Second Life economy posts solid growth in Q4
Thursday, January 17th, 2008 at 9:00 PM by: Zee Linden
Economic Growth. Many of our economic metrics showed much slower growth from Q2 to Q3 as can be seen in the charts below. We believe the slower growth was primarily due to the impact of stricter security on credit card processing, shutting down gambling in July and beginning to charge VAT September. With those things behind us in the fourth quarter, the Second Life economy demonstrated its resiliency. The LindeX - the purest measure of economic activity in Second Life - grew 13.2% to nearly $7.6 million USD for December and $22 million USD for the full quarter.
Concurrency. Peak concurrent users, shown in the red line on the chart below, grew 12.5% in the fourth quarter to more then 58,000 - up more than 210% for the full year. We’ve seen a growth in concurrency almost every week since the beginning of September. Growth continued last weekend when concurrency grew another 5.3% to 61,500.
User hours. In December, approximately 893,000 residents logged more than 25.6 million user hours (shown in pink in the chart above) or more than 30 hours a month per user. Of that just 519,000 Active residents, spent 25.5 million hours - averaging more than 49 hours per month. (”Active” is defined as users who spent over an hour inworld during the month.)
Combining a few of these metrics, indicates that residents spent more than $0.30 USD on the LindeX per hour used. Most of this economic activity went to the more than 50,000 residents generating what we call “positive monthly Linden dollar flow” from their activities in Second Life. We believe that many of these 50,000 users are creating the diverse creations and experiences that make Second Life such an interesting place to explore. This is the powerful engine fueling the steady long term growth of Second Life. The growth in Q4 combined with continued growth in January demonstrates that the Second Life growth engine is alive and well.
Transparency. I really enjoy the fact that we are such a transparent company. Throughout the good times and difficult times in 2007, we posted our numbers in a consistent fashion. Even with all the data we publish, its funny sometimes to see how people get it wrong. I wish other companies believed in transparency the way we do. I’d love to see our registrations, active users, user hours, economic activity and anything else comparable on lots of virtual world and MMORPGs. I’m sure some of the data is out there - and I’d love to see what you can find. Please post links to others data in the comments or send them directly to me (Zee Linden) inworld.
We will be discussing these and the newly updated Service Quality Metrics at Meta’s office hours in Beaumont on this Friday morning, January 18th at 10 AM PST.
January 17th, 2008 at 9:11 PM
So, charts. Awesome.
January 17th, 2008 at 9:15 PM
Can you imagine what the economic growth could be if LL could fix some of the long time nagging problems such as teleports, sim border crossings, and inventory losses?
Gee, I’ve only noticed it for the past 2+ years…
January 17th, 2008 at 9:23 PM
[quote]We believe that many of these 50,000 users are creating the diverse creations and experiences that make Second Life such an interesting place to explore. This is the powerful engine fueling the steady long term growth of Second Life.[/quote]
I was just discussing that today on a couple of occasions. We need to mature beyond retail, dance halls and sex to provide grass roots entertainment to enter a more diverse and mature second life.
The next generation of creativity will feed the survivors of the overcrowded retail malls and the ones that make products rather than lease space will be the foundations.
I’ve proved you can charge admission for an entertainment venue. I offer a money back guarantee to visitors if they finish my exploration labyrinth and don’t agree it was worth at least twice the L$50 admission. About 400 customers so far and not a single refund.
Themes like this will eventually be the backbone that supports the population after they drop dead from shopping, dancing and XXXing.
January 17th, 2008 at 9:25 PM
Glad to see that this aspect of the economy is improving! When looking for reasons for the slowdown in Q3, don’t forget that LL flooded SL with new land causing a massive depression in land prices in June and July as well.
I fully expect to see another increase in LindeX for January of 2008 due to the honest bankers liquidating their RL investments and buying Lindens with them so they can give refund their ex-SL customers. For instance, JT Financial has $200,000 USD in RL investments to liquidate and return. That’s a nice one-time boost to the LindeX.
January 17th, 2008 at 9:29 PM
I never worried for the SL economy–LL knows wery well how to get in there cash
Besides there are many clever brains in SL that knows how to run there business wery well..a cold brain..a warm heart a good consept and think loooong terms, and you do ok.
January 17th, 2008 at 9:34 PM
Clear, transparent and wonderful, Zee.
I share a lot of your enthusiasm, and I’ve seen a number of things ‘done right’ lately - pricing stabilised (thank you!), the basic experience improved, and smart policies with regard to gambling and “inworld banking” (heh).
To me, steady means reliable. I’m more confident we’ll see the 100 millionth real signup now more than ever; the recovery from the ‘hype’ days was a soft landing indeed. Better that the economy eases up smoothly, rather than scream upward only to crash later.
Desmond Shang
Independent State of Caledon
January 17th, 2008 at 10:02 PM
i have noticed an increase in *real* newcomers lately. i’m hoping the use of zombies will decrease as people that resort to fraud to raise relevancy are shunned by the community at large. naturally this process could be greatly expedited if LL filtered out non interacting avatar accounts from traffic metrics. but a fix one way or the other is welcome.
more programs to illuminate new talent, more programs to illuminate educational efforts, more brilliant use of the platform for interactive entertainment, more of what makes sl great is called for. and within this is the opportunity for philanthropists to draw more support to the cause for a platform serving the common good of the planet. the more good in sl the sooner the negative aspects (fraud, deception, theft, etc.) will be pushed to the side to wither out and leave for pastures of people that are not intelligent enough to protect themselves.
btw that first graph isn’t all that great. it shows log growth followed by a plateau (caused by the disruptions induced by necessary policy changes) followed by a small yet steady trend in a positive direction. the slow drip fills the bucket. look for ways to enhance steady solid growth and forget about log growth rates. 3 years of steady growth are far more valuable than spurts of growth followed by disruptions in the economy.
January 17th, 2008 at 10:11 PM
“I’d love to see our registrations, active users, user hours, economic activity and anything else comparable on lots of virtual world and MMORPGs.”
But then the Shirky’s of the world couldn’t provide the kind of skewed outsider commentary that we all know and love.
