Things will get worse if they ever get better

As much as we would all like to see the SL economy flourish, I some how suspect that things will get worse, if they ever get better.

Let's face it, the real world is changing with much of the work and wealth is shifting from western economies to China and India. The US economy is in recession (it could get nasty) and if they are not there yet Canada and Europe are not far behind the USA. Meaning unless you are independently wealthy in the real world, most people will have to tighten our real world financial belts and we will have less L$ to spend in world.

My best SL friend owns a sim and originally she opened it up hoping that it would be a successful residential sim. But it never gained much traction as a residential sim. Well since she has real life bills to pay to the Lindens (+ her VAT), she was forced to turn her sim into a commercial mall and she has done (IMHO) a great job with her builds to create a nice attractive commercial skymall complete with shops, a dance club and a games room full of free games people can come and play. She has about 60% occupancy and as much as she tries, it is hard to get more shop owners to come to the sim.

Last night I decided to do two things. Firstly I wanted to try and re-visit some of my landmarks to organize them and secondly I wanted to checkout the competition to see if what they were doing with their commercial operations and I noticed one thing. The vast majority of the sims I visited were empty. Some of them had some avatars, but most of these avatars were camping. It was actually kind of depressing. I feel sad to see my friend's sim empty. She has worked so hard to build what I feel is a good environment, but I also feel sad to see everyone else's sims also empty. Sure it was late at night where much of my fellow North American citizens we going to bed, but it wasn't that late and SL is a global community where one region of citizens are awake and logged in while the other region sleeps.

Things can not continue this way without negative consequences for all of us. I know operating the servers in SL are not cheap and not free. But the Lindens really don't seem to concerned about the longevity of this world. I suspect that they are only in it for the short term and who knows when they will pull the plug, take their money and run. As we in the West will have less real life money to spend and spending it in SL is one of the first places we will cut back. High tiers, no traffic, shrinking commerce and unstable servers make the prospects for this world even worse. No things will get worse before they get better, if they ever get better.

Comments? Opinions? I can't be the only one who sees problems with empty sims? Are we too diluted in SL? Are there too many sims and too many businesses out there for the number of people willing to spend L$? It wouldn't be as bad if the tiers weren't so high. But as long as the Lindens insist on charging high tiers, they will be the only ones taking in income. Is an SL recession good for SL? Can SL survive the long term under the current economic model the Lindens have created? How long before the Lindens pull the plug and take their money and run?

PS: if people see me marketing my SL best friends sim, it is because she is not fluent in the English language. But she is a very smart young lady. She only (LOL ... only) speaks Bulgarian, Spanish, Russian and Greek. So I help her market her sim and her products in English when I can.

So we will change, we will adapt. Our world will continue in one form or another.

Agree with Rockwell

However:

1) Last night people were generally advised NOT to do any shopping because of server issues, which is why undoubtedly a lot of shops were empty.

2) Perhaps more so due to lack of dollars, many shops and malls are empty for OTHER reasons:

- more shops than needed. Everyone wants to make money on SL - us shoppers can only spread our dollars out so far. There are more shops than needed. Why are people surprised if they don't get rich overnight when there is so much competition?

- lack of originality? A lot of shops sell very similiar things. Takes a lot of effort to explore new places in the hopes of finding quality stuff. Much easier to go places that others recommend, so everyone goes to the same place

- Not everyone wants to spend money. You don't HAVE to spend money in SL. Not everyone cares about the economy (whether they should or not is a separate issue)

- Crappy search engine.

B.

I agree, the world changes and adapts. It's impossible to tell where we'll be in months, let alone years. In that light, I want to treat this post constructively despite its fallacies. SL's fortunes are very closely tied to the shifting economic relationships of the world. There are some very good questions to be asked about our shared future, though I don't think they're answerable (except perhaps by Greenspan the Magnificent!).

But...

What?

So was this post marketing or trolling the Lindens?

I can make myself sad by going back and revisiting landmarks taken six months or more ago, too.

SL changes fast. Places go away, or move, or change hands. What's there one day may be gone the next.

On the other hand, there are always new and exciting places, too. Privateer Space is a good example.

And some places DO have longevity. The bigger hair and clothing and skin stores, for example. Mini-nations like Caledon. Places with large groups supporting them, like Starboards Yacht Club.

As for a RL recession hurting SL, it could work either way. With less disposable income to spend, more people might stay home and get their entertainment via computer. During the Great Depression, Hollywood made a lot of "feel good" movies...showing rich people living the high life. It was escapism for the out-of-work and struggling average person. SL could provide the same sort of salve, by being a place where you can go and live richly, even if your RL finances suck.

