The Second Life Economy in Q4 2010

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Yes, I agree; it is very difficult to search for land sales at all, there are properties for sale everywhere and it seems to take months before someone notices a good deal. Unless you list land for 1L or less per meter and have a reality bot show up, snag the land and repost it for 10 times more; land is not selling fast enough. Without land, empty beautiful land, new avatars are not going to want to reside in the linden ghettos.

This is about community, communication and fun; if you cannot find the people, interact with people and have fun doing it, people will find something else to spend their hard earn cash on. I contemplated buying more land to increase my gallery space but the signs I see do not give me hope for a long future left residing in my dream world.

I first mourned the loss of SL and my avatars the day I was forced to use viewer 2, I literally cried and was emotionally affected from the loss of my creative world. Some issues regarding building such as prim drift not related to the viewer drive me nuts, .05 angles.

Please be more open and honest with us, get creative and make SL the virtual world everyone wants to be a part of.

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Many of the interresting stats on Gridsurvey are last being updated sept or oct last year. So I think LL stopped providing them then all together.

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There is nothing more to say. When you will wake up, dear Lindens?

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It looks to me that web merchandise sales is going to plateau. All data show one thing that SL has reached the top and begins to decline. LL should really start advertising before it is too late.

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You can make these numbers up, and we wouldn't have any way to confirm it.

You have a history of hiding bad news.

You have a history of removing access to data.

Looking at previous data, SL has never had a bad day in its entire history. Yet there have been multiple major layoffs and concurrency has continued to drop.

LL has zero trust left with its user base.

So no, I cannot believe a word of it. Not when LL can make up numbers, hide whatever it wants whenever it wants, and has no legal requirement to tell us the truth. You cannot expect anyone who has been inworld to believe that land is fine, sales are fine, and the population is fine. Mainland is 50% owned by Lindens and the price for land is no longer in the toilet; it's in the sewer. Numbers and sales are down across the entire virtual world. And here you are telling me that everything is roses and cream? Preach it to the choir because your church is emptying.

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Second Life is stagnant in terms of growth...everyone knows it and so does Linden Lab. Failed strategies and missed opportunities has resulted in this present day scenario

The new CEO and the current management need to be aware of the old addage of "money makes money"...in that they missed the opportunity of growing their userbase during the recession by not investing in real-time Marketing and Advertising.

They really need to a look at IMVU and learn how to grow and market their own product (i.e SL)

"IMVU achieved $22 million in revenue in 2009 and is on track to gross at least $40 million in 2010, with 85 percent of its revenue coming from paying customers and 15 percent coming from advertising. To date, the company boasts more than 50 million registered users and more than 10 million unique visitors per month. It's grown 657 percent over the last three years."

http://techcrunch.com/2010/04/30/imvus-virtual-cash-cow-doubling-revenues-focused-on-gaming-video/

IMVU grew by a staggering 657% in the last 3 years.......and how much did Second Life grow during that same time frame? Nada...or maybe single digit %'s .IMVU have a 2 Million active user base (4% of total accounts), whilst we still hover around the 800k mark ( 2.5% of total accounts).They achieved that growth by aggresively marketing their product spending real dollars......on an inferior product i might add! (compared to SL)

Any LL excuses blaming recession is total bull and won't wash! The Management were asleep at the wheel for the last 2.5 years....or had their purse strings curtailed by the VC's. (one or the other)

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Are you sure about not many people using phoenix and imprudence? I could swear every person i look at (i use phoenix) has a red phoenix or purple imprudence over their head, and if they dont they have nothing (meaning they're not using viewer 2, cuz it has its own tag in phoenix). On my own personal little trip thru the world, as far as I can tell, the old timers in SL aren't using viewer 2, they hate it.

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You want to impress me... hire an independent, unbiased third-party statistical company and give them free-range to provide all the tracking information possible to provide. Then I might feel like Linden Lab is being up-front and honest with us-- and that this statistics blog is more than just pure PR tripe and self-serving coprorate propaganda.

