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Second Life Economy Stable in Q2 2010

Nelson Linden


The Second Life economy remained stable in the second quarter of 2010, despite one-time events that affected a number of metrics. The most notable economic event of the second quarter was a temporary decrease in the exchange rate of the L$ vs. the US dollar in mid-June that has since returned to typical levels. Our research in the weeks since this occurred indicates this change was due in large part to our merge of Residents’ inworld and XStreetSL L$ balances.This had the temporary effect of reducing L$ purchase volume as Residents lowered the total amount of L$’s they were holding because they now had one combined account.  Previously, Residents held a higher combined L$ balance in two separate accounts and purchased L$’s more frequently when they were keeping a minimum balance in each.  You can read more details in our quarterly economic spotlight post.

Changes in Reporting

From time to time we will change our reporting in order to provide the most relevant and accurate summary information for the use of merchants, landowners, content creators, and other participants in the Second Life economy. Our goal is to provide those who participate in the economy and run inworld businesses with the data they need to make informed business decisions.  We are making a change from the recent past by reducing the relatively large set of metrics we have provided--many where causality is complex or unclear--and we will instead provide a more focused data set with a briefer description about each quarter’s activity.  We believe the indicators below are the key items to focus on, and we are adding a page describing the content and methodology behind each figure.

In addition, we will be phasing out the data feeds at http://secondlife.com/statistics/economy-data.php. We’ll have more updates on this shortly, but because this data currently bears little relationship to the health or strength of the Second Life economy, we feel it’s appropriate to discontinue these feeds.

Resident-to-Resident Transactions

At least for the time being, one figure we will no longer publish in our historical charts is the Resident-to-Resident transaction data. As we’ve analyzed this data we believe that it is not as accurate a measure of the inworld economy as we would like. We are currently working to develop a more accurate metric with which to replace this number. For the near term, we will continue to publish a comparable Resident-to-Resident transaction figure for historical comparison. In Q2 2010, Resident-to-Resident transactions totalled approximately L$40 billion, or US$152 million.



Monthly Repeat Logins indicated improved retention and engagement over recent quarters:

  • Q2 2010 averaged 805 thousand monthly repeat logins, a rise of 8.6 percent vs. the Q2 2009 average of 742 thousand.
  • Levels are flat with Q1 2010.

monthly repeat logins.png


User Hours were slightly lower, at 108 million for the quarter.

  • The Q2 2009 User Hours figure of 126 million includes substantial usage attributable to “bots” and other scripted agents. Bot policy changes took place in mid-Q2 2009, making it difficult to make accurate comparisons with the year-ago period.
  • User Hours in Q1 2010 totaled 116 million.

user hours.png


Monthly Economic Participants (those accounts that receive or distribute L$ in a given month) are the most active and engaged participants in Second Life and the economy. Economic participation in the second quarter, on average, was flat against the previous quarter, and rose against the same period a year ago.

monthly economic participants.png



The average Linden dollar exchange rate moved from approximately L$261 per US dollar at the beginning of the quarter, to just under L$269 per US$ at the end and fluctuated across a larger range for two weeks during June (see second chart below), as we noted at the time. Average exchange rates, however, remain largely unchanged. As noted above, our research indicates this change was due to our merge of Residents’ inworld and XStreet SL L$ balances and temporary market uncertainty immediately after the announcements of our restructuring and changes in senior management. Read more details in our quarterly economic spotlight post.

average exchange rate.png


exchange rate, june.png


We are also improving and changing how we report the L$ Supply figure with this quarter’s post. Previously, this metric did not include individual XStreet SL account balances, and misclassified some administrative accounts as Resident accounts. For this quarter we have updated the calculation to include only Resident accounts, and have summed their balances across both XStreet SL and inworld. This number now more accurately represents the total purchasing power of all Residents in Second Life. Note that we have shown both calculation methods in the charts.

  • L$ Supply in Q2 was US$25.9 million vs US$26.2 in Q1
l$ supply USD.png

Historically, LindeX volume has been very stable, and the slight decline from Q1 is within past ranges. This metric is traditionally less volatile than many other indicators we report, and we expect this behavior to continue.    

  • LindeX trading volume of US$29.4 million in Q2 2010 was up slightly against the year-ago Q2 volume of US$29.1 million, but off from Q1’s US$30.7 million
lindex volume.png

Q2 2010 saw 39% growth in sales over Q1 2010 and 124% growth over the same quarter a year earlier. The primary driver of this growth was the merging of users’ Xstreet SL and Second Life Linden dollar balances. This simplified the purchase process on Xstreet, producing an immediate jump in sales volume. In addition to the benefits of the balance merge, we continue to show healthy growth from the acquisition of new users paired with the development of new creative products from our merchants. Q2 continued the trend of setting record sales volume and this quarter in particular contained an important milestone, as Xstreet SL had it’s first month with over US$1 million worth of sales.

xstreet sl merchandise sales volume.png


World Size grew to 2,110 square kilometers at the end of Q2, from 2,070 at the end of the previous quarter, and 1,900 for the year-ago period. Private regions accounted for the largest portion of inworld land (44 percent), and private homesteads the next largest (36 percent). Mainland regions accounted for 19 percent of the total inworld land mass.

world size.png


Recommended Comments

only bunch of lies.

economy is down, users are not buying anymore. No new gamers are coming since the lausy 2.0 Viewer

Banning Emarald will have additional negative affect.

