Category: business

Second Life provides musicians with new moneymaking opportunities

There is a burgeoning new online market for musicians of all types. Recording artists, performers, singer/songwriters, turntablists, playlist DJs, karaoke aficionados, and more can find paying audiences in Second Life. This article provides a top level view of Second Life from a musician’s perspective. It quantifies the market opportunity, and touches on some of the considerations in reaching this worldwide music market.

There is a burgeoning new online market for musicians of all types. Recording artists, performers, singer/songwriters, turntablists, playlist DJs, karaoke aficionados, and more can find paying audiences in Second Life.

Second Life

So what is Second Life? It is an online 3D virtual world, or Metaverse, where people meet and interact with each other through digital ‘avatars’ in a virtual landscape. Visually, this Metaverse bears a passing resemblance to Massively Multiplayer Online Role Playing Games (MMORPGs) such as World of Warcraft. However, this resemblance carries no further than the ‘look’ of such MMORPGs. Second Life is an alternative universe where avatars (people) are free to carry out whatever activities they wish. In my mind, the three qualities of such a metaverse that distinguish it from an MMORPG are:

  1. There is no previously defined goal or objective by which one may ‘win’. Instead, avatars live the life of their choosing.
  2. Everything inworld is created by the residents. With enough talent and time, you can recreate every thing you would encounter in the metaverse — be it a house, a landform, an article of clothing, a manner of moving, or any other ‘thing’, tangible or intangible, that can be discerned.
  3. Second Life has a freely functioning real economy, with a unit of currency that is freely exchanged to and from US dollars.

Size of the economy

So how big is this potential marketplace? Linden Lab, the creator of Second Life, reports that over $1 Billion in resident-to-resident transactions have been made since the inception of the metaverse. In 2010, the projected figure is in excess of $500 Million per year, and growing quickly. As quoted from San Fransisco Business Times:

In 2008, Second Life users spent more than $360 million on virtual goods ranging from land to designer shoes to lavish homes. The Second Life economy almost doubled in size – 94 percent up – between the second quarter of 2009 and the same period in 2008. User-to-user transactions now amount to nearly $50 million per month.

To put this figure in perspective, in 2009, all sales of digital downloads of music combined totaled about $1.9 Billion — barely a little over three times the size of Second Life’s economy. Indeed, Second Life’s economy is larger than the GDP of some real countries.

Music and other economic activity

Of course, not all this money reflects musical purchases. There are many other activities and goods vying for the avatar consumer’s dollar. Again from the aforementioned source:

In total, users around the world have spent roughly 115,000 years in Second Life socializing, attending live concerts, creating, selling and shopping for virtual goods, learning languages, attending business meetings etc. User hours grew 33 percent year-over-year to an all-time high of 126 million in the second quarter of this year….

However, music does represent a significant part of the overall inworld economy. At any moment of the night or day, there are multiple performances occurring across the grid. Rock, country, Hip Hop, or Americana … solos, duos, bands … some completely live, some with backing tracks, some doing mimed ‘role play’ … about any form of music you can imagine can find a worldwide audience on Second Life.

At any given moment, there are dozens of thousands of people logged in as their avatars to the Second Life virtual world, or ‘grid’. And for many of these people, attending musical events is their primary reason for being inworld. They visit virtual venues, hosting musicians on their stages, at virtual concerts. There they can sit and listen, or dance and interact with the other avatars onsite. While partying there, they may converse with the others in text chat about any given topic. As a musician, you are also able to see the local chat, thereby providing you with a direct communication channel between you and your fans. This provides a higher level of interactivity than typically possible in real life.

Dancing to live music
Dancing to live music

Employment in Second Life music

There are several broad categories of musicians performing within Second Life. Linden Labs makes an official distinction between Live performance and other forms of music:

A live performance in Second Life is presented by a person who is represented in-world by an avatar, and is creating the performance in real-time, streaming the audio (or audio and video) portions into Second Life as they are being created.

Playing back a previously recorded performance, whether audio, video or Second Life machinima, is generally not considered to be a live performance if there are no live elements performed while the audience is watching the show.

We do not intend to imply here that either Live or non-live music is superior to another. This is just being pointed out in order to understand how to present your performance consistent with inworld norms. If you are presenting a playlist DJ type performance, it would be a breach of protocol to list this as a Live Music event — however, it would indeed be appropriate to list it under the Nightlife/Entertainment event category.

And the variety of opportunities is quite staggering. I have seen the following types of acts, all paid for their performances:

  • Playlist DJs performing various styles of music for the dancing enjoyment of the venue’s patrons
  • Scratch or BeatMatch DJs creating unique layered performances using prerecorded tracks and synthesizers for real-time creation
  • Singer/songwriter types with a guitar or keyboard and vocals
  • People singing over Karaoke backing tracks of hit songs
  • Solo musicians performing with backing tracks of their own creation
  • Duos, trios, and full groups completely live
  • ‘Tribute’ acts, where the ‘musicians’ construct and animate elaborate imitations of chart-topping groups — to the original recordings by those groups
  • ‘Role Play’ or ‘listening’ sessions where original artists mime performances to their own recordings

Much as in real life, some performances are the main focus of the venue, and others are an adjunct to some other commercial or social venture — such as a mall opening, or a mingler. There are also inworld opportunities to sell digital downloads of your music — either limited to playing inworld or as universal mp3s.

Is it for you?

