SL In Deep Recession – Economic Indicators Implode!!!

by Alphaville Herald on 02/01/09 at 4:40 pm

Group creation and uploads drop 20% in December
LL panics, “temporarily” disables land statistics?

by Pixeleen Mistral, National Affairs desk


The Linden Lab spinmeisters webmasters have chosen to “temporarily disable” convenient display of Islands owned and added on the  Economic Statistics page – perhaps hoping to draw attention away from the virtual economy that is well into a deep recession?

Despite the “disabled” statistics, observers note that the grim numbers are available at the Economic Statistics (Raw Data Files) page could explain the Lab’s sudden reticence – an 8% drop in total islands in November was followed by a further 8% drop in December for a net loss of 3825 islands in 60 days, bringing the island region total as of December 31st to 22,714.

The drop in virtual island ownership is attributed to a 66% price increase Linden Lab slapped on the most popular of the islands – a move many observer’s believe will raise more net revenue for the Lab, despite the number of resident fleeing the price increase. However, resident alienation from the game world’s economy may threaten its viability and further depress demand for Linden Lab’s main product – virtual land.

Resident flight from SL could explain why a number of economic indicators including classified advertising, texture upload charges, and in-world group creation fees shrunk by up to 22% in December. This sort of powerdive in non-bot based activity strongly suggests self-reinforcing economic trends that could lead to the sort of deflationary spiral that threaten a number of real world economies in SL's major markets.


The virtual leading economic indicators were uniformly grim in December – sales of classified ad charges dropped 16%, in-world group creation fees fell 22%, and texture upload charges dropped 20%. This suggests the virtual economy is suffering the same sort of deep recession as the real world economy, raising concerns that the Second Life entertainment platform may not be real world recession proof – leading to further declines in demand.

Meanwhile, the Lab’s L$ spacebux printing press is in fine working order as LL sold 19% more spacebux to players than in November. December L$ sales by the Lab were L$91,788,306 or about $USD 346,370. The increase in Supply Linden sales is likely due to less competition from resident-run in-world business for L$ sales on the Lindex currency exchange.

As real world economies look for ways to inject liquidity and create more consumer demand, the Lab may want to consider similar measures to cushion the in-world economic fall — if the Lab has any interest in the player’s economy. It is also possible the real end game for the Lab has nothing to do with the L$ spacebux economy. It has become abundantly clear that SL in its current form is at best a niche market product and will never overtake pure entertainment platforms such as WoW – so look for a change in focus from the Lab as new CIO M Linden tries to keep the company afloat by any means necessary.

Now that the current residents have paid for the Lab’s server farm, is the Lab moving to a world dominated by enterprise-ready business meeting ImmersiveWorkSpaces? If this is the future of SL, current residents may be left with a sour taste after bankrolling the server infrastructure investments by purchasing OpenSpace sims — only to be driven off their land by tier price increases, without the benefit of an equity stake in the Lab. Meanwhile, playing virtual store in a bot-dominated down economy seems to be losing its charm for some residents.

17 Responses to “SL In Deep Recession – Economic Indicators Implode!!!”

  1. Aidamina

    Jan 2nd, 2009

    I think that the disabled island statistic has to do with the conversion of open space sims to normal sims/homesteads. And maybe the loss of many square meters of SL land because of the new island situation will actually drive up the land prices in Q1 of 2009.

  2. Orion Pseudo (Shamroy on SL)

    Jan 2nd, 2009

    For the life of me I don’t understand why the users of SL even put up with this crap anymore. Over, and over, and over again the Lindens have been continually giving their users a big ole FUCK YOU. Raising prices, lowering quality, breaking things here, adding useless features there, meanwhile restricting what people can and cannot use SL for while creating a virtual witch hunt with these arcane and draconian rules and policies such as broadly offensive and age play.

    Its blindingly obvious that Linden Labs has absolutely no idea what they’re doing nor do they have any common business sense. At this rate I seriously won’t be surprised if by the end of 2009 SL turns into an abandoned wasteland the likes of the Reuters sim – meanwhile the only ones left will be the mindless noobies looking high and low for “jobs” and “money trees” while the rest are nothing more then bots programmed to wander to and fro. And of course those who have their noses buried so deeply up the Linden’s butts that they’re too blind to see whats actually doing on.

