Is Second Life’s Economy Tanking?

by Pixeleen Mistral on 11/07/07 at 8:22 pm

Linden Lab’s numbers suggest we are in for a really bad recession. Like 3rd world bad.

by Curious Rousselot, Voodoo Economist

G1_2Linden Lab released the updated economic statistics for Second Life and it is time again for some fairly unbalanced analysis and speculation. Our friend Eric Reuters has provided a short summary also. Now, for some Herald-style analysis.

In our last article we performed a little magic with mathematics to estimate the number of active accounts in Second Life. Since then, Meta Linden has been kind enough to start providing number of active accounts. How exactly they determine what an “active” account is wasn’t explained but rumor has it that an active account has spend at least 1 hour a month in second life.

Meta’s number for active accounts is just under 495,000 accounts in June and around 508,000 accounts for May. Prior to that we have to rely on our earlier magic calculations, which give us a steady increase to around 409,000 for April. Does this June downturn (the first one ever) indicate we have hit the high-mark for Second Life or is this just summer doldrums? Only time will tell.

There are some other disturbing indicators, like the percentage of premium accounts as compared to the number of active accounts (see chart above).

After the inception of free accounts in 2005, the relative number of premium accounts hovered pretty consistently around the 25% mark. Until we hit March 2007. At that time Linden Lab stopped the New Land program and we see since then a drop in premiums to below 20%. Is this an indicator that premium accounts aren’t as worthwhile as they used to be or just summer doldrums? We may have to wait until fall to find out.

If this down-turn in percentage of premiums continues, what is it going to mean to Second Life? When the percentage of premiums falls, it means the land owners must each own more land. After all, you can’t own land without a premium. Land barons might be happy. But they can only be happy if they have more renters. Since we are seeing a reduction in the number of active residents, our friendly land barons may be in trouble too. No rent means no income. And that might lead to an actual drop in the cost of land for those of us that just want a small piece to call our own. We haven’t seen a significant cut in the cost of land recently. Lost of ugly spinning for sale signs but none of the land barons are abandoning their holdings yet. On the other hand, the Lindens are poised to flood the mainland land market with a new continent worth of virtual real estate.

G2_2Some other economic indicators don’t bode well for the health of the economy. Our economy is not closed. Linden Lab adds new Linden dollars regularly – and the L$s they sell on the Lindex are a source of revenue for the Lab as they sell those newly printed L$s for hard RL currency. The premium accounts get weekly stipends and nearly anyone can choose to purchase L$s on the Lindex. So, our economy doesn’t work exactly like the real-world but the indicators are still not good.

We’ve seen strong evidence that Linden Lab caps the exchange rate for the Lindex and the “Change in L$” is another strong indicator that Linden Lab is carefully controlling the prices.

Back in the account boom that spiked in late 2006 we also saw a corresponding jump in the influx of L$ into the economy. Now we are seeing a drop in that rate at which new L$s being injected into the economy. Since the actual number of premiums for the spring of 2007 have continued to grow, this drop in newly minted L$ doesn’t reflect a change in stipend payments. It must reflect other sources of L$ introduced into the economy. And those sources are shrinking dramatically. This suggests that the game gods are making less RL money selling L$s to players.

In fact, the numbers we have seen over the last few months are behaving in the exact same way that a real-world economy does when entering a recession. If this really is the start of a Second Life recession, what is it going to mean? It has been speculated that Linden Lab is unlikely to buy back L$ in order to keep the economy stable. But if they don’t and we do go into a full blown recession, then we are likely to see the sort of economic ruin that rarely happens in the real world.

A big recession in Second Life is going to mean that the L$ devalues significantly. And that means people that earn income in L$ and cash it out are going to lose and lose big. Land barons won’t earn enough in rents to cover their tier, let alone earn profit. Anyone relying on actual income from the sale of virtual goods will see significant drops too.

That means rent is going to skyrocket and the cost of goods will rise too. But, unlike the real world, the average avatar doesn’t actually need a residence. We pack up our prims and move out. We can stop shopping at expensive boutique and go to the freebie stores. In short, the people relying on the economy to pay real-life bills (including tier) are going to lose big time. What about the rest of us?

Those of us, like myself, that are in Second Life for the fun of it are going to get the opportunity to win and win big. When the land barons can’t cover tier because rents are too high and enough people move out, they are going to sell. If they all sell, the land market is going to crash. We get cheap land. We’ll pick a small plot and setup our hobby house or store. Maybe we even see First Land come back just so Linden Lab isn’t stuck with all that abandoned land.

G3Of course if land becomes cheap, what is it going to mean? That is an interesting problem all on it’s own. If we look at the number of active resident and the available land we see that there is around 1500m2 of land per active residents (both mainland and islands). But, if we only look at mainland there is less than 400m2 per resident.

