The three top businesses in Second Life are land sales, item sales, and (presumably — no hard data available) sex.
For businesses looking to explore Second Life, however, these are the worst businesses to get into right now.
First, land. It might seem a no-brainer on the surface: rent land from Linden Labs, subdivide it, put up a mall and residential housing, then watch the rent checks roll in. But wait. You need to find the residents and keep them happy. Hold events to draw in customers for your business tenants. And if the tenants don’t pay — you still have to meet your monthly obligations to Linden Labs.
These are all surmountable obstacles, though. What’s more problematic is that the Second Life land bubble is about to burst.
Not because the whole virtual worlds idea is going bust, but because it’s so successful.
Take, for example, Edy Rau (Rau is his virtual identity — he declined to provide his real name). For two years, he’s been running the Folk Cafe in Second Life, a venue for live music and social gatherings.
His Guitar Shop is still in Second Life — a beautiful example of how to do SL shopping right.
(Edy Rau’s Folk Cafe on the OpenSim-based Grid4us — formerly in Second Life.)
But in December, the prices got too steep for him to keep his cafe in Second Life.
A few months ago, there were no real alternatives. But recently, the OpenSim project — backed by IBM, Intel, and Microsoft — became good enough to use.
Today, Rau is a resident on Grid4us, which has 12 regions running on the OpenSim platform, with each region a square about 16 acres in size. He and his friends have built a residential German village — Rau is from near Munich — a marina, a small shopping area, and, of course, the Folk Cafe.
Artists can come and perform live, with sound streamed in to the cafe. Patrons can tip them — with real money — for their efforts.
Attendance went down after moving the cafe from Second Life to OpenSim, from highs of around 70 to just 30. But considering that OpenSim is still difficult to get to, that’s not a bad number.
Today, Grid4us owns its own servers. As a result, Rau can create an almost unlimited amount of items on his land at no additional cost.
Running your own virtual world has become almost as easy as hosting your own website. In fact, my 14-year-old daughter is planning to create her own world and host it on her laptop in her bedroom — for the entire world to come and visit. Am I concerned? I wasn’t, until I typed this paragraph.
What was that second business model? Oh, yes, making and selling things.
At “how to start a business” seminars in Second Life, this is the business that is usually talked about the most. With the tools built into to the Second Life browser, together with some additional open source software, you, too, can be a fashion designer, a furniture maker, a home builder, or a skyscraper architect.
These are what you would call hobby businesses. The work is so creative, and so much fun, that people are doing it for free, or close to it.
The last thing a business should be doing is competing against people who work for the love of it. Supply quickly outstrips demand. Consider such pursuits as poetry, painting, acting or knitting — people enjoy them, are willing to put in inordinate amount of time to improve their skills, and very few will be actually successful at these pursuits.
Of course, if you can organize these working-for-the-joy of it types, you might be able to have something there, as any number of poetry publishers who charge poets for printing their work will attest.
That leaves the sex industry. Actually, on second thought, this could be a great and sustainable business model. We have brand-name magazines like Penthouse and Playboy, why not a brand-name sex-based virtual environment?