RL Recession Effecting SL Economy.

I know that, Kitty. I'm saying that the volume gives no indication as to how much went one way and how much went the other, so it can't be assumed that the number of L$ bought is even reasonably constant. L$ being sold is *not* the same thing as L$ being bought so, for the topic of this thread, the Volume tells us nothing.

Zee Linden published some remarkably telling graphs back in the day - I could have sworn they were on the main Company blog but I can't find them now. I hope he gets wind of this thread, and comments here.

The point is that the same amount went both ways.

There are some economy graphs here:

http://secondlife.com/whatis/economy-graphs.php

Everything seems to be at record levels except for user to user transactions which haven't yet returned to their peak prior to the gambling ban. I think....American quarters start at odd times.

LL appears to make the market balance over a reasonably short period of time. One metric that doesn't appear anywhere I can find is what LL does (buy or sell) to provide arbitrage, which is what we would need to know the answer above. Then you would have to know sources and uses of funds on the sell and buy sides - new land and auctions are the inbalance there that needs to be accounted for, especially any and all auctions from abandoned land in a market where tier is disapportionate to value for many.

The metric I find interesting is the small number of people that are active over the last seven day span of time, which would appear to reflect the active people, buying and selling best. 500,000 over seven days, a drop of almost 150,000 from the residents logged in over 14 days. There is an incredible drop off of 375,000 from the residents logged in over the month and 740,000 over 60 days. If that is normal for SL, then it suggests that the metaverse is not a growing phenomena, because more people that ry it give it up after a relative short period of time. When does the potential growth in the primary markets get overtaken by the low percentage of us mud things that stick to the wall? Maybe a core of 400,000 or so that are logging in almost every day and doing something in SL? The true residents that buy things other than clothes and body parts(and the occasional weapon to go with the outfit).

I'm going to vote with the few that suggested that the resident mix that is actually in SL has changed and unless you sell body parts and clothes to the churning chaff, your market audience may actually be decreasing. Sort of, more people now know about SL and try it, but fewer stay around and become real residents.

My Income: With an exception of a slight peak last July, I have experienced a gradual decline in SL income since February 2007. The rate of decline this year has slowed, but its still mostly a gradual decrease from month to month. This month looks to be a new low for the year. I generally have found it pointless to gauge income on less then a month by month basis. So I look only at how many dollars I can take out after paying tier.

My spending: Having been in SL since 2005 I have become a bit jaded and my spending reflects that. I may occasionally go out and buy a new toy or avatar to try and spice up my SL life, but for the most part I have everything I might need, and/or can build it for myself if I need something else. I used to spend a lot more on toys and gifts when I was partnered or dating, but now have lost that motivation.

I'm spending more time in RL as caregiver to a sick family member so don't have as much time to make new products or play in SL. So some of the decline in my business is probably my own fault.

No it didn't. If I sell L$ to the tune of US$100, then something like 28400L will be added to the volume. If you buy US$50 worth of L$, something like 13200L with be added to the volume. The volume will show an extra 41,600L but most of it went out of SL and not into SL. It's not the same both ways.

Dude, if I buy L$500 then I get it from someone who is selling L$500 and you and I lose some US$ in fees. I don't really understand what your quoted comment means but I'm prepared to bet it's gibberish.

The only way in which you're kinda right is that Supply Linden floods the market with newly minted Linden Dollars but let's try to ignore that for now.

Considering the narrow band that the L$ trade in, yes, LL is doing trade balancing (arbitrage is not necessarily correct from my first post). And you can't ignore that impact unless you know how much it is. If it is significant, then the numbers are the next thing to bogus as far as anything meaningful. The more the balancing, the more the numbers are meaningless, especially in trying to compare one time period to another, as the volume then becomes a factor of managing price over a period of time than anything to do with the underlying economy.

Phil has a high probability of being right that there is a significant imbalance in the market that is managed by LL, and until you know what side they are propping up over a particular period of time, the volume is next to meaningless. Since LL doesn't tell us, we simply don't know.

