Opinions of the SL economy from a long term perspective.

I was wondering what people thought about the inworld economy, maybe for the last year. I would personally say that it’s collapsing in on itself and the ‘boom’ of Secondlife is so over. But I am just one person and one business owner. I have asked a few friends and they still have high sales. Mine always have paid my tier, and gave me a slight profit. And I always had a policy of not spending cash inworld, if my business doesn’t make tier I either throw it into a vending machine or move to a smaller plot.

But last year at this time I was almost up to half a SIM’s worth of land and monthly tier and profits. Now I can barely manage 4000 metres and my large plot has been on the market for about 2 months at 4.25sq/m and still won’t sell. So basically selling it for less than half what I paid and taking a huge loss. Just curious is others see the inworld economy falling apart.

It may depend on the business you are working in at this time. Over the last year or so, I have seen quite a few things that I thought were going to tip the boat. Each time, there are the knee-jerk reactions by some avatars. However over a few weeks, things returned to normal. Its a matter of diligence and patience.

Hmm. Prices seem to have gone down a bit since I sold off my land. Even so, the price you mention having posted your land at is well beneath the current market low. It should have been snatched up by a bot in seconds at that price.

Unless it's island property. In which case all bets are off.

Last week I priced mine a teeny bit above the (then current) low, and it STILL went within a few hours. Then, within a few days, it sold for a few L/sqm above the market bottom, and again to end users at a considerably higher price.

I can't speak for the whole world, of course, just add another piece of anecdotal evidence.

The business I help manage has been doing really well for the past few months. We have seen a bit of a dip during the systems issues that LL were fighting, but in general are strong.

I think that there is a natural ebb and flow of business - SL residents can be fickle, and it depends a lot on what products you are making and whether you make the right steps in the overall growth direction of your business.

My experiences seem very close to your own.I tend to trade up and down according to sales ,If good I expand and bad I contract.To me The game must pay for itself.I think the most important thing is change.Last year at about the same time I returned from a month trip where I had little contact with a PC to find that casinos had been banned luckily I sold up at the top end of the market.As for long term I tend to treat this game as a temporary fashion still slightly in vogue at the moment but tomorrow is another day.

Too many people expecting to be paid to play.
Too many faked figures.
Too many lifeless sims.

i keep moving my store location. no one can find me. i don't really care, i think it's just fun to build.

if you are in to gaming for the $, then you chose the wrong game.

My philosophy in a nutshell: sales of houses tell the tale. When houses are selling it means people are buying land, when people are buying land it means they are settling in and preparing to stay a while.

Houses are still selling well.


Sidebar: Sales of everything experience a dip when SL is going through a really bad patch. Look at quarterly results, not weekly or monthly. Quarterly is where the real patterns and trends emerge.

SL economics has its fluctuations, but not much worse than any other business efforts.

While Textures-R-Us had a dip in sales after recent SL client problems caused some issues, we seem back on track now. Sales are good, and staff artists like myself are continuing to create new and unique textures for builders in SL to use. Long-term prospects loiok good for texture sales, if you are a creastive artist who actually creates new and unique material.

My "Fox and Ground Construction Co" business has more potential sim building work than I have hours in the day to do. I'm building as fast as I can, and turning down some very profitable potential contracts because there just aren't enough of my own resources to cover more projects. I'm booked months in advance. Plenty of people are still buying sims, and need to hire skilled professionals to terraform, landscape and build.

On the other hand, I recently closed my clothing and furniture stores. Those markets are relatively saturated, and my time and effort are better spent doing building and texture work. Other people do better at making clothes and furniture than I do, given the amount of time and effort have been willing to spend in that direction. Yet certainly there are profitable makers of clothing and furniture in SL.