    We’ve known all along that Linden has been baking their stats and now this just goes to prove it. The numbers are blocked on the web site yet they’re still calculated on the back end and still available via xml and excel. To me that only goes to prove one thing, and that is those running and managing SL simply cannot be trusted.

    My advice? Grab a copy of Second Inventory and backup as much of the stuff you created as you can. If you’re really that attached to the SL technology then go and find an OpenSim grid with an economy or other methodology you like and start rebuilding. If you’re familiar with other worlds or technologies then go there. Either way once you start to realize the difference of not having to put up with the totalitarian rule of LL or their half baked policies and technological restrictions you’ll find your virtual life to be far less complicated and political! Perhaps a bit more buggy for now, but by far better none the less! There are other places to go build, create, and play. SL is only one of many and obviously not a very good one!

  3. LOL

    Jan 2nd, 2009

    “…for a net loss of 3825 islands in 60 days…”

    The past 60 days were just the start, the next 60 days will show a HUGE DROP in islands added due to the new billing rates.
    The next 60 days will get worse as residents abandon thier opensims and choose to cut losses rather then buy a Full island or upgrade to homesteads. As for “the Lab’s server farm” as more and more regions get taken offline, more and more severs will sit offline collecting dust. I am positive LL will find a way to make the residents of SL pay for that problem as well.

  4. Thomas

    Jan 2nd, 2009

    Actually homesteads are not currently listing in the stats. But that still does not explain the massive delta in the figures. Any grade school child can figure out that SL is going thru the same recession as we are.

    As far as Lindens working on other projects… Well common sense must prevail again. You don’t stagnate your company, you go out and find other income streams.

    My personal opinion is that Lindens as a whole lack common sense and the ability to be transparent. They fly off the handle with decisions that have negative impacts without consideration for the repercussions. When you have nerds at the helm you have to expect it.

  5. Gaius Goodliffe

    Jan 2nd, 2009

    On the page this data comes from:

    Economic Statistics
    Last Updated: Monday, December 29, 2008
    Reflects data through midnight, December 28.

    So, with 3 days of data missing from a month, one would expect the numbers to be down 10%. The fact that they’re down 22% does indicate they’ll probably be down for the month. OTOH, saying “they’re down 22% for the month” just shows the reporter is fond of distorting the facts (one of my favorite euphemisms for “lie”) in order to hype a story.

    Of course, that’s par for the course around here. Kinda sad when an organization reporting on LL makes LL look like amateurs when it comes to lies and propaganda.

    Setting the usual Herald spin aside, it would be interesting to compare the figures to December 2007. Real reporters dig out facts like that, because comparing to the same month or same quarter of the previous year is actually *meaningful* information.

  6. hey

    Jan 2nd, 2009

    Maybe we just need more bots!

  7. Eva Ryan

    Jan 3rd, 2009

    Next We’ll see Linden Lab in front of Congress asking for a bailout.

  8. janeforyou Barbara

    Jan 3rd, 2009

    A belive a relative large VR company like Linden Lab got or need a manegement that takes resposebillity for there owners and costumers.
    Adjusting to the marked as the marked it self are in a adjustment, taking invenstments and cost cuts at where it can be done, adjusting prices ( land and land tiers) to hold on to costumers and to get new.If The Linden Lab manegement cant ” read ” the marked ( us useres) thay need a new manegement.Of Linden Lab Manegement dont understand or cant do any of what i told here thay need a new leadeship.

    This is realy the same for all of us that got land and business in SL or RL.

  9. Ha Ha Ha

    Jan 3rd, 2009

    The Writing is on the wall. Even Playboy has Closed thier SL Club and is selling thier island for 600$US. When a XXX industry leader like playboy, sells off it stake in a vitrual world of smut then you know SL is a sinking ship.

  10. Oy gevalt!

    Jan 3rd, 2009

    Janeforyou Barbara, WTF was that?

  11. Blah Blah Blah

    Jan 3rd, 2009

    A bunch of you are just moaning ninnies. It’s called a recession. Say it with me now – RE CESS ION. It’s nothing to do with Linden Labs or its policies. LL is company. Their goal is to both make money from the customers and survive the recession. You don’t like that? Immigrate to North Korea where you belong. Second Life will carry on with or without you in some form for a long time in my not so humble opinion. For every tosser land baron or content designer that leaves more will step into their place. For every halfwit that has to leave because he can’t afford the tiers – good! Let the poor play around elsewhere. BWAH HAH HAH HAH

  12. Anonymous

    Jan 4th, 2009

    I dont think the SL ship is sinking, but it is getting a bit lighter.

