RL Recession Effecting SL Economy.

I think you're right and this is something I was discussing with a bigger business owner last night - SL has essentially suffered a sea-change in this regard. Previously, many creators were "making what they loved" and hoping to make money from others being interested, but that's no longer really a viable strategy - creating, and especially marketing, has to be practically a full-time job to compete at the highest level (yes, that means you can't have an RL job); or at least, if you do have an RL job, it has to consume all of your SL time.

And I think this _is_ a problem on SL, because it means that the people passionate about a given field wind up either pushed into creating content full-time (and thus _not_ creating context, which is just as important) or not doing so at all, and trying to satisfy their passions via mix-and-match and a credit card charge whenever they want to move their hands a slightly different way. It's telling that the fields where this could be satisfying are the most succesful - the generic social "clubbing" fields, where outfits are easily mix-and-matched and the vast majority of animations are dances which are self-contained (whereas, to truly play out a "role play" scene, you might need 100 separate animations - yes, I know no role-player ever does that, but that just exposes the problem) - and also, um, sex.

It's also telling that Desmond's been so successful because he creates context - and he actually mentioned here that people were coming to him, rather than cheaper OpenSpaces, because he offered a context that standalone land couldn't. Context is in demand, but it's difficult to create and manage. I'm sure Desmond is very good at this but I'm also suspecting - although it's only a suspicion - that his choice of Steampunk Victoriana has helped a lot because it's such a unique and unusual context that just being in it _at all_ feels special and unique (and that has the double bonus that it also creates a partially-insulated content market, giving the passionate creators a chance to be seen without being steamrollered by professional marketing budgets). In less specialised contexts, there's the problem of "all chiefs and no indians" within the context's social roles - as well as the fact that starting one now would be difficult, because the incoming population has adapted too far to the current model.

So, yea. The RL recession is shrinking economic willingness and the lack of and cost of context is shrinking the range of available virtual experiences - it's not a surprise that things aren't going too well, but hopefully, this will be adjusted for too.

WOW seems like the slowdown is even affecting the forums, Why are these pages loading so slowly?

==============================

Well lets see America just finished it worst week of economic anxiety in 70 years ...


And I just finished my worst sales week Since I opened over 3 years ago.

Superficially at least it is having an effect.

I wasn't going to chime in on this, but changed my mind for a couple of reasons.

Main Reason is :

My business is slower this morning than it was last night and this is a great place to plug the fact that I have a store with great stuff and feel that more people should be shopping there


With regard to the topic, I do not think that the RL economy should really have as much of a dramatic effect on this "Game" as much as some other factors. not to beat it to death, if you can still afford High Speed internet and Tier, you can break free 37 Cents for a (single) premium quality texture for your awesome cartoon house and not go broke.

I personally still feel raped by the fact that I am sitting here paying real $$ tier on land that is now worth less than a quarter of what I paid for it not even 6 months ago. This to me felt like a recession. When LL made the foolish decision to make SL look bigger than it is and flood SL with more land than could ever be occupied by the amount of people on it, I decided to stop spending real money here and to wait it out. Value of Land went in the toilet in less than a week, it seemed.

I lost " buying" confidence because that showed me how a bad decision by someone else can hurt me financially. So the "SL recession" in my eyes was started long before the apparent RL crisis that is being talked about now on your TV's.


to combat this while still enjoying myself here, I simply stopped spending money on Texture Packs and looked for singles that I actually needed or wanted..haha


but then again.. All I know is that if you are trying to be a bigger business than your customer base, you will lose out in a big way.


My input is.. try to enjoy things while they last and as long as this game is as addicting as it appears to be.. business in general will recover, unless LL adds even more land.

maybe all those people aren't just window shopping afterall, but are there to check your inventory..lol



and...




That was like telling people in the same business as you, that you hid some thin fancy frozen Belgian Chocolate in the freezer but not to touch it while you are away for a few days


I am VonGklugelstein Alter and I approved this Message!

Me too, me too!!! Come to my great store! I have Halloween stuff!

Since the userbase of SL is worldwide, though, a RL recession in the United States shouldn't be dragging down the whole SL economy, should it?

From what I recall from last year, business does tend to pick up around the holidays. I'm hoping that's the case this year too.

