How's the SL Economy, Stupids?

Visit this replica of the Wonder of the World Chichen Itza in SL.

Reprinted from the Linden forums, which you can see here, while I'm still on them.

The SL economy is going through some very, very severe, er "correctives" -- or MMORPG entropy and stag/flation, depending on how you view the entire set up.

This, despite T Linden's irrational exuberance yesterday about the "billions" and all these people making BANK as he said, smacking his lips. It was quite a performance. But the people making BANK are him and his friends as Ann points out using secondlife.com and the FIC system to instrument the advantage.

One very obvious sign of their hiding what is going on is their deliberate, conscious removal of the "statistics" link from the front page. This went without a bang or a whimper. First, they jollied people along telling them that it was just down temporarily for overhauling and bringing it in line with real figures after they cleaned out the dupes and try-mes from the account list. The link to the page was still featured, but only with partial filling of the data. Then they took forever putting it back up, saying that they needed to tinker with the island count after the consolidation of the void sims back into full-prim sims. Tateru Nino would call them out every now and then on her column at Massively, but they didn't return it. Then, they did, kinda sorta, but stuff was missing (like number of premium sign-ups). Then, they finally took it out behind the woodshed and killed it.

Let me repeat this again, for the doubtful: the Lindens have *entirely removed* all links to the economy statistics as a promoted feature of their product. The link is *gone* from the front page or home page of secondlife.com and lindenlab.com  It is not accessible through any obvious tab like "Land" or "Community".

You have to dredge it up with Google or search on here, after some tries:

http://secondlife.com/statistics/economy-data.php

After an MBC broadcast yesterday, I went hunting for it because I was really appalled at the concept that all that hard work, all that credibility built up over the years from Linden coders and community people as to their "transparency" and belief in the viability of their artificial economy was GONE and without a trace. Repeat: not temporarily down with an apology, but deliberately surgically removed from ever being visible on the website -- you'd have to know what to look for to find it. A return of it would require redesigning the template layout, go and look if you don't grasp my point.

So yes, there is a still-working and updating scripted service, which I imagine was parked in the back pages because the Linden who made it couldn't bear to see his work demolished so easily (just like the "objects sold in world" which used to be a wonderfully educational ticker on the front page (!) was finally retired in embarrassment because the objects sold were all things like "Sexxxpole Dancer's Tip Jar" and "Sexgen bed" or "Tringo" and never things like "Wonderfurry Sandbox Magic Widget".

Now, why did the Lindens deliberately retire this sometime over the summer in the deepest trough their economy has known since their GOMing of the GOM and the telehub destruction in 2005? Because they knew few would care, it's a decidedly wonky passtime, following those nutty statistics in their spreadsheets, and only a handful of bloggers bothered. Better to retire it, because it makes the whole thing look bad.

First, the premium accounts dipped down to 86,000 from their once-high of 100,000, and the Lindens said the dwindling numbers "weren't worth showing" anymore because they "didn't mean anything" although of course they *do* mean how many people are willing to buy an account to move into the Linden's manufactured communities of Bay City, Nautilus, and Zindra, if something else. And the answer is: not as many as are willing to move into island resorts. They're going to see an uptick of those premiums now so people can buy in Zindra, but not back to the glory days because they simply refuse to promote land -- they really seem to want to get out of the land business and more importantly, force *us* out of the land business so they flooded the market with enormous numbers of offerings all at once.

Second, there's the Supply Linden sales. I was fascinated to hear Tom Hale say they were "increasing the money supply" again, code words for Yeltsin-like policies of printing and selling money which devalues wages for merchants, of course, while enabling (in theory) newbies to have more ready and cheaper cash. "Increasing the money supply" is worse than say, President Jintao's policies (Hale lauded China, the way Z Linden used to laud the Chinese economic plan) of printing money or not trading foreign currency, because the government in our case prints and *sells* the money for their own benefit. So Supply Linden made a whopping $330,000 US off his sales last month, and is headed toward a record-breaker this month with already more than a quarter of a million in sales only at the 25 September mark. In his heyday, Supply made one million one month -- he is one of the unsung millionaires of SL. Then he'd fall on his sword and make a lousy $200,000 just to keep up the value and make it appear as if the RL recession didn't touch us here (but of course it does). Now, he's got to make BANK for himself at least so he's causing the currency to go down a point -- this after a tighter monetary policy the Alphabets ran for a while in order to try to cushion the pain of the Zindra move, which was enormous, due to abandoned land and lost rentals and sales for many people.

