Is it true? Biz 2.0 article claims $150k annual RL income
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Scottsdale Warrior
Registered User
Join date: 30 Nov 2005
Posts: 3
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12-07-2005 10:58
Hi-
I'm newbie who happened to read the SL article in Business 2.0 (Virtual Rockefeller). Of course it got my attention when I read, "one player is bringing in around $150k a year- in real hard cash."
Is it possible? How long would it take to start making RL income even half that amount?
Read another thread that talked about buying/selling land, running sex-based events, scripting, etc as ways to generate income.
Just curious what some "seasoned" SL vets have to say...strategies.
Thanks
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Lordfly Digeridoo
Prim Orchestrator
Join date: 21 Jul 2003
Posts: 3,628
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12-07-2005 11:01
One person does. She was one of the original "land barons"; she spends many many hours a week doing it full-time. It's a lot of work, and seems to be wavering due to new changes in transportation and whatnot.
A more realistic goal would be 1-2000 a month, which is what a lot of the top developers make from their content.
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blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
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12-07-2005 17:14
I suspect that's revenue, not income.
And if it is income, it's probably capital gains, in other words it requires continual re-investment and only a small percentage can be withdrawn to pay RL bills.
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Malachi Petunia
Gentle Miscreant
Join date: 21 Sep 2003
Posts: 3,414
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12-07-2005 17:27
It's marketing bullshit. Philip has no way of actually knowing and the person reporting the income is kinda keen on self-aggrandizement.
For purposes of comparison, I made US$2,000,000,000 from SL last year, and Richard M. Nixon is not a crook.
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Desmond Shang
Guvnah of Caledon
Join date: 14 Mar 2005
Posts: 5,250
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12-07-2005 17:52
It's provably true.
Say... 50 sims average. Each sim generating 3k USD / yr. That's 250 USD per month profit, or 445 USD per month. So... monthly, Each sim has to make 445 USD * 265 $L / USD, or $L 117925. $L 117925 / 65535m = $L 1.7994 per meter, monthly. Making 2048m go for $L 3686 a month, or 13.90 USD. Admittedly there are unrented areas and so forth, but then 2048m actually goes for slightly more: 15.00 USD. Buying 50 sims costs less than half the net gain... and one could ensure filled capacity on your way up... so who would *not* move forward under such circumstance? Simple, brilliant, obvious in retrospect. She had the guts to go for it; the rest of us didn't. When you win, that's called vision. *mulls over the calculation carefully* Hmmm. Considers forum title change to 'Business Boy'... seriously.
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Zodiakos Absolute
With a a dash of lemon.
Join date: 6 Jun 2005
Posts: 282
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12-07-2005 22:14
I think you forgot tier fees somewhere in there. I don't even want to know the tier fee on 655,000sq m of land. My head would explode.
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Nolan Nash
Frischer Frosch
Join date: 15 May 2003
Posts: 7,141
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12-07-2005 22:44
I spoke to the entrepreneur in question here personally about this claim of Philip's a few weeks back.
She says that the numbers are incorrect (she did not give me actual numbers, although she did tell me her tier cost at that time, and it was massive), that she is not thrilled at all about Philip using this as a marketing tool, and that she wasn't asked permission.
I don't think Philip is in any way bound to ask her permission; however, it might have been a nice gesture on his part.
