Is Credit Crunch affecting your Second Life?

I don't think anyone will deny that the credit crunch and recession is having far reaching repurcussions in many people's Real Lives.

I'm interested to know how it is affecting people's Second Life.

Have you had to reduce time or financial investment in SL in order to save money or work longer hours in RL to make ends meet?

On the other hand do you escape uncertainty in RL by escaping to SL? Has redundancy or restricted RL working hours meant more time for SL?

How have SL business owners felt the SL economy as a whole has reacted?

is this a survey in the guise of a query? (oh wait, they basically are the same thing) LOL

for me, it is pretty much the same as it was...

Hi Rhaorth,

No, not a survey and no ulterior motive, I just thought it would be an interesting discussion.

what about your own experience?

most folks will put their own answers after they post questions like this.

It would be interesting to see if the crunch in RL is affecting ppl in SL, however the amount of people that are on here and that might reply is a very small number.

still, might be fun to see what others say

Not having much effect on me directly, no. But friends of mine have had changes in employment or RL finances that have impacted them, to where they are not able to be in-world as often.

Credit crunch? Well, that's personal. But, are the repercussions of the present recession effecting my SL? A little...........I watch the news even more than I usually do. I haven't spent a lot of Lindens in SL for quite some time...........but that has nothing to do with any economic situation in the real world. It has more to do with the fact that I can make or build most anything I want.........and being the practical person I am I see no need to spend "money" on things I can do myself. Four textures for a prim skirt outfit is 40 lindens..........that's about the extent of my spending now for several months. Though there are days when I upload more than just a few textures. If the economic situation for me ever gets to the point that the $22.50 I pay Linden Lab every three months is a burden (or even threatens to be a burden) Second Life is going away for me.

Real food and shelter are necessary..........virtual stuff is not.

Sorry Rhaorth, you're right I should have volunteered a bit more info.

I'm more a casual tourist in SL to be honest. Two or three hours a week as an average.

As most people might suspect I'm not as "new" as my profile indicates. I'm not an alt though, more a reincarnation in that I was around a year ago (or so) and left for no other reason than I'd seen all I wanted to at the time.

In RL I run my own software business and while we're a little insulated from what's going on due to having a reasonable portfolio of solid(ish) maintenance contracts, we have seen a slow down in new business.

We also however do run a franchise business, and we've seen a marked increase in prospective franchisee interest.

My feeling is that perhaps the current economic climate is forcing people to re-evaluate who they can trust with their financial future. Ultimately they are finding that they feel safest with control of their destiny in their own hands.. thus a move to viable and real self employment.

My expectation therefore is that this will be a real test of the SL business model. Can people really come to SL and build a viable online business which is more than a hobby? will people be able to help household income with positive revenue streams from SL?

This of course depends on a consumer market being in place, the question is.. if we build it, will they come?

Just my view, I realise it's quite a dry subject so don't expect this thread to be around for long..

I wish people would stop throwing around terms like "credit crunch" and "these tough economic times" like some sort of demented mantra.

Ben Bernanke goes on record to say that he THINKS that the year isn't going to be as bad as predicted and suddenly stock markets go up.
How about we ALL say things aren't so bad and maybe the folks creating stock market mayhem will be lulled into thinking all is well, the market will go back up and we'll just agree to call an end to the recession.

I was taught to manage my money responsibly and the only effect these "tough economic times" have had is that some things can be had a lot cheaper because everyone is trying to sell stuff.
When a friend said she was worried about buying a new fridge in these tough economic times I asked her if she was losing her job. She looked at me in surprise and said: "No, of course not."
What did she think was going to happen to her new fridge?

I realize that people who have/had manufacturing jobs or those who let their debt go beyond what they can afford are suffering right now, but that doesn't mean we have to perpetuate this mess by sitting on our piggy banks.
I'm not about to stop spending my weekly five bucks in SL because someone else decides that there is a credit crunch.

