Friday, February 17, 2012

ArtGyro Open Forum: The Cost of Art

Saturday, 18 February, at 8:00AM SLT
ArtGyro LEA sim (LEA18)
Contact: FreeWee Ling

Following the first ArtGyro open forum on arts sustainability, three general areas of concern emerged: Commerce, Intellectual Property, and Legacy. Our next forum with be in the Commerce track and we will be discussing the cost of creating, displaying, selling, buying, and owning art. Everyone interested in the future of art in SL is encouraged to attend.

In preparation for the forum, here are some questions to stimulate conversation:

-What are the expenses related to creating, buying, selling, presenting, marketing?

-Who pays for what?

-Given the costs, can art be a viable business in SL?

-What are some examples of successful commercial galleries (i.e., those which sell art)?

-How are prices for art determined? (This may be a whole separate discussion.)
Here are some minumum fixed costs that somebody usually has to pay for art (or anything else) to exist:

In US dollars per month:

Full sim tier: $295.00
Full sim prims: 15000
Exchange rate: L$ 244.22 = US$ 1.00 (Lindex 14 Feb 2012)
The cost of one Linden is approx $0.004
Cost of one prim: $0.019666 (just under 2 cents)
Cost of one prim: 2.08 Lindens

A land owner pays for land whether the prims are used or not. Any unused prims are waste, adding to the cost of the used prims. E.g., if half the prims on a full sim are used, it still costs $295, thus effectively doubling the cost per prim used.

A typical rental parcel can cost 20%-40% above the actual cost to the sim owner, so a gallery owner renting a parcel at a premium price must add that cost to the prim cost.

2D art on a single prim is pretty cost effective. But a single object of 100 prims costs MINIMUM $1.96 (208 Lindens) per month to show. If a gallery owner takes a modest 20% of sales, that object will need to generate at least $9.80 (2393L) in sales just to cover its cost.

Similarly, the buyer not only pays the price of the object, but must also pay for the tier to display it. The 100 prim object will cost $23.60 per year to display.

SANDBOXES: Unless you are using Linden-owned sandboxes, someone is paying the tier to let you work in SL. If you own or rent land, that person is you. If you do not, that person is someone else. Do you know who that is?

1 comment:

  1. Interesting information. Obviously, everything has some kind of cost. There is even a secondary level of cost known as "opportunity cost", which is simply the cost to something or someone else whose product or service I'm NOT using when I use Second Life. And, of course, there are added costs to me when I use Second Life in my leisure time instead of, say, watching TV. Even though I'm not watching it right now, I continue to pay for the cable hookup regardless.

    So ... perhaps there's another way of looking at this. It costs a gallery owner x Lindens to display work (i.e. prims), but what does the gallery owner have without work to display? So, if we consider the gallery a small business, the costs of rent or tier (and prims) is the fundamental overhead of running a business. Unlike most businesses, the gallery owner doesn't have to pay for the goods on sale until they are sold. And then, they pay a wholesale price (i.e. the sale price minus the commission) and the artist gets some percentage. The gallery owner, in effect, bears almost no risk apart from the continuing overhead costs that he/she took on knowingly when he/she started the business.

    To me, this doesn't seem like such a good deal for the artist. As an artist, I have another idea. Why not simply sell the works to the gallery owner who wants to display them? I have costs, too. I have to have somewhere to work, prims to use, tools to buy or make. Without a sale, those costs go unreimbursed. And even with a sale, the percentage I get amounts to a hugely discounted price based not on my costs as an artist, but on what the gallery owner agrees to give me.

    If artists can get together and change the business model, perhaps they (the "content creators" in LL lingo), at least, can make some money. The gallery owners then own work that they can display and sell forever. Everyone wins.