This balancing is being done by Supply Linden who has been selling millions of Lindens every month (146 million last month) to stop the L$ from increasing in value. LL have never bought L$ because the currency has been desperately try to reach parity to the US$ or some insane value for well over a year.

My current assumption is that you have a basic understanding of how an exchange works so you're ready to be told about this very important piece of information (which I alluded to in my last post). As far as I can tell this info will just confuse and frighten Phil so I was trying to protect him from it. You can see how much Supply Linden has sold by looking at the bottom of this page: http://secondlife.com/whatis/economy_stats.php

Regardless this has the opposite effect to what Phil was trying to prove since it increases the supply of L$ in the game not decreases.

Just a comment. Since days of the week are not all equal in SL (certain days are generally low in body count, certain days are much higher), unless LL normalizes the months, the stats are not going to be comparable. Some months have five Fridays, some four, one month can have an entire weekend more than than another. Since I sitting here doing cash flow analysis for a business that gets 50% of its business on Mondays (Fed Ex and DHL deliver the checks from Friday bundling) and another 25% on Tuesday, you would be surprised what a shift of a Monday can make, one month over another. Throw in an extra Tuesday you suddenly have a 10-15% increase over the prior month with no real underlying change, and it can turn a couple of bad days into a really bad trend line. Doing bad, inconclusive graphs and I could probably talk them into shutting down a line of business...

Just saying, we don't really get enough raw data to know how things really break here in SL land. Back to doing the graphs on a 52-week basis.

If you market sell L$28,400 for US$100 and someone market buys L$13,200 for US$50 (just using your numbers) then the volume is L$41,600/US$150.

If you *offer* (limit sell) L$28,400 for sale at L$284/$1 (to yield US$100) and someone market buys half of that then the volume is L$14,200/US$50 with a remaining open order of L$14,200.

If you offer L$28,400 for sale at L$284/$1 and someone offers to buy L$28,400 at L$300/$1 the volume is 0 (no orders are filled) and you have one open sale order and one open buy order for the same amount.

L$77,941,490 was actually exchanged yesterday. Whether you want to see that "L$77,941,490 was sold yesterday" or "L$77,941,490 was bought yesterday", it is the same thing.

---

Or to put it ridiculously easy: if I *give* you L$5,000 how much L$ did you *receive*?

And second: if I *offer* to give you L$5,000 how much L$ did you receive until I actually give it?

The first is a filled order and counts towards volume, the second is an open/unfilled trade offer and doesn't count towards volume.

I do, and I will point to the bottom line of that chart, which pretty much disguises 'other temporary sources' to where we have no idea what LL is taking in on that side. So, yes, the clear cut entry is the supply side, but the largest 'temporary' uses line is far from clear cut. Break that out and maybe I can believe that LL is only pumping into the mix. OTOH, it could be a net figure of transactions that, as it is new money, will generally net to supply, or because it only considers new money as supply and there are similar transaction in that bottom line that represents transaction balancing. Since it would not be new L$, but old L$ being taken off the market with RL currency, that side could well be in the 'other temporary transactions' and, depending on classification, could well exceed the cash put into the SL economy in a given period. Again, I'm not saying that I know, only that until we have a better breakout of transactions, we won't know absolutely. You can quibble about the exact math, but Phil could still be correct in theory.

Desmond,

I'm not sure if you're doing fine right now regardless of the economy because you're Caledon, or could it be that themed communities in general aren't taking the hit that furniture and texture and clothing stores are? My rentals were a little slower in August, but they rebounded so well in September, I canceled all my advertising. I don't even know how people know to look me up, but they're tp-ing in and paying big money like always. I don't understand it, because I can't even find my business in search, but I theorize that maybe a community gets to a certain size and stature to where the residents themselves, with their links and their friends, provide the momentum, and you become somewhat of an un-killable multi-headed hydra, only in a good way.

Stores don't have the luxury of happy residents hanging around 24/7 inviting their friends over all the time to show them how happy they are. I think stores probably are affected more quickly and more drastically than residential communities when hit by economic shocks.