"Can people really come to SL and build a viable online business which is more than a hobby? "

For most SL entrepreneurs that wasn't happening before this "credit crunch". It's not about to become a viable business model now.

Hi Bran,

I'm glad to hear it's all fine in the Georgia household.

I'd have to say though that in my opinion your views seem at best ill informed and disconnected.

I'm not actually going to go into the detail of why, because I suspect that if you've reached March 2009 without appreciating what's going on in the world, you're not really that interested.

Needless to say I think that any of view of the current worsening situation as sentiment fuelled, is crass beyond belief.

Either way it's a valuable insight into how some of SL's citizenry feels about what's going on.

I'm constantly going against the grain on this subject. Second Life is not, and unless there is a huge change in the stability,reliability, and reputation of Linden Lab and this "platform", a realistic or viable way to even suppliment a real life income. Yes, I know some do just that. That extremely small percentage of souls who have accomplished such a feat did so at the very beginning of SL's inception or they got very lucky. I do not believe anyone can duplicate what's been done in the past with SL and making it a source of income that can be relied upon for real money to pay real bills. Way too many things against such a feat............such as anything anyone can make in SL to sell can be done by the individuals themselves.

Linden Lab's "business model" will only work when the economy is good (even bloated as it was for the last few years...........falsely bloated, as the recent events have shown). When the economy settles down LL may start making money again. But, I doubt any real life business is going to put much into SL or it's "economy"...........the best LL can hope for is advertising purposes. But the demographics of the SL population will have to change rather dramatically for even that to be viable........we just don't like being the target of advertising (I would venture to say we "hate" it).

The overwhelming majority of the people (residents) of SL few this "platform" as nothing more than a game. It will remain that way for quite a long time.........maybe for the entire life span of Second Life and other virtual worlds.

I actually think SL will survive this recession. But, reality might set in for the folks at LL when they see just how fragile their existance is and change the way they see the future of their platform. It's a game (a "folly" for almost everyone who happens to install the game and participate in the virtual world. So, I don't think many will use SL for even a supplimental income............and far fewer as a major source of income.

I think it would be easier to invent a reliable, efficient way to generate power using wind or solar technology than to invent something so unique in SL that it will generate a real income. And we know how long solar and wind power generating efforts have been around.

My thoughts. I know I'll be disputed. But after over 3 1/2 years in SL and almost 3 years of reading these forums, I can almost predict who will chime in and what they will say. Those are the ones who have "made" it.........they are proud of their accomplishments (as they should be.........quite a feat). But they are a small minority in these forums. The posters in this forum are a very small minority of the residents of Second Life. Put the total number of successes against the tens of thousands of users and you'll see your odds..........not very good. No sane, successful business will ever put more than just a little of their advertising budget into SL. Anyone attempting to do what successful businesses won't do is asking for huge ulcers with little chance of success.

Hi Peggy,

Thanks for that, I have to admit I tend to agree. Although there is the old saying about necessity being the mother of invention.

When I first arrived in SL in 2007 I did come as an RL business person doing research into a potential new market. I quickly came to the conclusion that ROI compared to that available in RL was very, very poor even if you could generate a positive cashflow.

As you point out there are always exceptions to prove the rule and as a result of Linden Lab PR and a certain level of vocal self congratulation, these success stories do tend to drown out what I see as the real SL story.

As I say though, that was then and now is now. People tend to be a lot more inventive, energetic and resourceful if their backs are against the wall and SL does offer an easy to access infrastructure and market (albeit a restricted one).

The other alternative of course is that SL simply becomes a world of ostrich heads poked into the dirt.

It might be that more and more people immerse themselves in an inexpensive fantasy lifestyle in order to escape a RL that isn't looking as good as it used to.

Even this scenario though brings some hope, because as the population of potentially desperate consumers increases, so do the opportunities.. maybe.

Perhaps you need to include in your OP: Only reply if your views agree with mine and/or you are an American citizen victimized by an unstable banking system.

