$$$$ - Is anyone making real money in SL???

My initial reaction when I read your post was "but that is the fun of sl." Then it occurred to me that not many people would enjoy that, and thus my advice here is that to be a successful content creator you have to enjoy making content and running a business more than anything else about sl.

This is a piece of advice someone gave me back when I started developing indie videogames. To be at all successful at it, you have to enjoy making games more than you enjoy playing them, because otherwise you will never be able to muster the energy to actually do the work.

stated succinctly:
If there is anything you would rather be doing than running your business, your business will probably fail.

There are always exceptions and I too know of a few players less than 6 months old that turn a good profit after all expenses have been covered, but I doubt anyone under a year old is making anywhere near a livable wage from creating content once they have covered their expenses. I think land flippers/developers are a different kettle of fish because they have to invest heavily in order to see a profit, but the profit comes allot quicker than for the pure content creators. I would be interested to know if any pure content creators are in that $5000 per month bracket. I am aware of 3 but I assume there are more judging by the size of some of the businesses i've seen.

Myself and a few others I know have also cashed in on the influx of corporations coming to SL and I think thats the way to go in order to make a quick buck from building. I've been doing custom work on one of the IBM islands and was astounded by what they were willing to pay.

By "content creators" are you only referring to clothes makers or something? I certainly consider animations to be content, and most of the large animation stores are probably in the top bracket, based on the fact that I'm nearly there and they're obviously making more than me

Actually, even if you are only referring to clothes, I read in an article somewhere (lost the link, sorry) that Blaze Columbia was making 6 figures within a year of joining SL.

Also, is Blaze a him or her? I wasn't sure so I reworded my sentence to avoid any pronouns.

This is sound advice




SO where do you keep your tip jar? lol.. your posts and insight have helped me immesurably since I started. And allthough I'm not much of a shopper the first names I knew by heart in SL were yours and Robin Sojourner.



Well I do enjoy a challenge, for me this is the next learning opportunity

-why

Just pay it forward, as the saying goes.

I have a California CPA advising me carefully (the same one I've had for over 20 years for both personal and business taxes, and I'm probably his poorest customer). First and most obvious: USD income is clearly reportable.

Beyond that, there are few precedents in virtual worlds but in theory assets gained (or anything of value gained) is taxable. By the same token, liability incurred is, well, liability.

Talk to Ricky Zamboni for detailed arguments about this, although at some point the real exchange of goods and services of value may devolve into the ridiculous. I don't think my youngest son's claw-shooter thing he found in Twilight Princess on the Gamecube should be declared as an asset. At least, I hope not!

There is also the matter of appraisal. Game credits are worth their equivalent in USD, plus the chance they could evaporate tomorrow, be taken away, or any number of high risk factors. 100 USD in the bank right now is a *very* different thing than "100 USD worth of $L as of this morning" is worth right now. Even "USD game credit" with the Company isn't the same as cash in the bank, not by a long shot.

Back to income. Not only is income reportable, the *type* of income matters.

If you perform *work* to gain income and you are a US Citizen, guess what? You are going to pay medicare and social security taxes, among a host of other state and federal taxes! Forms 940 and 941; W2, W3 for instance.

Oh no, you say - I didn't work for my money, I just somehow gained it through buying high and selling low because I'm so smart!

O rly? Well, guess what! You just made capital gains. Welcome to hell.

If you are a business, it gets more complicated from there. Incorporation, RL biz licence, merchant accounts, minimum tax, corporate tax filings.

Probably any monies gained below the 'hobbyist' maximums aren't going to be bothered with much, but if you make more than that, talk to a professional tax advisor. And not the kind working next to the grocery store in the strip mall. And quick.

Ged, I don't want to become a de-facto 'forums tax advisor' when in fact, I am no expert and I pay someone big bucks to ensure I do things correctly myself. Anyone with any more questions, talk to me personally inworld.

- nod - that's why I included my caveat in my question -- thanks MUCH for providing some insight, but don't worry -- I won't take it as advice from a hired CPA

FYI, I also brought SL to the attention of my "tax guy" recently. He's a bit, perhaps, "old-school" and doesn't quite "get" the idea of SL quite yet. But, he did give the excellent (and obvious) advice of keeping excellent records.

One interesting thought -- use SL income, and structure it as self-employment for purposes of contributing to a SEP-IRA. Might as well look to the years ahead, and have some assets growing tax-free for retirement.

I'm not in the league of you and the other "big names" mentioned in this thread thus far, but I *am* making profit, and I *do* want to report it correctly. It's still very much a "don't quit my day job" situation though

I'd say, as a practical person, declare it and pay the tax if and when you convert it into US$ or some other real-world currency - after legitimate business expenses. Until then, let the IRS worry about it. As if they will really come after the relatively piddling amounts they could get out of L$ in-world anyway.

I think that content and services are hugely underpriced in SL at the moment but I'm not sure they will ever be priced correctly. My sense is land and tier is too expensive and content/services not expensive enough. IBM was probably paying a fair price.

That's true - but that's changing too. As you have observed the strategy had to change between your SL generation and the recent ones, and in the same way it's had to change again since then. Many of the names I mentioned might have started off just making things that fitted with the communities around what they wanted to do - but now that's not such a good bet any more, because the big names *do* dominate those communities, and most of the "easy" things in those communities are already made or have been developed until they are no longer easy to make. It's becoming more about introducing new ideas within those groups - which can be tricky, because by necessity the group isn't interested in every single new idea. But it's still doable

L$5,000 a day = $561 usd a month

L$10,000 a day = $1,122 usd a month

L$20,000 a day = $2,247 usd a month



If you can make L$20,000 a day you are making 26k a year

It all depends what you consider income.