January 17th, 2008 at 10:24 PM
The second graph appears to show negative ‘peak concurrency’ prior to aug/sep 2006. Please explain how this is possible.
January 17th, 2008 at 10:30 PM
@ 2 : I agree. SIM border crossings (sinking in the ground and or uncontrollably flying/walking forward a great distance then rubber banding back) is a MAJOR flaw of the SL experience.
Newbies: At the top of your screen, click VIEW then select VIEW PROPERTY LINES. You now will be able to see the RED lines that mark the borders of each region (sim). When walking or flying you can now know when to expect this archaic effect caused by the lag created when your avatar switches from one server to another.
January 17th, 2008 at 10:41 PM
Wow, all I can say is OMG how second life has grown, I know SL has problems and all but OMG this is freakin amazing!!! I can’t wait to see what everything is like next year, you have to remember even though sl has problems , they do a real good job of fixing things :))
Thank you linden lab keep up the wonderful work, I enjoy being a resident and look forward to continue my support :))
January 17th, 2008 at 11:12 PM
Indeed Ann Otoole indeed. As i develope new games & gadgets i notice a substancial difference between the nautilus & corsica continent. Script performance on nautilus is about max 40.000 and on corsica 99.000, thus resulting in a far more userfriendly use of any scripted object. Makes me wonder, corsica was created right after nautilus, why that huge difference? The technical mess sl is and the longterm bugs that keep on coming back is what keep sl’s growth.
SL makes even the trains i run fly around like they where rockets.
Sl is sutch a mess technically that i am surpriced that people keep coming back and spend money. Its indeed time to take sl to a next level if it wants to continue existing.
January 17th, 2008 at 11:20 PM
To see a sims performance press ctrl+shift+1 to toggle true that feature. Script performance or ips its called in that viewer. I even noticed that rezzing about 50 or 60 sculpted prims in a sim makes it lagging HUGE. I wonder why they even released that when its making sl an even more technical mess and lagging a sim that huge. Try it out, rezz some 100 sculpted prims in a sim and see what FPS does in that performance viewer, the lagging is regionwide so its in the sim server not the UI.
January 17th, 2008 at 11:24 PM
I read that Linden sold 10% ownership.
And they said it was valued at over US$500 million.
You do the math!
January 17th, 2008 at 11:25 PM
The red line doesnt seem so logical to me . For the last 10 months there has been (hardly) no growth. It’s been stable and that’s not good for a game like this
January 17th, 2008 at 11:28 PM
Such statistical charts have been presented before. Those charts were blown out of the water when someone decided to trace past demographics to population. Interesting what happens when one includes ratio of residence in those figures. It made the stats flip upside down. In short: yeah, the raw figures had increased by some 15% for the period, but population had boomed some 45%. Ratio per user had actually decreased tremendously. And those figures were for legit users, not for alts.
So charts such as above, which provide only raw figures, are good for PR propaganda, not much more.
You want to see the real facts, show the population growth over the same period and then provide the RATIO stats, not raw data. Anyone can post raw data. It takes some skill to properly analyze that data and see whether the growth is healthy or detrimental.
January 17th, 2008 at 11:47 PM
I love these google stats Top 100 Countries by Active User Counts etc………sorry but if you believe these number then you been in VR worlds way too long. shakeshead does LL thinks we are this simple minded to believe these numbers????????????
January 17th, 2008 at 11:57 PM
Wow the Lindex per capita has dropped through the floor through 2007 when Robin started her churchification of our world in order to standardize our imagination.
All of 2007 has a Lindex of around 7,000,000 but the number of users has grown from 2,000,000 to 11,000,000. This means the lindex per capita has dropped from $3.50 to $0.67 give or take.
I think this very real drop shows both that campers are sucking the life out of SL and that LL needs to take a hands off approach to governance. Fire Robin and stop her insidious imposition of her churches morals on the vast majority of users.
January 18th, 2008 at 12:06 AM
An in depth examination of the data shows with a little cross-referencing, that bot use has simply exploded at this point, and that the policy changes have simply shifted the market balance, rather than bolstering it. Legitimate users have done their usual with the Lindex, but as Sean Heying points out, the per-capita figures reflect a very large number of apparent bots and/or dummy alts for various purposes (traffic farming and camping, chiefly).
I predict that this will continue to be a trend until traffic is made irrelevant, at which point we will probably see more truthful concurrency numbers and possibly greater grid stability. We can hope, anyways. Don’t ban the bots, make them irrelevant. Remove the archaic and over-gamed traffic statistic. Find a more realistic solution to a problem which is heavily abused by the unscrupulous, and please find an alternative to the politically motivated, ineffective Aristotle.
Aristotle proved totally ineffective, given that a self-admitted seventeen year old, banned from my sim, age verified himself to get back onto the adult grid. Need I say more? The system is a failure, as is traffic as an incentive measure. Either remove traffic, or bring back mandatory paid accounts.
January 18th, 2008 at 12:16 AM
1. Only Non Thinkers Will Take Promotional Demographics At Face Value
2. Patronising Arrogance Is Never Well Recieved
3. Meh
January 18th, 2008 at 12:20 AM
Love how the Lindex Volume graph has a red arrow which completely ignores the fact that it seems to have stagnated since Q1/Q2 2008.
I also find it funny how you praise the 50,000 “positive flow” people, whilst on the other hand doing nothing to protect their intellectual property.
Anyway, as usual with statistics, and as showvn by commenters before me, don’t trust conclusions drawn from statistics at face value.
January 18th, 2008 at 12:36 AM
@18: While I applaud your seeing through the hype and pointing out that the stats are slanted, I don’t agree with your attacks against Robin or statements about “churchification” of SL.
What you are promoting is an SL without rules, where everyone is allowed to do whatever they flat well please… everyone his own boss and his own God. That is “churchification” if I’ve ever seen it… it just puts the law in each person’s hands instead of the company who runs the show.
Now I will admit that LL seems amazingly inept at managing their business… to the point that I question whether it will still be around a year from now. However, total anarchy and chaos never result in a solid society and like it or not, that’s what SL is… a society.