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Desmond Shang
Guvnah of Caledon
Join date: 14 Mar 2005
Posts: 5,250
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12-07-2005 23:49
From: Zodiakos Absolute I think you forgot tier fees somewhere in there. I don't even want to know the tier fee on 655,000sq m of land. My head would explode. 445 / mo per sim breaks down to: 250 / mo profit + 195 / mo tier fee. 655,360m tier would be 1950 USD / mo. But that's only 10 sims. Hardly anything, compared to 60+ sims. Undoubtedly, Anshe is not 'standing still' with regard to strategy and is likely reinvesting - the smart move would be diversification. That might explain why she wouldn't take as much out as profit - that, and the fact that sims take a lot of money up front. But at the end of the day... multiply rates and "% capacity full" by fees, then subtract tier and you have some idea of the magnitude of the operation. *Very* Rough calculation: Income: 50 sims * 100% capacity * 65536m * (15 USD / 2048m) = 24000 USD / mo Expense: 50 sims * 195 / mo = 9750 USD / mo Net: 24000 - 9750 = 14250 USD / mo. Running at 80% capacity it's still netting 9450 USD / mo. Note that I left out buying 50 sims in the first place, which would cost > 50k USD. However that's quite affordable if you consider the net income, and a one-time charge against expenses - hardly an obstacle at this scale. Anyway, the exact number of sims she has, profits she takes... it's her business not ours. The only thing illustrated here is that yes, it's a viable strategy and quite capable of generating substantial income.
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JIMBO Juergens
Registered User
Join date: 10 Jul 2005
Posts: 33
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12-08-2005 11:12
I do beleive a few ppl make a decent income but they put in alot of work and are most likely highly skilled scripters/builders. The rest of the people play this game for fun and lose money.
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Zippity Neutra
What'd I miss?
Join date: 29 Sep 2004
Posts: 191
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12-10-2005 12:27
Desmond, an interesting analysis. But you really can't hand-wave the significant barrier to entry that buying the sims in the first place poses. You'll either have to start small and slowly climb the curve, or have access to capital. I really doubt most people can get someone to loan them a substantial amount of cash to buy sims from LL, and if they did, you'd have to provide a significant return out of what you're earning. If somebody is doing that with something like home equity, they'd better be single and childless. I can see it now... Land Baron II: Wrath of the Spouse! There are several people employed by Anshe to keep the business going. So don't forget that overhead as well as the tier, etc. And there's an entire other dimension to this with the malls that I assume Anshe is running. Commercial real estate is a different beast entirely, with different support costs and different returns. All of this takes nothing away from what she's done, and I'm not trying to talk anybody into or out of anything. Guess I just can't resist kibitzing... 
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Zapoteth Zaius
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Join date: 14 Feb 2004
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12-10-2005 12:46
It takes a lot of work, and you'd need to make some slow money first to buy the first sim, and get well known to make the tier payments..
When she started there weren't many people to compete with.. Now there are A LOT.. And to start now you'd find it hard to compete with her and the others out there..
She'd admit herself shes not the best liked person in SL, but you have to acknowledge the work and determination she needed to make what shes done work..
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Ricky Zamboni
Private citizen
Join date: 4 Jun 2004
Posts: 1,080
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12-10-2005 12:46
I know of multiple designers (i.e. *not* land barons) who were cashing out on the order of $1,000+ each week through GOM before we closed up shop. Not quite $150k, but a respectable income and not subject to tier fees and whatnot.
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Desmond Shang
Guvnah of Caledon
Join date: 14 Mar 2005
Posts: 5,250
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12-10-2005 19:12
From: Zippity Neutra Desmond, an interesting analysis. But you really can't hand-wave the significant barrier to entry that buying the sims in the first place poses. You'll either have to start small and slowly climb the curve, or have access to capital. Perhaps this is foolish to say, but I shall confess something right here. I am going to try to rent out sims myself. Beginning with only my in-game profits. My West Trade Imports can comfortably float tier for a sim even now, even without tenants, so if sales hold out I'll have some room for mistakes. The first island downpayment (1250 USD?) will take a while to accumulate, and I'll not runs so lean as to risk the land tier for West Trade itself in Alice. Goose, golden egg, and all that. Also, I've got some studying up to do, as I wish to have happy tenants. Perhaps I could refer tenant disputes to a group like the Law Society (if they would do it) and agree that their arbitration was binding. Would that be some assurance of fairness to a tenant? Perhaps it will be a couple of months before I get started. But as anyone who knows me can attest... I'm slow, but determined. One rented sim -vs- what is already is out there... I'm hardly much of a land baron threat! So all of you may now watch and laugh at my mistakes as I move forward. But now you know, why I have been watching what happened to Anshe re: the telehubs with such keen interest. Will something like that happen to me? Will the public respond to me in the same way? We shall see. One business boy?