I also don't know whether belt-tightening in SL works like RL, where people consider their home somewhat sacred and will let that go only as a last resort when it comes time to cut things out of the budget (which was partly the theory behind allowing suspect mortgages for risky customers -- so much for that theory). So maybe SL customers decide to stop spending willy-nilly, but it takes more to get them to take the plunge toward homelessness.

--Avion

Another longish-term business chiming in to the OP's comments.

We've been in business for about 18 months, now, and I do a weekly sales number in order to try to even out the times of day and days-of-week variances.

We have seen a cyclical but growing pattern. The last month, especially, has seen some record sales for us after a late summer slump. In fact, two weeks ago was our all-time record high for sales.

We are most definitely in a niche market - high-end traditional asian-themed buildings and furniture - not something that new residents tend to look for, and are speculating whether we have done what we can in this niche and thinking of diversifying to another.

We'd like to think that there is still a call for the quality stuff, and that people are less willing to pay for the average that they can get either cheap or free elsewhere. I think the bar is being raised on what people will spend their Lindens.

It stands to reason that if people have less RL money, they will have less Linden. I don't work in SL and don't ever intend to, therefore I use my C/Card to make purchases. With increased power bills, food and petrol, I have now set an SL budget. I won't be spending as much as I have in the past, but having said that, if there is something I particularly want, I will buy it.

I also have almost everything I need in SL now and don’t need to shop as much as I used to, perhaps it also has something to do with not enough newbees.

I'll reply to you and ignore Elanthius, since he seems to want to be rude.

Yes, I see your point now. I was overlooking that buying buys from residents, and vice versa.

Even in jest, I don't think it's a good idea to be calling people smug for reporting results that are contrary to what you expected. The whole point of a thread like this is to get as many people speaking up honestly as possible, so anything that'd discourage people from posting makes me cringe.



Anyway, I'm one of the people Phil referred to earlier as chatting a bit about an odd pattern of sales lately. For the past couple weeks my sales have been depressed somewhat, and the latter part of last week (Wednesday, Thursday, Friday) my sales were less than half what they were last year at this time. This struck me as concerning even taking into account the normal up and down on a day to day basis, because I literally cannot remember the last time my sales were that low.

That said, my sales Saturday and Sunday were double the previous few days (although still less than a year ago) and my sales so far today are strong. So the downward blip is clearly more complex than a result of RL economic woes (otherwise, why the rebound?) although it is just as clear to me that the economy in SL is currently experiencing a great deal of volatility, and that I need to do a whole bunch of work updating my store to help weather the storm.

Like you, Wednesday and Thursday was chronically bad for me and Friday wasn't much better, but Saturday was double - equal to Wed and Thurs combined. There the coincidences end because my Sunday was back down again, and today looks like being the same.

One thing I don't have is a unique visitor counter, so I can't equate sales to visitors. I'll correct that shortly.

I had a visitor counter briefly a long time ago. After a little while however I realized that the only thing I was getting out of the visitor counter was being able to impress people by shouting the command to spout out the list of visitors, so I got rid of the laggy thing.

For what it's worth, I have long found that there is little if any correlation between traffic and sales. I routinely have good sales on low traffic days and poor sales on high traffic days. I realize traffic is completely different from number of unique visitors, just a somewhat related thing I've noticed over time.

I was thinking about this just today. Economy in general RL has been going down for quite some time, and with the stock market plummet today we can expect worse.

I run a small business in SL, making unusual builds, so it caters to a small portion of residents. In other words my sales have never been huge. In general though, I made enough in lindens to cover my portion of the sim. Recently that is not the case and I'm having to purchase linden to cover it. That's ok today, but like many others, if things keep spiraling downwards in RL economy, luxuries like private sims for entertainment don't make much sense. I have an extra responsibility to maintain the sim: It is mostly used by our large hockey league, and because, for some people, SLHA is all they log in for, I feel a responsibility to keep it out there. At some point if things keep spiraling I suppose we have to look at having more partners on the sim or other options.

If I had the sim just for me or a store, I guess I'd be tempted soon to downsize, and I wonder how all of this will affect SL in general. I foresee many people having to make the choice to downsize or forgo land ownership altogether.