Gambling, pedophelia, and other things are illegal in many areas RL. People can lose REAL fortunes on SL just as they can in RL. All the whining in the world isn’t going to change that fact. People think just because SL is a virtual world, that RL rules don’t apply. Hogwash. Every society, from the family unit on up, requires some kind of rules to function properly. If anything, SL would probably benefit from INCREASED morality rules, not lessened. I know a lot of folks will disagree, but just look at the main continent. What a garbage dump!
If LL believes something may be illegal and that they could wind up in hot water by allowing it on their system, if they even think it might be a possibility, they have every right to regulate their board as they see fit. It has nothing to do with morals (obviously… SL is about as immoral as a VR world can get). It’s just plain business. They want to stay as far away from IRS and FBI hassles as they possibly can.
Just my 2 cents worth. I know a lot of folks may disagree, but in my experience, when people are allowed to do whatever they want, mob mentality and criminal activity takes over.
January 18th, 2008 at 12:41 AM
what i can see is that growth simply stagnate. this is not good. people tend to loose interest in a) join second life and b) be in world.
LL, do something. open the lab, change the policies, be more liberal, listen to what users say. LL, be more active with user feedback, answer questions, take users serious, use jira.
for instance, you had a blog post “Calling all builders, businesspeople and budding fashionistas….educators, entertainers, and more…” and what did you do with this blog entry?? YOU CLOSED THE COMMENTS ON THIS THREAD. thats what i call counterproductivity.
January 18th, 2008 at 12:50 AM
One more thought atm, if I may. I am rather surprised that LL would boast a quarter gain of 7.2m L$ to 7.6m L$ as “solid growth”. During that same period, peak user hours DROPPED. That’s “solid growth”?
OK, I’ve run this into the ground enough. Maybe LL is whallopped by the exit of Cory, maybe they needed a morale boost so are patting themselves on the backs. Understandable really. But may I make a suggestion?
Get in a top-notch programmer who can get your databases to work, improve logins and teleporting, more easily facilitate sim crossing (really, even if the system pauses 15 seconds on a sim crossing while it transfers data… that’s preferrable to a crash). Get Group Chat to work, get Group Notices to work, fix linking and other building problems, lower sim prices to a reasonable amount instead of gouging your customers… then I’LL pat you on the back.
Seriously. I’ve always given LL a kudos when it deserves it. Not much been deserving lately. So maybe a little more elbow grease and common sense, a little less of these useless charts above, and LL will have a reason for a pat on the back.
January 18th, 2008 at 1:00 AM
The red arrow on the Lindex graph seems to show a healthy growth over the past year. A closer look shows that the arrow is from Aug.2006 to Dec.2007 (a 16-month period).
But if you imagine the arrow on the graph covering the period Dec.2006 to Dec.2007, the growth is not really that healthy!
This would seem to further verify Sean Heying’s calculations and add weight to the arguments put forward by both Sean and Selkit Diller.
Like Selkit, I also recently banned someone from my sim for harrassing my visitors, only to find him/her there the next day under another name and bragging that he’d opened another account using his dad’s credit card. I wonder how many others like this, and how many alts, are bloating the figures?
Why doesn’t LL admit it? The age-veri system is full of holes and those Lindens trying to push it through need to take a reality check.
January 18th, 2008 at 1:03 AM
I suppose you include the hours that bots are logged in.
January 18th, 2008 at 1:15 AM
transparency, yeah sure. You might release these statistics, but Linden Lab transparent? HELL NO!
Just see how Gambling Ban, VAT and Banking Policy were introduced, far from transparent, and very dictator like. Overnight changing the rules of the game, and best of all: No communication before the policies at all, conduction of fraudulent business(regarding VAT without chance to accept or not the price increase, and missing receipts) and no clear extent of policing, without giving any knowledge of the extent.
Linden Lab needs to learn to communicate, that’s the requirement to be a transparent company. We see mainly only 1-way communication, no upfront warnings or opening discussions or seeing what actually would be good for the community.
Yes, Linden Lab is a company, and motivated by bottomline, but there is a better way to enhance the bottomline …. and that is, communication, proper communication, honesty and True transparency.
Gambling Ban: No one was warned upfront, overnight putting a lot of SL businesses bankrupt. Decision based on being a CA business, and RL laws.
VAT: Best of this was that it was mailed during the night for europeans! No upfront warning or notice, just an price increase effective immediately (which is illegal btw).
Banking Policy: Unfortunately, you just punished all the honest inworld banks, crooks had already ran with money. Best of all, it seems one person was given upfront warning, LukeConnell Vandeverre, and well, who doesn’t really have totally clean reputation, infact, many people thinks he is a crook. Whether he is a crook, or not, i don’t know, but i know his reputation. This was introduced slightly better, giving 2 weeks time to comply, unfortunately however, 2 weeks is not enough for acquiring any kind of RL regulation really, even LLC’s registration from start to finish (there’s more than the initial registration) can take easily more than 2 weeks. And still no clear extent of the policy! It seems it’s actually a complete interest ban, and so far, even RL contract personal loans has been told to be banned if delivery vehicle is L$.
That’s not true transparency!
I appreciate releasing the figures, but tbh, they don’t matter at all nearly as much as those policies. The figures are interesting, but ultimately, does not affect daily business that much, they give some insight, nothing more.
We would highly appreciate better communication, even if it would be 1-way, about the really important stuff. Figures aren’t really important.
Did you guys even consult inworld business owners of the effects to their businesses your policies make? I’ve heard of no such actions at all.
Please, become truly transparent, if you appreciate your business at all and want it to continue and achieve your goals, that’s the way to go really.
And i do understand that hard decisions has to be made now and then, that’s why consulting the business owners is even more critical.
January 18th, 2008 at 1:15 AM
Hello Zee and the rest of the Linden management.
At first congratulations to you all in your persistance in telling people that want to turn a “blind eye” onto the SL economy, that all is fine.
In addition, I found it very concerning that Meta discontinued the “unique user” data with the sentence that the algorythm wouldn’t be right. It was right all the time, until October 07. In my observation a vital milestone of the health of the SL economy has been taken out.
The total growth over the time of Mid 2006 to the end of 2007 looks impressive and is, in its own, but a health of economy is not a total number, it is the growth in the between. and if you take this into consideration, tears roll down your eyes. The growth over the Q4 of 2007 is only marginal.
