The Economy

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What's happening with the economy? To read some of the blogosphere, you'd think it was "tanking". The Motley Fool has got it all wrong because they've made the classic mistake in reading the LindEx upside down: if there are, say, 266 Lindens to the dollar now, and not 267, it hasn't "fallen" in value, it has *risen* in value, because the less Lindens there are to the dollar, the more they are worth, dollar wise.

The LindEx has been routinely enabling you to set a packet at the 263 point and sell within 24 hours or less, so I see it rising in its value. This afternoon, I was thinking to sell some Lindens, and saw 104 million at the 263 mark, and thought I'd see what it was doing later. When I checked this evening, *they were gone*. Sold. The 264 mark was empty; the 263 mark was with just a handful of change quickly selling. I checked yesterday's sales -- 107 million, closing at 263. That's a lot -- more than it has been in a while -- it was ranging from 75-80 million for a good long while. Of course, the Lindens control this rate by selling Supply Linden dollars that are printed to keep the rate "steady". But look at how much Supply made last month! US $536,946! That's more than he's made in a while, and while that means he's devaluing our wages by watering the rate down like that (we could be getting that money instead of him, because the demand in the market is there), he's still letting us sell for 263...I wonder if somehow an executive decision was made to make the "new optimal rate" be 263 or 264 which runs to about $3.65 per 1000 Lindens.

Then, if you read the erratic Ciaran Laval, you would also think the economy is "tanking" (that's what his headline says) or that "Jack has built a monster" -- and he makes up stuff, like crying "wolf" that the new ban on ads will also include rentomatic boxes. It doesn't. It won't. There is no need to spread panic like that. Jack hasn't built a monster, either. Ciaran, who has always been curiously ambiguous about the 16-m blight (because of a naggy tekkie love for edgecases and "freedom") claims that there is now a rising tide of expectations that the Lindens won't be able to control. Baloney. Let them just first clean up the extortionist parcels that have junk on them -- of which there are still no shortage, here on October 2. While Cytherea Eagle is gone from the people list and some of her signs are gone, the land is still in her name, and some of her worst signs are still in place. Curiously, Chrischun has taken down some of his gaudier more well-lit towers, possibly sensing they are going to be "over limit," but the land remains with his name and groups and he will likely put something else on them. This battle isn't over -- Looking in Donalbain last night, for example, where a nuge outbreak of nastiness has totally blighted the 4 sims there, I still see loads of parcels at ridiculous prices.

RightasRain Rimbaud also has a nasty-ass land-baron-hating article again. How can he justify this tripe? He knocks the land metaphor and knocks the Lindens' business model as if...he doesn't have land himself with stuff on it. He's always ragging on the mature sex life of Second Lifers as well -- but where does he think people are wearing all that fancy Black Swan lingerie at, their scripting and building classes?! Of course people want their own parcels and houses, and not only for cybering, but because most people *gasp* like and enjoy private property so they can putter around and make or arrange their own content, without having to just go and gawk at his primo stuff, some of which costs money.

Why is no one nominating me for the hottest male avatar contest on Hammie's blog?!

So what is happening with the economy?

Well, obviously, you have to separate what is happening with "the Economy" from your own little economy. My economy was terrible last month because I decided to spend instead of make money, on developing an infohub, but also because for the last 3 weeks, I barely came on, just doing the minimum, busy with RL work and family. I find that if I don't come on and literally stand at the store counter, I won't get as much business. It's always amazing to me how the mere act of being online, in my store, available to help increases business, even in a system I automate as much as possible. But it's just how it is. It's a harsh reality of SL. You need people in it. People are in a world, not on a web page, they want people, not clickable buttons like a PayPal. They often ask you something they already know, just to hear the sound of the human voice, or human type clack anyway.