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Adriana Caligari
Registered User
Join date: 21 Apr 2005
Posts: 458
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12-11-2005 01:39
Probably off topic - but someone mentioned most people lose money on SL
If you have a 512 plot and standard membership thats 10USD / Month
Approx 3000L ( give or take ) - stipend covers 2000L of that.
So all you have to do is make 1000L a month to break even.
Admittedly you dont buy anything or spend money - but 1k Lindon/month is not a lot.
Most vendors who have actually put work into their products and have a good product line-up can turn upwards of 1K Linden/month easily.
If you turn 3k Linden/month it is a blackbox business and requires little investment except for the initial design/code time and you are covering your expenses.
I have never paid money into SL ( except for the monthly membership ) and break even with a relatively small line up of products sold only at SLexchange and SLboutique .
So you dont have to lose money on SL - depends how much time you want to put to one side to set up a decent line of products.
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Scottsdale Warrior
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Join date: 30 Nov 2005
Posts: 3
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12-20-2005 11:20
It took awhile for me to get back from my original post here. Turned out to be an interesting thread. The bottom line seems to be--you could generate reasonable/healthy RL income. View it as a job or a business venture??
If you approach it as a true business start-up you need:
- resources (money/people) - time - strategy/biz plan
As I've stumbled around SL now for about three weeks, as a newbie, it seems to me to be just a social gathering place. Which it is, but has offered the opportunity to make money to a few. To approach it from a pure business angle "I'm going to generate $50k USD first year by doing x in SL" leaves you in a position of having to have unique skillset.
If my skillset is building business start-ups and I have access to capital I need to hire talent and build my "company". I'd have to recognize being a "me-too" competitor to existing Land Barons and have a unique proposition to generate income.
It sounds like some of those assets are out there, people in this thread. I've met a few others willing to offer expertise. But what if you want to take a stealth approach to this whole thing and start buying sims and subdivide/develop FAST. It's the 'money value of time' that has more weight for me. I could buy sims. But the ROI might not be such to justify spending $2-20k on this "start-up".
...so what would be my exit strategy? Could you build an empire and sell the whole thing to another LB?
...sorry...just rambling. The concept is intriguing as I wonder what to do post-sale of a business I owned.
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Desmond Shang
Guvnah of Caledon
Join date: 14 Mar 2005
Posts: 5,250
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12-20-2005 13:45
From: Scottsdale Warrior ...so what would be my exit strategy? Could you build an empire and sell the whole thing to another LB? ...sorry...just rambling. The concept is intriguing as I wonder what to do post-sale of a business I owned. Exit strategy? Why, demand for land will increase forever, there will never be a land market depression! Upon your deathbed you will grant your holdings to various sons and daughters, in proportion to their need, and they will lament the fact that there were only ten thousand sims to divide up. "Why, oh why did you not risk it all and buy the entire mainland back in 2005?" they will cry. Or, there will be a market depression someday. When land will rent for just slightly *below* cost to the barons, as they try to hang onto investments. Hoping for a better future that may or may not come. All of this has little to do with 'business skills'... and everything to do with guts and vision. As they say, everyone is a genius in a good market. But no amount of smarts, hard work or customer service will save you when nobody's buying.
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Scottsdale Warrior
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Join date: 30 Nov 2005
Posts: 3
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12-22-2005 19:25
Isn't it true that LL just keeps adding sims? Sorry, still too new to understand infrastructure.
If you're correct, than demand will exceed supply and prices *should* go up.