The economy heavily based on exchange of “virtual” land has completely broken down and no action taken by Linden Labs has turned this effect. Any afford in returning to a nearly growth has failed as the decision made by Linden Labd in Q3 and Q4 (gambling ban, E.U. V.A.T.’ing) had a devostating effect on a very single tracked economy. land prices have declined by 100’s of %.
The explosive influx of alternative avatars has been a mistake in it’s own as it shows a wrong growth. Only a unique user data, and even more the premium account data shows a real growth. Having only left premium account data (the evangelists of SL), the growth is minimal and indicates that only very very limited amount of people see Second Life as worthy to invest money into.
The Lindex (better holding hostage of CreditCard money) is marginal declining or stable over Q4, as no newcomers entering this economy, people are not able to sale up and exchange ownership, what is a super vital key factor in a land market economy. I believe that through the decline of land byuing newbies and though this effect not giving the possibility for land owners to sale up and take out the money of the Lindex is the only explanation that the Lindex is where it is. If landowners had the chance to sale up and take out the money, Lindex would be back to a stage od Q1 2006.
Linden Lab, please wake up and smell the coffee, the big times of tapping yourselfs onto your shoulders are over, sit down with economists and try to rescue an economy that is lingering in a treat of resession.
Good Morning
Marc Montague
January 18th, 2008 at 1:29 AM
I am surprised…really. I have one bussiness since one year ago and last 6 months had been really bad and some one catastrophic. I can think that is only me…but all bussiness people that I talk say me same. No gambling, crash with land sells, every SL corner with full permiss, bots,… I just hope that fantastic results of economy will be real to everyone that pays a lot of money to can keep land (+VAT of course in my case). But thx Linden Labs for this information, we really love SL and all options in this new world. Please send more information like this :).
January 18th, 2008 at 1:30 AM
[...] may want to subscribe to my RSS feed. Thanks for visiting!Second Life metrics to the end of December are now available and from an Australian perspective there’s been a significant drop in active users - 10,644 [...]
January 18th, 2008 at 2:26 AM
Zee, your transparency is commendable.
Is it possible that your definition of “active residents” could be shared more widely within the company? I’m not sure that everyone there is familiar with the distinction between people who actually use SL, and people who came here once, either for minutes or months, and haven’t logged in for ages.
I’m thinking, for example, of Philip’s January 9th blog post in which he refers to the residents as “the first hundreds and now millions of people who had the courage and passion to bring the virtual world to life by creating it and then believing that is was real”. I guess 519,000 doesn’t sound as impressive as “millions”, but it would surely look more consistent if everyone in the company was using the same figures and definitions.
I notice he also refers to Starax Statosky in his post — “I’d love to see Starax’s version of an Emmy” — presumably not realising that Starax left Second Life 17 months ago, and that there were many rumours at the time that it was SL’s problems and instabilities that led to him selling up, closing his account and leaving.
January 18th, 2008 at 2:33 AM
Oops, my bad — it seems that Starax recently decided to come back under a different name, presumably after spending a year getting whatever had irked him out of his system… Memo to self: must google better before posting.
January 18th, 2008 at 2:47 AM
I can see through this transparent prospectus that you’re doing very well. Yeah!! I’m elated for you and your success (aside from all the negative comments you’ve received thus far).Hey, the ignorant should be aware that Beta versions and in an expansive metaverse such as this, there are to be bugs. That’s a fact of life. Your (LL) engineers are doing a wonderful job keeping things up and running. Your support desk is tops: Professional & knowledgeable. It they don’t know the answer, they know what to do to best help you. Your Knowledge Base is overflowing with helpful data. One just can’t get lost in SL unless they really, really try. All in all, SL is a success. To the dissatisfied: Get over it. Now, to the Linden’s I care so much about: when/how do you propose the subject matter (speaking strictly for my many close friends)?
January 18th, 2008 at 2:55 AM
[...] what, SecondLife economy is there and growing… mind you, that “charging VAT” [...]
January 18th, 2008 at 3:11 AM
Nearly 406 million people speak Spanish in the world and the Hispanic community in Second Life is great.
Because we already offer a translation of the web in this language, perhaps we admire so much better economic data.?
January 18th, 2008 at 3:23 AM
If I am not wrong, I see that SL has reached a plateau in 2007 - where is the solid growth?
Additionally, the user core is half a million (less then a tenth of the nominal population), 10% of which are making Linden money.
I think all people screaming about bad policies and decisions last years were not wrong.
January 18th, 2008 at 3:24 AM
Perhaps there is something here I am missing……..
From a TA (chartist) viewpoint the LindeX volume is flat over the last year, it appears to be running into a resistance level at around $7 B
Ditto User Hours. In fact if I take the moving avage on that graph as an indicator of longer term growth there has been once recent Black Cross (actual stats under the longer term MA)
Lots of SL technology is above my own personal pay grade but charts I understand only too well…….
Any other TA folks here? Views welcomed
January 18th, 2008 at 3:30 AM
Sorry 33 i am lost in translation here. Are you saying things are all well on sl these days? Frankly they are not Growth is slow and paying accounts are dropping off. Anyone that can read those charters can tell you they are not real. They can`t be, mind you tho this isa vr world right? Hence VR number is key here.
January 18th, 2008 at 3:42 AM
Terms of Service
1.6 All aspects of the Service are subject to change or elimination at Linden Lab’s sole discretion.
“Complaints regarding Linden Lab has the right at any time for any reason or no reason to change and/or eliminate any aspect(s) of the Service as it sees fit in its sole discretion.”
People complaining about change without notice (aside from a Blog entry) should have read the “TOS” prior to joining SL or complaining which only shows your ignorance. Very rare occurrences, such as immediate changes in policy, don’t “just happen for the heck of it”. There is an army of attorneys whose sole purpose in life is to protect LL (and you) from harm.
Additionally, section 5 of the TOS is a good read for the aforementioned individuals.
In closing: The initial paragraph within the TOS reads, “If you do not so agree, you should decline this agreement, in which case you are prohibited from accessing or using Second Life.” That says it all.