When SL got started, it was easy for someone to make profits selling simple dresses or t-shirts, even if they weren't very good, because there were fewer options for consumers. If no one else in your town sells pizza, even a pretty bad pizza parlor can be profitable. But if that same town has half a dozen specialty restaurants that all serve better pizza than you know how to make? You either spend more time and effort and make a better product, or you fold. The larger SL gets, the more any business effort will be like in the Real World, where it takes time, talent, and lots of effort to make and sell a good product. Those who have the talent and spend the time and effort can certainly stull run successful businesses. But those who think they can just open up a store and put poor quality wares on the shelves and watch the L$ roll in are going to fail.

The SL economy, I think, is starting to look a great deal like IT itself.

When the computer was first invented there was a huge boom due to the original developments in the industry and their expansion. Now, however, this has changed - it's generally recognized, throughout the industry, that all of the "big" mainstream applications are pretty much done, and market leaders are established, so most of the work will now go into custom software for big businesses who need to use it internally. It doesn't help very much that most mainstream applications are natural monopolies - that is, most people would rather pay for just one application that has all the functions they need. Even those same applications are suffering from the fact that there isn't that much extra functionality with value for mainstream users. I mean, it's been well known that Microsoft is having trouble selling new versions of Microsoft Office because the earlier versions already do everything that most users ever need. And if the problem is stopping the largest software company in the world selling one of their flagship products, it's likely that the problem's deeper than can just be dismissed by "oh, you're just being miserable, there's always something new to be discovered".

SL, it seems, is going very much the same way - the mainstream use of SL is as a talker (just notice all the green dots in clubs) and most of the businesses supporting that (including providing generic "fashion" avatar items) are very well established, now. Some people will go further and build houses, but they still basically use SL as a talker, just with their own background. The above posts show the trend: Isablan observes that an established business in a mainstream field (housing) continues to be popular, while Ceera observes that creation of custom content (ie, whole sim builds) is becoming the boom field, just as it did in IT. Of course, this may wind up stagnating too, simply because it's difficult for new folks to get a foot in, when sandbox building isn't really representative of the process of building a whole sim and they won't be noticed in the mainstream area.

The real problem is that these shifts in SL's economy could be putting SL as a whole at risk - for example, IMVU is essentially an SL variant that's optimized for use only as a talker. The leapfrogging of in-SL skill development has basically meant that any feeling of competence or growth has been removed from SL for many users; while it might once have been the case that you could start in a sandbox and work your way up, now only a tiny minority will be able to do that and the majority of the "top slots" will be existing 3D artists who learned to adapt to SL. That fact alone may drive many people back to the "grinder" MMORPGs, which can offer growth, albeit through a less enjoyable activity but at least the path will be open. And I have to wonder how many of the people who build custom sims do so while already knowing that the plans the customers have for the sims will be doomed in SL's social model, but keeping quiet about that..

I'd put it less harshly, but I've turned down a few confidential scenarios where I simply knew the project would implode into irrelevancy and cancellation... and I didn't want my name or creator tags tied to that.

Though the outlook is not so bleak, I think.

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There's a certain amount of product persistence in the world, and it has to do with human behaviour. For instance, consider US-made automobiles in the 1970's. Not exactly good stuff - but a HUGE sector of the market would refuse to buy anything else. Period. It wasn't just nationalism... it was cultural. Look and feel.

That kind of thinking goes on today. Consider the Ipod. All the cool kids have them. Quite frankly, compared to what an mp3 player COULD do... they suck, and are far too expensive. Yet for a little bit of slickness, they are the 'cool' product and that's all there is to it.

Take Coke, also. It's flavoured fizzy-water. Anyone could make something comparable, and 99% chance that you could come up with a flavour you liked better. But... it's COKE! It's familiar. It's in that happy red can, and it's everywhere. Pretty girls drink it. You know you want it, too.

Humans are such funny creatures. Look at the loyalty to products and companies people openly despise... Microsoft, the oil companies, you name it. Why? Because... it's just "where it's at" or it requires effort to change.

And let's face it: the grid here is "where it's at" for anything even remotely like this platform.