Yes, all is fine in the Georgia household. That was my point. Not EVERYBODY is suffering repercussions at this point and only time will tell what'll happen in the future. And since I'm not suffering, I ought to do my part to help end these "tough economic times".

I'm glad you're such a genius that you can understand my view of world economics by reading just one brief post. And you may wish to read back a few days' worth of news to see how Bernanke's comment affect that day's stock rallies. If you don't like my jibes about that, I can only say "lighten up!"



I doubt that is the purpose of your post.

This has affected my spending habits both in and outside of SL. In my place of employment we are looking at a very bad year ahead with no work on the books for the next 4 months. Furthermore, the architects which feed our buisiness 6 months from now have no work. So I have tightened my belt and there is the slight possibility of a layoff, although I would be one of the last to go.

BUT, I had a premium account and land for the first 2 years in SL but had to downgrade to basic for the last year because of time off work when I was ill. This week I paid for a year of premium. Outside entertainment and meals will be cut back and I will receive much more then the $72 for the years membership in entertainment value and actually earn more in stipends then I am paying anyway. I figure it as a win for both myself and LL.

I agree with Brann and will add that tis so called "crisis" is in fact a self fulfilling prophecy. While there were definite stupid moves made in the banking industry- mortgages, etc- the media fueled the fire to the point that it could no longer be contained- mass hysteria has us where we are today - and don't even get me started on the infamous $13.00 a week u get to hang onto- btw- about that-dont think u r GETTING anything - the tax laws arent changing - the $13 will be taken at the end of the year... you dont owe less tax- u just owe it later- does it affect SL? Sure, to some degree- but for those that SL is a part of our lives- u adjust somehow. Personally, if it meant feeding my family or owning m land- then of course i wd give up my land- but until such a thing happens- no - SL is very much a going concern for me.

It depends on what people do in SL. I think that for most what they pay for SL (premium membership, tier, buying L$) is part of their entertainment budget and, as such, one of the first things to cut back on if necessary. If it is (as for me) monthly cost on a par with an average dinner at a restaurant, things would have to get a lot worse before I would be forced to cut back on that. It's too small a percentage of monthly expenditure to make a difference.

For people who pay 100s of dollars every month for whatever they are doing, this may be different.

As for SL business owners, I'm hearing mixed messages here: Some do well, others do get hammered. I don't see a pattern here.

Hello again Brann,

I'm sorry if I was a wee bit vehement in what I said. In my defence though the topic I'm interested in is not really the cause of the current recession nor who we should blame.

We are in the midst of a global "recession" which is fact, if only because at least in most of Europe and the US we have met the formal economic criteria required to call it such.

Since we are in what is correctly termed a recession, of which most commentators would say we haven't seen the worst, I'm not sure that using the phrase "tough economic times" is in anyway resorting to "demented mantra".

Also. since the straw which broke the proverbial camel's back seems indeed to be a sudden and accelerated restriction in the availability of credit to business as well as to consumers, it seems the euphemism "credit crunch" is also not entirely without reason.

I admitted that I'm in a somewhat priviledged position in which I've not been affected personally and can actually see a point where a continuing recession will increase revenue for my business.. it's an ill wind and all that.

I do however live near London in the UK and have seen a definite spread of the affects ripple out from the finance sectors into the rest of the economy with devastating results both for individuals and business.

If I may say so, you also seem to have a somewhat stockmarket centric view without much of a conception of what is actually happening there or what a 30-40% drop in the market can do to people's lives or retirements for that matter.

Yes the stockmarket bounces a wee bit in a bear market as well as a bull market and I know several day traders who make a good living even now out of profiting from the small fluctuations. These fluctuations however are not trends and the fact that Mr X said Y and share prices did Z for a day or two means diddly squat for the economy as whole.

I'm sure we all have opinions about who is to "blame" and what can be done to "solve" the situation. My main objection to your post in this thread was an apparent callousness to the the circumstances many people find themselves in and also people's understandable worries about the future.

