The Great SL Recession of '04?

Increasingly, it is looking as if Second Life has entered a period of economic contraction. Economic data released by Phillip Linden on this forum seems to indicate pronounced weakness in the real estate market and very sluggish growth in goods commerce.

While I believe that the sharp devaluation of the L$ is due in large part to the decrease in land prices, I think its also significant that so many people are trying to unload their L$s. This indicates that people would rather cash out their L$ than spend them and bodes poorly for future economic activity.

Ancedotal evidence (from Anshe Chung) seems to indicate that some marketplace's revenue is not enough to offset expenses - Anshe is considering closing some of her unprofitable / moderately profitable enterprises. I consider Anshe Chung to be like General Electric - while it does not describe the entire economy, it is a good barometer of the business climate. Just as we have seen the rise of malls, we may now see their downfall.

I'd appreciate any ancedotal economic evidence or remarks you could share.

Thanks!

~Jacqueline

Note; The L$ on the GOM continues to drop current price 1.05 US per 250 L$. Given that last summer the L$ on the GOM was $1.45 per 250 L$. I believe some of your assumptions are correct.

Cath

oh no an sl recession! i won't be able to afford food to eat. wait, i don't need to eat. well i can't pay my electric bill this winter! wait, sl is permanent summertime. well when my clothes wear out i'll be naked! hang on, they don't wear out. but i won't be able to afford gas in my car and i... um... what's the problem again?

i'm totally not jumping on anyone here, just honestly curious. is Ms. General Electric or any other alleged Land Barons putting money back into sl and the community (other than buying more land hehe) and all that or is it all going on the GOM to buy them ice cream cones irl?

cause seems like this has to suck for any Land Barons if there really are any but for the rest of the world it's got to be a good thing. cheap land woo!

This would make a great .sig quote, except that I'd hate to think of newbies being misled into believing it

Still, I do like the inference of the avatar name being equated to a corporation instead of an individual.

Okay, you all know that I know nothing about business.

But here are some things to consider when screaming that it was all the increase in land that cause the *sob* price of the Linden to drop:

1. Asshat server, connection problems, severe lag, building bugs, video problems, network problems and DOS attacks.

These probably had nothing to do with someone closing the software, and hitting the uninstall button or moving onto another area of the internet for awhile. Frustration does get to you after awhile -- why curse at the monitor when you can have fun somewhere else?

2. SL burnout -- we now have Halo, WoW, EQ2, CoH, Guild Wars, GTA, and about 90 other titles being released just before the holiday season. Could it be that the $50 cost of these games *might* contribute to why some SL accounts have not been renewed?

Could it possibly be that outside, yes the outside world, can and could also contribute to the less-spending habits? Could it possibly be that the "social aspect" of SL is now in full swing with the flooding of $9.95 accounts? Could it possibly be that individuals have said that they are not paying $25 per month to "live in a VR world" in a lag-filled sim of malls and clubs?

Nah.

My bet is on the influx of land. Yep, yep -- too much land, land being available at the snap of a fingertip for a project that is reasonable in cost...

Yep, it's the land that's causing all of these problems.

Better brush up on your building, scripting and photoshop skills Zuzi because if the value of the linden plummets, alot of the ppl who make the things you enjoy in SL won't have much motivation to make and sell them anymore.

hehe i already make everything for myself. i saw this economic crash coming and got busy building my bunker stocked with dehydrated prims. when all y'all die off me and my mutant hordes will rule the apocalyptic wasteland muhahaha!

ok not really but i do try to be self sufficient. making stuff is the funnest part of sl for me. maybe more people will give it a try if the economy dries up a lil bit.

I'm with Lynn on this one, why does it always have to be something internal that's affecting the price of the L$?

I see people with new land all the time, so Im not sure that is a factor. It could be that some suppliers have too much supply? Maybe it is easier to buy from the source now?

Performance issues are an problem, I hope a lot of that gets worked out soon. Having lag and not being able to move around is a great motivator to do something else. I know I will be spending a lot of time playing Half Life 2 very soon myself. More time there (anywhere) means less time here, pretty simple.

I still log in just about daily, but I am hardcore. I dont know if as many casual users have the patience to brush aside the performance issues.

With all that said, I am not even sure there is a lull in use of SL. I see a lot of new residents all the time. Many dont have a lot of cash so maybe some budgeting and thrift is at work. I know many get excited about making their own things, maybe that might be part of the reason for lack of demands for goods?

Im pretty confident things will get better with performance, I just hope it is soon. It is a drag trying to explain it way and pin down why it is the users fault.