So, I’m going to have to hope that all of the non-premium accounts don’t think the way I do if there is a crash in the land market. There isn’t enough mainland for the active residents to each have their own 512m2 if we all suddenly signed up for premium accounts.

Since that really isn’t likely to happen I’m not worried. Besides, all this speculation could be totally wrong. Maybe these are just summer doldrums and when fall hits the numbers will rise again. Maybe.

45 Responses to “Is Second Life’s Economy Tanking?”

  1. SqueezeOne Pow

    Jul 11th, 2007

    NO WAY! SLH predicts something negative will happen in SL? I am amazed!

    But seriously, folks, this shows why anyone who quits thier day job to make a living off of a computer game is an idiot.

    I also think the drop in land prices could lead to an increase in premium accounts, though. One of the major factors in my decision to go premium back in the day was first land and how cheap it was compared to the other land for sale. Nowadays people don’t want to pay huge amounts of money to keep 110 prims on the equivalent space a drive up espresso booth covers.

    But if all these free guys see that land is cheap now and they don’t have to dip into their RL wallet too much to get some I think you might see things even out and premium accounts go back up.

    Perhaps LL is banking on such a thing which might explain all the new land…

    Only Prok knows for sure! ;)

  2. Banned

    Jul 11th, 2007


  3. Kahni Poitier

    Jul 11th, 2007

    Well, they keep opening up new land, thereby causing land values to drop. And with the constant server problems, people like me downgrade their premium accounts to basic accounts (I just did it yesterday, I was tired of paying for crappier and crappier server performance).

    With another new continent opening up, land speculators and current owners are seeing their investments becoming worth less and less, and they’re getting pissed and not continuing to invest in it.

    The Lindens are destroying their own economy by making things worth less, and focusing on things almost nobody wants (like voice) instead of fixing existing problems.

    They’re bringing it on themselves

  4. Prokofy Neva

    Jul 11th, 2007

    Sigh. I always have to wonder why the Herald is publishing this kind of brainless incitement of class warfare by airheaded shoppers.

    Curious, do you realize that these “landbarons” you hate are just dumb girls like you? The lion’s share of them. The ones actually on the mainland, buying at the auctions or from the handful of actual landbarons. Just girls who want to rent out some land, make a dollar or two to go shopping? They are not in it for some big cashout; when the value of the Linden decreases they are in trouble, they have to ditch their land or even raise prices — but they can’t really raise prices in this hugely competitive environment, so they don’t. That is, those at the very high end of the spectrum like Desmond Shang on 20 sims or so might raise prices, but the lion’s share of mom and pop rental agents can’t, and their business, which is a service, a social network, a club, and a newbie helping operation all in one, is lost and killed.

    And you incite that to happen — wishing evil on people who are no different than you but who merely chose the land business as an SL occupation.

    You forgot to mention that Supply Linden was forced to print less Lindens because of the casinos being forced to close after being denied advertising — that caused more cashouts, and that reduced the value of the Linden, and in order to stabilize it, Supply sold only $550,000 or so, half of what he sold in January. That’s serious cash.

    When land is free, just like public projects, people piss on it, like they piss in the stairwells. You cannot encourage civilization when land is collectivized and has no value and is merely an object of theft and greed, like first land became.

    People have developed island rentals in particular as a way to add value. Their ability to charge reasonable rates or high-priced rates lies at the heart of the SL economy, like it or not. It’s making the Lindens’ bottom line, not scripting or content creation which they like to fancy is the most important thing. Ever sector is important; only one sector creates the Lindens’ direct bottom line. They fight it; it goes against their ideology.

    You fight it too, because you imagine everything should be rolled out like toilet paper for you to put your bling on. But somebody always has to pay.

  5. Kahni Poitier

    Jul 11th, 2007

    and also…. (continuation of last thought)

    I used to want to buy a sim of my own. But with land values going to be bottoming out, and the cost of owning a sim NOT going down to match it, there’s NO WAY in the world that I’d be investing in something that keeps dropping in value.

    Opening up a new “mainland” continent screws over every private sim owner, in a big way.

  6. Jabber39

    Jul 11th, 2007

    all the griefers’ fault. bastards.

  7. Ceeq Laborde

    Jul 12th, 2007

    I think the seasonal general low is playing a major part here and as christmas approaches things should pick up as expected..Fingers crossed.

  8. anonymous

    Jul 12th, 2007

    np, last I checked, IntLibber has like 38 sims. With over 7500 sims in this world, he’s hardly some sort of land monopolist, just a guy who started late last year with 200 US, and grew it into a good sized business in only 6 months.

    Anshe on the other hand had 550 sims in January, who knows how many now that she opened a new continent up north since then. Lot of them seem empty, tho she claims to have returned to profitability. Lots of other land companies out there. Tons of people with one or two sims. Still others who develop and sell land on the mainland.