I look at various indications to me that show the economy is "doing better":

o more Linden sales -- 107 million is a lot of change (about $390,500 in a day) -- that can mean people cashing out but...there are other people buying them, and it's not the Lindens (I don't think they do that) because Supply Linden, as I indicated, is doing a half a mil in business

o more concurrency -- 70,000

o higher traffic at resident-made infohubs which I look at every day -- 7000-22000 or more, instead of 2000-3000 as it has been.

o more new customers coming in to rentals that I can see, and some old ones who left when they were out of money coming back

o more contributions to the SL Public Land Preserve, and higher amounts

o more people attending live music concerts like Frogg's (it was sparse in the summer)

o spending up to 400,000 plus people last month who spent more than $1 inworld (it was 350,000 not so long ago)

o Joshua Nightshade has been expelled for disclosure from SLuniverse.com Good for civilization, good for the economy.

Those are the good signs. Are there any bad signs?

o less occupancy for rentals

o Sarah Nerd liquidation rate -- $3/m -- it has been $3.7 or 4 for awhile -- that means land glut still a problem

o Reasonably-priced good land sitting there for ages, people firesaling

o lack of confidence in the ad-farm clean up because...they're still very visible

o lots of bots still cluttering infohubs, that means people still use them for "traffic infusion" -- removal of Popular Places didn't change a thing there, clubs are still in the traffic arms race

o Eric Reuters is quitting his job to get a position in real media (Silicon Alley). That's a big loss to our world.

I don't know what category to put this information in, good or bad:

o traffic down at some top stores that used to use camping -- good or bad?

o top classified is $532,001 Lindens (!) -- desperation or wealth? This from an animator in "shopping"

o Azure Islands has a half-price sale on opensims. Leaving Las Vegas?

In part, it's because, as some people have said on World of SL, that colder weather and darker afternoons drives people indoors to their computers, but there are also new people.

Are these people education-related? I'm not so sure. There is one very persistent student who keep posting the same thing over and over and OVER again on World of SL, her opinion that SL is "not professional" and her shock that *this* is her classroom environment now. So much for all those maverick kids we're supposed to be remaking the world for with social media, and destroying the old for. In fact, they are conservative and scared and prickly and annoyed like old grumps.

I marvel as this person writes in painful detail about worrying how she will get noticed when she can't raise her little avatar hand -- she doesn't just type into the scroll.

I first encountered the wild scroll of hundreds -- thousands? -- of people on group chat on the live website chat room in the Sims. At first it was very hard to follow. But you learn, and you jump in, it's like anything you get used to it. I won't be changing; backchat and the Big Scroll is the lifeblood of SL. Perhaps the teachers need to explain this better. But if you find people that timid or that grumpy they don't sound like they will be out exploring, creating either traffic or sales for the economy. I don't see much in the way of student blogs beyond these repetitive Bloghuds and of course those twits in the pastel-coloured lawn chairs who keep posting pictures of themselves lounging and saying "Hi!".

To appeal to the new rush of students *cough* I've enrolled at Princeton -- I just teleported to the island, and I was in! Easy-peasy! And to think, it's so hard to get noticed by the devs at Connectivism College. I mean, not devs, but you know, the guys in charge there. Funny, I think of them as devs too. I have long college hair, I am listening to whiney emo music, and I even have a collegiate sweater from Simone with a little preppy looking seal on it. So this should work to get the gowns to the towns, surely...

There's also all this uh, collaborative business. I don't know if those people ever get out much. I know that if I'm shopping for my fabulous collegiate hair, I don't see them in the store, I see my tenants lol.

It's my firm belief that most of the 70,000 log-ons are owned, so to speak, by a mixture of Ansheland, Desmondland, Alliezland, etc. To be sure Azure and even Fairchang are showing more yellow, but it's not their own yellow. Look at the green dots. They are on these people's island continents or on their own new low-fat sims. Skim sims? I don't see them, uh, packing 50 avatars on to IBM's new green thing, traffic 925.

The Lindens put great stake in the idea that stability and less crashing will help retention. Well, sure. But...if you stay logged on, and the economy is crappy and you're in business, you will tier down.

