IMVU, which is still in public Beta (hmm, when do you come OUT of Beta, by many definitions, Second Life would still be IN Beta if that means the period in which you work out the glitches and bugs), has reached 20M users and a user-generated content base of 2,000,000 objects.

According to Venture Beat:

Chief executive Cary Rosenzweig says the company has built the equivalent of the eBay of virtual goods. Sales of such goods are generating $1 million in revenue a month for IMVU, which thrives on a so-called “micro-payment economy.”

In comparison, Second Life staked its economy of land with objects to follow. But like all virtual world economies, with no “sinks” it’s an open ended question how virtual economies scale – the more users, the more objects, the more objects the less they tend to cost over time. As I’ve said before about Second Life, the value of objects is no longer in their scarcity – let’s face it, there have been so many jeans designed for SL that you could clothe a virtual China, but their brand associations. In-world designers create experiences and attach value to their virtual creations through either ever increasing quality (although at some point there’s a top unless new tools are added – yesterday’s hoodie was replaced by ones with sculpted hoods and cuffs, or yesterday’s prim sneakers by the sculpted and rendered chucks from Akeyo) or through the experiences and name recognition they build around their objects.

In economies like World of Warcraft there are sinks – objects are removed from the in-world economy because they become useless as you level up, you sell them at auction or to NPC vendors, or because they’re combined to make new objects (herbs make potions, potions are consumed, objects gone). In worlds like SL and IMVU, there can be flush early days (IMVU might be there now) and then the trailing off when both the objects themselves and the servers upon which those objects reside become plentiful and cheap.

What’s interesting about Cary’s take on IMVU’s success, however, is his comment that it’s the avatar, not the world that counts:

Rozensweig says Harvey’s new effort is succeeding because it focuses on the creation of a great avatar and then builds an experience around that avatar. By contrast, There.com and other virtual worlds create an environment and then work their way down to the avatar.

What strikes me about this is that while this may be true, the tools for avatar expression are far more robust on other platforms, SL in particular. It’s their emphasis in the ecosystem of tools, sign-up, promotion and marketing that makes the difference.