The Second Life economy does not appear to be affected by the slowing economy of the United States.

User to User Transactions.  Total user to user transactions, a measure of the gross domestic product in Second Life, grew from an annualized rate of $261 million in Q4 to just over $300 million in Q1.  The economy has grown 33.6% since the low point after the gambling ban.

User Hours and Concurrency.  Resident user hours also grew 15% from an annualized rate of 304 million hours in Q4 to just under 350 million user hours in Q1.  Residents spent an average of $0.88 per user hour in Q4 and $0.87 per user hour in Q1.  Peak concurrent users grew 13.8% from 58,399 in Q4 to 66,468 in Q1.

Lindex Volume and Money Supply.  Taking advantage of the growth in the economy, the number of inworld businesses with Positive Monthly Linden Flow, a measure of profitability, grew 11% from December to 57,888 in March.  Volume on the LindeX, our virtual currency exchange where users can buy and sell the inworld currency between each other, grew even faster.  LindeX volume of $103.2 million was 17.8% higher than the volume in Q4.  Residents bought and sold just under $0.29 and just under $0.30 worth of Linden Dollars on the LindeX per hour of usage in Q4 and Q1 respectively.  The value of all the Linden Dollars in circulation grew 16.3% over Q4 to $18.2 million in Q1.  The exchange rate remained steady against the USD at approximately L$ 270 to one USD.

Land Mass.  The total number of regions owned by residents increased 11.1% over Q4 to just over 15,000 regions.  That’s the equivalent of of just under 1 billion square meters of space.  Residents spent an average of approximately 2,000 hours per region of space per month in both quarters with a slight uptick in Q1.

Meta Linden has posted the full data for March in a Google Spreadsheet here.

While we hope to provide accurate and useful information, please note that we do not guarantee the accuracy of any information; and we expressly disclaim all warranties and limit liabilities as more fully described in the Terms of Service posted at http://secondlife.com/corporate/tos.php.

[ALL CLEAR 18:08 PST] We thank you for cooperating while we worked on our database.  We have put the tools away and the database is humming again.

[REOPENED 17:32 PST] We have reports of transactions not completing. One of our databases is being checked and we will give an all clear as soon as possible. Until then it is best to refrain from transactions including land and L$ transfers.

[ALL-CLEAR 15:05] The database is happy again and the all-clear has been given. Inworld transactions and purchases can once again commence.

[UPDATE 14:48] Ops is working on the problem, and the database is again improving. Please continue to refrain from making inworld transactions however, until the all-clear is given again.

[REOPENED 14:30] The database is once again experiencing difficulties. Please refrain from inworld purchases and transactions until further notice. We will post progress reports as they become available.

[ALL-CLEAR 13:55] The issue has been addressed and the database is happy again. Inworld transactions and purchases can commence again.
[UPDATE 13:20] The issue has been identified, ops is working on it, and the database is improving. Please continue to refrain from making inworld transactions however, until the all-clear is given.

We are currently experiencing an issue affecting inworld transactions. Please refrain from making any purchases or transfers. We are investigating and will post additional information as it becomes available.

It’s astounding that with so many residents outside of the United States, we still only accept U.S. Dollars as payment. Localizing payment systems and maintaining the highest level of security possible for our residents is no easy task.

Today we’re pleased to announce a new initiative to make the Linden Dollar more accessible! Through our Risk API program, we have already established relationships with some of the biggest 3rd party Linden Dollar exchanges to keep transactions secure and protect our residents. We are pleased that these Linden Dollar resellers have chosen to work with us and we are now making their services even more accessible to our residents.

A new article on our public wiki page lists the payment options they offer by country, currency, and payment method. The wide range of payment systems these sites offer for Linden Dollars is now also directly available through www.secondlife.com via a link on our currency page to that wiki article.

To keep the information up-to-date, we’ve created two surveys. For those Linden dollar sellers that do not use our Risk API, we’d like to know what payment methods and currencies you accept and whether you’d be interested in using our Risk API. You can fill out a survey to tell us here. For our residents outside of the U.S., we’d like to know what currencies and payment methods you would like to see available to purchase Linden Dollars. A survey for Linden Dollar buyers is here.

By making it easier for our residents outside of the U.S. to attain Linden Dollars, we hope to make Second Life and all of the wonderful creations of our residents more accessible to everyone!

Hi Everyone!

I have published our monthly key metrics in excel, open document, and google doc formats. Links to these current versions are updated on our Economy page.

Concurrency, usage hours, and total resident-owned land continue to grow at a steady pace, while our count of Premium users dropped slightly again in January as we work on designing a better Premium offering.

You can come and discuss these or any other metrics analysis questions with me at my office hours in Beaumont, now on Thursday mornings at 8 AM (better for European customers) and Fridays at 10 AM.

I’ll put a reminder here to please keep comments on-topic and civil - we are open to constructive feedback but please keep it specific and on-topic, thanks.

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.

Please read this if you operate, or have transferred L$ to, an in-world “bank” or financial company.

As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.

Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized.

Usually, we don’t step in the middle of Resident-to-Resident conduct – letting Residents decide how to act, live, or play in Second Life.

But these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse – leaving upset “depositors” with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy. At least as important, the legal and regulatory framework of these non-chartered, unregistered banks is unclear, i.e., what their duties are when they offer “interest” or “investments.”

There is no workable alternative. The so-called banks are not operated, overseen or insured by Linden Lab, nor can we predict which will fail or when. And Linden Lab isn’t, and can’t start acting as, a banking regulator.

Some may argue that Residents who deposit L$ with these “banks” must know they’re assuming a big risk – the high interest rates promised aren’t guaranteed, and the banks aren’t overseen by Linden Lab or anyone else. That may be true. But for all of the other reasons we’ve set out above, we can’t let this activity continue.