Yep, I agree Good points.

Right now I have plenty of revenue but no profit because I'm recouping my investment AND paying the tier for 15 sims. One day I hope to actually make some money. Good luck to you !

WOW! What a huge amount of well informed and fascinating posts.

What I'm hearing from all this is:

Do what you love
Be original
Find a niche market
Develop marketing techinques that suit your business
Don't expect to be a L$ millionaire overnight
Small is beautiful - sell 2 L$1000 products an hour - every hour
The big money is providing services for companies outside SL, who want a presence inside SL

Thanks for all the comments.

Cheers,
Bute

I wouldn't say that's necessarily big money, just that it is money that doesn't get reported by LL's economic reports, since it generally doesn't involve their money. I also suspect this market is saturated with people who want to do this.

If the indications from what dancers are tipped has any relevance to the economy, it must be slowing, tips have been way down last few months in a few clubs I know of, probably since we lost so many premium residents, the whole "play for free" thing seems to be running rampant. The number of people visiting clubs is up but their spending is down. The yellow fungus continues to grow across the SL map.......

Wouldn't it be funny if the health of the real economy were tracked by the tips going to strippers? Front page of the Wall Street Journal: "Investors react to the report from Brandy that fewer dollar bills are being deposited in her G-string."

Well in a sense we do track such things, but we simply label it differently in RL...

This also doesn't hit on some other categories of the money market in SL...

Until 2 posts ago, no one had ever even mentioned any aspect of the entertainment business in SL. It' probably the 'third leg' of the money market in SL (the other two being content creation and land sales). It's also the only real 'service industry' in SL... Most other 'services' I can think of more correctly become product services (even custom building is product, not service even though service is a aspect of it).

Anyways getting more back on the topic... I've meet the owners of a couple escort services and they make a sizable RL income off of SL... Alot of which is made from hosting ads and also taking a cut from the services rendered by the allied escorts...

On the other hand, the best most club owners can hope for is break even & they make far more from 'rent' than their clubs usually. Their main attraction is the ability to generate 'draw' from other forms of profit.

By the way if your looking to advertise a gadget, clothes, hair, etc in SL another good option is to find fashion (like myself) or gadget bloggers and offer them samples. We can generate a good amount of SL traffic this way with no 'real' (as in $L or USD) cost. And the products we like best normally get a spot in our page to keep you 'in sight' even when you aren't designing anything 'fresh' for us to review.

I suspect there is quite a bit tax evasion happening by SL's residents and not declaring earnings is gonna come back to bite some people in the arse. I already know of someone who had their paypal acount frozen after earning £8000 and they were then investigated by trading standards and long story short, prosecuted and heavily fined for not declaring their earnings from SL.

Not sure about the U.S., but minimum wage in the UK is £5.35 (about $10 USD). The average working week is 37.5 hrs so that would equal £10,432 p.a. (about $20.7K USD) so I think if you earn above that you are technically earning a livable income from SL.

The stats page does not capture all the people who make money in Second Life; only the ones who do it by collecting income in L$. It misses the private estate operators who take their payments out-world (usually via PayPal), and the people who do large-scale SL builds for corporate clients (companies like Electric Sheep Company and Millions Of Us, and independent developers like Aimee Weber).

I know of at least four paths to making significant amounts of money in SL:

1. Land sales and rentals.
2. Building and custom content development for RL clients.
3. Selling goods and services in-world.
4. Selling goods and services out-world for SL residents (SLX, etc.)

Yes, there are people in the third category who make enough money to support themselves. No, it's not easy money; just ask Simone Stern how many hours she devotes to her business. The other two aren't easy, either, and land dealing also involves substantial financial risk.

With a great deal of time and effort, I make enough from my shape business to provide all my in-game pocket money. If I continue to work hard, I anticipate that by the end of the year, I may actually be able to cover at least some part of my US$40 tier as well.

But to put this in perspective, I make more from ONE HOUR of RL free-lance web work than I have from 3 or 4 months of sales in SL. If I would put as much time into my freelance work as I do into my SL business, I'd be pulling in at least US$thousand a month in extra income.

The irony continues. I've actually cut back my freelance work load to have more time to play in SL, so every hour I spend in-world is costing me money.

Quite obviously, my "business" in SL is a labor of love.

Well, I make a part time income here after tier. Used to make three times as much before the landbots. I love it though. Even if I wasn't making money, I'd probably spend almost the same amount of time here. I'm trying to streamline my operation here though. Getting out of the private island biz, which barely pays. I'm mainly working on putting together my club. That is my focus now. Still, when you add up all my assets and all the money I've cashed out etc, and deduct all the money I've spent on business or frittered away on clothing and houses, I'd come out about 14-15k in the black, in the 10 months I've been here. Not too bad for part time. Most of that is invested in world to limit taxes.

My SL daily income equals my RL hourly income... if I do the math, I earn 83 cents an hour in SL. LOL! I calculated out my time and what it's worth re: designing clothing. If I spent 15 hours for a super complex dress, including all accessories, flexi stuff, etc. and I sell it for L$500, I would need to sell roughly 166 dresses just to pay for my time. That translated to about 33 cents an hour. Labor of love.

All the same, an extra $20/day is definitely nice to have!

I've heard the US economy can be tracked by the sale of white pick-up trucks..Sales up, economy up. Ever notice how many white pick up trucks there are on the road?

People playing for free aren't spending much..probably because its hard for them to buy Lindens with no payment info on file. I guess the hope is that many will choose to go premium.