    Land prices rise and fall due to supply and demand. First land was a welfare program that was depressing land prices in one way, but in another encouraging people to get premium accounts so they can participate in the SL economy more, and often giving people a quick injection of capital to start a new business, even though it was often with shady developers frauding the system with fake alts.

    The ‘recession’ is a flight of capital by people intimidated by the ID Verification program LL has proposed. People don’t want to become identifiable by their nations tax agencies, and frequently believe strongly in their right to privacy. They’d rather go find another game run by a company thats not quite so dysfunctional as LL is.

    The ID Verification program will NEVER keep out griefers, and will not keep out kids who have access to their parents identity information. Given the degree to which LL is cracking down on free speech, free expression, casino and adult business advertising on a network that is intended to be solely FOR ADULTS, if they insist on turning this world into disneyland, theres no reason for ID verification, other than to help national governments tax their citizens for economic activity those governments had absolutely no hand in encouraging or fostering (ergo have not provided services in expectation of payment).

  9. Anonymous

    Jul 12th, 2007

    >>”all the griefers’ fault. bastards.”

    Nah not really. The griefers are too incompetent, like Nigrapassion up there who is the very incompetent head of the PN “spy network.” Remember the PN are here to try to bring down all of SL, crash the economy and such, and make a permanent mark on SL. All they’ve done is crash furry sims repeatedly and become a joke. In other words griefers don’t put a dent in anything.

    It all boils down to the LL business model is grinding to a halt. This is what happens when people get too greedy, LL included, along the lines as stated with the Land Barons (who will eventually be in over their heads and drowned in their own greed)

  10. Obscure Doodad

    Jul 12th, 2007


    This is cumulative. The in world economy almost certainly lost a lot of money when the casino hit occurred. Then Age Verify appeared and a LOT of folks have extrapolated what it means when 50% of the user base won’t submit themselves to the perv database. That is a 50% cut of potential customers for adult area products.

    If you own such a sim, you have to realize that you will be paying tier out of pocket if that happens. It is somewhat likely that people are not excited about $300/month leaving their RL bank account so . . . they punch out before it happens. Why wait?

    There is a sim count floating around another thread, but I have never seen an estimate of how many sims get abandoned and pay no tier.

    Sex is a big part of the in world economy. With the child pron scandal and age play scandal and BROADLY OFFENSIVE now in the lexicon, sex may not sell quite as well as it did. Result? Less money moving in-world to spend on it.

    Does this reverse? Is this a cyclical recession? Or is the bloom off the rose? Unlike RL, this CAN be permanent. There will come a saturation point where everyone inclined to look at SL has done so and the learning curve and poor performance drove who was driven away more or less permanently.

    For LL, this can be a very ugly thing. When a business plans for growth that does not occur, the consequences are crushing. Investments in hardware proves to be wasteful. Employees hired on expectation of growth have to be dumped and severance paid. Executives usually get booted for “failure”, and the replacements are clueless for a year at least.

    Anyway, probably the worst thing for LL about a recession is it provides LL’s competitors time to catch up.

  11. Reality

    Jul 12th, 2007

    Um, in what way is a new Mainland continent screwing over those that rent space on a Private Island?

    Mainland: you must have a premium account to even be able to get ‘land’.
    PI: No Premium account required

    There’s one in favor of Private Islands right there – not to mention the relative low cost of Private Island plots as compared to Mainland Sims.

    Granted the people already established as Private Island owners reap the benefits … However the casual user reaps the benefits as well.

    Now then – Kahni, LL is fixing bugs. If their progress is not to your taste (quite a few bugs in the client too you know) then I suggest that until they do fix the major server side bugs – the ones made worse by client side bugs – you go looking for a third party viewer. some of the bugs fixed in recent viewers were not fixed by LL but by others.

    Hell, once the source code for this new viewer is released and made into a third party client I’m getting the update for the one I already use.

  12. Coincidental Avatar

    Jul 12th, 2007

    My understanding is that LL drastically reduced the new land supply in June.

    The average land price went down again and fast. But I don’t know what the average figure means, because the land price on private islands and on mainland should be reported separately. And I didn’t find consistent historical information on the land price either! [Note for Meat Linden if he happens to read this.]

    The average land price is still higher than a year ago, I think.

  13. Prokofy Neva

    Jul 12th, 2007

    >The ID Verification program will NEVER keep out griefers, and will not keep out kids who have access to their parents identity information.

    Verification isn’t really about keeping out kids, the Lindens of all people know that. They can only try to make a legal kids’ grid, and do their best to keep them out of the adult grid, but it’s impossible to filter. So they do something else: they make adults who put out adult content responsible. If you want to run a sex club, then you have to be carded. There’s actually a surprising number of people willing to do this, and they can count on it. They’re the same kind of people who give their RL drivers’ licenses to rent hotels in real life where they watch porn movies or have affairs, and give their credit cards to porn sites on the Internet. The government isn’t interested in them.