Forgive me if I also find the view that we can somehow talk our way out of this in the foreseeable future a little niave to say the least. If nothing else the slight "I told you so" flavour to your posting will be of small comfort to those (possibly reading this thread) who are worried about losing their jobs or worse still homes.

Anyway, aside from all that I was a wee bit peeved because if nothing else you seemed to be derailing my admittedly tedious thread, in that I was interested in the impact of a recession on SL.. not the reasons for the recession in the first place.

SL is for me good entertainment value for most of the time and a very cheap worldwide advertising platform for our RL business. However after the OS fiasco we got rid of ours saving 75USD then gave our private estate up and went down to a sims worth of mainland saving us a further 100USD i have an annual premium account and get 500L$ a week stipends so effectively LL pays me to play here.

Personally i rarely go in game now, but my wife does as she makes and sells things which help towards the tier, nearly paying all costs each month so all in all SL is cheap for us as we do not pay VAT as we are a registered business and claim SL as advertising expenses.

But we like many others do not buy lindens anymore and i certainly don't put the same money into it that i used to SL has lost a lot of the shine it had for me and to be honest if it wasn't for the fact that we used it for RL business advertising, i wouldn't mind if i never logged in again

I think the recession is bound to affect the amount of money that many people spend on SL. Particularly those who spend a lot like island owners.

On the other hand, the recession is likely to see an increase in the amount of TIME people spend in SL.

If the recession turns into a depression and difficult times drag on a for years, more people will hang on to their old computers instead of replacing them. Also some people will be forced to leave the computer age when their comps pack up because they won't be able to afford a replacement. That might have a small downward effect on SL.

I only see indications of further deterioration in the RL economy over the coming months, there seems to be nothing to stop the downward trend despite a few politicians trying to talk things up. I'm from Britain, by the way!

Something else which we'll be seeing is that companies are saving costs by minimising their IT expenditure. Specifically, I don't see major corporations investing into top-line graphics cards for their employees' PCs. This will impact the ability of corporate customers to follow innovations LL may be contemplating (shadows, for example) or use SL at all (e.g. if they use the infamous Intel graphics cards).

My 3 months in SL costs less than one evenings night out. So I choose to save money by being on SL.

The problem in any recession is ways in which money gets tied up in savings accounts as people fear for future. Referring to my real life - my own income depends upon the desirability of my "product" by a wide swathe of young adults to early 30s. I sell little or nothing of what I represent/produce to anyone over that age. I havent noticed a lowered demand in my product BUT I have sensed reticence on agencies to commit funds/promises in teh near future. Naturally I hope this will pass. I have positioned myself to hopefully survive but I feel very sorry for those who have not.

Trouble is that those older people - 45 and upwards may never regain their losses in stocks markets of world. And those who say they cant afford stock portfolios (nd never owned them) have prolly got a pension fund in which case they are/will be impacted in their futures. Charities and welfare systems will all be directly impacted. Many foundations have dried up and univesrities have lost hug amounts of regularly donated funds.

Economic crises of this magnitude impact all - in this case globally. Middleclass of developing nations may not have teh same foundation of historic economic stability to survive this crisis as dominant G7 (or is it 8 -dunno) middle classes. For example This could impact sub-continental economies and definitely affect Chinese and Japanese markets.

We may resort to an "I'm all right Jack" attitude very easily but we must be aware that everything can change overnight. In this case all ourselves impacted: small town/main street USA, manufacturing cities of UK, French bistro owners, teachers in japan, Ozzie ranchers, teenager buying cds in Tahiti are all going to see some impact.

SL will be impacted as all technologies will be. Look at all tech companies across teh whole spectrum. Selling products at a loss is a dangrous resort. Management of a bank account does not truly relfect ones safety net - electricity/food/gas or petrol/mortgage/rent/leases - all services - will eat away at any frugal habits. It's not the end of teh world but its a shift in the world and a changed outlook of one's own part in world is demanded.

Hello Stephen, I just read and considered all commens here and they are interesting section like letters to editor in newspaper. I think your post demands a serious answer and one which may open up more discussion.