Unfortunately we're not talking about a little dip in the real economy but a serious slide, probably far-reaching. Let's face it: SL can be a very, very expensive "game". It's one of those luxury items that people will discard if it comes down to need.

Thanks for that, Johan. It saves me from writing it

After I posted, it occured to me that a unique visitors count wouldn't be as useful as I'd thought because many people come as couples, and each couple is really ony one shopper.

I'm late...as always.

Let's see...I found SL back about the end of April 2006. After a week of getting the hang of it, I was inspired by castles...and by my first month I was a paid premium resident, had bought a 1/4 sim, had uploaded several hundred bucks. I was so totally into it that once the real money became Lindens, the whole value concept changed. Amusingly, it was more valuable to me than cash - and while I shopped constantly for builds, skins, avatar upgrades and avatar costumes, furnishings, etc. and while I did technically "blow" a hell of a lot of real cash for make believe money, I was far more conscious of pricing and value and quality than I am in RL. Amusingly (if not pitifully) I spent more time finding the right castle back then than I spent getting the apartment I'd recently moved into in Feb. A weekend for the apartment, a month and a half before I bought the castle. But then to be fair, if I could actually afford, let alone FIND a castle in southern USA in real life I'd probably take the same approach.

I've been a major consumer since coming to SL. I bought a lot because I had no idea how to make anything. Or script. The beginning of this year I finally got a whole sim and was so happy...that I never could figure out quite what to do with it and months passed and that 300 bucks was starting to hit home in RL. It wasn't that it wasn't affordable - I had the extra to use but when summer arrived I did recognize that was 300 bucks less for vacations and doing stuff we usually did outside. SL is awesome during winter, I hate the cold and love SL on a cold rainy night. Don't mind one bit that my RL goes into hibernation and I can make up for it in SL having a grand old time.

Ended up letting go of the sim when LL dropped the price a month after I paid 1600 bucks. I was royally upset about it, felt cheated. Before I did, though, I suddenly realized that I had a knack for building after all. Don't know where it came from, one day I just started doing it and it was good stuff. Got in the zone. In my last incarnation I hired a builder to do something for me and he took me to TRU...and right in the middle of it, seeing all those textures I was so completely inspired - everything I looked at I was getting ideas for this or that build. I spent a lot of Ls at TRU and will be again soon as LL sends me my stipend here shortly.

But in this 2 years, it was not recession out here (and it does affect us but we work with it) that settled down my spending - it was learning to make stuff myself. There are a few areas that I can't do at all so I have no problem patronizing shops in SL and paying people who are good at what they do. I don't buy crap products, I look for quality...but I think I am doing what other builders do - smug or not, delusional or not, and seeing something else and thinking *I could probably make that* and then go to a sandbox and recreate it best I can - not to thieve peoples' stuff but out of inspiration, to see if I actually can build it or make it...or my version of it. What I shop for now are scripts, textures and anything avatar related.

So that was the long way of saying that it's less recession and more personal ability to DIM...and that, I do believe, could be the secret to saving this country from the kiss of death around the corner about to shock and awe a whole lotta oblivious people!

Self reliance. Learn to do stuff, make stuff, build stuff, learn what you can and find your groove...and with the money you save you can help invest in others who do what you can't. It is my opinion that even though we're all consumers on some level, if we move out of the gluttonous novelty stage of SL and into finding a groove as a producer of goods to put back in, that the economy of SL will remain steady and not under any real threat other than external - crappy viewers, LL going out of buisiness, hurricanes, etc.

I haven't spent less overall...it seems I've spent more in SL, despite the changes. The difference is that it has hit a steadiness, a flow.

PS: is there ANY place in SL to get single textures that aren't the standard noob freebies (I got all those already ;-p) I don't mind paying TRU for a collection of textures but man, if you guys could consider an option of selecting which textures to get for the 600L that would rule. Surely there's a scripter out there who can whip up some sort of gadget to make that possible If yes on the single textures place, please IM me in world! I'll build ya a castle ;-p

Just FYI, after I posted that my sales yesterday were strong, the sales pretty much stopped. No need for minute by minute updates I know, just wanted to make a little correction to my post.