While new user growth may be stalled, while retention rates may be dropping or flat, and while the ‘golden age’ of Nike and CSI and BMW may be over for Second Life - it still ranks as the third fastest growing Web-based site according to tracking powerhouse Nielson, at least in the UK, behind only youTube and Facebook in total user minutes.
Data from the Lab shows a similar trend. As Hamlet Au reported over on New World Notes that:
“Most concerning for the Lindens, the total number of Premium accounts (Residents who pay a recurring subscription of $6-9.95 a month, depending on plan) has been steadily dropping since January, slipping over 3500. That means less revenue from subscriptions and virtual land ownership (since you need a Premium account to own land.)”
And yet, he also finds that there are more ‘high rollers’ on the Grid, looking at economic stats that suggest that:
Despite the user plateau, nearly 80,000 Residents more are now engaged in economic transactions– and not just petty cash, because the L$10-50K spending cohort is among the largest to grow. In other words, of that 80,000 who joined the cash economy, 17,000+ spent some $37 to $187 worth of Linden Dollars last May.
And that “those who are already in-world are in there longer. Why vanishingly less are willing to stay with them there (nearly 1.5 million new accounts were created since January) remains the key mystery.”
Now Nielson, the folks who bring us the TV ratings among other measurements, concludes that Second Life is an up-and-comer:
““Whilst the social media wave continues to have the biggest impact on Internet behaviour levels, it’s important not to forget that some of online’s more traditional sectors continue to perform well. The representation of sectors such as games, search and retail - through sites such as Second Life, Google and Asda respectively – show the health and vitality of the entire online arena.” ”
There is, of course, a mystery in all this. One of the theories is that bots are chewing through the Grid, racking up 24-hour “user sessions” as they camp for those dribs and drabs of Lindens while in-world retailers struggle to keep their stores afloat. But another theory might just be that our picture of a user has changed. The beach house, socializing user of yesterday might very well have been supplanted by teachers and students, businesses and trainers - who knows, maybe the hidden economy is all off on those closed islands, with IBM happily playing behind its firewall or Cisco or whoever holding business meetings over on some corporate sim somewhere.
I’ve also long proposed that in a virtual economy where nothing decays and where there are no sinks (at least in WoW there are NPCs to buy up your grinding junk in order to maintain some scarcity) that at some point, the value of objects will drop off a cliff - why buy a house when they’re free, or next to free? In a land of plenty, where does scarcity come from? The object economy is a pyramid scheme - it only keeps chugging along if the objects keep getting bigger and better, or if the user growth keeps climbing exponentially.
So that leaves the high rollers - and whose to say that schools or businesses don’t WANT freebies - they want the best, they’re Cisco or Cigna afterall. So they’ll drop some change on some Scope Cleaver couches and hair from Armidi or wherever.
Perhaps the real economy has shifted, as Philip famously predicted, to a service economy - one built on helping folks solve problems, not on furnishing their beach houses. Meanwhile, the brands, which struggle to make SENSE of Facebook - how do you make money on random pokes, afterall, continues to struggle with Second Life as well - how do brands, which prefer to communicate in 30-second snippets and maybe a viral thing here or there, make money in environments where the users are deeply engaged? Throw up a billboard on GTA maybe, throw some free skins around in Second Life (see Evian), but struggle to crack the question of how a 30 second brand makes an impression in a 296 million minute world.
“the value of objects will drop off a cliff - why buy a house when they’re free”
Uhm, what did i miss? Houses used to be amongst the cheapest items in SL, at least when i first logged in, and now they’re amongst the most expensive. A good prefab will now set you back $1000’s when it used to be $100’s at most. I do take your point about object-saturation devaluing things but there’s an interesting flip-side to it too - it devalues them to their owners too…
The increasing quality and sophistication of (many) objects available in SL keeps things churning as people upgrade their beach-house or its contents. New features added to SL make this more likely too - look at how sculpts have changed things (shame they take a fortnight to load, but hey) or how Glow re-invents certain objects. These new techniques make yesterdays freebies look very tired and dated and everyone wants to update and upgrade.