I wish we had real numbers from the Lindens, instead of these fake things like "393 residents in the Positive Linden Flow category of $2000-5000." First of all, that's a big category. And not very many people. I'm one of them! But...that's my tier, too. They don't tell us how that breaks down, although one interesting factoid was let slip by M Linden in an interview recently that had never been yielded up before: he said 60,000 people make more money, of some kind, than they pay Linden Lab. That's why they log on, of course. 218 people make $5000 or more -- and some bunches more, as they are able to sell or buy $2 million Lindens in one transaction.

And by "real numbers" I also mean: I wish we knew which percentage of the economy was end user; which group or business; which outworld business; which education; which non-profit. There is a received wisdom these days that it is 1/3, 1/3, 1/3 with inworld business/end user, then outworld business, then education/non-profit, but I don't think so. I think it's 60 percent end user/inworld, mainly socializers, and 40 percent business and education. I don't know why I think this -- because I don't know!

These people are all inworld businesses, not IBM. And yet, as I've noted, while the Lindens boast about them -- us -- they don't provide them any attention in the form of a dedicated Linden, council, status -- anything. We are supposed to put on our InSL badges and shut up in the concierge group lol.

Although price per square meter paid for land (I assume this is mainland only) has gone from 1.9 to 1.4, the Lindens auctioned off more mainland.

They seem to have added less islands in September than August; the figure that caught Motley's eye was the great increase in square meters sold, but that was only because of the empty calories of the skim sims, 65536 at a gulp, only $250. Doesn't look like the full sized mainland sim spigot is opened yet, and there's only a few smaller parcel in the US $ queue. Premium accounts fell to 84,000 or so.

Comments

[Elanthius Flagstaff]

I can't quite tell from your post but I think you agree with me that the economy is not collapsing at all. Maybe we're slightly worse than 6 months, more likely there's very small growth. I'm not sure when you saw that 263 was empty, whenever I check it's firmly at L$100 million. The consistency is suspicious, it has been at or about 100 million for several weeks now. It makes me think that a user with deep pockets or maybe Supply Linden is doing it deliberately. The economic stats page though still shows "only" 10 million lindens sold this month. The minimum sale on the LindeX has been 263 and the maximum has been 274 for months now. So I'm predicting stability there for the foreseeable future.

Also, the ridiculously expensive classifieds are created by a bug that allows you to pay once for a classified that stays up forever so nothing interesting can be concluded from their existance.

Lastly about the various statistics on economic performance. I wonder if a new approach could be used: just ask people. I'm no statistician but if you can ask 1000 Americans a question and get a 4% statistical accuracy I suppose you can do the same in SL with even fewer respondents. It can't really be that hard to get 1000 SLers to answer a questionnaire anyway. People who don't understand statistics will dispute the result but I think if it's done right it could give us all the answers we want.

[Ann Otoole]

The economy is fine. There is a turnover in progress as oldbies drop off and superior talent emerges. It is inevitable.

Some land empires may be faltering because of nothing more than inept management. Not surprising. Still does not mean the economy is bad. It does mean more of those "humper bunker" sims are appearing all over as people flee the blight/lag of the mainland for privacy that can only be had on a private sim.

Sometimes the high dollar classifieds really have zero to do with Secondlife.
To wit:

http://forums.secondlife.com/showpost.php?p=2072878&postcount=80
---------------
Hendrik Schroeder wrote:
Just to clarify...

I am the guy who bought this 500k Advertising and i am definitly payed 500k for it.
We are a RL company whos doing animations for other games and video productions outside sl too. Our Headquarter is in europe and advertising costs arent real costs, because they reduce the profit and after that the tax payments. What we do in SL is more strategy without any focus on the ROI.

The SL advertising system is the same like google adwords.
When i booked a SEM campaign on google, i payed 0,20cent per click one year ago.
Today when i book the same campaign its more than 4,00€, because theres a big competition with my keywords. Same situation is in SL now.... also called as capitalism.
-------------------

[euroSLEX Euler]

We run an alternative L$ exchange (VirWoX) in Europe and can only re-emphasize that at least based on trading volume on our exchange, the SL economy is very healthy (see http://www.openpr.com/news/55593/The-Virtual-World-Exchange-Quarterly-Results-Q3-2008.html ).