Maybe Tyche Shepherd would be the ideal candidate....she has a lot of detail in place.

http://www.gridsurvey.com/

info borrowed from Tyche's website :

40.9% of Mainland owned directly by Linden Accounts (Mainland is 6401 regions)
6.8% to 7.7% of Mainland by area is abandoned parcels (details - 2nd Jan 2011)
56.4% of Private Estate regions are Full Regions, 43.9% Homesteads & 0.7% Openspaces
(details including top 20 Estates - 25th Jan 2011)
Monthly Tier Estimates - Private Estates c.US$5.131 Million, Mainland c.US$1.017 Million
Currently 29741 Linden Homes are occupied out of 32444 down 4.3% since September 2010(details - 2nd Jan 2011)

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Very well put and thank you! The shift of commerce from in-world to web has been accelerating for the past year and already having the effect you mentioned above. Smart businesses also have moved strongly away from renting satellite stores to producing affiliates which has pushed common rentals down even further. This was a known and planned outcome by Linden Lab who does not benefit directly from in-world sales but does take a percentage of all web sales. If you add the introduction of Linden free housing to the mix the impact on rental business is huge, so much that it has been driving the large increase in abandoned land. That may contradict what Linden Lab says about the 'size' of the world growing but then again they did not provide information about the amount of abandoned land or how the inclusion of the teen grid impacted land growth. Remember that Linden Lab can maintain as much unused land as they like so 'land growth' by itself is a useless statistic.

Due to these issues, my stand on commerce opportunities in SL has changed dramatically since 2006. When asked now, I tell potential business people the best thing to do is produce and sell product only, hold the minimum amount of land needed to get products listed on the web marketplace, and invest in affiliate vendors. Setting up direct sale in-world stores is simply a waste of money. The ONLY reason anyone should hold land in SL now is for their own personal use and without expectation of breaking even under any circumstances. As harsh as that sounds, it is good business practice in SL which is vastly different than RL. Linden Lab banks on people forgetting that simple fact!

As always, remember the first rule in Second Life is to have fun, NOT make money! Stick with that and you will be just fine! Peace and love everyone!

I have noticed during the course of this year, my sales have gone from roughly 50/50 (in world and web) to 90% from the Marketplace and 10% from the store, probably less now. And I no longer rent satellite stores because NO ONE ever shops in them at all anymore. The one I maintain is for a reason other than sales! and if that reason went away, i'd leave that spot too. No one shops in world anymore and as a result, I have been thinking of shutting down my in world store for just website sales only for some time now. haven't been able to bring myself to do it yet though lol. I enjoy having the environment and it helps to have a store for people to come to when you post new product in groups. But even those responses are dwindling. I think that commerce may not be an option anymore and we need to think thru what we really enjoy in sl (for me it is the commerce ) and if it's time to move on or not.

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Web merchandise sales volume grew 5.8% in Q4 = in world sales down by at least that much!

In world sales support tier --- your primary revenue stream. Replacing stores with magic boxes is a loosing strategy for everyone!

Agreed, so ... how do we fix it? I know this was a blog about economy, but all this goes into the economy. Can we start a conversation perhaps, or maybe all gather in world to talk or something, about what we as residents can do if we ban together. There's power in numbers. Right now we are all a bunch of random voices that are pretty much all in agreement with each other. It has been my experience that though we spend the time to post all this on these blogs, no one at LL reads it or they just dont do anything about it.

So ... I have a Business and Economy group in SL, if anyone wants to join it so we can all banter together and what not and maybe create an effective organization to help interface successfully with LL to get our business and economy issues taken seriously. Any takers? Just IM me in world and I'll pop you in then you can pop whoever you like in or what not. if not no biggie, there's nothing in it for me really but hopefully rebuilding for myself and everyone else, what used to be a viable economy ... OR if there's a bigger business group that actually has plans and discussions like this, can someone point me to it? I've joined and unjoined so many cuz they really just don't do anything lol.

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on

Second Life is stagnant in terms of growth...everyone knows it and so does Linden Lab. Failed strategies and missed opportunities has resulted in this present day scenario

The new CEO and the current management need to be aware of the old addage of "money makes money"...in that they missed the opportunity of growing their userbase during the recession by not investing in real-time Marketing and Advertising.

They really need to a look at IMVU and learn how to grow and market their own product (i.e SL)

"IMVU achieved $22 million in revenue in 2009 and is on track to gross at least $40 million in 2010, with 85 percent of its revenue coming from paying customers and 15 percent coming from advertising. To date, the company boasts more than 50 million registered users and more than 10 million unique visitors per month. It's grown 657 percent over the last three years."

http://techcrunch.com/2010/04/30/imvus-virtual-cash-cow-doubling-revenues-focused-on-gaming-video/

IMVU grew by a staggering 657% in the last 3 years.......and how much did Second Life grow during that same time frame? Nada...or maybe single digit %'s .IMVU have a 2 Million active user base (4% of total accounts), whilst we still hover around the 800k mark ( 2.5% of total accounts).They achieved that growth by aggresively marketing their product spending real dollars......on an inferior product i might add! (compared to SL)

Any LL excuses blaming recession is total bull and won't wash! The Management were asleep at the wheel for the last 2.5 years....or had their purse strings curtailed by the VC's. (one or the other)

Recently I had an issue where someone hacked my paypal and used it in sl to purchase thousands of USD worth of lindens. Linden Lab's answer was to lock me out of SL for ... 6 WEEKS ... while they "investigated" with NO communication or avenue for me to communicate as I was locked out. They wouldn't reply to my emails and my phone calls were met with "you have to wait for the admins to respond to you, no one can do anything." It finally took spending even more RL cash to ship Fedex packages to their legal department and marketing director to get them (within days) to open up my accounts again and all they said was "we're done our investigation, good luck."

