With the world economy shrinking by 4% over last year, Second Life bucked the trend with a 94% increase over the previous year. The economic stats, published just in time for SLCC, give a shot in the arm to an overall impression that Linden Lab continues to trend in the right direction.
A few highlights:
- USD 144 million dollars in total user-to-user transactions, an increase of 94% from the same quarter last year
- Voice minutes totaled 3.2 billion minutes, up 48% from the same quarter last year
- LindeX and Xstreet hit new all time highs
- Resident-owned land in Second Life increased 11% from last year
Now, a few things about all these stats. First, I think it’s great that user-to-user transactions keep trending up. But on their own, those numbers don’t actually mean that much because it obscures actual value created.
I can give you a buck, and you can give me a buck back, and we can do that 94% more times than last year, but it doesn’t mean that anything really changed other than the buck got a little more worn around the edges.
So it’s encouraging to see that the increase in transactions is matched by an increase in sales on XStreet, which was recently purchased by the Lab and integrated into the platform. What may be a little misleading, however, is that the increase may be attributable to this very integration. The advantage of having XStreet on the log-in page was surely bound to give transactions there a bump.
It IS, however, interesting to finally see numbers coming out of XStreet. You can extrapolate that before its buy-out by the Lab, the V-commerce site was doing in the $1M USD range, which would have represented a $40,000 annual profit for the previous owners on transactions, (they also made money on classifieds and banners and exchange, of course).
So that leaves us with land which also increased. The post notes, however, that this was largely driven by an increase in Homesteads:
“In Q2 2009 Resident-owned land increased to reach a total of 1.743 billion square meters. This is 7% growth over Q1 2009 and 11% growth over the same quarter one year ago.
The increase was driven primarily by the addition of new Homesteads in the month of June, which added approximately 98 million square meters to the world. Many Residents purchased new Homesteads to take advantage of the $95/month pricing, which ended on July 1, 2009.”
While the stats suggest that the number of transactions is growing, I’m not entirely convinced that SL has had its best season. The impact of the policy change excluding bots makes the user hours and concurrency numbers hard to parse and it will be some time before we’ll be convinced that a) the bots are actually gone and that b) we’re actually seeing NEW users coming in-world, staying, and spending money.
Finally, I can’t help wondering that with the Lab’s revenue model based primarily on land (or server rental for the rest of you) whether an 11% growth in land sales based on sales of Homesteads is a good thing or a bad thing. Basically, they increased their revenue from land sales based on a cheaper type of land (although not as cheap in the long run as the open space simulators).
We’ll see where the trends take us in the Fall. It would be nice to get a few quarters of statistics where we’re not still ‘clearing out’ the impact of policy changes like bots, open space, or who knows what else.
I think the Homestead fiasco was definitely far more a detriment than a benefit; setting folks up to get comfy with a full region, then pulling the rug out from under them… only to offer them back that rug at an increased price.
I sincerely doubt the grandfathered price is going to carry through past a year, even though LL’s had a history of grandfathering full regions in to updated programs (like upgrading class 3s to 4s, 4s to 5s). So unless things have changed significantly by then, I think we can probably see a lot of unhappy and homeless folks by July of ‘10.
The bots aren’t gone, they’ve just morphed a bit. Now you will find aimlessly wandering herds of bots moving through an otherwise vacant sim instead of bot farms at 3000m.
I agree with Aki that there is more Homestead drama coming as the 1 yr anniversary of the debacle comes around.
And LL has wonderful figures to boast about an economy as long as you don’t parse out the zero and 1L transactions, the Zyngo transactions, and the transactions by people pretending to be “day-traders” trying to turn a profit by moving L$’s between alt accounts and different L$ providers.
Remember the old adage; if it looks too good to be true, it probably is.
I look at the stats released by SL and shake my head in wonder… in my own personal experience, my two-year-old store has just had its worst quarter ever, after almost two years of small, steady, almost predictable growth.