The Lindens have never understood, accepted, or conceded that land has to be a legitimate commodity in this economy that reflects real value, not only of the content that it brackets (that's the only way they will see land, as a ring setting), but the marker of ability to garner and keep social capital i nthe form of good service, interesting activities and features, etc. The Lindens used to help keep up this value for themselves and us by setting auctions at a higher price. No more. It's good that they provided sufficient supply of Zindra to prevent the gouging that occured on Bay City and Nautilus (they had to, because they had to have incentive for people to get their adult business off the main grid area), but now we're stuck with a land glut and a tanking economy.

Land sales are always tied to content sales and that's another living, vibrant connection the Lindens have always studiously and stubbornly avoided admitting. Land is what you show content *on*. A new content maker needs land for a store or for a workshop or an events space and is intimately tied to the land market -- but the Lindens want to remove all that by driving merchants on to XStreet and force them to display on the 2D web instead of the 3-D world where they become a burden for the grid gardeners (the happiest sim is one with no people on it).

Third, there's the hard numbers, the real numbers you need to look at, and disregard all this stuff the man behind the curtain is saying about the billions.

And they are:

473,553

That's the number of people who spent more than one dollar in world in August. Less than half a million, out of the 1.3 million or so 60 day uniques or 966,000 30 day uniques. That means all of you are chasing that less than a half million people willing to spend more than a dollar.

And you wonder why your sales are down? Go and look at the spread of how those transactions break out -- the big ticket items are a small percentage: only 74,138 people spent $10,000 or more last month, which is what you'd have to ask them to spend if they got even a low-cost 4096 m2 on an island, put up a house, filled it with furniture, and tipped some musicians.

74,138 people in SL, logging on out of 1.3 million, willing to spend $37.20 a month on "this game" -- and frankly, *you* were probably one of them, buying houses for your rentals, paying staff, buying a wardrobe to look good in business while the other 400,000 flew around and played in sandboxes or whatever it is they do on SL.

There's a huge whopping disconnect with all this. Look at the customer spending distribution and the transactions, and you can't see where the billion or even million is, but this is where it all gets above my paygrade. I leave this to someone else to parse, while the link is still operational and the stuff is there to parse still. It may not be for long.

Now, for all you people making BANK, let's look at these BANK numbers, shall we, for August, admittedly the nadir of the year for many:

219 people made $5000 US or more, 374 $2000-5000,651 $1000-2000 -- and yet this "positive monthly linden flow" category doesn't show what they made *after tier*. So, cut it in half or more.

Where is the miracle of Second Life? The miracle of Second Life is that 20,006 people made $10-50 out of thin air last month, and 4,096 made even $50-100 last month, enough to "pay for their game" and give themselves the modest salary of a Venezuelan cacao plantation worker, namely, $3 a day.

And yes, that is a miracle because, well, before that, there was nothing, so it's something. It's not a stick in the eye. But...the labour, the hours, the initial investment of computer/DSL line/disposable time that went into making that $3 US a day in SL, well...staggering. People are amazing, what they'll do. Amazingly persistent and resilient, people are.

What is the story of the Second Life economy? The story of the Second Life economy is a pyramid. You decide whether it is a pyramid *scheme* or a pyramid such as the ancient Mayas inscribed on the earth under instruction from the gods to draw down the universe's powers...

Comments

[Stroker Serpentine]

The only statistic I have ever followed with any regularity over the years is the PMLF. Subscriptions, Unique logins and quantative population figures are too susceptible to gaming and influences such as bots and alts. It still astounds me that given the indubitable quarterly earnings posted publically from barn to bastion, they sure aren't taking many of us along for the ride. I agree with your assesment that net gains are likely 50% of the posted figures. Even if it were 40% thats still less than 400 people who make more than $500 a week off SL. Out of 75,000 residents? Yeah, there's one helluva disconnect alright.If you want to know how the inworld economy is doing track PMLF over the years. Then tie that to population averages. Talk about things that make you go "Hmmmm". If the average is indeed a $37 expenditure, that would cover a premium account a a spat of land. I am certainly no accountant but if one were to analyze per capita the ratio between expiditure and revenue I think the resulting statistics would verify my sneaking suspicion that the only one really making any money is Linden Lab. Which would justify the apparent necessity to tout the economy. Suffice it to say Second Life has been very good to me.But thats the community not the caretakers.

[Interested Merchant]

wow that IS interesting - the PMLF statistic i mean.

No wonder they hide them. I'm a hobbyist myself and around 800 usd a month after tiers.

I had no idea there were so few actually making money in this game/platform...

[Annyka Bekkers]

Is anybody archiving these stats in a public place? It would be nice to see the year over year figures

[brinda allen]

@Stroker... "Suffice it to say Second Life has been very good to me.But thats the community not the caretakers."

Yes, So true. Remember the island pricing fiasco of 2008? :-(

It's good for the *Benovolent Monarchy* that there are us, "hobbyist".