    >Given the degree to which LL is cracking down on free speech, free expression,

    Where are they doing that? I mean, other than banning me from the blog months ago?

    >casino and adult business advertising on a network that is intended to be solely FOR ADULTS, if they insist on turning this world into disneyland, theres no reason for ID verification, other than to help national governments tax their citizens for economic activity those governments had absolutely no hand in encouraging or fostering (ergo have not provided services in expectation of payment).

    This is an interesting premise. Perhaps there’s something to it. Likely not. The governments would do better to watch PayPal more than something like SL; PayPal is where the money is sent.

  14. Inigo Chamerberlin

    Jul 12th, 2007

    It’s been clear, from such evidence as declining online numbers and declining inworld sales that SOMETHING’S going on, for some weeks now.
    Yes, LL’s incessant moving the goalposts (stipend changes, first land abolition, etc) has had a negative effect.
    But the ‘summer recession’ is a well established phenomena as most residents with two or three years experience of SL will know.

    Personally I think what we are seeing isn’t exactly an ‘end of the world’ recession, with Land Barons and big retailers leaping out of skyboxes without one of Cubey’s admirable parachutes (which are about the only flying vehicles still usable these days).

    What’s happening is the usual Summer Recession, boosted by some really unfortunate issues.

    For instance, the CC processing cock-up – HOW can you expect people to BUY L$ in an economy with few other sources unless they are a Land Baron, Retailer, or in the ‘service industries’? And if they can’t buy L$, they can’t spend L$.
    Then bear in mind what happens to people attempting to cash out their earnings (to pay tier or other bills) – if a reduced number of residents can buy L$, then the value of the L$ drops.

    And that’s just one obvious example.

    Poor grid performance at higher login numbers is a limiting factor of online numbers, reducing the potential pool of consumers.

    LL saturating the land market is keeping land prices ‘low’ – that’s a purely relative term, I can remember land prices being far lower in the past when the economy was in MUCH better shape – the difference being that Lindex didn’t exist, GOM was a free market exchange, indeed, SL was pretty much a free market economy, which it certainly isn’t today!

    In fact what we MAY be seeing is how a ‘control’ economy reacts to a combination of the normal Summer Recession (people spending more time outside in RL than inside at a computer in SL), combined with some nasty effects caused by a particularly badly timed and severe batch of the normal SL infrastructure issues.

    The interesting question is, will LL loosen their control of the economy and let it ‘float’ and recover? Or will they keep pushing buttons, twirling knobs and throwing switches in increasingly desperate efforts to stabilise things?

    We live in interesting times folks!

  15. anon

    Jul 12th, 2007

    “Sigh. I always have to wonder why the Herald is publishing this kind of brainless incitement of class warfare by airheaded shoppers. ” – Prokofy Neva

    lawl this has to take the cake as one of the top ten Prok quotes

  16. Imsaho Fleury

    Jul 12th, 2007

    > When the percentage of premiums falls, it means the land owners must each own more land. After all, you can’t own land without a premium.

    Er … I own land with Azureislands. Admittedly I’m a premium account holder but i don’t need to be .. many (?all) of the private groups allow non premium accounts to buy land.

  17. Onder Skall

    Jul 12th, 2007

    I think Pixeleen might be right about an impending land value crash, but for a very different reason than just number crunching.

    We’ve quoted Linden Lab time and again saying that they do NOT plan on making money selling land – that long-term, their business plan doesn’t involve land sales at all. If that’s the case, land is ALREADY worthless in Linden Lab’s mind. If THAT’s the case, I’d expect them to pull levers and flip switches that cause land values to dive on purpose just in the name of fun.

  18. Onder Skall

    Jul 12th, 2007

    WHOOP – correction – I saw Pixeleen’s name at the bottom of the post but it was Curious Rousselot’s article. Sorry!

  19. Avatarius Avatar

    Jul 12th, 2007

    I have notices a steady increase of people on line when I try to get on – so I haven’t seen a plummeting of the number of people regardless of the statstics – so perhaps the people who stay spend an increasing amount on line?

    Anywho, I have left the mainland and now rent on an island – as do most of my friends at this point (spinning “for sale” signs and trashy casino/dance clubs don’t do it for me) – so if we are representativ of the demographic – premium accounts should be declining since one doesn’t really need them.

    And less cash circulating? No idea – though the friends I have who build and sell and the higher quality shops I patronize seem all to be doing well at the moment.

    I don’t see the gloom and doom – though as restrictions tighten and LL subsidies are removed – it is inevitable that there might be an economic contraction – though the high quality builders will likely weather it OK.