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Sincerly, i'm tired of people who thinks that shouting "LIES" will make their opinion a truth.

If you have the "real" data share them, if not STFU and GTFO to IMVU.2irorb6.jpg

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Sorry for this to the rest of the fellow commenters. And... thanks for the data. Of course RL crisis is affecting SL, also the feeling of plateau and the recent changes in the Lab (Lindens fired, change of CEO....)

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Sorry, the timing of the L$ account merger and the mid-June blip in the Lindex makes your explanation feel like too much of a handwave for me. OK, I know I altered my buying pattern, but it wasn't the sort of sudden change needed to create the blip, not with hundreds of thousands of active Residents. And that's my problem: you use a slow-acting change to explain away something that looks remarkably sudden.

You did a good job of keeping the exchange rate stable, but your explanation feels dumb.

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Of course you all posted the economy is stable..what else would we expect you to post? Nice how you all are going to leave out  the user to user transactions...because that would REALLY show how unstable the business world is in SL. I have had it with you all at LL and your constant BS and ALWAYS screwing up how one does business in SL...I moved my stores to another grid that does very well and they dont spend there time trying to figure out how to blow smoke up everyones A** .Bite the hand of the one who feeds you enough times and they soon vanish. I could care less what any of you "fanboys" have to say...If you have invested the time and money I have over the years in here then I would listen to you but alot of you that seem to always defend LL have no actual grounds to stand on...just alot of hot air.

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If things were going great, Linden Labs would not have fired M Linden and let 1/3 of the other Lindens go.

I've got too much time, money, love and energy invested in SecondLife; I'll be here 'til they shut it down.  I think we should cheer for them to succeed because we're in this together.

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Whereas user to user transactions aren't the greatest of benchmarks, they are a benchmark, I can see why it's a skewed stat as I send money back and forth between alts, the same for PMLF, I'm not a fan of the stat but it is a benchmark.

The overall tone of saying you're changing the way you report things, but not putting in replacements has an air of spin, whether that's intentional or not I cannot tell, you seem to be well meaning and trying to put in place more meaningful metrics.

Fixing search, would help greatly by the way.

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Of course you all posted the economy is stable..what else would we expect you to post? Nice how you all are going to leave out  the user to user transactions...because that would REALLY show how unstable the business world is in SL.

Actually, all user-to-user transactions really shows is money going round and round in circles in the economy. It tells us little to nothing about the state of LL as a company.

The important thing is how much money people are putting into SL versus how much they are taking out and, while we don't have exact figures on that, from the stats above it actually looks a lot better than I thought it might.

Still - as Raul alluded to earlier, I'm sure all the doom mongers will find a way to pick the figures apart to make it fit their belief that the sky is falling!

If the sky really were falling, there would be no way to hide it in the figures. It would be obvious.

The sky isn't falling though and, as I have always suspected, SL and LL are doing well despite some bumps in the road!

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The data shows what we know already. SL is sorta flat-lining, only the old remain. This is very worrying. For economics, for developements and for the WOW factor. Unfortunately we don't know how much land is "unowned" where residents have left and the land still shows as being owned by them. This is a scary void in the data.

I would have hoped some info would be revealed about the total value of LL and the recent reports about the decrease in value but I understand this is for Secondlife economics so I'm hoping for to much.

I regred the intention to skip the Economic Statisics feed, I hope and expect you will find a proper repository for that data.

Attention must go to cusomer satisfaction, the best advocates for sl are in sl, and towards bringing in new residents.

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I find it rather funny, that XStreet should be responsible for the LindeX decline. And what an incident, that it came with the layoffs;) I rather think it was kind of a panic. People sold their assets, since they were uncertain about SLs future when the layoffs and the departure of the CEO were announced. I am happy that the prices are stable now, though on a higher level than before. There has been a lot of shifting in the market as well. In my case for example, I get almost no traffic in my inworld store anymore. Traffic from classifieds dropped by 80%. At the same time sales at XStreet increased by a much larger amount. I make more money than before with my products, though almost all from XStreet now. The Internet certainly is much better in visualising information in many cases and I think for the future the Internet needs to be even more present in SL, not only through XStreet. At the same time 3D and hopefully Second Life will be more present in the Internet (WebGL?). I am still very optimistic for the future and hope we all together, the lindens and the residents/content creators will succeed.