And yes, the exchange rate of L$ compared to the US dollar is rather boring to watch. But compared to e.g. the Euro it is much more interesting (and profitable to trade): Since beginning of August, the value of the L$ has risen by about 15% to Europeans (in August it was trading around 430 L$/Euro, now it is about 370 L$/Euro). This is of course because of the recent fluctuations in the EUR/USD exchange rate of the real world economy.

[Tammy Nowotny]

The Linden buck has proven to be a good value... although the transaction costs of turning your virtual quid into real-life dinero are pretty high. I may have to check out Virwox.

[Prokofy Neva]

Elanthius, I tell you -- it was empty. I looked and looked and refreshed the page. Perhaps I was hallucinating? This was in the afternoon yesterday. I couldn't believe my eyes, but then checking the day before yesterday's totals, it was 107 million in sales, so it seemed plausible. Yet now I see yesterday was only 87 million in sales. ?

It's back at 107 million on 263, 3 million on 264. And yes, I do wonder if it is being manipulated by someone playing it, but how could it be Supply Linden? The Lindens have never had a policy -- at least not an explicit and open one -- of buying Lindens -- they just print and sell them.

I'm not sure if the economy is "tanking," I think it is making a slight comeback, but I can't be sure as not all the facts are visible.

I've occasionally seen ads that look as if they "stayed up" even after expiring on my profile, but they aren't visible anywhere else except there, i.e. not on the list. Are you sure about that bug? Seems like something they'd want to fix pronto, as they get real money for classifieds, they are not sinks.

Oh I agree that more surveys and gathering of real field data would help. It's hard work and time-consuming. If you put up a survey, as Hamlet did, you only get a very skewed sample of people who read that blog and like to fill out surveys. So it has to be done inworld very doggedly.

Yes, I think the Lindens will keep the Linden fixed at a certain value range.

Anne, I don't see any "power law" at work here that produces "superior talent" -- and I'm not sure it's oldbies dropping out, as some of the oldbies that have always been around, with high business volumes and high paying ads are still there.

"Advertising aren't real costs"...hey, what a life lol.... Interesting explanation and good find. I wonder if that RL animations guy with the lack of real costs in Europe is significant competition to Cristiano and Mr. P, who is one of those oldbies with large volume and an expensive ad.

Does trading value equal health? It may only equal churn, lots of people cashing out and selling off land, lots of naive newbies... I can't tell. I think that overall, it has to represent health, however.

[Ciaran Laval]

My headline said no such thing, I posed the question and then went on to say that I didn't think it was. I said that the stats were neither startling or worrying and that I took most of these "The sky is falling" posts with a pinch of salt.

Yes I did get it arse about face on the Linden dollar after reading the motley fool article. It is strenghtening not weakening, others pointed that out to me.

I also never said that the ban would include rental boxes, I asked Jack about them on the back of his repeated comments that the policy had to be consistent. Unoccupied rental boxes advertise, for sale signs are covered by the policy, it was a perfectly fair issue to raise, especially as I have a vested interest in that area and would rather have been told prior to October 1st whether I needed to create a new rental system for my mainland parcels. Jack didn't provide an answer but my boxes are still there so I'll take that as a sign they're fine.

However yes, Jack has created a monster. People yesterday were claiming that it's not fair that people can make so much profit out of 16M parcels. Those who were vociferous about visual spam on microparcels have now turned their venom to their mere existence. If someone wants to try and sell an empty 16M parcel for a ridiculous price then more power to their elbow. Take away the extortion techniques and you take away a lot of their market value. I do not want to see Linden Lab gtetting involved in price controls like this and Jack should nip this nonsense in the bud.

The guy with the 500K plus advert has explained his position as Ann points out, however there was apparently a bug that had been exploited, the animations guy was not exploiting it.

[Darien Caldwell]

All I can say is, for me sales are up, traffic is up, and I'm getting asked questions I've not heard in over a year, questions from genuinely new people, who are seeking help with Second Life. All indicators to me that things are going well, and if trends continue, it could be a very busy holiday season.