  20. Tenshi Vielle

    Jul 12th, 2007

    From what I’ve heard, SL always takes a dive in the summer – this is nothing new. We’re probably missing a good chunk of the college population since they went home to mummy and daddy for the summer.

    Give it until November, THEN tell me if the economy is still dipping.

    BRB, my cartoons are on!

  21. Loloz Oh

    Jul 12th, 2007

    Could it be a “summer doldrum”? I don’t think you used that phrase enough times in your article.

  22. Overcast

    Jul 12th, 2007

    I really don’t hang out in SL much anymore. I was going to buy some land, but it was just too complicated or pricey. With no ‘first land’ ever available, it just kind of killed my interest in buying any land.

    I still login from time to time, but – yeah summertime has a bit to do with it too.

  23. Curious Rousselot

    Jul 12th, 2007

    Prok, Do you realize that you are arguing with me but we are both on the same side? Only difference is I didn’t insult YOU to do it.

    I didn’t say what caused the economic slump. I only pointed out that using accepted economic indicators it looks like the SL economy is headed into a recession.

    Any economist will tell you that three months of decline (in a row) in an economy is a strong indicator that the economy is entering a recession. This is textbook macro economics stuff.

    The recession could be the result of the ban on casino advertising, it could be the loss of First Land (which I completely agree was horribly broken), it could be the anticipated age verification. It could be some combination of those or something completely different.

    You are telling me that the mom-and-pop land barons are going to suffer if my predictions come true. Isn’t that what I said?

    And perhaps I didn’t make it clear in my article but I don’t hate the land barons, I like them. I’m renting and I’m quite happy to continue.

    The drop in premiums worries me far more than the overall economic indicators. A drop in premiums means that LL will have a harder time paying there bills. That worries me because that would spell the end of Second Life. I don’t want that.

    I may not have mentioned this but the number of premium accounts is continuing to rise. But the number of active accounts is rising faster. To me that indicates that the Lindens have done something to make the premium account less valuable to the average user. That worries me because if it continues the Lindens won’t see the revenue.

  24. Curious Rousselot

    Jul 12th, 2007

    Imsaho, you said, “Er … I own land with Azureislands”.

    So, if the people running Azureilands decide to give up and abandon their islands and stop paying LL the island tier, will you still have land? Or will LL shut down the island for non-payment of tier?

  25. anon

    Jul 12th, 2007

    I think we forgot to add in the fact that much of what we see in SL is a scam. You learn this by purchasing from the scammers and them stealing your money.

    With ever growing public awareness of such issues, people are being far more cautions within SL. Not so easily persuaded to fork out the real cash for what might just be a total waste.

    I hope that continued education throughout the web helps others with their SL ideas. Certainly before they start spending real money on it.

    Far too many scammers. The word is getting out. Linden has failed to provide protection from such and people, and the public is becoming more informed on the matters.

  26. Kahni Poitier

    Jul 12th, 2007

    Prok is the last person who should complain about the Herald publishing brainless incitement.

  27. Mariel V

    Jul 12th, 2007

    Risking being yelled at by the economists, or, furthermore, the MG residents, I will just quote my friend when we were discussing the reason why anyone would even want to build a toilet in SL: “Anything above cubes is useless”
    I love the great works in SL. Everyone does. Still, reading this post reminded me of her, and I think that it is a fair point to reconsider our role and aspirations in Second Life. Hoping the whole grid doesn’t crash for a gigantic prim in the shape of a silver coin, my greetings from the other side. :)

  28. Gaius Goodliffe

    Jul 12th, 2007

    My own profit reports are down recently, but it’s amusing that SLH has lived up to my expectations for how economic numbers would be reported. If the SLH covered the real world, they’d be predicting a stock market crash every few months.

    Premium accounts? Not a good measure of economic performance. It’s much more dependent on a couple of factors, including the mentioned lack of First Land, but also the much greater awareness and availability of Estate land, which, if you don’t like having your home surrounded by 16m plots advertising Mr. Lee’s Greater Hong Kong and worse (the Mr. Lee ads are tasteful compared to many) and just general random garbage, Estates are the way to go. With things like the Azure Islands and such out there, I don’t know why there’s any demand for mainland at all anymore. It’s like living in the middle of a sandbox. Why would anyone waste money on it when they can have much better value, decent space between neighbors and prim bonuses, and responsive management vs. not-our-problem LL? But if smart consumers are looking for Estate land now, what incentive do they have for a premium account? The only other one was the generous stipend and only us “old-timers” actually get enough stipend these days (L$500/wk) to justify the cost of a premium account.

    Thus, I think the decline in premium accounts can be linked to the fact that there’s no good reason to have one anymore. Back when you got L$500/wk, the mainland was less trashed, and estate land was less common and didn’t come with prim bonuses and such, it made sense, but nowadays? Why would anyone become premium members today? That premium membership numbers are still as high as they are is the real mystery. But all this is mostly independent of the question of overall economics.