It’s a tough time for SL designers and builders I know, but it isn’t all over just yet…
Sorry, Eris, I didn’t mean to imply that the object economy was dead, merely that it’s being elevated to a higher plane. Because you’re right - houses have gone up in price because what was acceptable a few years ago isn’t now - now, it needs to be rendered, have built in security systems, ability to change the textures and lighting schemes, have windows that don’t just tint they have blinds that swing closed, or are rendered external to SL in 3DS Max and stuff like that.
So picking up on Hamlet’s post over on NWN, while the growth of new residents is flat, he points out that the number of “big spenders” is growing. I’m proposing that the market for ‘lower end’ goods dries up - again, my jeans point. How many jeans can there possibly be? BUT, how many jeans with sculpted legs? And they cost more. So you get the lower end huge market evaporating and people spending more money on fewer items - again, the “level” at which content developers operate keeps increasing, it’s no longer enough to texture clothes you also have to sculpt the hoods, and not only that but build a service-business with a well-branded retail experience, group management, community events, promotion etc.
My take on the situation is it’s positive not negative - so long as the “level” at which content is developed and sold keeps increasing, SL will continue to have a sustainable economy (although land pricing is a whole other line of thought). Sites like IMVU and other ‘object-based economies’ where the tools aren’t as robust, will suffer in the long-term unless they too build, well, economies of tools rather than economies of scale.
Cool, we agree again then! I should apologise for misreading your original post…
This growing ‘divide’ between high-end content from experienced users and the older or freebie content is inevitable, a similar thing happened with the web in its early years. Altho’ it makes SL all the more interesting and we should celebrate the better content, it’s slightly sad too. So many users will find they’re unable to compete with the quality levels needed to have a successful business and will fall by the wayside - at least as builders, hopefully they’ll remain as residents. Natural wastage some might say but it makes SL seem that little bit less accessible to would-be creators, the hill you have to climb gets that bit steeper.
As for the increased hours we’re spending in-world - surely most of that’s a bot phenomenon? When there are people running bots just so they can auto-add people to groups isn’t there something wrong with the system and our use of its resources?
We really need to track down Nielson and find out how they gather their stats, I’d say. I’ll, um, add it to my list I guess.
Copyleftists and leftists in general deeply wish for the object economy to be dead because they think the neo-communist model that will obtain in cyberspace will supplant discrete objects sold one at a time with intellectual property rights with a freebie culture where everyone will work on the collective farm for free, share in a “join work product”, and live off stone soup. That little old lady who grows the turnips is going to be worked to the bone, of course…
“The beach house, socializing user of yesterday might very well have been supplanted by teachers and students, businesses and trainers - who knows, maybe the hidden economy is all off on those closed islands, with IBM happily playing behind its firewall or Cisco or whoever holding business meetings over on some corporate sim somewhere.”
Yet another cherished geek goal — to get rid of those beach house socializers with their tacky mass culture and tawdry cyber-sexing and replace them with sophisticated urbanites having art gallery opens in faux distressed urban settings.
Except…those teachers and students do not do a lot of consumer buying. They are themselves horribly devoted to the freetard culture and encourage everybody to make and distribute for free — they don’t tend to buy a $3500 mansion, even if they might buy a $1500 skin — but they try to get the free skins.
Businesses and trainers? I don’t see them as massive upholders of the economy, either. Why do I think that? Because when I fly around my rentals or go shopping which I do constantly, I see people with group tags that show they belong to other rentals, clubs, newbie groups, activities groups and not business groups. The business people don’t leave their islands — to be part of the economy, they’d have to leave their islands.
Oh, they might hire an interior decorator and she might buy a plant — woot! — but that’s hardly an infusion into the economy.
I think that in fact bots *do* in part account for this big 30,000-80,000 surge, as bot use has been increasingly substantially precisely because of the economic downturn, as businesses seek frantically to increase traffic on a few high-traffic venues or increase camping because they need to pay for eyeballs to come see their vendors’ offerings and maybe buy out of them.