Thus, as we did in the past with gambling, as of January 22, 2008 we will begin removing any virtual ATMs or other objects that facilitate the operation or facilitation of in-world “banking,” i.e., the offering of interest or a rate of return on L$ invested or deposited. We ask that between now and then, those who operate these “banks” settle up on any promises they have made to other Residents and, of course, honor valid withdrawals. After that date, we may sanction those who continue to offer these services with suspension, termination of accounts, and loss of land.

We will not apply this policy to companies who submit a registration statement, charter, or other applicable license from a governing regulatory authority, or who are merely conducting marketing or education, but not accepting payments.

You may report a violation of this policy through the Help/Report Abuse feature in your Second Life viewer, and follow the instructions given.

Answers to FAQs are located here: http://secondlife.com/community/support.php?questionID=4899

Apologies for the delays in getting these out, folks, we’ve been busy behind the scenes trying to focus on some service improvements, stability, and instrumenting the system to deliver us more internal metrics - such as Teleport problems. I expect to more consistently release these within the second week of each month, to correspond with the week that I’ll be holding office hours. (Note: I have changed my office hours from weekly to monthly to better focus on delivery and service stability)

So, here’s the facts: October is now available in Excel, OpenDocument, and Google doc formats, though you’re likely going to bypass those altogether and look at November stats in Excel, OpenDocument, and Google doc formats since all of the October figures are included in November- excepting the breakouts of active users by country and age brackets, and the breakdown of Logged In users by Gender, which are always specific to the month published. Please check our Metrics Glossary for an understandable set of definitions of the figures we publish in these documents.

Key takeaways: In November, we had another slight reduction in overall Logged In User Hours (our first drop was back in August) that is related to the Unplanned service outages. Overall economic metrics continue to trend slowly upward, including the Lindex exchange figures and resident-to-resident transactions. Premium accounts continue to slowly tick upwards.

Change: Due to data quality concerns under the “Unique” population figures published historically, we are discontinuing publishing this figure. It had several challenges, regarding retroactive cancellation of accounts and the algorithm used for determining uniqueness.

Thanks everyone, and see you early in January for the 2007 Economic wrapup, where I’ll look to format these in an additional simple single-page with the top 10 key figures by month.

[update: Included link for Metrics Glossary page and Changed link to October google doc to one that includes the October Active Users by Age Bracket - the previously published set included "data through" on that tab for November - previous dataset visible here]

Hello everyone! I have posted the Economic Key Metrics through September 2007 on our Economy site, in the standard Excel, OpenDocument, and Google Docs formats. Definitions for these metrics are available in the wiki Metrics Glossary page.

Top highlights include: a slight increase in Premium accounts for September, and continued gradual growth along other metrics as we continue our focus on increasing Stability and Availability of the system. As Hamilton noted, the Service Availability chart has been updated through September, where we had great success in decreasing Unplanned Outages.

Please join me on Friday mornings 10 AM at my Office Hours in Beaumont to discuss these metrics and to triage any other requests for the public JIRA category for Metrics.
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Over the past 4 years, there have been many thousands of news articles and analyst reports about Second Life. Some of these have included incomplete facts, questionable assumptions, or odd comparisons, but we at Linden Lab do our best to take all of it in good humor. We live in a fast-paced world of constant information and change, and we know that even the best-intentioned people can put out results before understanding the facts. Hey, we should know - some might say that we ourselves put out product that isn’t always fully baked.

However, sometimes misinformation takes on a life of its own - especially when the source is a normally reputable institution. We respect Yankee Group as an analyst firm in good standing in its field. But their press
release this week cited a figure that we just can’t figure out: they claim that the average time spent per user of Second Life is just 12 minutes per month.

Just this past August, users of Second Life spent over 23 million hours in Second Life. During that month, there were just over 974,000 user logins to Second Life - that’s an average of 23.6 hours per user!

But hey, maybe Yankee Group was looking at a different user number. Were they counting the unique user registrations? That would be 6.2 million users - but that’s an average of 3.7 hours per user. Maybe they were
counting cumulative total registered accounts through August, 9.3 million users. Uh, but even that is still an average of 2.5 hours.

So, just what is that 12 minutes per month number?? As near as we can tell, that might be the average time that users spent logged in on the Second Life website in a month. Or . . . could it be . . . the 6.2 million unique user registrations divided by 23 million hours is close to 12 minutes . . . but that makes no sense - is it possible that anyone would have done the division backwards??

Many European Residents have asked for clarification about VAT (Value Added Tax) in Second Life and how it impacts them. While each case may be different, I’ve tried to answer the questions in the Knowledge Base and to make it easier, I’ve also attached the VAT FAQ here.

The questions fall into a few categories, which I will try to address in this post. I’ll also be available in-world at a Town Hall meeting on Monday October 8 at 11:00AM PDT at The Pooley Stage to answer additional questions as well. Please come prepared with voice enabled so you can hear, as I’ll be answering by voice and chat questions by voice to be more efficient with the time.

First there’s been some debate as to whether or not we have to charge VAT and why.

The best place to get full details about European legislation is at Europa, “the portal site of the European Union”. It provides up-to-date coverage of European Union affairs and all legislation currently in force or under discussion.

The relevant section on that site is called “VAT: Special Arrangements Applicable to Services Supplied Electronically”. The Directives were implemented to create a level playing field for European Union (EU) businesses with regard to the indirect taxation of electronic commerce. Essentially, prior to this Directive non-EU-based companies providing electronic services to EU customers had an advantage in that they were not required to charge those customers VAT:

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