The Intricacies of IMVU's Unique Economy
Balancing Creators, Sales, and Credits
IMVU, the 3D avatar-based social platform, has always had a unique economy where users can create and sell virtual goods, making real money in the process. In this blog post, we will dive into the complexities of IMVU's economy, exploring how creators were paid, the role of sales and promotional credits, and the challenges faced while managing the creator community.
The Unique Economy of IMVU:
IMVU's economy allowed creators to be paid a percentage of sales in credits, as long as the items were purchased with non-promotional credits. Each item sale removed some credits from the economy, but it took multiple sales for credits to exit the system. Creators could resell their credits through third parties, with some making over $100,000 annually. IMVU maintained an arms-length relationship with resellers, allowing them to exist for the sake of the economy without explicit endorsement. It was more of a symbiotic relationship that enabled credits to be removed from the economy while allowing creators to cash out and earn money.
Running Sales and Credit Influxes:
Sales were crucial to IMVU's business but posed challenges in understanding their impact on the economy. For example, 50% off credit sales would nearly double daily revenue, but the long-term effects were hard to gauge. These sales acted like a central bank, injecting massive amounts of credit into the economy. Balancing sales against revenue demands was tricky, as relying too much on sales created a cycle of dependence and made it difficult to maintain normal pricing.
Think of it like a central bank, we created a massive influx of credit into the economy on a one time basis, but there wasn’t a good way to measure when there was too much saturation of credits in the economy. Therefore, we had to be constantly watching daily sales to ensure we didn’t become overly dependent on credit sales and also watch credit sinks out of the economy.
We had to balance this against revenue demands - if we were behind plan for a given month, the instinct was to run a sale. But doing this often just created a cycle of dependence on sales and made it hard for us to keep things at the normal price. Therefore, we had to stay disciplined in how often we ran sales.
Promotional Credits and Creator Community Management:
Ensuring new users had enough credits to get started without upsetting creators was a delicate balance. Providing too few promotional credits resulted in a poor user experience, but giving too many risked angering creators, who didn't receive monetary value for items sold with promotional credits. Outreach to creators was essential, but finding the right balance was challenging.
The main thing we had to figure out was how to give enough promotional credits to a new user so they wouldn’t be perceived as a noob by others in the community. However, if we gave too many promotional credits, creators could be upset because they would see sales for their items that wouldn’t result in monetization.
We constantly iterated on the right amount of promotional credits. If we didn’t give enough, a new user would have a terrible avatar and outfit and many of the others in the community wouldn’t befriend them. Our core retention metric was linked to finding friends in the community within the first few weeks.
We tried an experiment where we gave away a massive amount of promotional credits - it looked like it was creating a lot of onboarding for the new users, but the reaction from creators was so negative that it risked a key part of the economy. Building IMVU was not as simple as just optimizing for onboarding - the whole cycle needed to be considered with key changes or experiments that we were running. You had to balance a focus on the core retention metric for new users while also making sure that the creators who generated all the content and goods were happy.
Building a Credit System to Address these Challenges:
Several key principles guided IMVU's credit system development:
Promotional credits needed to be limited to an amount sufficient for outfitting a new avatar, allowing users to onboard without upsetting creators.
IMVU facilitated the creation of affordable looksets (complete avatars with outfits) by working with creators and sometimes compensating them separately.
Sales were crucial but had to be carefully managed to preserve the value of credits and prevent economic collapse.
Conclusion:
IMVU's unique economy presented numerous challenges in balancing creator interests, sales, and promotional credits. By learning from their experiences and adapting their credit system, IMVU managed to create a thriving ecosystem that benefited both creators and users. This serves as an interesting case study in understanding the complexities of virtual economies and the importance of finding the right balance to ensure the sustainability of the platform.