As a non creator my spending is down a bit, but not so much because of current events, but more so because of my use of SL has changed. I'm not inworld as much as before, I don't own land or have a big house to furnish, and there is just less I want to buy, even I can have only so many pairs of shoes. I was spending upwards of $100 a month when I had land, a house and Premium Membership, but now it seems that my usual 10K Linden purchase lasts the entire month now, when I used to make that buy 2 and sometimes 3 times in a month. I do have an occasional spree, last week I did spend 10K in a day of shopping, most on new skins....and a few pairs of shoes.

The US Economy makes up a little bit more than 25% of all Economic Growth in the world.

A US recession affects everyone.

the longer people are in SL the less they need. I got rid of my land so no drain there now. My stipend is fairly high still and I hardly spend half of it anymore. I shop occasionaly but something has to be really unique to intice me and lets not forget. Items dont wear out in SL, you only need to buy something once.

Also of course there is the fact that even if US customers are only 30%-40% of the Userbase

Thats still 30-40% of the userbase that could be spending less money, that has a big impact on sales even if non-US user's spending remains constant.

I rest my case lol

I am not blaming you! lol But this is a good example of how when a person looses interest and downgrades how that affects the SL economy..

The fact you have "down graded" ( figure of speach ) is part of the problem.
Without land, you have no desire to build, own a store, create content.. your SL priorities have changed presumably since you decided ( for what ever the reasons ) to loose your land/house...not online as much..maybe this is for reasons that have nothing to do with money but it still has an affect.

There will be people who have done what you did "for" financial reasons and like you are spending less L$ because of it.



I keep creating textures and they get better with time and skill and hope if and when things pick up again they will all be "new" to customers who are currently having a break from content creation.

Well yes, this is of course happening.

Spending on SL has NOT kept pace with SL Account Numbers and Concurrency rises for a long time now.

The "SL Economy" has had an effective recession for years.


=======

Simple math if LindenX activity remains fairly flat while the other numbers go up .. there's less money per capita to go around.

The Stores that are doing as well or even doing better are not doing as well as they would have been if SL was still growing economically to keep pace.

Meanwhile a lot of stores are doing less well than before.

Hmmmm....hard to say. My sales have plateaued the last two months, and possibly gone down a touch this month. But I really haven't marketed many new items as I've been working on private commissions in SL, and have been RL busy (starting college again). And in SL, if one doesn't make new things, one is quickly forgotten.

That said, I've seen increasing traffic in my main shop, which is set up for people to "hang about" in (I've a small pub area) and try out demos. So, perhaps people are tightening the purse strings somewhat, and prefer just to window shop and play with demos. And that's fine. Everyone uses the Starbucks analogy, that is: "My horse/dress/widget costs less than a chai tea latte!". But with the economic times we're seeing, perhaps it should be "costs less than a week's worth of Ramen dinners".

I'm a creator, but have only been 'trading' for a few months, so I couldn't say if sales are up or down. But from a consumer point of view, I'm definitely spending a lot less on 'frivolous' stuff and saving my money to pay essentials: tier and rent.

A few months ago I would happily buy US$50 of L$ once (sometimes even twice) a month, use some for two or three weeks of SL rent, and blow the rest on shopping sprees. That same US$50 now pays mainly the rent, so it lasts a lot longer.

I still buy the occasional item, but when I consider the letter I received from my power supplier today, telling me they've increased their prices for electricity from 17.9p per kWh to 25.15p per kWh, right before the cold weather starts to kick in, I'm going to save my L$ to pay for the important things.

Aw thanks Though I must confess that if times got tough, I'd have to defend the business side of things the best I could. And perhaps fight for business more, and love it less. I'm just glad I haven't faced anything quite like that yet.

It's very, very important that I like what I'm doing or I'd be doomed into something nightmarish and unending - possibly ten years and beyond. One can't just roll up an estate and say "I'm done!" So I'm here for better or worse. A poetic justice perhaps, if it became a mere moneymaking situation.

* * * * *

I only know how I'm doing, it's just one tiny piece of the puzzle. Caledon is roughly 0.17% of the grid (43 regions /25000 regions) landwise - about 1/600th of the land market sector, not statistically significant.

Lilybeth's business touches upon a lot more of the world; hers may be a bit better global picture of what is going on.

As I said, I don't understand the LindeX except that I use it to cash out. I.e. what LindeX volume? I only see the Sell page, which has 2 lists:- "Open Sell Orders at the Best 20 Rates" and "Open Buy Orders at the Best 20 Rates". The latter is the only list I watch, and I think that may be the "volume" that you mentioned, as it represents people buying L$.