I don’t think bots account for ALL the surge in spending, however, and here is what is going on. Americans and British and other English-language speakers think the world ends when their old world decreases, but they forget that those speaking French, German, Russian, Japanese, Portugese are coming *too*. You can’t read their blogs (actually, I get a kick out of reading their blogs sometimes when I see them linking to me, and I find it hilarious to read stuff like this that is incomprehensible except for one word:
Prokofy hagendazz mit kerflaken ham su permabannen.
LOL
I see blogs in Taiwanese, Hebrew, and Tagalog mentioning only two decipherable words “Prokofy” and “FIC” lol.
These French and German and Japanese and Russian are coming in and starting businesses and sometimes very sophisticated products that they sell to their fellow countrymen. They are venturing out and starting to buy farther afield as well, so even without especially advertising for “foreigners” (although I try to put in key words at least) I get them. They can’t understand a word I’m saying, we use translators sometimes, but they do understand how to right click and pay an object.
The EU members think that because of VAT, and because of all the whiney little issues fanned by Vint Falken, that SL is dead. But it isn’t dead for someone brand-new from France or Germany or Russia or Japan who doesn’t care about their effete culture and is essentially not THAT different from the mass culture of the beach housers and socializers. People are people.
They may have succeeded in retaining precisely because a lot of the Orientation Island stuff contained English only or Western-style cultural memes that were simply opaque to them so they skipped right over them lol.
Eris, your tears for oldbie freebie content leave me COMPLETELY AND UTTERLY unmoved, and here’s why:
You feted oldbies made crappy content, and then glutted the market with it horribly, making it free and copyable, but not transferable and sellable, and often not modifiable.
They didn’t REALLY want to help the economy by helping innovation by leaving things on “mod” — they merely wanted to show off their fake altruism and have other people tier their freebies displays to drive them to their stores where they sold whoppingly expensive stuff. They didn’t REALLY want to help newbies by enabling them to transfer and sell their items, often by modifying them — which would REALLY be altruistic. The newbies would hardly sell them for much, and it would help both spread of the loss-leaders and help to newbies to enter the economy, instead of having to enter a harsh apprenticing system controlled by oldbies ruthlessly.
So what happened due to this awful oldbie freetard culture is that innovation was stifled, and newbie-to-newbie economic relations were not encouraged. A newbie who could pick up an ugly Siggy Romulus beachhouse never had any motivation to try to sweat out making his own and selling it.
It took breaking the forums, where these people ruled, and making a larger world with lots more people outside the US, finally to get the newbie-to-newbie economy functioning again, largely thanks to Brazilians, Japanese, Spanish, Dutch, Russian, etc. who made cheaper furniture and houses.
I knew SL was finally turning a corner more than a year ago when I saw my first German 512 m2 prefab, with a creative design and nice textures.
The people who wanted to “help” newbies by showering them with freebies as if they were toddlers and not adults with disposable income with DSL lines just like themselvse helped cripple the economy.
The fact of the matter is, the oldbie craftsmen still go on making expensive stuff and freebies which they still use all their FIC institutions to get newbies hooked up — showing up in the Library even with skins; being in Showcase; getting on the website; being featured in Torley tutorials, etc. etc.
>Perhaps the real economy has shifted, as Philip famously predicted, to a service economy - one built on helping folks solve problems, not on furnishing their beach houses.
In one very large sense, you can’t make money on the Internet because it’s basically just a big telephone you use to call the warehouse and send the same trucks over the same roads with the same stuff you could get if you went to the store in person.
There is a certain amount of artificial demand you can create for people to buy $1 hats on Facebook or even $100 US beach houses on or $1500 islands on Second Life, but it isn’t going to be wildly massified because most people pretty much have to earn and buy money in real life pretty much tethered to their real-life needs.
An entire film arose over the structure of this giant telephone called the Internet that provides all kinds of technical services, consulting, software, scripts, etc. but a lot of the jobs are being shipped to India and China and while it’s all good, and represents a successful sector, it isn’t enough to entirely replace old features of economies like making steel or plastic or lumber.