Reason I mention this is, while I was out of world all that time, I went investigating other virtual worlds including IMVU. Do you know that at NON peak times, IMVU has hundreds of thousands of people logged in at the same time? i've never seen less than 80 or 90 thousand people logged in and that was at like 3 or 4am EST. Usually you'll find at least 150,000 people or so logged in AND you can create content and earn real cash on it.

I visited other virtual worlds as well, and they are loaded with people and I think a lot of people who left SL are in them. I also traversed the various other SL grids and found one in particular that I liked, the people who own it are wonderful, you CAN make money (they use PayPal for transactions) and it's got a growing community base for roleplay while having a traditional "earth" realm (i.e. non roleplay like clubs, etc).

What this shows is LL's blindness is creating opportunities elsewhere and if they don't wake up soon, everyone's going to go elsewhere and then where will everyone be? hmmm.

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on

So ... I have a Business and Economy group in SL, if anyone wants to join it so we can all banter together and what not and maybe create an effective organization to help interface successfully with LL to get our business and economy issues taken seriously. Any takers? Just IM me in world and I'll pop you in then you can pop whoever you like in or what not. if not no biggie, there's nothing in it for me really but hopefully rebuilding for myself and everyone else, what used to be a viable economy ... OR if there's a bigger business group that actually has plans and discussions like this, can someone point me to it? I've joined and unjoined so many cuz they really just don't do anything lol.

Join the Content Creators Association....it's a well respected group that have direct links with a few Linden employees. You might want to send a IM to Gwen Carillon for an invite. The Group has been around for quite some time now with a lot of the big players as members. (260 members)

This Group is extremely active via Notices and Group Chats.....particularly on Content theft & Copybotting.

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Reason I mention this is, while I was out of world all that time, I went investigating other virtual worlds including IMVU. Do you know that at NON peak times, IMVU has hundreds of thousands of people logged in at the same time? i've never seen less than 80 or 90 thousand people logged in and that was at like 3 or 4am EST. Usually you'll find at least 150,000 people or so logged in AND you can create content and earn real cash on it.

I visited other virtual worlds as well, and they are loaded with people and I think a lot of people who left SL are in them. I also traversed the various other SL grids and found one in particular that I liked, the people who own it are wonderful, you CAN make money (they use PayPal for transactions) and it's got a growing community base for roleplay while having a traditional "earth" realm (i.e. non roleplay like clubs, etc).

What this shows is LL's blindness is creating opportunities elsewhere and if they don't wake up soon, everyone's going to go elsewhere and then where will everyone be? hmmm.

InWorldz Grid I presume!

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by

on

Perhaps we need to form an SL Chamber of Commerce, similar to real world Cof C ?

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The missing statistic I would most like to see is this: Of that flat-lined world size, what percentage of the total space is now owned by LInden Lab, i.e. "abandoned." Looking around various Sims, I see huge quantities of land now owned by LL with former structures carefully maintained to make the abandoned land look used.

Painted

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as per the gridsurvey, abandoned is 7.7% of the mainland and Linden-owned is 40.9%. This means 48.6% of the mainland is not making them any income.

I have no doubt LL is keeping the stuff on the sim intact. Anything they can do to maintain the illusion that they haven't driven their money-maker right over a cliff. Before people abandon land they should wipe it clean. And the more LL plays these silly games, the more distrust they will generate and the less anyone will believe anything they say, write, or put into a contract. Sadly, it is distrust that LL has itself created with this adversarial relationship with customers that has caused this mess. LL could have just left people alone to enjoy their purchases and their land. But noooooo...

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The missing statistic I would most like to see is this: Of that flat-lined world size, what percentage of the total space is now owned by LInden Lab, i.e. "abandoned." Looking around various Sims, I see huge quantities of land now owned by LL with former structures carefully maintained to make the abandoned land look used.

Painted

as per post above (8 up)

http://www.gridsurvey.com/

info borrowed from Tyche's website :

40.9% of Mainland owned directly by Linden Accounts (Mainland is 6401 regions)
6.8% to 7.7% of Mainland by area is abandoned parcels (details - 2nd Jan 2011)
56.4% of Private Estate regions are Full Regions, 43.9% Homesteads & 0.7% Openspaces
(details including top 20 Estates - 25th Jan 2011)
Monthly Tier Estimates - Private Estates c.US$5.131 Million, Mainland c.US$1.017 Million
Currently 29741 Linden Homes are occupied out of 32444 down 4.3% since September 2010(details - 2nd Jan 2011)

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Thanks Rene and Shockwave.