After reading the above, you may be eager to delve into Second Life as another marketplace for your musical endeavors. As you can see, the opportunities are nearly endless. Further, it costs nothing to try your hand at it — plus, it’s just a whole lot of fun. No matter what sort of musician you may be, there is another market waiting for you in Second Life.

This is but one article in a series on opportunities for musicians in Second Life. Further articles will cover resources, technical issues, groups and organizations, revenue streams, publicity outlets, and more. Next up, however, will be a brief overview of the software required to pipe your music inworld. I hope you join us in this journey to a strange and wonderful new world. In the meantime, you may wish to do some early exploring on your own — it is free to get started! Just click the link below:

Secondlife.com

secret to maximizing revenue for music downloads using paypal micropayments

Many musicians are selling digital downloads of songs direct to fans over the internet. This allows the musician to retain the lion’s share of sales that formerly would have been retained by the record company. For the majority of these musicians, the Paypal Micropayments Fee schedule can drastically increase their profitability. If you are such a musician, it would be most advantageous to learn how to employ this facility, and start paying Paypal less than a third of what they are paying today!

You can likely make simple change to your PayPal account, that could easily boost your profits by 35% or more!

The artist as record label

There is no question that the traditional ‘record company’ model of music sales is being obsoleted by a new digital download model. In this new model, bands can interact directly with their fanbase. Direct band-to-fan sales of digital album and song downloads net the artist several times the amount of money per sale as did the old ‘recording contract’ model. Indeed, under the new model, the artist performs the role of record label, receiving all the money that in the past would have been retained by this middleman.

Once the decision is made by the artist to market direct to fans via online sales, the artist must choose a means of handling the financial part of the transaction. For the overwhelming majority of artists, the logical choice in this area is to partner with PayPal for the merchant services.

PayPal is simple, trusted, and ubiquitous

PayPal is the leading provider of internet transaction processing services. In operation for over a decade, it is a widely-trusted, secure brand, easing customer fears about dealing with potentially sketchy transactions. It allows consumers to pay in the form that they prefer — be it through credit cards, debit transactions, or from their PayPal account balances. With over 150 Million accounts, and transacting in dozens of currencies, it is a globally-recognized brand.

Using PayPal as a payment processor, money is paid from the account of the consumers’ choice to your PayPal account for each digital music download. For each such transaction, PayPal  receives a small amount as their compensation for their service. This is deducted from the seller’s receipts.

Two payment rates

What is not widely-known, however, is that PayPal maintains two separate fee schedules (or Merchant Processing Rates) for sellers.  The fee schedule specifies exactly how much of each sale would be paid by the seller to PayPal for the service of processing the transaction. Depending upon the dollar size of your average transaction, it may be advantageous to be under one or the other schedule.

The Standard Fee costs the seller a flat rate of $0.30 (in US Dollars) plus 2.9% of the total transaction. Under this cost structure, if the artist sells a single song at $0.99, PayPal charges $0.33 to the seller for the transaction fee — a third of the entire selling cost.

There is, however, the Micropayments Fee structure. Under this structure, the Micropayments Fee costs the seller a flat rate of $0.05 plus 5%. Using our previous example of selling a single song at $0.99, PayPal would charge only $0.10 as the transaction fee — less than one-third the cost of the Standard Fee!

Maximizing profits

As seen above, using the Micropayments Fee structure can result in dramatic increase in profitability. Let us assume a single download of a $0.99 single is a typical transaction for your act. Under this model, you would net $0.89 per transaction employing Micropayments Fee schedule, as opposed to $0.66 under the Standard Fee schedule. Or stated another way, this increases your profits by 35%!

Is it right for me?

One can readily see that the Micropayments Fee is a much better deal for small transactions. With a lower flat rate, it makes small transactions competitive. However, with a higher percentage, it becomes less of a deal as the average transaction cost increases.

So where is the crossover point? About $12.00. If you expect your typical transaction to be lower than $12.00, it would be better to employ the Micropayment Fee. This would be exemplary of most singles and albums sold as digital downloads. If you expect your average transaction to be greater than $12.00, it would be better to employ the Standard Fee — but do you really expect your average customer to buy all your albums at once?

Signing up

The Micropayments Fee option is a little known feature of the PayPal system. PayPal goes to no great lengths to advertise its availability. Accordingly, not many know of its existence. There are considerations to changing your PayPal account to the Micropayments Fee schedule.

First, PayPal only allows a single fee schedule for a given account. You cannot use the same account with the Standard Fee schedule for some transactions and the Micropayments Fee schedule for others. However, this is easily dealt with by employing two accounts — one for each fee schedule.

Second, PayPal allows only Business accounts to employ the Micropayments Fee schedule. Neither Personal accounts nor Premier accounts qualify. However, it is a simple matter to open a Business account with PayPal.

Wrapup

Many musicians are selling digital downloads of songs direct to fans over the internet. This allows the musician to retain the lion’s share of sales that formerly would have been retained by the record company.  For the majority of these musicians, the PayPal Micropayments Fee schedule can drastically increase their profitability. If you are such a musician, it would be most advantageous to learn how to employ this facility, and start paying PayPal less than a third of what you are paying today!

Free Special Report available!

I have prepared a simple, step-by-step guide which walks you through the process of setting up a PayPal account under the Micropayment Fee schedule! For a limited time, I am making this report available at no cost to you. All you need to do to receive this valuable information is to sign up with your first name and email address, so I know where to send the .pdf. Once registered, you will also receive periodic bulletins with my exclusive hints on business and technical issues in the new music business! You may unsubscribe at any time, but the special report is yours to keep!