Philip fails to realize, evidently, like you, that the basic problem most people want to solve is having a meaningful relationship with another human being who listens to them and has sex with them. And Second Life has solved that problem wondrously for many hundreds of thousands of people.
But…real life continued to solve it better, or at least, Facebook continued to solve it better.
Yes, there are 10 million people playing World of Warcraft, but I think that most people aren’t adolescent boys who want to play war. So there’s a limit to this sector and the “problems it can solve”.
I realize the business types are struggling manfully to portray this as a platform where there can be training and meetings. Unfortunately, it runs the high risk of exposing how fatuous and meaningless and wasteful the whole trainings sector thing itself is in business unless it’s spliced very carefully.
I think for most business people from real life in SL, if you asked them what they really got out of SL, if it isn’t a close personal relationship, or a sense of accomplishment from building, or a topic about which they can self-express on a blog, they haven’t gotten anything out of it and it doesn’t interest them and they wander away, even if they mouth platitudes about “training”.
Second Life is a telephone — a party line, for most people who can’t afford the level of privacy and sophistication it can offer some.
Prok - I’m not an economist, I leave that to Castranova along with his tireless attempts to preserve the magic circle. But I DO follow his line of reasoning that in a world with no scarcity that it’s a bit of a pyramid scheme when it comes to an object economy. 10 people come, they make jeans, they need 20 people to come along and buy them, those 20 need 40 to buy the t-shirts they make, and so on. There are no sinks - the only sinks are canceled accounts and my inventory. Some day I’ll hold a 1L sale for items called “Object” and bring down the markets entirely.
Time, attention, users and MAYBE server space are scarce, so they’re the things that leave platform owners with some levers with which to control the world.
Thus my disagreement with Linden’s sudden change of sim pricing, and my railing along with the Rezzables that they don’t do enough to attract new users and haven’t been aggressive enough in improving the orientation experience. In a world of abundance, the battle is for new users, their time, and their investment in the one scarce resource left - server space. Oh, sorry - the other scarce resource right now is code - sure, there’s other worlds, but there’s a scarcity of code that allows you to launch a user-generated world that comes anywhere NEAR to Second Life. It’s why the concept of taking the server code open source is moronic. SURE, let folks teleport to OpenSim and back - if they’re going to leave anyways, you might want to preserve the ability to keep a lifeline to their wallets - there’s no commerce on OpenSim, at least let them come back and spend some money - again, the scarcity is time, and if you can’t have all of it, desperately try to hang on to a few minutes of it anyways.
So that leaves us with new users. Sure, Linden can pull in new markets - but if only 1 in 20 stays past the first hour, well, sure, I guess there are a lot of countries out there, maybe broadband will catch up with the Filipines, but it would be a lot easier if they’d get 2 in 10 to stay instead.
So, I’m not ADVOCATING for a freebie culture. I posted here quite a while ago that one of the economic metrics that isn’t tracked but should be is the gift economy - the freebies, swaps, handouts and crafts. Don’t ask me HOW to measure it, maybe Typewriter can go stand on a sim somewhere with a clipboard and watch, or harangue people at the local mall to complete a “short simple questionnaire” and then upload his data to Castranova’s brain or whatever they do.
Frankly, if Xcite! would publish its sales data, I think we’d learn everything we need to about the direction of SL. As Xcite falls or rises, so does the Grid.
And some time ago, I think back in the days of my poor understanding of the term ‘thumb-sucking’, I tried to clarify that yeah, sure, I’m an elitist northern liberal or whatever, but that I realize that the reason Second Life exists, the reason it will persist, is because of the beach house, not whatever’s happening over on the Princeton sims. It’s a Story Box - well, it’s what I call it anyways. As I said:
“There’s room for the quiet steady pace of Caledon and its genteel citizens, and there’s room for the dark urban shadows of Midian City or the City of Lost Angels. The communities of shop keepers, the people saving up from camping to rent their first little plot of land…all of these are important stories. Because when we gather round to talk to each other, first we need to sort out what happened in the day, and that’s what people are doing….imagining variations of their real lives, or ones that they’d like to have…talking and chatting, mingling and copulating, driving the car they’ll never be able to afford otherwise or getting a makeover that catapults them to movie star good looks.”
