finally, a red-herring argument at play in this debate over freebies, one of a few such claims, is that we eggheads are big supporters of freebies. It clouds a more ominous development that has not gotten so much ink spilled: the monthly listing fee per item is going to hurt the hobbyist content-creator and just enrich the Lab. And that really does tick me off, as an educator and a lover of the creative work I see on display in SL.
@Vlad, now that's a curious fact!! Someone ought to really do some statistics…
@Ignatius, yes, you're right about the "freebie culture"… I believe it's actually related to the way our society thinks that educational institutions are worthy of our respect and of special rules, because our civilisation is strongly grounded on universal, very high education levels (comparing, of course, to all other civilisations before the European Enlightenment in the 18th century).
That's why students, teachers and academic researchers get discounts on most of their purchases; why they get public grants, and so on. If education weren't the most important thing that our societies had, we would not be so eager to be so "helpful" towards them.
And this means that you can copy content — if it's for educational purposes. Or at least, you can do it to a degree. In return, almost all work researched is released (for free) to the public: this includes all papers and thesis, often describing highly advanced technology with quite a lot of detail, as well as, on the computer programming side, a lot of applications. All for free.
Nevertheless, I understand Moon's point of view. This "pushing for free content" is a very strong streak of the academic world, and this gets complex when this attitude is passed along to students, who then get this idea that our society is supposed to provide them with free things, at the same time encouraging this same society to pay their bills (via grants and similar methods). I'm also guilty as charged; my own father insists with me all the time that I should abandon my own business endeavours and just get a grant and a job at a university "like everybody else does"…
Dear Ignatius,
My apologies: I have spoken too generally when in fact I had some very specific cases in my mind.
Rest assured that I do believe that you don't use free unattributed content in your academic projects!
Cheers, and good luck on those!
I think I must have missed the point here: most newbies (an important group) don't have any money but most do want to make their avatar distinctive. My guess is that they are much more likely to shop at the large number of inworld freebie places rather than xstreetsl. The availability of such free content, albeit of variable quality, and a shared shopping experience is a major attraction for SL.
As far as education is concerned, it is probably dangerous to generalise but driving freebies out of xstreetsl will almost certainly encourage educators to migrate elsewhere for many of their specific needs. Again, there are already inworld sites for this but I expect web sites with a specific education focus will also emerge, if only because the content will be deemed appropriate for students to search on campus.
It is also important not to see SL in isolation: educators can often see benefits in going with non-SL virtual worlds and, indeed, just this week I was at a conference where one of the major selling points of an alternative was that certain aspects of SL ("silly avatars") were absent.
Like Iggy, I spend on xstreet, inworld and with developers. I also use my blog to promote commercial products that I feel have value or potential. I think many educators pay their way in this regard.
One issue of major importante is the move to server-rendering technology. With the end of rendering at the client, basically content current 3D content theft is gone, as is the low availability of SL due to firewall or hardware issues… Both will contribute immensely to a lively economy. http://www.tgdaily.com/hardware-features/44367-nv…