On reflection I think it is easy to ignore crisis but that doesnt mean it will dissipate. I am concerned since I produce a "barometer-product" and I employ people. So far no dismissals and I will retain as much as possible since I depend upon a "team". But how long will our product be in demand as times toughen? I am not "computer software" by way but could be defined as a "popular product". The issue I see here is how rapid all this was. Although I do not approve/liek teh following analogy an acquaintance told me he was losing equivalent of a ferrari a day n terms of business losses as inital crash was occurring. He brought it to cash terms. He saw it as a personal cash loss. On other hand, I saw it as employment for peopel I have worked with and who have worked for me in some cases for ten years. Many are hired "on spec' on short term contracts. But I cant hire/pay them when no cash/demand of product is incoming. We are at mercy of a panicking population on a Global platform. I could always rely on somewhere in world for my product to sell, but not so much now. That is the issue for me and for many more in reality. If YOU are my employee then YOU are in it with me - you see? I suspect service industries will be hammered in this "dinosaur extinction".

Ofcourse this is all very general and really more details cant be provided but I think I explained as much as I could.

One problem I see evidenced in business and population and world is growing selfishness of everyone. Protectionism is beginning at teh base level of consumer's home and that is gonna be a truly negative path to follow as nations indulge in those economic policies.
"Jig"

I suppose I am one of the fortunate few early adopters talked about earlier in this thread. That said I do not make a RL living off SL. I managed to make my SL pay for itself and a little bit over.

Myself and my family have mostly withdrawn from the business end of SL. Some may have noticed Textures After Dark is gone after being in existence nearly 4.5 years. The House lot and animations business went a long time ago. Interestingly enough none of these closures had anything to do with sales or Hard economic times. It had everything to do with the family just wasn't enjoying it anymore.

We tired down to 2 small home plots. We spend time exploring and visiting with each other. We have fun.

As for spending habits. Between us we can make almost anything so other than uploads we don't buy much.

I think that SL can be like the 1930s movie palaces. People with less money to spend, and fears about the economy or their job security, may put off a vacation or car purchase. They then take that "savings" and spend pennies on the dollar for fun in SL, just like during the Depression, people spent pennies for 2 hours of escape every weekend instead of spending dollars on something "real." I'm seeing pretty good business, probably a little better than before the RL stock market crashed last fall, and I haven't been spending any money on advertising. Some of my tenants I know for a fact are what I would consider not very well off in RL. I assume that living in my communities for them is a way to get a decent amount of entertainment for way less money than a vacation or a night out clubbing. I hope no one is paying SL rent instead of buying baby food. Barring that, even poor people are entitled to some enjoyment in life.

I don't come to SL seeking big profits. I use it as a creative outlet for building things and planning communities. But you have to rent them out and/or sell things unless you want to shell out thousands of dollars a month just for your own personal sandbox. If you take pride in your work, and also bend over backwards to be helpful to your customers, then they stay with you, come back to you, recommend you to others, and it becomes hard to fail.

I agree with Brann about a lot of the problem being the panic induced by all the gloomy rhetoric. You could give the same news report 2 different ways:

1) "UNEMPLOYMENT PREDICTED TO REACH RECORD 10%"
or
2) "EVEN THROUGH WORST OF RECESSION, 9 IN 10 WORKERS WILL KEEP THEIR JOBS"

On the other hand, it's good to face the problem in order to instill a sense of urgency to find solutions. I cannot ignore the fact that there is a problem. My brother is unemployed, for the first time in his life. My "retention rating" dropped a level at work because the company is laying people off, so all the numbers shifted downward. So even though I am doing fine, the poor economy is hitting me right in the face. The philosophy of the party that won the last US election is that government is needed to tackle the problems. It's an FDR model rather than a Reagan model. I don't want to engage in a right vs. left argument; both sides make some sensible arguments. But that is why the president is expressing the state of the economy in dire terms, in order to bolster the idea that big problems require big solutions.

--Avion