As I read the links talking about the loss of third party ownership and increase in LL owned and abandoned land, I started wondering if my owning my half-Sim is like pre-paying rental on a deck chair on the Titanic. Unfortunately, my retail income from SL gives me nothing to dispell that feeling.

Painted

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Very well put and thank you! The shift of commerce from in-world to web has been accelerating for the past year and already having the effect you mentioned above. Smart businesses also have moved strongly away from renting satellite stores to producing affiliates which has pushed common rentals down even further. This was a known and planned outcome by Linden Lab who does not benefit directly from in-world sales but does take a percentage of all web sales.

This is a risky strategy for Linden Lab, the percentage taken from marketplace sales is a means to generate lindex sales for Linden Lab, the commission itself doesn't get banked and earn Linden Lab money, it's an indirect mechanism to aid them in selling Linden dollars on the Lindex, which is a direct revenue stream and one that by all accounts had pretty much dropped to nothing.

So there is a case for Linden Lab to introduce this commission, however If people downsize and pay less tier, then Linden Lab need those Linden dollar sales (and the income they get when residents sell Linden dollars) to make up for lost tier and get them back on track with Supply Linden sales.

Now if Linden Lab can pull it off whereby they get tier and increase Linden dollar sales, that's should be good for everyone because it would suggest we have real growth in the economy.

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One of the things which disappeared in viewer 2.x was the ability to give a calling card. This was a great way to keep track of business contacts without having to friend them. I was sad to see it go. But having said that, I know it was an under-used feature. On many occasions I have asked for a calling card and then had to explain how to give one.

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"Smart businesses also have moved strongly away from renting satellite stores to producing affiliates which has pushed common rentals down even further. This was a known and planned outcome by Linden Lab who does not benefit directly from in-world sales but does take a percentage of all web sales."

Actually, Linden Lab doesn't take a percentage of web sales. Since it's their currency, the chunk they demand for Marketplace listings really only represents an enforced markup by retailers. This inflates the retail cost, representing another way for Linden dollars to slip away from the in-world economy.

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Alice, I don't know if LL is going to address the "block" issue, but we're talking about what to do about it in the Firestorm project. Expect to see something more than Show/Discard/Block.

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Land prices ( aside from areas by the seaside arent generally high) its the tier's that are high....

if you think land is too highly priced thats probably someone over ambitious - tier prices are down to linden management and I cant see why they dont have the sense to make changes to the tier systems and payment methods to give SL the boost it needs....

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"Can anyone explain to me how Linden Lab can state there was “…falling supply on the LindeX….” under Average Exchange Rate and then say, “Money supply grew significantly…” under L$ Supply? Either the supply of L$ increased or decreased but I can’t figure out how it can do both. Can any professional finance or account person shed light on this?"

I'm not a pro finance person, but I understand this. I think. :-)

There are two figures: One is the overall amount of Linden dollars that exist in-world. That's the 'money supply,' and is apparently growing.

The other is the falling supply on the LindeX, which is a market in which Lindens are bought and sold for US$. When you buy Lindens in-world, what's really happening is that LL is finding the best deal it can on the LindeX and then doing the transaction. (That's why the amounts are 'estimated' until you do the actual transaction.)

Market data is here: http://secondlife.com/my/lindex/market.php

If you look at the Volume graph, you can see a general downward trend. This is how the LindeX supply can be falling, even as the amount of currency in-world grows.

(Note that you can also do buy and sell orders to ask for an exchange rate. This is a little more complicated than just selling your Lindens, but can help you on the exchange rate if you're smart.)

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There are two figures: One is the overall amount of Linden dollars that exist in-world. That's the 'money supply,' and is apparently growing.

The other is the falling supply on the LindeX, which is a market in which Lindens are bought and sold for US$. When you buy Lindens in-world, what's really happening is that LL is finding the best deal it can on the LindeX and then doing the transaction. (That's why the amounts are 'estimated' until you do the actual transaction.)

The trick here is, that as others have stated in previous posts, the amount of lindens available is growing because of the increase in sales volume and ad purchases on the Marketplace. As was stated, these lindens are fed back into the system so that they have more to sell. It does not signify any real growth other than that people are buying now more on the marketplace than in world (where lindens dont get the cash for sales/advertising). It's not really a helpful statistic if you ask me, but I could be mistaken lol.

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