  29. Prokofy Neva

    Jul 13th, 2007

    Curious, we’re not at all on the same side, as you believe that plummetting land prices and the deliberate land glut is a good thing and rational for the economy; I believe it’s not a good thing while it brought a necessary corrective for a time

    You’re prepared to see yourself and others getting cheaper land as “the real winners of Second Life” and gloat at making land barons losers; I’m not, and not because I’m one myself, because I take losses, and it doesn’t bother me because it’s part of what I wish to do in SL to experience it directly and with lots of field information. See my article above for my reasoning on why it’s ultimately a bad thing to constantly incite class warfare, which the content-making class has been doing for years, and now the chattering classes on blogs.

    No one disagrees there is a slump, and one that is actually more than three months, but it really does take better research to find the reasons. And obvious factor for decrease in premium accounts isn’t the end of the first-land program which was *under-used* in fact, odd as it may seem — people feared it! This has been explained many times, but you may have missed it: when buying $2000 worth of Lindens becomes cheaper to do on the LindEx then to buy the $9.95 monthly account, people stop buying the premium, which they bought primarily for its stipend.

    Casino ad bans have caused a cash-out, but the Lindens monitoring this and other expert analysts have actually remarked that the decrease by a point — and then generally a rallying now of the LindEx indicate that people aren’t cashing out in the large numbers expected — they are putting money in real estate or other things.

    You said the land barons would suffer — and then in the next sentence celebrated that suffering by gloating and calling yourself and others the winners of Second Life, and them the losers. I’m sorry, but I find that unacceptable. That *is* what I mean by inciting class warfare — this endless incitement of hatred of the land-baron class which you are as guilty of as the next person, even if you yourself rent and appear to be a happy renter.

    You are simply incorrect that a drop in premiums, however, is some kind of doom for the Lindens. It’s as if you haven’t grasped the essence at all of the land business in second life: YOU DON’T NEED PREMIUM ACCOUNTS TO RENT ON ISLANDS. People dump their overpriced premium accounts that have them paying more for Linden stipends and getting worthless 512s that they can’t efficiently use, and they rent on islands for less. It’s just that simple.

    >I may not have mentioned this but the number of premium accounts is continuing to rise. But the number of active accounts is rising faster. To me that indicates that the Lindens have done something to make the premium account less valuable to the average user. That worries me because if it continues the Lindens won’t see the revenue

    Again, we’ve been over this time and again — and I wish if you’d embark on these economic guru essays, you’d at least google the back issues of the Herald. The tipping point for making purchase of the $2000 stipend (now even only $1200!) was reached a long time ago. You can simply buy more money now with the same $9.95/mo or even $21.95/3 months. And you can’t afford land even at $10/m that is going to get blighted and worthless on the mainland, so you rent on an island. Pure and simple. Try to see the entire contest of island/mainland rental economies to get it.

    The Lindens could afford to completely grind the more-lucrative mainland auction to a total halt, with no sales for over a week, because they are selling islands at a clip with higher tier, and they also plan another big continent glut.

    By September, the Lindens will have this world awash in $5/meter land, many middle-and-small-size barons will bail or liquidate, just as the did last summer, and the summer before last. More patient barons or those willing to gut it out and pay tier on empty rentals can pick up some nice liquidated land then, and hang on til the winter. Island dealers who are also glutted out will continue to experience very soft sales and finally, with the $195 tier ending at some point likely in November or earlier, we’ll see a HUGE glut of fire-sale islands on the market, as 50-percent-occupancy or less island owners who can’t face the jump to $295 tier, and whose tenants won’t pay more rent and flood to the *mainland* of all places to buy new cheap land, will be forced to dump — even abandon. Big land barons like Anshe or Adam will make a killing.

    You’ll get what you want — hatred of land barons always leads to fewer, and more powerful land barons, not less land barons.

  30. Prokofy Neva

    Jul 13th, 2007

    I don’t know why there’s any demand for mainland at all anymore. It’s like living in the middle of a sandbox. Why would anyone waste money on it when they can have much better value, decent space between neighbors and prim bonuses, and responsive management vs. not-our-problem LL?

    What’s amazing is that there is demand for mainland. And new rental sims appearing on the mainland constantly.

    I was impressed, for example, to see the Palace Rentals when I went I recently bought a cheap 512 for an office in Flagg. This fellow has actually bought a half dozen sims and put in sidewalks and roads, fulfilling the function that the Lindens used to perform (now they don’t). So he’s made his rentals and his land sales more valuable by being buffered and protected. It makes for a more managed and less blighty look — and when you get one person willing to set a decent example like that, you start to see others catching on, and other people start to make their sims look nicer.

