Can you make money with Second Life?

By | August 27, 2007

If you watched the movie Total Recall (1991) before, you’d know what I’m going into. Virtual reality takes on a larger meaning with Second Life or SL. The signs were all there, that the Web would eventually get into making the concept of animated avatars real and playable. Never mind if you don’t look anything remote like your avatar. For those who want to know more, MMORPG (Massive MultiPlayer Online Role Playing Game) is a type of game where the players comprise a worldwide audience and these games never “sleep.”

First we had chat rooms, then we had Friendster, then MySpace, and now we have Second Life, and the likes of Entropia, and There. Although I want to disagree with this CNN article on Second Life, it looks to me, all that Second Life hype is starting to pay off! At last count, they claim 9,000,000+ users, although only about 15% of members are considered active members. That is still a large number of users who represent a potential market.

Signing up is free of course, but you will soon find you will need a Premium Membership, if you are really going for the money (and you will need to spend money, if you want to own land and all that). Also a relatively good computer with a GOOD internet connection.

The currency in Second Life is Linden dollars, which can be earned and withdrawn in PayPal (USD) or check. If you sign up for Premium Membership, you pay Linden Labs $9.95 per month, and get a stipend of 300 Linden dollars per week. Owning, or rather renting land in Second Life can be expensive; depending on your ambitions, it can go as high as hundreds of dollars per month in fees. That’s my impression, that although signing up sounds free and easy, very soon the reality hits home – you need to spend real money if you are really serious.

What I’m interested in, is the prospect of making real money on Second Life.

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Yes, you can make money on Second Life, but it requires real investments of time and money like anything else. But, it appears that people do make money on Second Life, mainly by being:

  • avatar designers
  • land owners
  • service providers

If you have a graphic design background, you could fancy your chances of making money on Second Life. Some people like Anshe Chung reportedly made hundreds of thousands of dollars from the virtual “real estate” business of Second Life. Basically, in order to make money on Second Life, you need design skills, or large sums of money to purchase the “real estate” plans there.

My main reservations to “making money with Second Life” are the competition and shifting face of this virtual reality world, all governed by the monetary objectives of the company that runs it. The constant emergence of competing MMORPGs like Entropia and There could mean a gradual devaluation of assets and properties in Second Life, as people are enticed elsewhere.

So if you sank a lot of real money into this, you could sustain real financial loss should Second Life wane after a while. The success of any money making ventures in Second Life is entirely dependent on the continued stability and popularity of the entire Second Life operation. As I see it, there are many competitors that could dilute each others’ market share respectively.

Other than that, I see the potential of virtual worlds like Second Life becoming centers of teaching and learning, supplementing real universities. The use of Second Life as a virtual classroom has not been lost on many educational institutes, who have bought hundreds of islands just for educational purposes.

This could also indicate how things may turn out in Second Life – large institutions buying out large parcels of land and using their newly acquired “assets” to raise their profile, advertise, etc. These consortium types of sales, coupled with high rental charges for land by Linden Labs could slowly discourage ordinary users from investing money in Second Life, thus actually encouraging them to look elsewhere, once land gets scarce and rental rates soar.

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