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Traxx Hathor
Architect
Join date: 11 Oct 2004
Posts: 422
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12-23-2005 12:08
You're asking the same questions I did when I got here, Scottsdale. Land used to be a good investment before LL started routinely cranking out more new sims than the market could absorb. This change is good if it puts downward pressure on land prices, thus providing more incentive for basic account holders to convert to premium. There's also a general trend of people moving from the mainland to private islands, particularly groups of islands such as Hiro Queso's subcontinent or Azure Islands. The people making the move seem to be motivated by a desire to get away from a situation where the styles of neighboring builds clash.
This thread has touched on several aspects of Anshe's business model. One major factor is her policy of buying the sims and other land at distress sale prices. Don't factor in capital costs of what you would pay LL for a new sim. Think around the half-price mark instead. She performs a valuable service in SL by acting as the buyer of last resort for people who have to unload their land at a loss. The other factor in profitability is that you have to pay Anshe a substantial sum in order to be allowed to rent from her. I think she calls it purchasing a deed. The idea is for the deed-purchaser to resell this deed to another individual when it's time to move elsewhere. How does this work in practice? The deed-holder can spend time trying to find a purchaser or alternately the deed-holder can sell back to Anshe at a fire-sale price.
I'm always interested in looking around SL, and finding out what works. In this particular case I'd like to stress that what works for Anshe makes her a very formidable competitor if you're thinking of being an island baron.
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KittyKatt Kerensky
Registered User
Join date: 6 Sep 2004
Posts: 212
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12-23-2005 14:14
I don't know the actual history but the person being refered to most likely made her step up from her little stores selling various creations by buying and selling telehub land and renting booths/stores/land near those hubs.
If you look at just one of the hubs where she had/has land and booths, if you roughly estimate she had 30 spots for rent (many more at some hubs) at an average rent of 250L/week, that grosses her about 32,000L per month or about $125/month per telehub. I don't know exactly how many hub malls she had but it was quite a few. Thats not including the profits (which are now gone) from hub land sales.
This kind of business could have started on a relatively small scale where most anyone with the nerve could have joined in as competition (as a few did). Of course that strategy is no more.
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Frank Lardner
Cultural Explorer
Join date: 30 Sep 2005
Posts: 409
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Savvy Business Boys (or Girls) are Savvy because they are Flexible
12-23-2005 16:26
KittyKat: Good business people (as opposed to merely lucky ones) know how to adapt to adversity or market changes and cut their losses. They then find where the market is going and get in front of it. They don't stay stuck on one strategy.
Scottsdale: I lack the experience of others posting in this thread, but what I've seen in SL is that most successful business people are sole proprietors practicing a skill in making a market or crafting through coding scripts or crafting awesome clothing designs using SL tools.
Due to the pending challenges of enforcing service contracts, collecting debts, accounting for sales and profits and sharing equity, there are few if any true "companies" combining efforts of multiple residents in the sense of "first life." The margins are so slim, and the competition from "freebie" products and services so pervasive, that there is little to cover the transaction costs of forming a company.
That may change as active residents grow beyond the current quantum of 1,500 - 4,000 residents "in world" simultaneously.
In the meantime though, if you expect to net money, you'll need to get your hands dirty, and expect to get a relatively low hourly equivalent compared to "first life." If there are some residents making the money suggested by the magazine, they are the exception, possibly even the singularity.
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KittyKatt Kerensky
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12-23-2005 16:51
From: Frank Lardner KittyKat: Good business people (as opposed to merely lucky ones) know how to adapt to adversity or market changes and cut their losses. They then find where the market is going and get in front of it. They don't stay stuck on one strategy.
Frank, you absolutely right. I'm not saying that she's NOT a good business person, or that she IS a good business person. I'm mearly pointing out an opportunity that was available to her in her early SL career and she made the most of it while she could, and that this was most likely her path to where she is today. The losses she had from the demise of the hubs, while a significant amount, will not destroy her SL business. On the contrary, it was only a part of her SL business endevors. I'm certian she will do fine moving forward in SL. As for her capabilities as a business person, I think her success in SL speaks for itself.
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