[melponeme_k]

A land story from me:

I recently sold a nice lakefront with two protected sides to another resident for a respectable amount of money. Then this buyer immediately turned around and abandoned it. Which I thought was interesting. Perhaps they discovered they couldn't afford the tier? But for what they paid for it, that could not have been the problem.

Then I see these buy a built up mainland sim adverts on the LL page and wonder. Where is this pre-built land? Will they flood the market yet again with more mainland? Or are the gathering up old mainland?

You are right, land linked to content sales. Islands and large chunks of mainland were owned by shop owners. If these are lost due to copybotting, I highly doubt there will be enough little homebodies like me around to suck up all that empty land.

[cube3]

right,
i agree. a few thousand people globally making 50 bucks a month now. I think it was more like 100 bucks last year. BANK ..lol

before? its all existed once the net allowed for these bilion of pennies businesses for the common man;),lol

no magic, there was ebay, which before they also got greedy, allowed you to make on average 10 bucks a listing IF you got up on a sunday, hit a thrift or garage sale, and picked up a few 2-5 dollar items....

so actually, ebay was less work, less headaches, and more profit for the 100-500 usd a month amature Getty's could make while still under the thumbs of the techno UNREGULATED miracles of commerce.:)

All of the SL machinatins for thel ast years would be fine, but only if it was an "entertianment product" and not the "second coming of business and spirituality and government, etc" that the blogger level media and cynical tech bankers, constanstly employed and unleash on the world as to the "real" reason for building this "virtual world"..better world, wiki culture, yaadd yadda yadda

i still would like to know who BANKED 90k a month... and what the actual PROFIT was for that BANK? and was it in server rentals, tool software, or content/virtual items.

[curiositykilledthecat]

How much revenue do u make urself from banners etc by running a blog about SL?
Do u publish these numbers :P

[Crap Mariner]

curiositykilledthecat -

Now now now... you forgot to ask about the tip jar.

-ls/cm quite proud of my "Coffee For Prokofy" habit.

[cube inada]

I noticed ORANGE island in SL is closing down. It was one of the few "thought-examined" corporate entries into the SL fever.
The Million or 64k dollar Question for them and virtuality is WHATS NEXT?, do they attempt to "scale" and expand virtuality as branding beyond the SL closed system of a few thousand diehards, or do they pack up, and stop attempting to brand and market in the virtuality media concluding it was just another "disco dancing fad" where they used to sponsor dance contests in realife bars and warehouses turned into dance halls in the 70s...:)

"tech experiments" sold from a LAB as "community" and "economics" culture... only from SF:)lol

But what of the "children?"..;)lol

anyhow, will they continue in a curve outward, or will a large media company decide, lessons learned, and pull away for "western line dancing" to next emerge...?

the test for virtuality as a media is again set down.

[Desmond Shang]

>>"219 people made $5000 US or more, 374 $2000-5000,651 $1000-2000 -- and yet this "positive monthly linden flow" category doesn't show what they made *after tier*. So, cut it in half or more."

219 making 5000+.

That covers a lot of range, in there. Some millionaires, certainly, and some not~so~millionaires.

After tier, which in my case is close to 9000 USD, I'm not netting 5000 USD/month. Not too far off, but certainly that's not the cashout. And then there's taxes.

Stroker and I are certainly in the 219, as is Anshe, Adam, and probably just about every other major land baron. Prolly Prok too.

As a club, it's probably a lot like the old "gentleman's clubs" of a century or two ago. Where you have a few of the real millionaires making the big changes, and then "baby barons" like myself who are in the door, barely, but not terribly important in the grand scheme of things.

[cube inada]

I truly appreciatte the info Desmond, since I believe your buisness plan IS the most capable to turn a legal /sustainable profit in the SL /LL system.

I count out gambling/ZYNGA/ bank pyramids etc.

Adult Content as Stroker can attest to is a profit generator, but it comes with its own business/culture costs as well.

as for land, i agree with proks "why we need it" but its always going to be an artificial construct in digital realms, and always the "yo yo for the" server service bankers to play the masses with. Open Spaces type business plans will now endure forever...unless like in RL we set up civic restraints..but looking at the RL housing/market fiasco in the world..well.we dont seem to want to fix basic human needs resources for a more common good....i hope that dont make me a commie.:)

im not sure why we needed this "second life" EXPERIMENT..lol if the real life world / US economy wasnt virtual enough for the last 100 years.

[Prokofy Neva]

If I'm not mistaken, I think the Google terms prohibit you from discussing the revenue.

[melponeme_k]

Speaking of revenue...I noticed tonight a slight drop in L prices. I remember a week or so ago, L4000 was closer to $20 now it is near $15.

So they have printed more rubber bills. I wonder if we will see inflation in the SL economy soon.

[Prokofy Neva]

They sold already a quarter of a million this month and $350,000 or so last month, more than usual but still not the worst in their history.