The "where it's at" effect is so strong, you can even take the cocaine out of Coke and people will keep preferentially drinking it for 100 years. And utterly despise 'new improved Coke' even if you try to make sane market moves. Like the Ipod it is now a cultural phenom, and quality of product or anything else comes second.

Something to think about.

I agree with a lot of what Yumi is saying in her last post.

SL is becoming divided into two groups. There is a small percentage of people who have the talent and experience and skills to create content that can be profitable in the current market. And there is a much larger group of people who use SL simply as a social gathering place - people who are willing to buy clothes, homes, and even whole sims, but who have neither the time or the skills to make stuff themselves. Look at the real world. What percentage of the population purchases clothing, and what percentage actually makes clothing? Or cars... Or computers...

One friend of mine once said to me "SL is great for someone like you, because you have the artistic talent to make stuff here that people want. For you, it can be profitable. But for someone like me? I'm not an artist or a programmer. So there's no way for me to make a profit here. It's a big chatroom and mall."

Now, for a lot of people, a customizable 3D chatroom amnd mall is a wonderful thing, and they will be very willing to pay for it. Many of my friends in SL, the only way we could ever meet and socialize is through some sort of on-line chatroom. The visual and 3D environment of SL is more stimulating and interesting than a screen full of text chat in ICQ. SL also has advantages over places like IMVU, in that we can use adult content here, where what you can present visually and even in speech in IMVU is ratings-restricted.

I do find that a lot of people really get into making their own space to socialize in SL. Like a teenager decorating their room, they go crazy making the space "theirs", and expressing their own vision of what makes a comfortable place for them. So for a lot of people, that means they buy a lot of 'things' to enhance that environment. No one 'needs' a painting on the wall of their bedroom in SL. No one needs flowers in the flower bed outside their house. They don't even need a bed. Yet it adds to the ambiance, and makes it more immersive when you add such touches.

As a sim designer, I try to design and build sims that will be successful for my clients. I work with them to make a design that will do what they need, and I advise them on the costs and pitfalls that I have learned about so far. I'd rather not spend months of time creating something that will have the lifespan of a mayfly, even if it does pay well.

Some of my clients see their sims as a pure entertainment expense. They don't plan to do anything at all to recover the start-up or operation costs. Some have other business ventures, in SL or in the real world, that are quite profitable, and that pay for the expenses of the "for fun" projects. Some just write it off as the cost of their fun.

Some see it as a business expense - the cost of having a space in this virtual world in which to represent their real-world university or business. I hope that the sims I have designed for them fit their needs, and that they can make good use of those resources. They don't expect the sim itself to cover 100% of the sim's expenses. Other benefits, such as publicity, or the ability to offer extension classes worldwide, make it worthwhile for them.

Most of my clients right now are in one of those two groups - "for fun" or "it's a business expense".

Yet some sims are looking to make back 100% of their start-up and operations costs based on what they do on that sim. Honestly, those are the hardest projects to design, and they need to have a solid business plan and the patience to wait many months or even years to see a full return on the initial investment. Some seem to be successful. Some have failed. I don't take many of those clients, and when I do, I try hard to advise them honestly.

i agree to a point. many new users are willing to try their hand at building before buying, so i predict that home sales are not a completely accurate reveal of the economy.

My opinion on how the economy is doing would largely be based on the amount of L$ that Supply Linden sells.

As long as it's selling L$ at all, there's more demand for L$ than there is supply so the economy is growing.

If it ever has to stop selling L$, some sellers will find it hard(er) to trade their L$ for US$ and it could turn into a bidding war with the exchange rate slipping (good thing for L$ buyers though) and it's a gamble what LL would do about it if it doesn't stabilize by itself. They indicated that they'd consider accepting L$ for tier as a new economic sink in such an event, but that would mean they loose revenue.

I don't really consider the in-world (L$) economy to be of much importance at all because L$ has no value in-world, only at actual time of exchange, and especially since most people's business model depends on cashing out, if only to make tier.