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?