The Dog That Didn’t Bark: The Stable Linden
by prokofy on 23/10/06 at 6:13 pm
By Dow Jonas, Inworld Economy Desk
Argghhh…Here I am, on the Herald yacht for weeks…lazily trailing through the Caspian Sea after my all-expense-paid trip to Baku to discuss the emerging presence of oil companies in Second Life (watch this space!). I left last month thinking the Herald was in the capable hands of Pixeleen; there was absolutely nothing of interest happening on my beat and I could easily afford a well-deserved vacation after a year of indentured servitude to Urizenus involving pay-off of an ahhhh…real estate venture.
Then last night, all of a sudden Dah-DUN-dah-dah-dun-da…my mobile starts playing the first few bars of the Soviet national anthem (the only ringtones on the rental phone at the old Azerbaijan Hotel) and it’s Pix, telling me to wake up and get on a story. Dropping a couple of Alka-Seltzer into a bottle of lukewarm Narzan, I kicked the twins out of bed and struggled for my laptop set to “Dial-up: 1 out of 99 Tries”.
Three glasses of tea from the dollarized room service and a shot of Stoli later…I focused. Yes. Why is the ruble Linden currency stable?
Why has it been stable and holding for weeks and weeks? Even when Linden Lab faced its worst test ever on September 9, 2006, having to reset the entire population’s passwords, the Linden merely dipped faintly and then continued on its steady fall, i.e. increase in value against the U.S. dollar.
I write as L$2 million is parked at the 270 mark; just the other day L$4 million parked at 271, which made me figure it would stay at that level for days, disappeared into the exotic sands of Second Life like Caspian crude into the Azeri shrub-steppe. In fact, with as many as 50,000 sign-ups last week-end, and the million mark of registered accounts now passed, the Linden currency is really hot. Most people don’t bother with the premium accounts anymore, when $9.95 can buy you not the $1200 available in premium accounts now, or $2000 still coming in the older premium accounts, but more like $2850 at today’s rates.
Check out the new Linden economic statistics page to see why the Lindens doesn’t fall further: Supply Linden, the Lindens’ money printing-press who issues virtual money out of thin air, sold L$20,117,994 Linden in September and L$29,939,807 so far in October. OK…that explains why the Linden doesn’t improve in value back to the glory-days of $4.25 US per $1000 that our beloved GOM used to keep it at, but it doesn’t explain why the Linden didn’t crash back to L$300/US$1.00 or L$360 as it was just a few months ago, when not only password problems forced many not to log-on, but chronically poor performance, and then an entire week of grid-crashing left the world barely up and functioning and closed for part of the day every day for a week.
How to explain? First, a major reason IMHO is that this same period since the big 9/6/06 hack and the chronic grid crashing earlier this month occurred right when the Lindens closed the Land Store and slacked off on the production of mainland sims for the auction. This is a good thing, in our view, although LL didn’t do it to stabilize the Linden, since they ardently believe that their land glut is unrelated to the cost of the Linden. Get out a chart chronicling land availability against Linden rates, and I bet we could prove it differently — whenever the Land Store and/or auction closes, the rate improves.
Second, new land sales are up, apparently, judging from this line in the statistics: L$2,120,485 was sunk out of SL to Governor Linden in first-land in September, and L$3,263,176 just this month (there don’t appear to be any other land sales for Governor Linden).
And third, and most importantly, insiders say, the big market-movers are not nervous, are confident of Second Life, and are not putting out their millions to clog up the sales queue and aren’t fleeing for the exits. Why? Because there really are more people coming into the world, even when you scrape away the hype about the mythical “million,” and they really are buying lots more stuff and people really are making more money and therefore don’t mind as much keeping the stash inworld.
Still, the mystery of Second Life, for my money, is how the mere 12,339 online this minute (who represent, say, 74,034 in 24 hours if we posit each log-on is 4 hours) are able to spend $586,635 US in 24 hours. That’s a lot of custom skins, X-cite parts and Skunk Money . That’s like U.S. $7-8 per person per log-in, and that seems inflated, given all the people we see grubbing for pennies sitting in camp chairs. Are they counting stuff twice?
Lindens claim they no longer seek a target trading price, but it happens to be 271 these days for reaons not everyone can understand. At a secret society Prokian public meeting back in August before I sailed for warmer ports than the Sutherland Dam, Lawrence Linden, the LindEx guru, suddenly made an appearance and discussed some trading policies but wouldn’t reveal all of Linden strategies so as to prevent manipulation of the market. He hinted there might be some enhancements coming to the premium accounts to make them more appealing again, but with all the problems of hacking, grid crashing, and now deluges of newbies, the Lindens are probably back-burnering any changes now.
So our recommendation is: sell. Erm. Wait. No, buy. Where did those twins get to???
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