    Linden Labs is ranked fairly low with the better business bureau and this is what happens.

    What’s going to happen is in the future is that empty sims that have been abandoned will more than likely be removed from the grid, any empty mainland sims will suffer the same fate.

    What’s happening is that the bubble burst, and Linden Labs is rebounding back to realistic figures. SL is a niche game, and will have a customer base forever. I always thought it would up and die, but that’s not too likely, there are people who will always play. Not saying that it wont die though, that’s inevitable. but just one day going belly up, nah. They’ll scale back well before then. Scale back to what’s actually being used. Land Barons will be smart to do the same. Cut your losses and move on.

  13. Ziffle

    Jan 4th, 2009

    Still obsessed Uripix?

    If you hate LL so much, why do you refuse to detach your leech sucker mouth from it?

    Uripeniscar – biting the hand that feeds wormy mouth since 2004.

  14. Obscure Doodad

    Jan 5th, 2009

    Folks, there is a reason LL may not survive, and it has nothing to do with RL financial crisis.

    It’s Open Sim software. People are hosting their own sims, connected to a grid with an asset server that has avatar inventory follow them from place to place, for about $9 USD/mo if hosting in quantity. A popular number quoted is $30 for 5 sims. Not per sim. For all 5.

    The sim software is open source. People grab it, FTP it to a server, and run it — putting their sim at some grid location. And that’s it. They have a sim (or 5) on which to build and import content that they made on SL and visit neighbors and all the rest.

    The difference? It is buggy for now (think late 2006 SL) and it costs < $10 per sim per month (no setup fee).

    Why is anyone on SL? Because the word hasn’t spread yet.

  15. Baron Cuttlesmith von Blogharder, Esqu, MD

    Jan 6th, 2009

    The Lindens are known for their shady shit, but the disabling of the islands added count is due to incompetence. In early December it fucked up and reported that every existing private island was abandoned. The reason for this bug isn’t known, though it could be that the negative number went so large that it triggered a bug, or maybe they just fucked shit up preparing for their New Year’s Teabagging on openspaces changed to “Homesteads” and it reported the change as mass abandonment. Probably the latter.

    Now, you Openspace people can fuck off. Openspace is a huge bag of shit, and will be irrelevant until PEOPLE ACTUALLY START TO USE IT ON A MEANINGFUL FUCKING SCALE INSTEAD OF A FEW HUNDRED PEOPLE. Moreover, the various openspace “entrepreneur” fucks are more shadying than a furry ageplaying virtual banker. All of the people who own it have an axe to grind; many of them are former bank ponzi schemers or casino shits.

    If there’s one thing about SL’s community, is that it is so batshit crazy and inept that it cannot do anything well. The “openspace” idiots failed because they couldn’t get their shit together- it turned into a bunch of whining fucks. There’s no way that real competition is going to come from SL’s community. It will only come when a company who knows what the fuck it is doing does it.

    The best thing LL can do for SL’s economy is to stop trying to police everything. People LOVE GRIEFING AND TOLLING; they can’t get enough of it. That’s why JLU and the green lanterns do what they do; without grief, their SL would be boring. Even furries love it, as it gives them a nonstop source of dramafodder that allows them to do what they love best- whine. For the rest, it gives them something to focus on so that they won’t attack each other due to lack of drama; it gives them something to make communities around.

  16. Baron Cuttlesmith von Blogharder, Esqu, MD

    Jan 6th, 2009

    As another note, I guarantee that Philip Rosedale is sick of the colossal douchebaggery of his entire world- from the shitty way it is made, to its stupid ass staff, and the insane customers. What he is doing right now is setting up Linden Lab to be sold off this year. He’s saying to himself, “fuck this shit, I’m starting over.” After selling off his failure he will then start from scratch having fresh capital, and then jew over the new owners of SL by taking SL’s customers and best employees.

  17. Orion Pseudo (Shamroy on SL)

    Jan 7th, 2009

    “Despite the “disabled” statistics, observers note that the grim numbers are available at the Economic Statistics (Raw Data Files) page could explain the Lab’s sudden reticence – an 8% drop in total islands in November was followed by a further 8% drop in December for a net loss of 3825 islands in 60 days, bringing the island region total as of December 31st to 22,714.”

    An interesting update on December’s numbers.

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