Nelson Linden

Retired Linden
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About Nelson Linden

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  1. The Second Life Economy in Q4 2010

    Thanks for the question, Nuhai. These two "supplies" are different. One refers to the total amount of L$ put up for sale or "supplied" to the LindeX by residents in a given time period. The other refers to the total amount of L$ in resident accounts at any given time, or the total "supply" of L$ across the entire economy. Falling supply on the LindeX puts positive price pressure on the L$ (meaning each USD is worth fewer L$). When the LindeX supply is insufficient to meet demand without significant price fluctuation, and other economic indicators are strong, Linden Lab may increase the L$ supply. In that way, LindeX supply and total L$ will frequently be inversely related when viewed in a relatively short period.
  2. The Second Life Economy in Q4 2010

    Hi Hitomi! I made note of the removal of user-to-user transactions in my Q2 2010 blog post where I stated that it is “not as accurate a measure of the inworld economy as we would like.” I agree wholeheartedly that it would be high-value, but transaction volume as it stands now is quite noisy, not differentiating, for instance, between a purchase (or anything that involves a true change of hands) vs. something like game-play on a machine (where L$ are moving furiously but a tiny fraction ultimately changes hands). Simply put, it’s too unreliable for any of us to run a business from and therefore was de-emphasized. Our goal in removing some metrics was to pare them down to our most reliable, clearly definable data and then build others back where appropriate. The comments on this and previous posts are certainly helping us determine where to focus. Keep commenting! As for your second request, “Total L$ held by residents” is provided above, under the heading “L$ Supply.”
  3. The Second Life Economy in Q4 2010

    2010 ended on a positive note for the Second Life economy, with several key measures growing while others remained stable as compared to Q3 numbers. Total money supply, LindeX volume, and web merchandise sales volume were all up between 6% and 8%, indicating growth in economic activity. Also, the L$ rebounded strongly from Q3, appreciating 3.7% quarter to quarter. When comparing 2009 to 2010 measures, average monthly repeat log-ins were up 8%, average monthly economic participants were up 4.3%, annual web merchandise sales volume was up 104%, and the world size grew by 5.8%. For a definition of the metrics in this post, please see this wiki page. Click on each image below to see a larger version. AVERAGE MONTHLY REPEAT LOGINS Repeat logins gained 1% this quarter. Average monthly repeat logins in 2010 rose 8% over the 2009 average. USER HOURS User hours were flat this quarter, appearing to stabilize after a gradual decline in the prior four quarters. Total user hours in 2010 fell 10% from 2009. AVERAGE MONTHLY ECONOMIC PARTICIPANTS Economic participants were flat in Q4, remaining in the historical five-quarter range. Year over year, the 2010 average of monthly economic participants was up 4% from 2009’s average. AVERAGE EXCHANGE RATE Increasing demand and falling supply on the LindeX caused a 3.7% appreciation in the value of the L$ in Q4.* The average L$ value in 2010 was within 1% of the average value in 2009. *Note that the exchange rate is expressed in L$/USD, meaning larger numbers represent a lower L$ value and smaller numbers represent a higher L$ value. The average rate is calculated by dividing the total L$ exchanged through the LindeX by the total US$ exchanged through the LindeX in the quarter. L$ SUPPLY Money supply grew significantly in Q4 to US$28.4m worth of L$, 8% over Q3. The year end money supply in 2010 was 11.9% over 2009. LINDEX VOLUME Mirroring money supply growth, volume on the LindeX grew 8% in Q4, nearing the top end of the historical five-quarter range. Total LindeX volume in 2010 was nearly US$119m, 2.8% over 2009. This means that an additional US$4m traded hands on the LindeX in 2010. WEB MERCHANDISE SALES VOLUME Driven by greater merchant adoption and improved shopping features, web merchandise sales volume grew 5.8% in Q4. 2010 web sales volume was up 104% relative to 2009. WORLD SIZE World size remained flat in Q4; 2010 year end world size was up 5.8% relative to 2009. Today, Second Life's virtual land mass would be roughly twice the size of Hong Kong.
  4. XStreetSL L$ Exchange Closing Dec. 15

    As we continue our transition to the new SL Marketplace, we will be closing the L$ exchange on XStreetSL and moving all L$ sales and trading to the LindeX, the main L$ exchange. The L$ exchange at XStreetSL will close on Wednesday, December 15th. All other account management and transaction history services will remain available on the XStreetSL site through at least the first quarter of 2011. When trading is halted on the XStreetSL exchange, any unfilled orders will be canceled, and all balances being reserved (both L$ and US$) will be returned to Second Life accounts within 24 hours. You can view both your L$ and US$ account balances by logging in to the LindeX.
  5. Join the Second Life Advertising Beta!