    The newer continents are actually look 100 percent better than what I’m familiar with from the pioneering days of the Hidden Lakes and the Atoll Continents in the core and immediate north. More and more, people buy whole sims and lay them out with intelligence. I see more and more Europeans duplicating that experience we all have had flying in a plane above Europe: numerous neat squares of farms and villages and stores in very neat and pretty arrangements. Less and less of that giant sprawling laggy American mall or ugly suburban tract.

    There’s no question that both Europeans and Latin Americans coming to Second Life have simply beautified the mainland. To be sure, they are prone to cheap casinos and camping as the next guy, but they can often make it look better lol.

    In the oldest oldbie core sims, you still see the goofy sandbox mentality. Let’s buy land and put some giant spinning thing on it. Let’s put a giant Pokemon face on the land to show on the math. Let’s put a giant dumb-ass spinning sign. The core sims are dotted with many idiocies of that sort perpetrated by the founding sandboxing/script kiddies’ class. The next layer of sims — core and atoll — are more established and have survived their plagues of blight and have many nice areas.

    The worst scourge of the new sims is the ad farm. I think Lindens should solve this by banning all ads on 16 m2 except those they themselves rent at Linden roadsides or designated areas with zoning rules.

  31. janeforyou Barbara

    Jul 13th, 2007

    The SL economi ” diving” are cuz of sevral things,casinoes went down, but also ppl left SL for a number of reasons, and its summertime, summertime are allways downtime, over the summer we will se uptimes as ever before, 8 mill ” members” ok, the stats before summer shows bout 0.75% of the ” members” was online at primetime, on 8 mill that = 60.000 online at primetime and we will se that in august/sept- so i dont worrie.

    Its a other problem i se now and thats ” newbee” mall owners, some seam to think its just to get a 2048 spot and set up a 3 floor glass house in mainland to rent out 24 shops…its not thay easy, i had lots of notes getting invited to open shops in this new lill “malls”.. sorry you need to make some more out of it.

    To make some kind of business you need 6000 meters or more,, you need a club-dancers-events-nice design-and good manegement pluss you got to be willing to invest a lot in marketing,, then after 1 yare hard work you may se some good results :-) Just like in RL!

  32. Khamon

    Jul 13th, 2007

    “The core sims are dotted with many idiocies of that sort perpetrated by the founding sandboxing/script kiddies’ class.” – Prokofy

    You take that back!

    Well no, it’s true. We need a Core Restoration and Preservation Group I suppose. Yeah, that’s the ticket. Forget Philip’s toy economy; groups solve all problems in this socially-oriented wora’uld.

  33. Curious Rousselot

    Jul 13th, 2007

    Prok said, “You’re prepared to see yourself and others getting cheaper land as ‘the real winners of Second Life; and gloat at making land barons losers”.

    Actually, I don’t see it that way at all. I see it as sad that the ‘land barons’ could lose. I wrote it the way I did because that gets lots of eyeballs on the article. And it gets you to post your rants, which get more eyeballs on the article.

  34. DaveOner

    Jul 13th, 2007

    -it’s summertime
    -Lindex has been broken so people have been relying on camping or whoring
    -Too easy to be a free account
    -Not enough insentive to go premium (i.e. 1st land, high land costs)
    -Adding land is a good thing for the entry level consumer/builder.

    If LL makes land cheaper then they have a better chance at convincing the free guys out there to go premium to own land. This may make the big timers lose a little money but it will naturally redistribute the money which will lead to more US$ to LL overall if they can pull it off.

    I know it’s hard for some to believe, but I think there’s a chance that LL knows what they’re doing and aren’t as shortsided as a lot of it’s critical “expert” residents.

    And they’re out to get Prok.

  35. joe

    Jul 13th, 2007

    “When the percentage of premiums falls, it means the land owners must each own more land. After all, you can’t own land without a premium.”

    I got as far as this inaccurate quote before i quit reading. If he/she has a basic fact as this wrong, I can only imagine how wrong the rest of it is. NPI’s can own estate land.

  36. Khamon

    Jul 13th, 2007

    “‘When the percentage of premiums falls, it means the land owners must each own more land. After all, you can’t own land without a premium.’

    I got as far as this inaccurate quote before i quit reading. If he/she has a basic fact as this wrong, I can only imagine how wrong the rest of it is. NPI’s can own estate land.” – Joe

    The OP was referring to the fact that Linden Lab require premium accounts to own all of the Mainland they print. If the number of premium accounts is declining, and LL are continuing to print Mainland, then the persistent premiums must be owning more land per capita. The only other possibility is that LL are getting stuck with increasing amounts of abandoned land.

  37. Prokofy Neva

    Jul 13th, 2007

    Khamon, no, the quote is still wrong. One problem is that the Lindens appear to be showing the average price per meter by mixing in both island parcels for sale and mainland parcels for sale. We need to get clarity on that, but it does appear that’s what they’re doing. Those parcels are all in the for-sale list, so like them or not, consider them really “for sale” or not, they are in the for sale list and hence likely the source for the data.

