September 28, 2008 by Ciaran Laval
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There's an interesting article over at the Motley Fool discussing, a little tongue in cheek, the Second Life economy.
The financial statistics aren't encouraging, a drop in spending, a drop in the value of the Linden dollar and yet, they point out that usage growth is up. Indeed concurrency has been hitting the 70,000 mark recently. So who are these people? What are they doing and why aren't they renting my land spending money?
Some people are still making healthy profits, over on Caledon I can almost hear Desmond saying "Crisis, what crisis?". However there does seem to be an increase in people questioning the state of the economy.
This needs to be put into perspective, ever since I arrived in March 2007 I've seen people stating that the sky is falling or that sales are down. So it's not unusual to see these complaints but there seems to be an added sense of gloom around at the moment.
Personally I'm still not happy with search, I don't think it's a useful business tool in its current guise. However even allowing for that, that's an individual issue, the money should still be being spent somewhere. There was of course the gambling ban, which did hit the overall economic stats although not in the way some thought it would. I always felt that gambling money largely stayed in gambling circles.
However gambling bans are so 2007, so why does it seem we're getting less for more at the moment? More users, less spending, something is amiss. The stats aren't startling, they aren't even worrying, but something doesn't feel quite right at the moment.
The RL issues, which are both startling and worrying, could kick in at some point, but I don't think that's the issue just yet. There are also people still carrying extremely expensive adverts.
So what is going on? Are some sectors so saturated that everything is getting stretched too thinly? Is there a shift in people's spending patterns or is this normal SL behaviour, some of you older guys must have seen all this before and take it all with a pinch of salt.
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The Linden Economy...
is largely dependent on the US economy - more directly so than national economies. Why? It's based in the US. And in the U.S. , Bennigans closed because... people can't afford the dinner out anymore (at least part of the reason).
The Linden Lab can't be looked at in a vacuum... no, I didn't read the referenced article, but I just saw the bill for the bailout shot down by Republicans.
Interesting times? Sure, I live in them... :-)
Second Life Consultant
No, it's not.
I don't want to go through that Fool article and point out all the different ways it is complete nonsense. I think anyone will agree that while it's conclusions may or may not be true it's evidence is totally bogus.
Regardless, I'm not seeing a significant drop in the economy. Private estates are selling like gangbusters, literally hundreds of new ones every week. Mainland prices are "stabilising" or to put it another way "collapsing" but I'm attributing this mostly to the explosion in private estates. Some landlords are struggling but this has got to be due to the tough competition. If there were actually less renters how comes there are so many new sims? They can't all be deluding themselves, well, I hope they're not.
The exchange rate is not falling, it's been totally stable against the US dollar for over a year. To be fair there are signs that it might fall. Quite worrying signs actually but nothing has happened yet.
Personally I'm just starting to believe that every time some SL business gets into trouble they post on the forums (or their blogs) that there's a recession, or it's the summer slow down, or the ageplay ban has caused a real estate crash or whatever other cockamamie reason to explain their own personal problems and everyone else having a bad time piles onto the thread.
Let's stop taking in terms of anecdotes and start focussing on the fundamentals. You can argue about the meaning of the statistics and the different ways they're "flawed" but they're all up over 6 months ago concurrency, PMLF, LindeX volume, sqm of land. It's hard to say SL is in trouble until some of those things go down. Growth has slowed for sure, but it's still positive.
Indeed
As I said I've seen enough of these "The sky is falling" posts to take most of them with a pinch of salt, markets change, someone creates something more impressive, spending habits change. This isn't a place where treading water will take you forward.
There's also the issue that people who are doing well have a reluctance to scream that from the rooftops for fear of looking arrogant.
Openspaces have indeed created more regions and people are still buying full islands, there's a thread over at SLU that has some interesting stats on new islands coming online etc. I was involved in a thread recently on the official forums where someone told me they might abandon their island and I told them that they shouldn't do that, it will sell, and within an hour it did sell. The market is still very much there.
I don't think anyone is seriously saying SL is in trouble, but I do think it needs something to catapult it to the next stage and maybe that's my impatience showing through there, I want to be wowed by something and at the moment, even the noises from Linden Lab from their blog are flat.
PMLF isn't a stat I'm impressed by, it's just the nature of it, but concurrency figures are a good indicator and they're up. It's certainly not all doom and gloom, if it were we'd know about it as we'd all be singing from the same songsheet.
Totally agreed on the
Totally agreed on the catapulting thing. We're all so used to astounding growth that this 5% a month crap can be frustrating. When is SL gonna explode again? Can LL even do anything to reproduce those heady days? Probably not.
So, in the midst of a real
So, in the midst of a real life economic crisis, some analysts and pundants would rather take the easy route and find a story about about the decline of a virtual economy.
RL: energy crisis, economic crisis, war in iraq, etc etc etc.... the economy isn't poor in the real world because of a bad search and gambling bans. The Second Life economy is poor because USA's economy is disasterous.
Second Life is lucky americans can still even come inworld to buy a few things.
Look closer. That's a rise
Look closer. That's a rise in the value of the Linden Dollar. Motley fool has the right numbers but misinterpreted the direction.