January 18th, 2008 at 3:49 AM
LOVE the trend line on the first graph. Was that drawn in by hand? By someone’e kids? Using wax crayons? Even at a casual glance you can see growth has turned down.
I’m not surprised. I’ve had three businesses now destroyed overnight by different, arbitrary, knee-jerk, Linden messing-with-the-economy, whammies. I’m fed up with funding Philip’s retirement. There won’t be a fourth.
January 18th, 2008 at 4:30 AM
I dont know what kind of business in SL that got ruind over night by TOS changing..but regulation of business can happen in SL as in RL
If you cant change the way you do a business in SL or in RL you got little chance to do any. If you are a creator of items you can change,,if you own land you can change–The bank ppl was not as i se it a “business” it was a fraud–The casinoes was more or less places to ripp ppl off, and this places had good time and warings to change- Legal business in SL good good chanses if you admin it right
You need to se the marked, you need to do the groundwork and right marketing and you need to be huble and listen to what your costumers tell you-information = cash!
January 18th, 2008 at 4:32 AM
Why are you quoting TOS? Most people understand them and obey it…There id no real growth. If we see the subjections or users along withthe gains thenI say there would be a Neg factor. Not positive…..
January 18th, 2008 at 4:52 AM
“Even with all the data we publish, its funny sometimes to see how people get it wrong”
In what way exactly did we get it wrong? Simply by disagreeing with it?
Thank you for being transparent with data about OUR economy (you know, “your world, your imagination”). How about some transparency about governance decisions like the ban on unregulated banks? Which would still be about US, not about the LL as a corporation. We saw that kind of transparency anyway when Cory was terminated and the decision would not be justified even internally.
January 18th, 2008 at 5:07 AM
Well impressive as the ‘Graphs’ are, I fully disagree.
I have been in world over one year, and in this time have witnessed countless business closings, many many avatars self exiling and migrating away.
Land is a joke, the price is insanely high, no resale value. Quality of the virtual world has rapidly decreased in stability for the last 6 months.
Many of my friends are original content providers to SL from day one. Many have rolled up their carpets, packed teir bags, and left SL permanently.
My business has shown a dramatic decline tho new scripting and products continue to come forth. People are NOT spending money at all. Activities are slowly loosing interest, live music is also loosing its appeal.
I understand the TOS, and Linden may do as they see fit. However, should this Morality continue I for one predict a total collapse of the economy. This IS a real world economy we are talking about, even if it exists only in our minds.
Issues to bolster the economy in my opinion are simple.
1) Regulate land, set prices from LL when released to a realistic ‘cost of living’ guideline. Any user can be a land baron and rob his fellow man, but honestly Linden Labs should when originally releasing new land set the prices realistically. Islands are at a ridiculous price, and the land auction is a virtual and real world JOKE.
2) Campers, who cares! If a person wishes to pay $L2 every 10 minutes that is their business. HOWEVER…. free accounts should be regulated as such - A fair TRIAL period which allows a person to explore and experience the virtual world, and then MANDATORY payment to continue. This if implemented will show a SIGNIFICANT reduction in lag and performance issues, not to mention give true statistics.
3) Realistic Expectation. This means quite plainly that we as users should be afforded realistic expectation to receive the quality we pay for. Hire the best of the best, programmers that can correct long term issues, inject new vibrant codes/ideas, and by all means make the next viewer update WORK.
4) Incentive Bonus. Yes a bonus! Users who create quality business’ within second life, original content not resale full perm garbage, should be afforded a bonus, as in free monthly premiums, perhaps a bonus in stipend, something to draw new and creative content to the forefront of our virtual society. In the real world, towns, cities, countries, offer huge tax breaks for business’ that will create jobs and merchandise to bolster a lagging economy.
In short, yes LL is a business. We understand that. However, if LL chooses to regulate and propagate the idea that this is a REAL society, with a REAL economy, perhaps the corporation should begin running this business like the REAL country/world that it is. We are the nation of Second Life, and as such should be treated in the same manner. If LL ran SL as if it were a true independent nation, wow what a difference we could experience!!
LL I give u applause for the Second Life Platform, but alas, evolution has reared its ugly head. Shall we GROW with these new changes? Or shall we simply allow ourselves to become extinct and be replaced by new breeds emerging like Hipihi, etc.???
Evolution, revolution, inovation, change, progress, or extinction. The choice is clearly up to you Linden Labs. What say you?
January 18th, 2008 at 5:12 AM
@39: It’s very interesting that you quote section 1.6 from the ToS, in the context of a discussion of the economy.
There are many real life examples of governments messing with their countries’ economies — the Zimbabwean goverment trying to outlaw inflation while making political decisions that have destroyed their agricultural base; Argentina’s government being forced to devalue their currency; the UK government withdrawing from the Exchange Rate Mechanism; Venezuelan oil fields being forcibly nationalised — and when this happens we all tut about what a mess they’ve got themselves into and how it will damage investor confidence and economic growth.
Of course sometimes these things have to happen for important reasons, political or otherwise — but, every time they do, the economy suffers as a result. Economic stability and growth requires investor confidence. People need to have some sense that they are able to build something of value, and that it won’t be taken away from them through instant decisions over which they have no control or right of redress.
Why would anyone build a significant-sized business for real in SL, any more than they would in Zimbabwe? They know that it only exists for as long as Linden goodwill allows, and that at any time the parameters of the Second Life experience can be changed in a way that makes their business poof out of existence. And don’t forget the anti-fraud measures, etc. that serve to underline the fact that your “money” is just tokens — which can be taken out of your account without warning, as a result of alleged activity on the part of others over which you have no control.
So yes, you’re right; the ToS do basically say “we can do what we like, with no warning; and if you don’t like it, don’t come in.” And for as long as it says that, it will act as a limiter on economic growth, just as much as the technical instability does.
January 18th, 2008 at 5:18 AM
That red arrow would appear even sharper back in July. I don’t trust the arrow there. Looks like it was just slapped on. Who is to say that next month wouldn’t be even lower just like August was? Gambling was shut down in July. This month, banking will be shut down having a further impact on our economy. This post appears pretty optimistic ignoring the fact of the banking ban.