    The Lindens continue to print land for one simple reason: they need money. People pay money for auction sims — sometimes double or triple what they pay for islands. So it’s ready cash. They have a cover story up that they print land based on “demand,” that is, number of premium accounts. All we need to do to see that is not true is note that…the number of premium accounts are going down, but the number of sims being printed — and owned by somebody (land flippers) — is going up.

    Does that mean that more land owners on the mainland own more land? Perhaps compared to a year ago, the per-person amount is higher, but given that the number of premiums is dropping AND the number of parcels for sale is increasing, we merely have a lot of flippers.

    People hate flippers; they are a necessary part of the economy, however. What we’re about to see is a lot of flippers bail out. I’ve been noting more Governor-Linden land seized again lately, and not being immediately hurried into auction but just left in ‘maintenance’ — anecdotally. Have to study it more to see if this is a trend.

  38. Khamon

    Jul 14th, 2007

    No, Prokofy, you’re just being contrary telling me “no” then repeating me almost verbatim.

    If there is more Mainland than there was a year ago, and fewer premium accounts than there was a year ago, then either the residents own more land per capita, or Governor Linden owns more land. The only way to argue those points is to tell me no, I’m wrong, then repeat them as your own.

    I do agree that we need separate figures for average cost of estate and Mainland parcels, and that Linden Lab prints land for the sole purpose of balancing the quarterly bottom line. But those points don’t invalidate my statement.

    If you want to talk seriously about this stuff, communicate something other than “everything anybody else says is automatically wrong.” That’s the impression I get from most of your posts.

  39. Tristin M

    Jul 14th, 2007

    I was wondering if you looed back to all the summers that SL has had up to now and compared them…would it show that SL is takinging…personally I think SL has had a great run and its going down the tubes now. The lab refuses to listen to its customer base and instead listens to just the people on its fourms. I’ll ride till SL is dead and burried I just wish a “new” SL would happen along before this one dies

  40. Curious Rousselot

    Jul 16th, 2007


    LL has only been providing the numbers needed for the analysis since September 2005. So, we can’t look very far back to see if there is a trend. however, I did take a closer look at 2006 and there is a small drop in the economy in the summer of 2006. The 2007 drop is much more pronounced but then the population base is a lot bigger too.

    There is a good possibility that we are seeing a summer slowdown which will start to pick up sometime in August or September. There isn’t really enough data to do a real trend analysis and a number of factors have changed significantly since last year. Most notably:

    - changes in the gambling industry (no casino advertising)
    - changes in the sex industry (broadly offensive and age verification)
    - changes in the land industry (no more First Land; which was broken anyway)
    - more changes in the land industry (LL is only selling whole SIMs, no more small plots)
    - huge increase in population since last fall

  41. Rock Ramona

    Jul 16th, 2007

    its really simple,6 months ago i was paying 165us in tier and spending 50 us on stuff id buy in world…soon,i couldnt move on my sim ,performance went to hell,unverifieds griefers rule the world,got to the point where i couldnt drive my cars,fly my planes or use my boats..i complained and the Lidens told me so sad,to bad,so to hell with them,i havent spent a penny in SecodLife in months on anything,and i never will again,no big mystery here folks,,this place is nothing to me but a free chat room nowadays,,,i used to be upset with the griefers,now i just laugh,log off and say let em grief,anyone who stays here and spends their money and supports these peopleis a fool,take that money and spend it on yer kids,give it to your church,buy a homeless person a Big Mac

  42. Sin

    Jul 30th, 2007

    I do think SL is going down…all the problems are cummulative. I don’t see too many newbies entering these days…as 4 or 5 months ago. And many people that entered then, are starting to leave.
    -Voice: what for?..try talking in a crowd with 5 people at same time.
    -Sex and ID verification
    -No free 1st land
    -Land too expensive: even with the new continent..Land Barons will buy it all and keep the price up.
    -Land and L$ appearing from air. A great ticket into recession.
    -People knowing is hard to get a RL income from SL.
    -Bad News, Bad comments, Bad Blog posts
    -add yours….

  43. Stacey Sugar

    Aug 8th, 2007

    I still think LL should open up the server code for developers to create their own grids and connect to the SL grid. We’ll get better content, probably better support from the 3rd parties and I would think a better gaming experience. We had the client opened up recently … the next best step would be for LL to open up the server code and allow mini-grids to attach to the main grid.

  44. mobile phones with free gifts

    Don’t buy your next mobile phone until you know about the free gidts avaiable from a trusted name like Tesco

  45. Soma.

    Sep 17th, 2009

    Soma overnight.

    Soma. Soma sen. Soma addiction and lying.

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