Etsy for Avatars

Having a hard time understanding the Virtual World marketplace?

Think of it as Etsy for Avatars. The first time I heard this phrase I was instantly delighted with how clearly it sums up the potential for peer-to-peer selling in virtual worlds.

Virtual Worlds are a marketplace for selling premium services, "renting" real estate, selling customization services, monetizing advertising campaigns, empowering community-based fund raising and more - but what Virtual Worlds are perfect for - is peer to peer selling.

But instead of thinking of Ebay, think of Etsy.

So what is Esty?

While Ebay is a place where you can sell anything, Etsy is a place where pride in craftsmanship, artistic ability, and cultural acuity matter more than cut-rate prices. A community develops around the curatorial practice of selecting the best items, showing your top picks, and of course, hawking your own wares.

How big is this market? Here are two examples:

1) According to their website, IMVU has reached 40 million registered users, 6 million unique monthly visitors and a $25 million revenue run rate.
2) Second Life claims 250,000+ goods created each day.

So what are the barriers to success?

Ease of Use

The biggest is ease of use. It is still hard to create great content. Winners will emerge in the virtual goods market by finding a way to deliver higher quality goods easily. I faced this same problem a few years ago while working at DreamWorks. It is a lot of work to create high quality avatars or CG characters. The team of extremely talented designers and modelers and painters were working around the clock to create each new character. I found a way to automate the templating process to leverage 3D assets in the creation of 2D designs - the result was an elimination of the tedious set-up time that went into the design process. The artists were free to create based on actual geometry, rather than guessing, revising, and guessing again.

Curatorial Voice: Featuring Quality Goods in Open Marketplace

The second biggest challenge is featuring quality goods in a open marketplace. With so many virtual products being made each day, how can you best find the right avatar mod, fashion accessory, media appliance, virtual vehicle, or other item in the vast sea of product?

Let's first look at fashion retailing for some pointers. Two of the biggest fashion magazines are Vogue and W. They have teamed up to create Style.com. However, even with a huge fan base from the physical magazine, they are getting busted each month in page views by Polyvore.com and Lookbook.nu

How do these two underdogs do it? Polyvore features guest bloggers to give curatorial direction, but that's only half of the story. They have a very easy to search catalog of product and a super-simple UGC tool that makes customization of fashion collages a snap. These are then bloggable, and the whole cycle perpetuates itself.

Lookbook.nu looks gorgeous. It is a street fashion site with big numbers each month. But where they really shine is how clever their quality strategy is: they combine a velvet rope admissions policy with a remarkable innovation called "karma filtering"

With Karma Filtering turned on - you only see the good stuff - as demonstrated by the individual user's dedication to the community. They earn karma points for community involvement. With the filtering turned off - you see everything else. It makes for a much more enjoyable browsing experience to see page after page of great UGC.

Karma Filtering simultaneously energizes the core community while keeping the site looking fantastic. Those filtered out can still participate, and are encouraged (much like in the real world of fashion peer pressure) to try harder next time. Is it mean? Yes and No. Yes it is no fun to get filtered out, but you are filtered for karma (meaning community participation) not filtered for having a lousy look or unattractive features. To be honest, I think it is one of the most clever devices used to keep a site looking great without having to manually police every entry.

What about games?

Finally, let's look at Sony Playstation. They have a virtual world called Home, which is still struggling to find it's feet as a hangout/game launching venue. They will get there - as soon as they perfect the rewards/badges/achievements piece of the puzzle to drive use, game re-play, and longer/return engagement. They've taken the first few steps, and will make it happen soon. What I wanted to point out about Sony, however, isn't Home, but is the original programming featured on PSN. Watching Pulse or Qore presents entertaining, enjoyable hosts who lead you through the latest products.

Can templating, automation, and semi-automation play a role in the creation of customized goods and avatar services for virtual economies? Can virtual goods adopt curatorial, Karmic, and guided soft-touch sales and presentation methods? Absolutely!

This market is growing.

If you have a good story about a particularly great example of the selling, marketing or distribution of virtual goods - please leave a comment.

Links:

Esty
IMVU Creator
SL Wikitecture
SL Immersive Spaces
SL Relay for Life
SL economic stats
PSN Original Programming
Style.com
Polyvore
lookbook.nu