If that's what you mean then I can tell you that it has changed a hell of a lot in recent weeks. A few weeks ago, when my sales showed definite signs of increasing as I expected through September, the L$ buy orders were up around well over 50 million at the 274 rate, but it's sunk since then - down to well under 30 million at times. For the last few days it got down to a mere 17 million, and those are the days when at least some of us had really awful sales. Today it's picking up and right now it's at 36 million. Coincidentally, my sales are also well up today - so far.

If that's the volume you mean, then there has been a drastic deterioration during this month - the lowest days being Wednesday and Thursday, when some of us in another thread 'coincidentally' found that sales on those 2 days to be incredibly low comparitively speaking. I cash out at least once a day and usually several times a day, so I do see those numbers virtually all the time.

Before making any assumptions, I'd like to see how next month turns out. We're just leaving the days of the summerblues, football season isn't over yet, there's just sooo many things involved, lol.

I never had a desire to buildor create content anyway, so that really doesn't factor in, but otherwise those are valid points. My SL" interests" have changed,. I don't say "priorities", because I don't have prorities in SL, it's just entertainment, I guess you can say that is a result of RL priorities, though.

I think you're right about that, Desmond. Before you entered this thread, I thought that you wouldn't see the decline that stores see, for the simple reason that people don't just stop renting a place in the middle of their rental periods. If it continues, you're likely to see it although, if you still have a waiting list, it'll take longer to affect you. I hope you don't even see it. If you don't, it'll mean that we're over it

it's even affecting other countries like China and Russia..

The summer itself has been bad in rising prices ..the last week with everything up in the air America is in unchartered waters and at the risk of losing it's triple A rating.

my honest opinion is we are at the start of it only getting worse..

we have majority that can pass this plan for bailouts but the democrats don't want to do it without the Republicans backing it also..

in other words..we want you to take the blame with us..if it was a sure fire thing to glory they would have used the majority and voted this bailout in already..
1 trillion dollars in one shot..
the biggest unbacked check in history..

they print more money for this in turn lessening the value of the dollar even more..and with such an amount at one time it's going to be felt sooner than bits and pieces being plucked at a time..

i can't help but to agree with you that there is an impact here from rl ecco but also more to come..

Well just because the Rl/SL economy has weaknesses no one should give up as long as they aren't losing more money then they can stand to lose.


There were people who became rich even during the Great Depression.


But looking at your Costs compared to Revenues is definitely a very good idea.

Sowwies, thought it was obvious what I meant .

With "LindeX volume" I mean the "total amount of US$ spent to buy L$ for a given month" (you have day by day statistics as well but they tend to bounce up and down all the time) as part of the "key metrics" (http://static.secondlife.com/economy/stats_200808.xls).

(Sent a PM about the rest since it's kind of a derail from the thread )

privately owned businesses do well in times like these..well i should say better than others anyways lol..

the ones in dire straights right now are the ones that abused the deregulated market and were not happy with the interests they were already getting from loans or investments..

if there is a demand for your product and you are not in the market or abusing the market the only thing that can hurt you is the things you need from the market..

unless all your customers are invested in the market of course lol

we will be hurt from prices that the market causes but if not invested into are not at the risk of folding because of stock trades or stock going up or down..it is because of real assets not fake that we would fold..

SL is kind of different in it's strength..it relies on more of customers that come to it for entertainment and to escape all this other junk in the world and be or do something else.. if it gets tighter in the RL then it becomes process of elimination..
when the world turns alittle meaner and takes more of your time there becomes less time for the freedoms we love and enjoy..it becomes more about keeping your rl a float and unchanged as much as possible but with sacrafices ..sometimes thats a slowdown on buying clothes in sl or having sl at all..it just depends on how much that person is affected..

when something comes along that affects everyone you see it in many areas..each affected less or more than the other but all still having to make a change..

we may not be there yet but i feel very strongly that we will see it soon..

i've been watching this market and these banks for the past 4 years and 2008 was the d-day predicted that they would all be having to die or pay the piper..
even the bank of scottland predicted september as being the month the U'S would face it's worst..here we are

who are the ones making out in this whole mess right now?
look twords the Federal reserve..who made out in the great depression?omg the same guys!!
history does repeat itself

A few points here....one is that sept is historically a month when the stock market takes a tumble and then going into oct. This has been the case for decades...so this is not new and for someone to predict things would hit the fan in Sept was a pretty safe bet LOL.