[Prokofy Neva]

Ciaran,

You're impossible. A headline saying "Is the economy tanking?" is asking the question because it believes there is evidence for that.

If your rentals are not doing so well, I understand, rentals are hard to do, many rentals suffer, and it's because of the low-prim sims and other factors, but that is not the entire economy.

I think the bulk of the economy is actually in content sales, even if rentals and land sales are a close second, but that isn't even something we know, is it!

Your asking Jack about rentomatics is pure provocation. It's unnecessary, there was nothing to suggest they'd be treated like ad farms, and it's just perverse. Not the first time you've done something paradoxical like that, either.

Jack didn't create a monster; he didn't create much of anything yet. A handful of provocateurs at an office hour doesn't make some sort of massive pressure on the Lindens. And the fact is, their February policy WAS about extortion and that WAS the hook by which we could get rid of obtrusive ads, so there is absolutely NOTHING WRONG with being persistent on the issue of getting rid of 16ms PERIOD. And you know that. You know full well that the extortion is the hook for the Lindens to act, and it's also what is keeping these assholes in business, as some people do pay to get rid of them. So to somehow forget that, and de-link your discussion from that, and suddenly pretend this is about "Jack creating a monster" is just -- again -- belligerent and perverse. You seem to love being perverse, directly against your own interests, seemingly.

No, people don't get to try to sell an empty 16 m2 for a ridiculous price under the February policy, which was not retired, nor even under the new one. Because at any moment they *could* put something on it -- it's a technique of extortion and you know it.

Honestly, Ciaran, you are being a total ASS about this.

Unfortunately for your sudden head-up-ass theory, Linden Lab DID get involved in price controls in February, DID act on it, and DID accept the idea that putting $7999 or $9935 (like Chrischun) or even $1999 on a 16 m23 is EXTORTION. We all get that. It's not about controlling the land market; in fact, it's about making it free to retain its value and sell freely without fear. Your failure to grasp how crime affects freedom, and isn't itself a factor of freedom, is remarkable, but then I expect nothing less these days from lawless geeks.

[Ciaran Laval]

My rentals are doing fine.

Extortion is the hook for Lindens to act, and they're taking away the tools, now should be a period of wait and see if it works. If it doesn't work it gets revisited, which is precisely what has happened after the February ban.

The key point you mention is that they did put items on the land. They used those objects to try and extort. Now they are having that tool taken away.

[Prokofy Neva]

No, the extortion is the price. That's what extortion IS. I see a common technique now, where the ad cutter in fact sells a normal 512, and then sells 4 or more 16 m2 parcels next to it. Virtual Landz for example is doing this all over, selling 448 m2, and cutting up th e rest, and then other people buy it and flip it or DO put stuff on it.

As I explained to you in world, you are a perverse, belligerent person on this, and not doing anyone, even yourself, any favours, with this insane edgecasing and trying to "prevent Linden interference in land pricing." They already interfere. They already have a policy against extortion, that is not only about content and price, it's also about price.

The idea that you remove the menace only by removing the ability to put content on the parcel is absurd, as most of what we have seen for months is either a) removal of content and keeping of absurd price, so that the threat still hangs over your head, and you are still induced to buy b) removal of price but keeping of content, so that you don't technically have the extortion hook anymore.

Both of these tactics are what you are objectively encouraging by your lobbying of Jack now and your claim he has "created a monster". He didn't create a thing. We who care about keeping value of land in an open land market and preventing crime have ALWAYS defined extortion as not merely the content, but the price, too.

[Desmond Shang]

From Victoria City in Caledon, at least, the economic outlook is pretty strong.

Booked solid full for 2.5 years, and if anything it looks like demand will be climbing sharply over the next few months.

That's not to say the economy is good for everyone, though.

Which historic king was it that redistributed the wealth evenly among rich and poor? Only to find the wealth was largely back in original hands after five years?

This is how I see the grid working, some days.

[Ciaran Laval]

I'm belligerent? Jesus Christ, pot, kettle and black. You can be the most incorrigible eejit at times.

