Total Tier vs. Lindex

https://blogs.secondlife.com/community/features/blog/2009/08/12/the-second-life-economy--second-quarter-2009-in-detail

Here's another way of looking at the numbers...

Assuming most of the lindex numbers are residents putting hard currency in or taking it out, and that these numbers are roughly equal, and that very few people are both buyers and sellers, there is perhaps US$5M per month to be earned by residents selling content in-world. That is, about US$5M per month is converted from L$ into hard currency.

Assuming there are about 5500 mainland regions and 13000 full estates earning about $275 each in tier, and 9000 homesteads/openspaces earning $95, residents pay about US$6M per month in tier.

It would be very interesting to know how much land is held, directly or through renting, only by the people who convert L$ to US$, including all their alts.That'd tell us how much hard currency is actually being earned by those trying to earn hard currency.

Edit: Another measure would be how much US$ is transferred to paypal or paid by check. That'd miss tier paid to other residents by paypal but would still be interesting to know.

Another edit: Seems I was wrong thinking the Lindex was a good measure for how much hard currency is earned in-world. See my comment below about conversation with T Linden in the blog comments.

Bear in mind also that a portion of what is cashed out via Lindex is likely to be re-invested via PayPal payments made to Private Sim owners, as residents use their in-world profits to pay for land that is not Mainland.

And how much economic activity is entirely outside of SL, paid for by check or via Paypal directly between residents, for land or services exchanged inside SL?

The total tier estimate I've listed includes private estates, but yes, I'd like to know how much land is held, directly or through renting, by the people converting L$ to US$. The objective is to know how much of that money they give back in tier, and you can't even estimate that until you know how much land is held by people trying vs. not trying to earn hard currency.

Sort of off your topic....but every time I look at the graphs, this jumps out.... check out the surges from 4th quarter of 2006 into 1st quarter of 2007.

That Business Week article on Anshe Chung hit in November of 2006, if I remember correctly. A ton of people came in from that article - business people with money to spend and invest. The kind of people who understand the concept of SL - explorers - creators - entrepreneurs. A good portion of those people stayed - they are still on my friends' list and still active - still spending and investing - still creating and exploring.

Look at those graphs.

It's been almost 3 years now. Another good PR hit like that one - right now - (it's past due) - would work wonders.

HELLLLOOOOO!!!! Anyone Home???

That was also about 6 months after they opened the registration flood gates and about the time that they announced the 50% tier increase on private islands but that people who got in soon would be grandfathered. And it was about the time that landbots really started to take off. And camper bots and 97 other kinds of bots.

Meade - I wasn't sure what other factors were involved - that's when I came in - but everyone I made friends with during that time frame came in from that article. Tons of people. I didn't know what land bots were then - but good thing, because I flipped a ton of land at profits back then. Ignorance is Bliss.

Did you get that piece of pie I sent you?

Mmmm.. Pie!!

I think what SL needs is a prominent article in a popular magazine about people who are making anything from grocery money in SL to those who are supporting their families with SL. An article about one person in a business mag did a lot for us. I think a broader article about the many possibilities for earning extra money in SL would really help.

Right now, I think that would be a bad idea.. LL needs 6 months of not pissing people off and making SL better for users first. If they can do that, if, then more press would be great.

Interesting development in conversation with T Linden in the blog comments. He (she? why don't they have names?) says other currency exchanges are large. I thought the Lindex was much larger than all of them combined. That the others are large introduces the likelihood that there is a lot of trading between exchanges, so some of the volume has nothing to do with in-world activity. He also says there is trading even on the narrow buy/sell spread on the Lindex.

So it seems that the Lindex is, after all, not a good indicator of how much money people are earning on in-world activity.

Here's what I had to say...

I think a lot of people came thinking they could make money playing an online game.

Edit: I had already heard of SL but I came in September 2006 after reading an article about customer data being compromised

Yes, I do, to the tune of 2.58 million L$ in play right this minute, and I make a small profit on my Lindex trades, but the other side of each of my trades is with another resident buying or selling L$ for some other reason - going shopping or cashing out.

What I and other Lindex traders do is provide liquidity and stability in the market. Liquidity means someone wanting to buy or sell *right now* can do so, cause us traders have standing orders sitting there. Stability cause in the aggregate we keep 100 million L$ in the market at stable prices, so the rest of you have some assurance the price to buy and sell L$ will not wildly change from day to day.

In return for providing these services, I make 0.217% profit on each round trip buy-sell cycle.

Do you trade entirely on the Lindex or do you buy from one exchange and sell to another?

unless my maths is way off, that means your making about 500-600 L$ a cycle?

I limit sell mine, and that can take a few days, so I'm going to assume a cycle is around 5 days to complete.

I would of thought you could get a far better return on what is about $10K US$ elsewhere, so if your happy to say so, what motivates you to trade currency in SL?

It is a fair bit more than 500-600 L$. WHen I did it on the 10 point spread we have now I did it with FAR less cash and made about 700-800L$ a round trip.

A week per complete buy sell cycle is probably about right. Been that way for a long time.

oops digit shift, its about 5598 per cycle, which means if a cycle took 7 days, you'd be doing just over 10% PA, not bad really. (and as you have said a cycle is probably closer to 5-6 days, 5 day cycle would give you almost 15% PA)

/me rushes off to buy, err sell, err, *bah too complicated*

Your math is off. 0.2% x 2.5M L$ = 5000L$ per cycle. It works out to 18% return annually lately. If it gets to where the return is too low, my money goes elsewhere.

I have not traded on other exchanges yet, but am considering it, but I would have trust issues with anyone other than Linden Lab holding that much money, it would want a wider profit spread to cover the increased risk.