I concur with th OP post about 98%. I don't think that SL will fold up. There are a lot of people who live on fixed incomes who designate a certain percentage to entertainment. Although I don't believe that this is enough to keep the doors open, SL is in effect cheaper entertainment than going to a movie...eating out, eating steak for that matter and OMG gas! I think that people will choose to tighten their belts in other ways. I do agree that there is an impending recession. I do very much agree that too many places are empty. Yesterday (Sunday) the grid was lagged to hell for all the people logged on, but yet none of them seemed to be where I was. Even in light of the Access Server issues, I was at some very popular sims and still only saw campers. I don't know why that was and I sure don't know where it was everyone was at, but I know they were there! Meh...probably they were 25% camping bots and 50% traffic bots. The rest of us were out there doing something though. Just not shopping.

Good point. I hope you're right!

Oohhh, look up at the sky! is it me, or is it getting closer?

For as long as I have been in SL (which admittedly isn't that long) I was always amazed at the sims that had no people and wondered how on earth their owners could afford them.
Also I am more than used to non-functioning LMs out of my inventory - that has been a feature of SL since I first joined too.

I think the ones that *DO* survive any length of time without major rebuilds or moving are the exception.

I'll give you another "take" on the recession angle - since doing things in SL is so much cheaper than in RL, maybe MORE people will come in to go to clubs, go out dancing, build a house, or generally find their entertainment, and SL will boom as a consequence.

US$10 goes a lot longer in SL than it does in RL.. You don't have to drive, either.

I like pie

This is a very good point. It's always been a selling point for virtual worlds to consumers, and is beginning to more directly apply for people in the U.S. in particular. Watch as slowly growing gas prices encourage a broad drop in travel, and the rising convenience of broadband to urban and suburban markets, along with the rise of computer/console gaming as an alternative to more "conventional" entertainment, pulls people online in record numbers. Kids who grow up on web games and networked consoles get interested in structured MMOs, then graduate to working on or playing in freeform virtual worlds.

I agree with this statement.

The only thing i do forsee being effected is possibly Land investment. Suddenly spending $1675 for a potentially empty sim looks a whole lot more expensive, not to mention the re-occuring $295 tier fee. I've always thought the tier fee structure was too high for what you get.........we'll have to see how the economics pans out through a very rocky 2008 & 9.

As regards other items like clothing, skins, gadgets etc.....i think it will be business as usual. 3/4 days camping and you can afford an A-grade skin! I think the demand for affordable items will continue unabated.

Oh how predictable. I guess I have opened myself up to abuse with this thread since there is no shortage of people who like to flame others here.

For those people who have invested real life money in SL for sims and monthly tiers, then I appreciate your comments and yes the argument of people potentially spending less money on real life activities and more money online is valid. Of course it is one thing for people to comment on spending RL money on small time SL products like clothes (or whatever else) versus spending RL money on SL sims and tier payments. The later is much more of a real world financial commitment and it will be the later where people cut back on first when RL financial responsibilities get stretched.

Maybe an SL recession is a good thing? Maybe there are too many sims out there? In a market economy only the strong survive. Maybe people abandoning their SL financial commitments will be a good thing? Maybe it will send a message to the Lindens. Maybe it won't.

Go ahead and flame me if some of you people feel you need to. But regardless of how you may feel about me and this thread, the reality is, is that we are about to live through some tough real world economic times and SL sim/land owners will need to choose between keeping their SL ventures alive and whether spending their RL money on food, housing and all the other bills we must pay in an ever increasing expensive real world.

PS: I guess I started this thread because I care about my friend's well being in SL. But I can only assume that she was willing to accept the risks of opening up her island (some of our communications do get lost in translation) before she started it. I know while I am not in a short term bad position with my real world finances compared to the average person out there in society. But there is no way I can see myself spending $1700 + $300 every month towards making the Lindens rich (and I don't have to pay the extra VAT).

I was talking to someone about this exact same thing this weekend. If you do the math (and as long as you don't calculate the cost of the computer or intenet service, SL is the best value in entertainment out there. Most people are going to have computers and internet access anyway, since they have become such an integral part of our lives. If you look at the value, though, compare SL to the cost of going out to a movie. Figure about $50.00/person, if you go to dinner first, then get a soda and popcorn at the theater. $50.00 gives you $L12,500, which is enough to do a LOT of shopping, dancing (with tips), buying toys (I suggest biplanes), and general goofing off. A movie lasts 1.5 hours. $L12,55 should last you way longer than that. Plus, no gasoline to get to and from the computer; no dressing up to impress whomever you go with; no idiot with a giant hat sitting in front of you...etc.

If times get tough, we might actually see a surge in the SL economy as previously casual players look to cut their recreational budgets.

High gas prices do seem to hurt business.

It doesn't seem to affect how much people play SL though. Of course you can play SL without buying things.

If anything, people will be a little more cautious with their money in SL too. I wouldn't expect to see many large purchases of land except from established land owners or those who have it and can comfortably do it. We might see a surge in the rental market, though, which would be a good thing for many landlords.