However...in times of deep economic issues...a few personal luxuries sell strongly - cosmetics and alcohol being a couple. The is because getting a new lipstick or having a drink is fairly cheap and makes you feel good for awhile.

With that said...I think that content creators like myself who have a strong mix of low price and higher price items do better than those with only higher priced items. To go back to an earlier post...when I am concerned about spending, I will def buy one texture i really want but i prob will not buy a pack of 10 for a much higher price just to get that one texture inside the pack.

I think the days of people blowing tons of money in RL may be curtailed a bit, but with correct biz adjustments, those challenges can be overcome. And if the market is giving feedback that your items are not selling, it could very well be that the prices are too high in this biz environment where there are LOTS of furniture stores and texture shops. If large expensive items are not selling...try making a less content rich or script rich version and see if it sells better at a lower price. If large packs at higher prices are not selling...might be time to also offer things in singles or smaller packs and see how that does now.

For example, I sell many many curtains and most are priced around 75L. I keep the price very low and do not sell them copy so that one person who needs one curtain will pay a lower price than someone who needs 10 curtains. That has worked very well for me. When ive made packs, they dont tend to sell, so i dont have them anymore. I also make note of which colors sell the best, which styles and expand my offerings to include more of those more popular qualities. This seems to work well and i also ask for feedback from my customers.

And again, im having trouble getting into forums and having these posts load correctly...that def makes me wary of transactions in SL today...much more than the US economy.

Thank you for the detailed PM explanation, Kitty. I've looked at the daily figures for this month and, although I still can't say that I understand it all, I am now even more convinced that the effect on sales that stores are seeing is it do with people holding back on spending money rather than people simply not fancying the items in the stores. There are too many coincidences in the figures for me to accept them as just coincidences.

Heh, My sales hit bottom on thursday and friday, but are way up today. I've been extremely lazy in promoting my shop so I have only myself to blame for slow sales, but I wouldn't be surprised if sales in SL in general slow.

I have to agree with a few things that have been said so far... the first is that like Brenda, my own purchases have seriously dropped off. I can only have so many hairs/shoes/outfits before I forget what I have, no matter how well my Inventory is organized. The other is that the newbies that I meet don't seem to be super interested in dressing up or buying "stuff" in general; they're here for the virtual chat world and are happy with freebies. Just one girl's opinion... dunno if it's even valid.

It's hard to give information and explain concepts to an observation like yours, Lillybeth, without giving details about your own business, so those who scream store plug, zip it.

When I first started here, it was just after the Business Week article on Anshe Chung, (that's how I ended up here).....and it seems that the general new population was quite a bit different then....business owners, professionals, entrepreneurs from RL. I was selling furnished home set ups on land, as fast as I could complete them. They were selling to these type of people....many were less than 30 days old, and ready to spend money to settle in here. Because of the 30 day linden limit, we had to come up with other ways of purchasing.

Those generally sold from 49k to 125k....and that went on for a about a year. Those buyers were also starting businesses and buying sims and investing heavily, as well as buying all the skins, hair, clothing, and accessories.

Land Valuing and Quantity of Land was quite a bit different then. That has to be a factor.

I noticed the buyers profile start to change, after about a year, and it was mostly couples who had settled in here, and become partnered, who purchased....some single people who had settled in, but not necessarily high rollers from Fortune 500 type companies, which were what I had met before then. Maybe the couples were from the Business Week article population that jumped in a year before, that had liked it and settled.

I have a steady increase on the store, but that's because I just started it, and have nothing previous to compare it to, like several mentioned above.

I don't notice that original type of population, that I ran into shortly after that article, buzzing about any more, but it might be, because I don't offer that many home packages for sale, now. It was that population that was spending a ton of money. From my friends list, I can tell that they have gone back to RL. I do notice it when I go to the dance places on a Friday or Saturday night, and the individuals I meet are not the same type I met at the same places 2 years ago.

SL needs to get another article like that out to the public. My judgment would be that it's more of a less than effective PR thing than a RL economy thing. Was just reading another thread about the Welcome Introduction Experience, and I think that would play a huge factor in retaining the type of person I mentioned, for more than an hour, and yes, that has changed for the worse, since I landed here.