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This is a plan LL has had in the works for some time now.....They bought out X-Street and screwed up search...what this is doing is forcing in world business owners to close shop and move to X-Street....THAT is where LL makes money...they couldnt stand the idea that there were people in SL actually doing quiet well for along time...noooooo they cant have that....they need to have there fingers in it

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The story I hear is that there was a website exploit on the Lindex page which allowed large volumes of lindens to be 'created'. If this rumor is true, it would explain the sudden increase, and why Quick Buy and Sell were (and maybe still are) disabled.

Of course there's no way to know if the rumor is true, and I don't expect LL will ever admit that if it was. But it's certainly food for thought.

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Raul, so may you are some single player, maybe no premium, just for fun.

So let me tell you we business owners are not single minded as you.


Start to invest, buy land, open store and participate in the economy, else shut up.

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This looks like "nothing really changed, everything is fine" to me?  Not sure i would expect them to publish any negative data though.


Be nice to see more third-party reports.  Im new-ish to SL though and am not sure were to go for such info.

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A one day spike in the price of anything which then settles down is not worth a forum discussion other than a root cause analysis if there was a computer breakdown.  As a trader in commodities or stocks, or even in statistics it is considered an outlier.

secondly, it states the land mass has gone up, but mostly estates.  Frankly, I am surprised that the mainland is only 19% of the total system.  The mainland is massive.  So if private estates have risen, you would have to assume total land tax collection has risen.  I do not know if you can abandon an estate and it just sits there being counted like mainland can be.  But in all business, you should not only make a profit or break even if you have 100%, the percents usually lower.  I do not know what the break even percent would be, however, just having estates and homesteads negates empty openspace on the mainland, which frankly IMO, is not a total bad thing scattered as it helps with lag and load whilst traveling.

thirdly, like some of the so called politicans in the world we have now who has this view, they would ask what is wrong with a flat economy?  People are still here, and they are spending just as much as they always do.  I personally am old school.  I like booms and bubbles. You need to see when the bubble peaks.  But as long as there's no contraction we are ok.


And there doesn't seem to be a metric if old timers are dropping off and being replaced by newcomers.  If there was a one to one exchange, there would be new people here, just not total population growth.  Just like real world statistics of newborns replacing seniors at a break even repopulation level.


Seems ok to me. I'd like to be an in world bill gates and all, but I'm happy SL exists and the people in world with it.

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If things were going great, Linden Labs would not have fired M Linden and let 1/3 of the other Lindens go.

I've got too much time, money, love and energy invested in SecondLife; I'll be here 'til they shut it down.  I think we should cheer for them to succeed because we're in this together.

       What you're cheering for in a sinking ship, Why not  try to persuade management to go back to the first days of actual fun. That's the only way things will truly stabilize is if they stop trying to look good in the press and bring back the fun and the frivolity of Second Life. They need to revert it back to the diamond it was before they tried to polish it too much now all they have is broken glass.

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I am more surprised that 36% of landmass is homesteads. Would be interesting to know if there is a conversion of full estates sims to homesteads, cause if that happens, tier income should drop.

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hahaha thats a good one......do you have ANY clue or idea of how many of us business owners in here have had to make changes time and time and time again over  the years because LL screws everything up so bad all the time??? I think before you post somthing like that you should have the experince to back it up....I have had  almost 5 years of it and finaly got sick of LL competing  with the ones who actually  put the bread on there tables.

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They finally removed the User-To-User transaction Woohoo! To be completly honest, anyone who thinks that UTU is important go somewhere else :> Just Kidding.

But seriously, I could have 50000L$, I would create an alt, and just send money between both my accounts, lets say i can make up to 100 transactions per hour, and i do the same thing for 24 hours, lets do the math ;

24 hours x 100 transactions = 2400 transactions per day,

2400 transactions per day x 50000L$ = 120000000L$

As you can see, in 24 hours, I have just made L$120 Million worth in transactions.

As you can see, anyone can inflate the user to user transactions at any given time, without LL being able to single out what are your alts.

So UTU is a completly useless data to me, and I am glad LL took it out, because wake up people, I am 100% SURE, that the L$40 Billion is NOT the exact number.

If i was to give a complete guess, I would say probably L$20 Billion to maybe L$30 Billion.

One more thing, donations, money gifts ALT to ALT money transfer are all things that make this data wrong, what LL is having troubles with, is taking the User to Merchant transactions, but lets face it...there is absolutly no way on earth to only take the user to merchant transactions.

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hmmmm,it seems to me that you assume a lot about virtual folks you don't know, and it seems to me that your expectations of LL is infantile at best. How is this all working out for you in RL? Always remember, LL created a virtual world that you chose to do business in, if it is not working out for you, well by all means leave, you are annoying the rest of us that continually adjust to the changes

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