Cover Charges; Are They Inevitable?

Thump Magazine recently had a poll on whether its readers would pay a cover charge in lieu of tipping to watch a second life live performance. The result was an overwhelming 71% saying they would.

The live music club scene in second life is a fragile one. The costs for staging these events are considerably high and the opportunity for revenue is low. Live performers typically charge 3000-5000 Lindens per hour and add in a host/manager and a couple other staff members and you can see the costs for the second life venues running at about 6000 lindens per hour. And that is just one hour. To have events every evening and sometimes two, three or four performers per evening and suddenly the overhead to run a live event venue climbs to over 125,000 lindens per week. Pretty pricey stuff. Even with people pooling their resources to run these events, it’s still a drain on pocketbooks.

I run a live music venue in second life and bear the costs myself. For that reason, I only hold a live event once per week and for an hour. My costs are typical of most venues, performers in the 3500L range, my manager and staff is approximately 700L for a total of 4200L for that one performance.

What revenue streams do live venues have? Well, typically most clubs rely on tipping. But to cover the 4000-6000 lindens needed every hour, tipping would have to be extremely generous. Assuming events attract about 50 avatars, each one would have to tip an average of 80L for the club to break even. And that is on top of tipping the performer as well. Now 80L is not a lot to tip, and most people who do tip do contribute more than that. I typically tip from 100-200 lindens when I venture out. But then, not everyone tips. Of the 50 av’s in attendance, only about 10 on average contribute to the venue (more contribute to the artist). Even if they tipped 200L each, the venue would only bring in about 2000L, creating a loss of 2000-4000 lindens for the hour.

Another form of revenue for live venue owners is advertising however from what I’ve seen at most venues, there is not a lot of advertising other than for their own businesses.

So why would anyone get into the live event venue business in second life? It certainly isn’t a money maker or a sound business venture. A lot of venue owners will say they do it out of the love of live music and to keep it strong in second life. That’s true, and I feel the same way. It’s great to support live music and to provide places for artists to perform and without the venues; second life live music would not flourish. But how long can this go on the way it is. Will owners eventually have to shut down because of the drain on their finances? Will they be able to find other revenue streams to support the venue?

Well, cover charges have been suggested before, and while I’m not totally in favor of them, there is some sense to them. Again, assuming 50 avatars at an event, the venue could charge a cover charge of 100L per person and make enough to cover their expenses and a little bit of a profit as well. And is 100L cover charge an outrageous idea? Well for a lot of people in second life it may be. New additions to sl would be shut out until they can afford the cover charge. Also, a lot of people would probably limit themselves and not drop in to see a lot of performers since they would have to pay the cover each time, even if they didn’t stay long.

I don’t know which way it will go. I really don’t want to see cover charges in second life because I think it is far to limiting in our ability to see and experience everything here. But I also don’t see tipping at venues increasing. A lot of people won’t or aren’t able to tip and the ones that do, do consistently, but not enough to make live venues successful?

Sorry, I don’t have the answer? Do You?

Jenny