Ok, I'll bite. I have had months that were slower than others, but on the whole I just have not seen a long term drop in spending or time in SL. If anything, my traffic at the Gardens increases over time and business is great.

You say that it's a shame that your friend's lovely sim that she worked so hard on goes empty. I say it is because there are a gazillion sims just like it out there. You have to offer a unique experience that becomes entirely your own. Attracting visitors and shoppers is work and if you want those people you need to be offering them something beyond what they found at the last 10 commercial mall sims they visited.

High fees and overduplication of the same ideas (clothing, architecture, &c) basically trend toward market shakeouts. Heavily favouring existing businesses and those who learned the lessons early.

I tell you what, if I were starting now as opposed to when regions were 195/mo... Caledon wouldn't exist.

It's a tough world - and this goes beyond virtuality.

There's an incredible phantom land of almost-realised dreams... wondrous places and experiences that never quite made it, due to economics.

On the other hand, tough economics brings us together. If regions were 5 USD/mo, Caledon wouldn't exist under those conditions either. Everyone would have one - and they would all be lonely, desolate places.

I think that depends on the people spending small-time SL money, because it's those that make the Business Owners able to cover their SL costs and stay open.

If the small-spenders spend more on their Sl entertainment then that will make the Island and business owners more profitable, so they can stay in-world.

Listen, I'm not saying that this will necessarily happen, just that there are multiple ways to predict what could happen in the future - it doesn't HAVE to be doom-and-gloom.

Right now, the business I work for his seeing it's strongest business in many many months. No downturn yet, anyway!

*sharp intake of breath* I think you just spoke heresay!

Actually I can remember my first 3 months in SL not so very long ago - I think I must have spent no more than L$100. Somehow I went from that to needing to spend thousands, perhap millions of L$, looking back it mystifies me how that happened.

You don't know flaming. This ain't flaming, this is constructive criticism.

Worry granted, your friend takes a mighty risk starting up a sim and accepting the costs. But she's an adult and (presumably) able to take care of herself. Every year a whole lot of money vanishes down the drain of entertainment and SL is just the tiniest sliver of the tip of it. Luckily, this thread positively redeemed itself and we got to talking about the economy and how SL isn't that bad costwise compared to the alternatives, as long as you don't mind spending some nights indoors.

One of these days I'll be able to tell the tale of the best (or worst) $600 I ever spent.

There isn't much real flaming that goes on this forum anyhow. Been years.

Couple quick bits to the OP:

SL seems barren since people from all over the world have places and built them up - they do come in, but more than likely, not when you're in.

60% occupancy at a mall is not too bad (for RL figures (which I know may not apply, but people are people), lenders use 75% as a rule of thumb for rental occupancy)

I think it will take a serious legal action for LL to close their doors at this point, and even if people do cut back on how much tier they are willing to pay, or some island owners just up and quit - leaving their island to LL - the worst case result will be a trimming back in the size of the SL world, if LL does need to take some of their servers off-line to cut cost.


Glad to hear you're looking out for your friend, but if I can give my 2 cents worth? Perhaps you can research how to increase her occupancy, or concentrate your efforts into developing a good draw for her island...something to enhance the experience people have either while shopping, or instead of, or before or after.
(like...people buy some dance animations...nothing wrong with a low-lag club nearby as a place to check them out)

Something in the OP hit a little close to home. I live in southern California, where gas & food prices are outrageous, and rent even more so. The cost of all these keep going up a lot faster than the almost non-existant raises. And people trying to follow their old landmarks to my place will find that it's just not there anymore....


...because they missed the announcement that I bought an island.

Just because you keep hearing about how bad everything is supposed to be, doesn't mean that it's really that bad. "Slightly worse than last year" makes a crappy headline. Most people see stories about an impending recession and start thinking that everyone in the neighborhood other than themselves is on the brink of bankruptcy. Every couple years the economic sky is falling, and every alternate couple of years it's better than ever before. Calm down, try some decaf, everything will be ok before you know it.

But if any of the Doom-n-Gloomers are still worried and feel like they need to panic sell their island, let me know. I'm thinking about buying another one.

Colette, this was not the motivation behind creating this thread. Of course people can login to SL and not spend a single penny of their RL money in world.

Not saying you are one of these people, but it is easy for someone who does not pay into the system to flame people who do pay into the system. No the motivation was geared towards those who have RL financial commitments in SL. At what point does it make sense to stop paying into a system where thousands and thousands of sims get little to no traffic.

Maybe an SL recession is good for SL? This is of course assuming the Lindens don't rely on growth to keep the grid alive. If the Lindens rely on growth, then I am afraid the days of SL could be numbered if a bad real world recession was to hit us (there should be no arguing that people living in the West need to adjust to an ever changing world where the jobs are shifting to India and China).