It was a bubble. Based on the summer publicity and the temporarily-large influx of new people. Caused people to "overinvest" and "overspeculate", in land, lindens, and the small base of commodities that SL supports. Currently, there's more of nearly everything than what the market will support. The bubble was further supported by the strategies of LL and IGE. For awhile. Interesting to guess why.

Now it's burst. Correction time. Levels out later. Maybe. If people keep their heads. And growth is managed.

Happens a lot when some new and potentially profitable factor prevails on a semi-closed economic system. People overreact to the good news, and then overreact to the bad news later on. Psychology heightens the effect, both ways. So does external market competition after the bubble bursts, i.e., other games and vw's.

South Sea Bubble of 1720. Steel and Petro Bubble of 1888-1892. War Debt and Reparations Bubble of 1919-1926. War Reconstruction Bubble of 1954-1969. Tech Bubble of 1993-2001.

But hell, what do I know about any of this?

<<snickers>> and starts to exit the thread

On second thought.....

ya know, and all those people that cried we need more land to kill the land barrons.....

You got your wish, now swallow your pill no matter how bitter it is.

Shadow

Certainly seems like a good explanation. The dot-com bubble had us thinking anything on the internet must be good, and VC's pumped money in. Now only the sensible, useful internet companies make money. Post-bubble, they're treated like any other business. "Need capital for a Web startup? Okay, what's your business plan? How will you make money?"

Maybe the land barons, clubs and malls are the pets.com or boo.com of Second Life. They sprung up anywhere, many without a reason to exist. Now business owners may have to do something more useful/innovative/efficient to make the same levels of money they were used to.

Give people a reason, and they'll spend money!

Imagine what the SL world would be like if we couldn't fly.. Or teleport... Or if objects couldn't be copied, everything original.. There would be a good economy for everything. Supply and Demand would be in full swing. There would be a true reason for there to be roads. Vehicles can transport them, and there would be drivers, and what not.

I think that LL needs to rethink how the economy is going, and figure out new ways of things being made. Got to remember too, this is the economy that was working with less than 300 people at one point... Now its way higher, 140,000 I think (correct me on this).

140K *accounts*

But look at the actual maps -- people aren't in-world any longer for whatever reason.

Very true, so then there must be at least what, 50k active users that login at least once a month? Maybe only 25k. But still that's enough for a city in RL.

Fact1: Only 15% of people own land
Fact2: Only 2-3 thousand people own land
Therefore: 2-3 thousand people equal 15% of the total number of people, which adds up to 13-20 thousand people.

Everything is fine from my 1024. I won't be putting any more money toward SL till things really turn around. Time on my side, I'll just putter around until then. Beats trying to make people understand on the forums, anyway.

So like you said, eggy -- where are they?

I really enjoy the up and down of the L$ versus the US$. I keeps SL nicely separate, like its own country (or planet / reality / un-reality / whatever).

Sure, many (of us) who trade L$ for US$ aren't making as much as we used to be. SL ain't quite there for paying as a full time job yet, unless you're WAY more talented than me (and some are). It just adds another angle of intrigue.

That's why SL is the greatest "game" ever - you choose your own goal. You don't WIN the game... you WIN by creating a Second Life you enjoy. If you want to pay your monthly tier, or your RL rent, or whatever through US$ earned through SL - then THIS is the next, big, challenge of the "game". It will never end as SL evolves. Truly genius, even if it may have been unintentional.

Peniccilin (sp?) was unintentional too.

This isn't to pick on those who trade L$ for US$ - every major "shift" in the "game" economy affects those who use that sector most. Last time, it was the land barons with the major land releases. Now, its those trading money. Next time, it will be those EVIL LIVE HELPERS.

Regards,

-Flip

Ezhar has tracked 18,000+ unique names in SL. I'd say this figure is pretty spot-on.

-Adam

for those of you who dont know me, i am a liberal. About the SL recession i would like to say
ITS BUSHS FAULT

we now return you to your regularly scheduled politicaly moderate posts

OH CRAP I THINK I KILLED THE THREAD. QUICK SOMEONE CALL A MEDIC.

Outside. There is a world outside you know. It's big, and bright, and right now cold and wet, at least around here.
I dont know what concurrency rates are like these days, but I can tell you that I, for one, dont log on every day. It's a good thing that I can reply to my IMs from my email account! Besterest feature evar.

My sales are up, while land prices are down.

I think people are hungry for content.

Buy Hiro's Katanas! They change color! They are Nifty. You know you want them! Go get them! Tell him Eggy sent you and he may or may not give you a discount!