January 18th, 2008 at 5:37 AM
Funny how numbers can be made to say anything you want them to say.
Your numbers say “solid growth”, yet if you go to your own website forums you can hear your residents saying “sales are down”, “bots spoil real business” and other grumblings about the SL economy.
Who are you going to believe, numbers or people?
Who did you build this platform for, numbers or people?
January 18th, 2008 at 5:53 AM
And yet teleporting STILL isn’t fixed. Just tried to TP somewhere *5* times, each one kicking me out of the program. What about using some of those millions of dollars to add a single line of code in that, y’know, sees if TPing is possible and if not cancels it before SL crashes? Or is the money being diverted to fancy graphs instead?
January 18th, 2008 at 5:54 AM
2007 was a difficult year for Second Life. 2008’s not looking much better.
The establishment of anonymous accounts in June 2006 opened the doors to underage players. This resulted in international legal scrutiny, increased exposure to legal liability and damaging media coverage. Linden Lab responded by intruding into residents’ sexual relationships and expelling two consenting adults for underage roleplay - even though no underage players were involved. Refusal to close the anonymous accounts and dogged insistence on an ineffective and unsound ID-based age verification system cost Linden Lab considerable political capital with no benefit. ID-based age verification is no better at screening underage players that credit-card verification, nor is it more ‘fair’. It rarely works for residents outside their home jurisdictions and, in many countries, it may not even be legal.
While anonymous accounts may have launched Second Life’s dramatic growth phase (October 2006 to June 2007), failure to formulate a land management strategy resulted in a speculative bubble as Linden Lab first starved and then flooded the mainland market. Islands ceased to be an attractive alternative when LL raised tier charges from $195 to $295 early in the cycle. Worst affected were the very residents who comprised the growth phase. The unexpected policy reversal on gambling in July further undermined Linden Lab’s credibility. Growth stopped. Premium accounts and total hours remained flat throughout the second half of 2007.
The overnight imposition of VAT (15-25% sales tax) on European residents (40% of SL’s population) in September not only trashed European landowners, but it caused considerable friction between European and North American residents as Linden Lab, a supposedly global company, began charging based on regional factor prices. It also led to the crazy situation whereby European landowners (some owning dozens of islands) who shifted their tier to North American business partners lost access to Live Chat support.
Longstanding problems of asset management, grid instability and poor customer service have undermined residents’ confidence in Second Life’s entire technological and managerial infrastructure. While organic development was the correct approach to building Second Life, expectations of success amplified perceptions of failure. The year ended with the resignation of CTO Cory Ondrejka due to “irreconcilable differences” with CEO Philip Rosedale.
Just days into 2008, without consultation or discrimination, Linden Lab banned all banks, regardless of their history, reputation, structure or business practices. In a matter of minutes, SL’s evolving financial system was demolished as sound and responsible banks closed their doors in the ensuing panic. More residents lost money because of LL’s clumsy intervention than from all bank frauds combined. Good businesses were crippled and good people hurt - not so much by scammers as by Linden Lab itself!
So, what went wrong?
Philip Rosedale and the Board of Directors are highly skilled engineers with little or no knowledge of economics, economic history, strategic planning or customer relations. As Second Life grows from a technological startup to a mature business, they are out of their depth. They are making serious mistakes. They are destroying the wealth and confidence of the entrepreneurial class who risked enormous time and money to build Second Life in the first place. More importantly, they have lost sight of their original vision.
Second Life was about user-generated content, remember? It was about “your world, your imagination”. That was the business plan and founding principle: to create a world that was VIRTUAL, VOLUNTARY and ADULT - framed by the philosophy of individual liberty and responsibility. Second Life was NOT intended to be a pale imitation of real life. It was NOT meant to be a playground for Republicans and Democrats to ‘govern’. It was NOT about majority rule through public opinion. Yet this is what has leaked into Second Life since 2007, drip, drip, drip. The sad irony is that now, out of ignorance and a naive desire to ‘do good’, Linden Lab is poisoning the very world they created and seek to protect.
How do we fix it?
Linden Lab is a private company, so they can do with Second Life what they wish. We ‘residents’ have the choice of being here or not. At the moment, there is no viable alternative to SL as a comprehensive virtual world. Therefore, Linden Lab still has time to prevent Second Life from becoming the ‘Lotus 123′ or ‘WordPerfect’ of the virtual universe.
1) Regain integrity of the system. Announce the closure of all anonymous accounts on 1 March 2008. ‘Anonymous’ accounts may now be described as accounts without payment information on file or have not been age verified through the ID scheme. Keep the ID scheme during the transition process, but consider phasing it out by the end of the year and returning to credit card verification.
2) Stabilize the financial system. Lift the ban on banks. Present the following message on the login screen: “Rate of return (interest or profit) on any investment is proportional to the amount invested, the length of time invested and the RISK OF NONPAYMENT.” Give residents information, not regulation, and the system will evolve in a healthy and productive way. Reputable businesses providing good customer services will always prevail against fly-by-night operations.
3) Reassert the founding principles of individual liberty and individual responsibility. Resist the temptation to sanitize Second Life. The road to hell is paved with good intentions; the desire to protect residents from themselves will only lead to a downward spiral of regulations to offset the harmful effects of other regulations. Also, Second Life is NOT real life. It is NOT a nation-state. Second Life is virtual, voluntary and adult. We are here by choice precisely to escape the restrictions of real life - and there is no Berlin Wall to prevent us from leaving. As for those who want SL to become more like Disneyland, well, Disneyland already exists. We don’t need another one.
January 18th, 2008 at 6:02 AM
I am not sure if teleports or land crossing would have a noticeable impact on the economy. I totally agree with AnnMarie Otoole (#3)
SL has to become more mature, content should matter and since we have to pay to create something we should be allowed to charge for it.
Do the math, lets assume there are 200k active people and the net amount spent is 6 Million that means every resident is spending 3 USD per month! Hell thats nothing!