Wait and see, that's all I'm saying. This fixation is dangerous because of the precedents it sets if we go down the route of interference. I've had land on mainland sims where people have bullied my tenants off it by telling them their build isn't suitable. That is not the way forward.

Even the top brass at Arbor project are saying wait and see, there's no need to fuel the extortionists at this point, their tanks are running on empty, do not feed them.

[Prokofy Neva]

Ciaran, you truly are an *ass*. We've "waited and seen" since February 2008, DUH. The Lindens ALREADY had this policy. And they ALREADY acted on ARs under this concept of only extortionist prices, without content. You are really barking up the wrong tree with this.

I fail to see how you can be so dense about this. Small parcels of a size 16 m2 or 64 m2 plus a ridiculous price ARE extortion. That's what extortion IS. If it is 2048 or 4096 or even 512 and has a ridiculous price, it's the land market, i.e. Bay City or Brown. Once it is a tiny parcel, it it not "the land market" but a TOS offense, a crime, and extortion. Every one can see that. It's obvious. It's not rocket science, and only obnoxious perversity would prevent it.

What "fuels" extortionists but silence, which is complicity? And Linden inaction, which we've had since February, with only partial implementation? I fail to see what we need to "wait and see". I will document and ticket every one of the HUNDREDS of these pieces of shit I see near all my lands on 65 sims.

What astounds me is the shell game you play here when the discussion is EXTORTION and PRICES, and suddenly you begin whining about BUILDS and their nature and people bullying about builds.

But ad farms are not about "builds". They are about *signs*. Signs are not builds. 16 m3 for a lot of money are not parcels for a lot of money. Any observant person can tell the difference. 16 m2, signs, extortion prices -- that is the target of this policy. It is not high-priced parcels and builds. It is fairly easy to tell the difference.

Your pretense that there is some lack of distinction and your muddying the waters constantly with bullshit as you did about the rental boxes means you are not a credible reporter or even commentator on this topic.

[Ciaran Laval]

It's where it leads to, the 16M plots are being made redundant.

I whine about bullying and builds because that's where this is heading. The argument was visual spam, week in week out that was the argument and now that is being dealt with the goalposts have been shifted.

As for the Lindens already having this policy, plenty of people complained about the lack of action on the existing policy. Indeed people are complaining about that right now with some people reporting success and clearing of neigbouring parcels and others complaining that nothing has changed.

[Ciaran Laval]

I'm not playing a shell game as you call it, and the rental box issue, as I've said several times was about self interest in my business model. Rightly or wrongly I was concered, it was only when Jack kept talking about consistency in policy that that became an issue.

I'm not buying the 16M parcels around my land for the crack, they're being joined to my existing land to make contiguous plots, but their availability when for months they weren't available is encouraging. I'm not the onl person who is now purchasing such plots at affordable prices.

[Kimberly Rufer-Bach]

Maybe there should be a price cap on parcels under 512m2.

[Prokofy Neva]

Ciaran, you are *such an ass*. By supposedly taking care of your own interests, you are in fact ensuring that an entire class of people could be harmed. Thanks a lot! And it's totally stupid, as there was never anything remotely like this said, you are just dreaming up edge cases. It's perverse!

Again, you cannot extrapolate from your little sim situation. Look around you. There are thousands and thousands of them everywhere, and they are not at normal prices, but are extortion.

[Razrcut Brooks]

"Honestly, Ciaran, you are being a total ASS about this."

"Ciaran, you truly are an *ass*."

"Ciaran, you are *such an ass*."

[Carl Metropolitan]

You're in luck--you were nominated. "I've always had a thing for stubble, so Prokofy Neva comes to mind. Posted by: Crap Mariner | Thursday, September 25, 2008 at 06:06 AM"

Will Iris Ophelia take up the challenge and have you as one of the "pick three" choices in her 30 semi-finalists? Only time will tell.

I'd have nominated you, too but I'm way too insecure in my own sexuality to do that. (After all, one can only be called "Carl Metrosexual" so many times before it gets to you...)