I can’t help but wonder what exactly these transactions really indicate since I’ll bet a good percentage are main-account-to-alt-account transactions and don’t really mean anything except money is moving, but not really changing hands.
Bots are NOT gone, as I personally see a herd of them every time I go to pay my tier for my store… as long as ’some’ are allowed, no matter what good their purpose is supposed to be, then they will never be gotten rid of. I personally think we should ban model bots, and give those jobs to real avi’s… that how economy works, isn’t it? This ‘all for me” attitude is ruining SL.
well read my manifesto to T, which he answered with a total lame nothing:
http://secondthoughts.typepad.com/second_thoughts/2009/08/my-manifesto-for-t-linden.html
https://blogs.secondlife.com/message/7818#7818
Each time I open the front page now and see that “94 percent growth!” I feel like I’m looking at the breathless agitprop of some Eurasian dictatorship fluffing their stats for the visiting IMF delegation. It’s ridiculous.
Bots are not gone.
Ad farms extortion are not gone
Homestead sales are empty calories because they are a temp boost due to $95 grandfathering that glutted the rentals market and we are starting to see them sold or abandoned now
You forgot the empty calories of the $50,000 1024 m2 Nautilus sales.
The decline in Positive Monthly Linden Flow businesses isn’t even touched, and should have been; those numbers are squirrely due to their failure to subtract tier.
And so on.
There are just so many questions, and so real hard answers, that I don’t know what to think anymore.
I will tell you one thing: the Lindens retired “Economic Statistics” as a feature of their product, as a dedicated hyperlink on the front page and other page side bars with a text explanation and further links to Excel documents.
It’s gone; it’s not just a temporary lack of reporting, the *entire section* is deleted and gone as a link from the front page.
So that tells me a basic truth that we will watch unfold in the coming year: as the deletion of the product feature “Economic Statistics” goes, so *the economy itself*.
The Lindens will end by removing the economy from their product feature.
They may disguise that by the fact that people have the ability still to buy carnival tickets in batches and perhaps even sell their unused tickets back to the system for other carnival goers, and carnies will be able to cash out their carnival tickets.
But…it will not be a complex and robust economy like a normal country and will never become…a real boy.
Prok – I guess my overall opinion is that the economic stats are interesting leading indicators, but come with so many footnotes and require so much interpretation as to be fairly meaningless as actual measures of the SL economy. Even if they WERE more transparent, they also miss the ‘gray economy’- all of the transactions that happen outside the Lab’s purview. B2B, Paypal, whatever.
I would love it if we could have a few quarters where we didn’t need to discount (or account for) some kind of policy change – this quarter, we need to consider Homesteads and bots, next quarter something else – would be nice if there were a few quarters where conditions were generally the same and we could just look at ‘clean data’.
Why doesn’t the Lab get an economist or something on staff? They’re hiring like mad, and they’ll never publish stats on how well the Lab itself is doing until they go public or whatever…so why not treat the economy like a real economy, and have um Castranova or someone lol come in and put out real reports as if he were the Fed.
So, yeah – no detailed economic stats posted anymore, and all these other sites putting out press releases about how large the virtual goods industry is, yet with SL we get these obscure hard to parse numbers which reflect only one slice of the overall economy in any case.
[...] regarding the 2nd Life economy: Second Life Economy “Grows” 94% Over Previous Year Dusan Writer’s Metaverse Second Life Economy “Grows” 94% Over Previous Year Its a good read. Also questions the validity of statistics. __________________ … It is [...]
You’re so right, Dusan (and yes, Prok’s right too!). Unlike many others, I cannot say that the in-world economy “has hit my store hard”. The competition is overwhelmingly fierce, but every time I do a bit more publicising of my items, they sell like they always did… so I know that any eventual lack of sales is only my own fault, not of “the economy”.
Nevertheless, the questions about transparency and what the numbers actually mean are quite pertinent. I also miss the huge amount of monthly statistics that we got, in almost-raw-format — to be replaced by a quarterly report which is interesting but always too full of “marketing” for my simple tastes.