This doesn’t negate the fact, however, that when we gnash our teeth over the new user data, or time in world, or slippage in the economy that there are a few realities at play:
1) As the number of objects has grown, deflation occurs, and objects that once may have cost money can now often be got for free.
2) As a result, as Eris points out, the way to win in this economy is to create ever-better objects, which often means creating stuff AROUND the objects. Which is good, because it means better stores instead of sloppy prims, and it means communities and group management tools etc.
3) There MAY be a shift to more user time in world because there are now a few other user ‘types’ - namely business collaboration, schools, etc. I’d propose that these groups don’t do anything for the SL economy - they help sell server space, but even for that I think Linden’s headed in the wrong direction, because for the schools they need cheap, they need lower computer specs, and they need secure. For businesses, it’s fine for a few willing early adopters, but the SL “brand” is too fraught with peril for the majority.
I point out these realities not because I agree with them, simply to point out that there are a few things that change over time, and how we measure ‘traffic’ or ‘growth’ should take into account some of these countervailing trends.
So what we have is Second Life as one of the top three growing sites by sheer volume of hours. youTube and Facebook are based on user-generated content but it’s FREE content, made for free and given away for free. Now, youTube was just forced to download the IP addresses of all those folks who viewed illegal youTube videos to the government - THAT’S what I call copy protection. But really - have either Facebook or youTube made any MONEY yet?
The only people making money amongst these top three sites are the Lindens, selling server space that they threaten to open source, and the content creators whose creations are not aggressively protected. And sure, a land owner or two - but I call them content creators as well, because they really take a blank slate and create an environment that people are willing to pay money to live on.
If your analogy is right, then what the Lab is planning is to give away free long distance to anyone who wants it so that they can then proclaim that IBM is using their phones, and will then wonder why they’re not making money and IBM is chuckling as it packages up fire-walled sims with integrated Lotus notes apps or whatever.
But at least the phone sex lines will probably keep turning a profit. As Xcite! rises, so rises SL.
Prok - I’m shedding NO TEARS for “oldbie freebie content”, good riddance to it, it’s ugly and inept - altho admittedly I learned a lot from pulling it apart.. I was making the point that new (potentially creative) users seeing the increasing quality of content available within SL may be discouraged before they start - it was a passing thought about SL’s inability to get past its current plateau.
You might think my content equally ugly and inept but my ambition is to improve and certainly not to be one of the ‘oldbies’ - how very dare you!
I may have agreed with some other things you said (i usually do) but i don’t have time to read all that - never a word when 100 will do, eh Prok?
you all have some interesting conversation going…not sure I can add too much other than a few (perhaps) relevant details:
– Nielsen data seems to match the online hours reported by LL, so looks like the IP traffic from UK to SL. So mystery still is it bots/campers or new users? When/if LL kills popular places I guess we all find out fast enough.
– Not sure I buy increase in revenue coming from inside firewall–unless dem corporate dude charge each other lindos to attend meetings or they hire escorts to support them (not a bad idea actually)
– We are seeing increase in per user/daily transaction value actually. We think this is due to increase sophistication of buyers and that our stuff is better than average. However, our cost to produce this stuff and promote it is also a lot higher yielding lower per unit profit. Basically working harder for less…
– If LL would categorize some of their transaction data we might have a better shot at understanding economic drivers. If I have more energy I would track the the mid band transactions and see if that is growing as fast as the low end stuff.
– Objects have long-ish shelf-life, but at same time the more sophisticated buyers demand constant flow of new stuff (some makers try to do light reworking on their merch but people too sharp now). Word I hear is that only way to get customers in is with a new thing–even though this drives sales of existing merch. So there is some concept of momentum that sustains existing inventory value.