    As part of our continued efforts to provide Residents with new ways to promote and discover products, services, and inworld businesses, we have recently launched the SL Advertising Beta at and we invite you to join the program. Second Life Advertising is a self-service advertising system allowing advertisers to purchase targeted display ads on multiple Linden Lab web properties such as the SL Marketplace and SL Land Auction sites. If this test is successful, then we hope to extend advertising offerings to additional Second Life web properties. To learn more, check out Torley’s video tutorial on the wiki, where there’s also more information about the program. Among other things, SL Advertising features include the following: Display banner ads evenly over the time period you select Target ads to specific SL Marketplace product categories To join the program, just go to the SL Advertising Beta site and click on the “Get Started Now” button. Please send us all of your feedback, requests, or suggestions to And if you're on Twitter, please use the #slmarketplace hashtag.
  6. The Second Life Economy in Q3 2010

    The Second Life economy continues to be steady, with nearly all key measures staying within a narrow range of just a few percentage points up or down over the last year. The largest changes compared to last year's Q3 were an increase of 7.2% in World Size, a decline of 11% in User Hours, and a 115% increase in Web Merchandise Sales Volume. Over the last year, the number of people participating in the economy has also been consistent, ranging from 480,000 to 496,000 (currently 486,000), as has L$ Supply, which has ranged from US$25.4 million to US$26.2 million, and was at a 12-month high in Q3. For a definition of the metrics in this post, please see this wiki page. Click on each image below to see a larger version. AVERAGE MONTHLY REPEAT LOGINS Average Monthly Repeat Logins fell 2.1% from Q2 but still rose 5.3% year over year. USER HOURS User Hours fell 3.7% from Q2 and 11.0% year over year. The most significant quarter-to-quarter loss of user hours was from the heaviest usage segment (accounts logging over 300 hours per month). AVERAGE MONTHLY ECONOMIC PARTICIPANTS Active economic participants fell 1.0% from Q2 and year over year. AVERAGE EXCHANGE RATE As expected from the fluctuations in June, the average exchange rate of L$ per US$ rose 1.7% from Q2, or 2.5% year over year. Note that a rise in the L$ exchange rate represents a drop in the value of the L$, as one US$ now buys more L$ than it did last quarter. L$ SUPPLY The equivalent US$ value of all Resident-held L$ grew 1.2% from Q2, or 6.1% year over year. Although there may have been fewer economically active accounts in Q3, this suggests the L$ in those accounts did not exit Second Life. LINDEX VOLUME LindeX volume in Q3 fell 3.8% from Q2 and 2.8% from Q3 2009. With fewer economic participants, there was less need to replenish L$ balances from the LindeX. WEB MERCHANDISE SALES VOLUME Total sales volume on both Xstreet SL and the new SL Marketplace rose 8.5% from Q2 and grew 115.2% year over year. Note that the SL Marketplace was only in beta during Q3 and makes up less than 10% of total Q3 Web volume. WORLD SIZE Total world size fell 1.4% from Q2 and grew 7.2% year over year.
  7. Two Important Updates on 2011 Land Pricing

    In February of this year, we shared our 2010 land pricing plan where we discussed pricing and policies for private regions and addressed grandfathering, transfers, and retail pricing. In the spirit of giving you as much advance notice as possible about changes that may have an impact on your plans and budgets, here are two important updates on 2011 pricing: 1) All retail private region maintenance, including grandfathered pricing, is expected to continue without increase through Dec. 31, 2011. What you pay now, as a retail customer, is what you’ll continue to pay through the end of 2011. 2) We will adjust how education and non-profit advantages are provided, effective Jan. 1, 2011. All education and non-profit private regions of any type, purchased after Dec. 31, 2010, will be invoiced at standard (i.e. non-discounted) pricing. All currently discounted renewals which occur after Dec. 31, 2010, will be adjusted to the new price at that time. To continue to provide entry-level, private spaces to educators just launching their programs, we will be providing Homestead and Open Space regions to qualifying organizations without their meeting the retail full-region criterion. Customer Support will be available to answer any questions that you may have about these changes. We hope that these announcements help you effectively plan for the coming year. And, we’ll continue to update you well in advance of any additional pricing changes.
  8. Second Life Economy Stable in Q2 2010

    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 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$152 million. RESIDENT USAGE INDICATORS MONTHLY REPEAT LOGINS Monthly Repeat Logins indicated improved retention and engagement over recent quarters: Q2 2010 averaged 805 thousand monthly repeat logins, a rise of 8.6 percent vs. the Q2 2009 average of 742 thousand. Levels are flat with Q1 2010. USER HOURS User Hours were slightly lower, at 108 million for the quarter. The Q2 2009 User Hours figure of 126 million includes substantial usage attributable to “bots” and other scripted agents. Bot policy changes took place in mid-Q2 2009, making it difficult to make accurate comparisons with the year-ago period. User Hours in Q1 2010 totaled 116 million. MONTHLY ECONOMIC PARTICIPANTS Monthly Economic Participants (those accounts that receive or distribute L$ 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. LINDEN DOLLAR RATES AND RELATED METRICS EXCHANGE RATE 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. L$ SUPPLY 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 LINDEX VOLUME 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 XSTREET SL MERCHANDISE SALES VOLUME 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. LAND WORLD SIZE 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.