If one has a real cool club with a top notch DJ, one has to make a contest and give away free money that people come in the first place, these contests are usually rigged because these contest cheater groups. Charging admission for an entertaining program sounds about right. I doubt the cheater groups would pay admission to place their vote, less malls would be necessary to pay the tier, less malls means more relevance in the searches etc. The popular places are either free sex places, free money or freebies. What’s free works for traffic but doesn’t work for the economy.
If LL would really like to boost the economy they had to ban products for 0L$. If just every current freebie would cost 1L$ a newbie had to make a decision to use the credit card or sitting ages on a camping bench. As a real woman I am worried about the behavior of the men that feel anonymous. I kinda lost my faith in humanity just by standing at my store from 2000 daily visitors 1000 of them are male that say nice things like (show me your boobies) i have to clean my banlist every 3 days because it is full. Basic accounts should be considered a 1 month free trial and after that they should be forced to upgrade. By having the real names on file this rude behavior would change, creators would have more financial resources to create REAL content and so on… but in a world that works this way i understand that the most people won’t agree with that idea, anyways from the economical and ethical aspects it would help a lot
January 18th, 2008 at 6:16 AM
According to your chart, there was solid growth in Q1, but the rest of the year was ups and downs. Q4 was alright. Lets see what happens over the next couple of quarters.
January 18th, 2008 at 6:55 AM
While we are all used to lag, particularly on the mainland, and “solve” the problem by simply avoiding those areas like the plague, and so discount it in our thinking as “just another thing not worth complaining about”, like the weather…. we mustn’t forget the impact of lag on the economy. Stores and malls in which you can’t walk because it’s like molasses, or in which despite waiting patiently for more than a minute, over half the things on offer are still grey and so you can’t see them. And so, you’re out of there. Maybe you spend your money somewhere else; maybe you just give up.
And maybe, the answer to this isn’t something the Lindens can provide. As in the early days of the Internet, when people tried browsing the web with 56k modems, many said “this will never take off, too slow.” But now with high speed, it’s a different world. Perhaps thus as well as people’s video cards improve, if only to take advantage of Vista’s Aero interface and SL benefits as a side-effect. But still, I made sure I got a kick-butt graphics card, and am on 8 meg down high speed, and still flee from molassy, grey malls.
In any event, whatever the cause, and whatever the answer, and even though we’ve learnt to live with it so that we learn to avoid it, the effect of lag on the SL economy must surely always be there as a damper.
January 18th, 2008 at 6:57 AM
Land Sales by Resident
December 2007 6.2988
January 2008 6.4057
wow landprice gone up ?
January 18th, 2008 at 7:00 AM
PLEASE POST GROWTH CHARTS USING LOG SCALES!
In a log chart, steady growth appears as a straight line, sloping upward.
Linear charts distort growth. Steady growth looks like a curve with all the apparent growth at the end of the chart. A chart showing what *looks* like steady growth (with the values increasing steadily, a straight line sloping upward) hides the fact that the growth rate is declining.
Please, if you’re going to post charts, do it as though you have a clue what the data means and how to present it.
Yes, most folks don’t really understand log charts. But they don’t really need to; plotting growth on a log chart makes the important information (the GROWTH RATE) visually apparent and intuitive, even to the mathematically challenged.
January 18th, 2008 at 7:09 AM
[...] (via Official Linden Blog) [...]
January 18th, 2008 at 7:15 AM
P-p-p-profit
January 18th, 2008 at 7:20 AM
Key Second Life metrics for December
Total signups increased by 529,224 (4.73%) in December compared to a growth of 605,095 (5.72%) in November. New-user retention to 90 days is still about 10% according to Linden Lab, having apparently remained more or less unchanged over the last 12 mon…
January 18th, 2008 at 7:47 AM
What you really mean is that spending has just about recovered to the levels of ten months ago, but there are more users, so per capita spending is LOWER. Under most definitions, that’s a recession. Caused of couse by not only those non-transparent and sudden policy shifts, but the worsening performance.
What it also shows, is DROPS as new shinies were added, not growth. You know, a year spent ignoring users, including the Open Letter, until Philip’s sudden about face in his end of year statement that LL will concentrate on stability and happy customers rather than shinies, once of course, ou have brought on board this laggy mess called Windlight.
Not checked them yet, but have you reincluded those unique user numbers, and by country. Odd how they were very useful while SL was growing, but the instant they fell in October, were suddenly deemed “unreliable” and scrapped. The reliability is not so important, as trend. There is no reason to assume that any errors are not consistent from month to month, making relative changes valid statistically.
From your own graph, user hours are flattening. But there are other important numbers: churn rate of premiums for example, where you seem to be losing 10-15% of Premiums per month, hidden by new ones coming in. Of course, you are far from transparent with all the numbers, so that we can make proper analyses, but at least the ones you do are a step in the right direction.
What is clear, is that something has panicked Linden Labs into suddenly trying to be customer friendly, giving more info, and that volte face on shinies vs performance. Perhaps it’s dropping user numbers (particularly in Europe, which saw a loss of over a third in most European countries since Key Metrics came out, maybe due to the US centric policy, difficulty in buying/cashing Lindens, lack of language support, VAT and generally unfriendly support for Euro hours when they make up the vast majority of customers), dropping income, or a good competitior just around the corner, or maybe all three?
If you were really transparent, you’d tell us the real reasons for Cory’s leaving, and Philip’s about turn…
January 18th, 2008 at 7:51 AM
So lets see: solid economic growth, but any bank interest over 0% is “Unsustainable” by the definition set by LL? Sorry, that dog don’t hunt.
January 18th, 2008 at 7:54 AM
——————————
’d love to see our registrations, active users, user hours, economic activity and anything else comparable on lots of virtual world and MMORPGs. I’m sure some of the data is out there - and I’d love to see what you can find. Please post links to others data in the comments or send them directly to me (Zee Linden) inworld.
——————————-
Hmmmm.. Followed your request and posted links to blog posts detailing how the “Big 3″ MMOs now routinely host over 1 million concurrent users.
Added links to both Google trends charts and Alexa traffic data showing that interest to “secondlife.com” has declined 50 percent in the past year.
Additionally linked to data showing that the number of ‘active residents’ (yes, I know the correct term is CUSTOMERS) has declined by over 30 percent in the last 6 months.
