Tuesday, February 19, 2013

DTs and IMVU Economy 2.1

 How you get Developer Tokens

When you get sales that result in no credit profit, this either means that:

1. You are selling your product for the base price. No markup from the base price = no profit.
2. The customer used promotional credits to purchase the product and you received one Developer Token rather than your credit markup. When this is the case you always get 1 Developer Token for each sale regardless of your normal markup/profit.

You can also get Developer Tokens if you have stickers on your homepage. When people click the "buy this sticker" link on your homepage and buy the sticker, you get a Developer Token as a sort of referral bonus. Currently anyone can get Developer Tokens this way.

How you use Developer Tokens

Non-registered members (members with Guest_ in front of their name) cannot currently use Developer Tokens.

Registered members (developers and non-developers) can use Developer Tokens to reduce or eliminate the cost of shout-outs. For this purpose each developer token reduces the price by 10 credits each. If you have Developer Tokens they are automatically used to reduce the price of any shout-out you buy.

Developers (only) can use developer tokens to reduce the catalog submission fee when submitting an item to the catalog. For this purpose each developer token reduces the price by 10 credits each. This only applies to the submission fee paid to IMVU, this never applies to the derivation fee paid to developers

So you want to be an IMVU developer huh? If you want to do it for fun then by all means, jump right on it. If you're looking at developing for IMVU as a business proposition however you should take a moment to become with how the economy works. Things have changed a lot from the early days of IMVU. It can still be a very lucrative business for the right kind of entrepreneurial artist, but understanding how you can make money before you start is important.

Making Money as a Developer

Unlike a salary job in the real world, the amount of time you spend working on a product does not directly affect how much money you can expect to make out of it. Talent, business savvy, and luck are much bigger factors. You also don't get paid for your work all at once. When you sell products in the IMVU catalog, people are spending small amounts of money to buy your product. In addition to this you only get a portion of what they spend, and you get paid in virtual credits.

IMVU allows developers to sell credits. They benefit just as much from selling credits them selves as they do from developers selling their products on IMVU. The ability to resell credits is the developer's incentive to participate in the IMVU economy. IMVU has more products in it's catalog, and developers have virtual credits they can sell for cash. This arrangement is mutually beneficial.

Because IMVU sales credits for a certain amount, developers generally have to sell credits for less in order to compete. Without the incentive of a cheaper price, there is little reason for an IMVU user to buy from a developer rather than IMVU directly.

The important point to note is that you will make very little money on average per sale, literally pennies in most cases. The good news is these pennies add up to dollars as you get more and more sales. You can think of your business on IMVU as more of a royalty than a salary. The lucrative end of the deal is that the work you do today continues to pay off over time for weeks, months, and sometimes even years after the work is done.

How Developers are Paid

There are two types of currency on IMVU. Credits, which customers pay for with money, and promo-credits or predits, which are free. The debate over the value, logistics, and fairness of promo-credits is beyond the scope of this explanation of the economy. Needless to say there are people that feel adamantly that promo-credits are unfair because they are a way for IMVU users to purchase products that result in very little compensation to the developer. There are also people that see promo-credits as a necessary component of the virtual economy, and should be considered a business expense of sorts. There are valid claims on both sides of the fence and the debate is ongoing.

Promo-credits are a harsh fact of doing business on IMVU. They are useful for getting new users and that means more paying customers, but result in sales which developers get little compensation for.

To understand how purchases work look at the diagram below: 

1. When customers purchase your 3d product, if they purchase it for themselves and they have any promo-credits they will pay for it with promo credits. If they don't have promo-credits or of they are purchasing the product as a gift for someone else they will use credits. In some cases they will have some promo-credits but not enough to cover the entire cost of the product. When this happens they will pay part of the cost with what promo-credits they have left and the remainder with credits.

2. Each time a product is purchased IMVU gets 250 credits or promo-credits. These are effectively destroyed. IMVU does not "recycle" credits because they have no need to. They can create as many credits as they want at no cost because credits are simply a virtual currency. IMVU always creates exactly enough credits to cover what people are purchasing. IMVU cannot "run out" of credits or have a surplus. Out of what is left, each developer that made part of the sold product gets their markup price in credits if credits were used to pay for the product or a developer token if predits were used to.

3. Developers can then choose to sell any credits they have made for cash, or re-invest them in the IMVU economy. They can buy other developers 3d products, advertise their own products, or use the credits to cover the cost of submitting more products to the catalog. If a developer gets a developer token for a sale, each developer token can be redeemed for 10 credits worth of advertising or 10 credits off the price of submitting a product to the catalog.

As you can see, getting credits is obviously preferable to developer tokens. Most products you will sell in the catalog will have a markup higher than 10 credits, so there can be a significant profit loss in addition to the fact that you cannot sale developer tokens.

The Bigger Picture

To get a better understanding of how developer tokens come into play, we can zoom out slightly and see the IMVU economy in general: 

 1. Credits are always purchased, promo-credits can be earned in a number of ways, but they are always free.

2. The the non-developer, credits and promo-credits are virtually the same thing. The only real difference is that promo-credits cannot be used to gift products to other users. Promo-credits can also not be transfered.

3. When users spend credits or promo-credits to purchase services or do other things on IMVU that doesn't involve developers all of the credits and promo-credits simply go away. When they buy 3d products made by developers IMVU still takes a portion of the payment and it goes away. What is left goes to the developers, but only credits go directly to the developer. Promo-credits are never used to compensate developers for sales.
4. Credits can be cycled through the economy because they represent real money coming in and going out. It is undesirable for promo-credits to cycle this way since this creates loopholes that might be scamed. To prevent promo-credits from cycling, developers are never compensated with them. Instead developer tokens are issued. These can be used for some things developers would find useful, but they cannot be used for anything that would compensate another developer. This is how cycling is prevented. Only IMVU can receive developer tokens, and like credits and promo-credits they are destroyed when IMVU receives them.

5. Obviously, credits are most desirable because they can be sold

No comments:

Post a Comment