Result? Comment ‘held for moderation’!!! Guess that telling the truth ‘busts the rules’ :^)
January 18th, 2008 at 7:55 AM
Oh, up until Q1, concurrency followed total users at about 1%, until you had that three month stagnation at around 38K, since then, concurrency has continued to drop (like average number of avatars per sim too for example, Last 60 Day :Logins dropping etc etc). So if it was still tracking that, we’d have 120K concurrency today with 12 million users, instead we have just half of that, yet another drop in numbers, so not worth waving the flags too much…
January 18th, 2008 at 8:00 AM
Looks like sl missed it’s financial growth everything seemed to be rising intil the casino ban comes in place. After that you can only see a modest growth. Like you see they even had to add an arrow to make it look like solid growth.
January 18th, 2008 at 8:41 AM
People complain about Sim Crossing (Yes they are annoying.), Lost Inventory (They ARE actually working on that you know!), and Teleports. Perhaps a slowing of growth IS a good thing in this area as it allowed LL to get up to speed and perhaps even ahead of the growth.
January 18th, 2008 at 9:14 AM
Nice to see SL economy getting back in December to the level it dropped from in March
Lets see if we can keep that level and grow from it in 2008.
January 18th, 2008 at 9:45 AM
After many communications with many businesss owners who are giving up in second life due to the theft of their products they created being sold by theifs who make enough profit they can buy a top classified ad
there many skin creators are no longer creating new additions because they dont want to see their work 2 weeks later in the well known high profile rip off artist stores. Please add some type of SL registration of creations and brand name and unique store/brand name in SL registration. Charge a dollar so creators can register their creation and for those wanting to register a unique brand or store name a couple hundered dollars and this registration means that if anyone else copies/rips or uses the registered in SL name or product then they will be terminated. People cannot afford to pay trade mark in RL fees and many people are not in the USA to do the whole trade mark thing/ copyright thing… Make a SL trademark copyright registration and the fees go to pay the linden lab employee who is in charge of it. The main topic of creators in sl is that they no longer have the desire to create because the theifs openly steal and sell copied products to the point they pay the top classified fees.
Please consider putting up a registration for SL trademark/copyright of product and brand name so that creators once again have the desire to create knowing they can register their creation or brand name with SL inworld registration and if anyone rips them off they have confidence the rip off artist will be shut down
January 18th, 2008 at 10:10 AM
They are doing their best to kill the economy with stupid legality questions though. Casinos, Banks, and soon even a little adult entertainment will be running into alot of trouble. And I can just smell the freaking IRS sticking their fat nose into SL soon..
Damn, LL… Just move the servers to a less anal country like the netherlands or something and remove the restrictions that choke us..
January 18th, 2008 at 10:46 AM
Personally, I’m very encouraged by the current direction SL seems to be going in, the experience seems to be improving again.
I’m very concerned though about the trend in premium accounts, it’s really pretty flat, only about 500 net gain per month for the last 4 months. Having fewer than 100K people in the world who are willing to make an investment in SL is not good.
January 18th, 2008 at 11:19 AM
“I really enjoy the fact that we are such a transparent company”
Too bad you are only transparent either in retrospect or if the transparency suits your purposes. I am sorry, I really do love your idea and the product you created, despite all the lag and errors and continuing issues. But the way you run your company just… sucks. At least for us paying customers.
January 18th, 2008 at 11:19 AM
The second graph is actually quite interesting. The user-hours graph is following a classic resource-saturation “s” curve… early exponential growth followed by an asymptotic approach to the resource limit. The concurrency graph, on the other hand, seems to have had three separate resource saturation events in 2007, smoothly flattening out in March, June, and November, with new resources (additional servers, better software, whatever was required to allow more concurrent users) in April and August.
This implies to me that if it wasn’t for the bottlenecks … the performance issues … concurrency and user hours would likely have increased exponentially throughout 2007, and the top graph would have followed. That implies to me that Linden Labs needs to do something really drastic to deal with lag. I’m talking about actually splitting the grid, and having separate grids each with their own asset servers. I’m talking about having to leave your inventory behind in your home grid, carrying only what you have in your attachments, or pay in money or time to transfer assets from grid to grid. I realize this breaks from the “one world” model, but I’m afraid that model just isn’t scaling up.
January 18th, 2008 at 11:52 AM
I don’t think many are buying the numbers, sorry.
If you want to really be transparent as you say–give us the numbers adjusted to Unique People that are in Second life.
Currency transactions peaked last march and have been flat ever since.
User hours appear to have peaked and flattened, but they have to actually be down because of the ten’s of thousands of Alts floating
in skyboxes–(a lot of them are there 24/7)
Sorry to say it, but I think overall credibility is going south.
January 18th, 2008 at 11:57 AM
Well, after one day of reading the above posts, one this is very clear:
Linden Lab, your customers are not as gullible and stupid as you seem to think they are.
Now three years ago, I’d say yeah, you could get away with this nonsense. But the above posts are for the majority very intelligent, very insightful, and call a brick a brick.
You see, some of us did go to high school. Why, some of use even went to college and *gasp* took statistical analysis courses.
Shocking I know, but the next time you decide to put out a PR chart to make LL look good, please remember that a number of your customers can actually analyze that information and come up with the facts… and they ain’t pretty. LOL
Look, I know you folks want your board to succeed. I know you’re enthusiastic about SL. Want to reallly do some good? Hire a couple of us that aren’t butt-kissers to tell you the real scoop from day to day. Get in a couple of bottom-line, everyday SL users who know what’s what to play the Devil’s advocate. You need some folks like that, someone who doesn’t toe the Linden Lab propaganda line, to help you keep your center and focus on projects that REALLY need to be accomplished.
In order to make SL work, you need to stop thinking like a Linden… and thinking like a user.
January 18th, 2008 at 12:01 PM
ooops… and START thinking like a user. :DDD
My bad. But hey, good points deserve to be made twice.
If your company starts asking itself, “If I were a customer, how would I want SL to operate”… you might actually pull it out of the predictable nosedive.
What nosedive? The one SL is already in (performance is blah) and the steep nosedive it’s going to take the moment your competition opens its doors. Which looks to be happenin