For Second Life Entrepeneur, Revenue Declines As US Unemployment Rate Increases

Here's a fascinating if somewhat disheartening chart from the blog of ArminasX Saiman, whose Second Life company, Electric Pixels, sells particle effects. Despite several marketing campaigns and new product releases, his in-world revenue has been declining fairly consistently since January '08. The eerie thing is, he matched the data from that dropping revenue to the steadily rising US unemployment rate. And as you can see above, they seem to have an inverse relationship; real world joblessness climbs, and in Electric Pixels' case at least, Linden Dollar cash flow descends. (Full results and further analysis from Mr. Saiman here.) At the same time, other virtual entrepreneurs seem to be doing quite well (a few quite well indeed), so I'm prone to call this a case of SL Residents getting more cautious with their discretionary virtual income.  In the context of everyday SL socialization, having the best and latest particle effects may seem less of a necessity than, say, a new fashion design or covering the rent so your land baron doesn't boot you from his property.  It's common sense that Residents are likely to curb their virtual spending when their real world income goes down, but it's striking to see it expressed in such stark times, even if correlation is not causation. (Then again, whenever anyone discusses correlative data, it seems to cause someone to blurt, "Correlation is not causation!")

Comments

[Massmedia]

It is regretable rate of unemployment in the most advanced country like USA what would be the future of world economy if the major economical partner of world facing such recession!

[Hottie Something]

I am one of those land barons mentioned. Baroness, if you please! :P People ask me all the time is business worse because of the RL economic crisis. My answer is always: "Heck no!"

SL has its own economy. If a poor RL economy does anything to the SL economy, it actually helps it. Where else could you buy yourself a hot outfit and hang out at a club till all hours of the night for less than $10?

SL has always been an escape from RL and when RL starts to suck SL starts to look even more appealing.

The SL economy in general is on an upswing right now. Land prices are up, people are screaming for more land and business has never been better for a lot of folk.

[Adric Antfarm]

I'ld like a beer and two of whatever Hootie is on please.

[Melissa Yeuxdoux]

Perhaps some people have escaped from the Sec^H^H^HAlphaville Herald...

Hottie has a point. Discretionary spending isn't all or nothing, and SL is far less expensive than many RL alternatives.

[anna gulaev]

"Correlation is not causation!" is the slashdot crowd being mindless parrots. It makes them feel smart using big words, even if they don't really know what it means when you string them together like that.

[Sioban McMahon]

I've been wondering about this, more specifically how the downturn in the economy might affect donations to our charity. Happily, the donations haven't declined at all. The only thing that hurt us temporarily was the Open Space conversion in January, we had some flux in tenants for our residential rentals (which pay our LL fees) as we traded in sets of four OS on a few full sims. Other than that, we're still rolling along great. Knock wood.

[Echelon]

I agree with general consensus that while sales may be declining for Mr. Saiman, I'm not really sold on the point that their sales data is indicative of the greater trend in SL's economy. It would be interesting to see someone pull together a wider survey, independent of Linden Labs' seemingly sunny economic predictions.

[Brad Reason]

i recently posted my own observations on the recession of crowd attendance at music events
http://djdoubledown.blogspot.com/2009/04/is-there-current-music-crowd-recession.html

My POV seems to state that even FREE events, where the sim and people involved are giving away free entertainment, are also now bringing in as large of a crowd.... and some people think that also correlates with the real world recession.

I honestly do not know whats going on. I can't put my finger on it. Some people have seen a decline in business, some haven't. Some have seen a decline in event participation, some haven't.

I wonder if it's a combination: Frugal spending PLUS the "stale" factor may be why certain things inworld are less successful than they used to be.

[Sioban McMahon]

re: "stale" factor

That's the problem with extrapolating from the pattern of sales in one store. There are a lot of confounding factors. Is the designer putting out a steady stream of new and interesting merchandise? Did a new designer appear who has captured part of the person's former customer base? Are the products out of fashion?

SL's ease of movement makes it a tough place to do business, whether you run a venue or create things such as clothes or furniture. With a couple clicks, your customers can be be at a slew of places sharing (fully or in part) your niche.

[Hottie Something]

Oh Anna I love that comment! "Correlation does not equal causation!" I always say that. I can't believe I forgot to add that.

Hey Two Worlds. I showed my mom by quitting my job a year ago and living off my SL income :)

[Adric Antfarm]

Two Worlds ;

Surely you jest sir or have mastered the fake-out (or just not seen my blog - which I am not going to pimp out since Brad made me realize how tacky it looks in comments).

I will however say, please for the love of FSM. Let the free stuff go people. It's not doing anything but freeing us from seeing noobs as they hunt the grid for hours dreaming of a free gift that is more expensive than buying a decent 1000L item (assuming of course they make at least $4.16 per hour which I know is a stretch) given the time they wasted.

If you tell me your can't compete with free crap items then I suggest you find another way to pick up extra cash.

Like others here I have to agree I hear people telling horror stories - but - I also hear people telling me they are making some serious duckies. Freebies are just not that hit and miss peeps - it's dealers who spent their time making great stuff, supporting it, and knowing how to get the word out (including the all important word of mouth from the customers you did right).

I'm looking for volunteers for an experiment btw. I need one dealer than whines about the unfairness of things to build business and one that works his/her/furrie tail off for it so I can see which one is still here in 12 months.

Apply within.

[Hamlet Au]

FWIW, "Two Worlds" has been permabanned from NWN for racially inflammatory remarks and general unproductive noxiousness.

[CyFishy Traveler]

FWIW, "Two Worlds" has been permabanned from NWN for racially inflammatory remarks and general unproductive noxiousness.

/me applauds wildly.

[Ann Otoole]

Not everyone's revenue is dropping. Basically if your revenue is dropping then people don't want what you have to offer. It is as simple as that.

Adapt or die is the nature of business.

[Adric Antfarm]

I ramble on forever only to find Ann O'toole sum it up better than I could with just a few sentences.

[Crap Mariner]

Despite the economy, I keep spending more and more.

But then, when has the price of blackmail ever gone down?

Damn photos!

-ls/cm

[Adric Antfarm]

I think sometimes (and I know this is dumb on so many levels) the Linden to dollar thing gets in your head.

A while back I saw something I really wanted that said 1000L and I was like ....WOW.. SO MUCH---until my ability to do simple math kicked in and I was like...dude; it's like 4.16. You've spent that much on coffee and donuts which isn't able to spit push bullets out at high and super high push settings. BUY IT ! BUY IT NOW! Hide in the grass during the need noob free prize grid hunt and treat yourself. You deserve it. You do.

[CyFishy Traveler]

Adric--same thing happens to me. Particularly when I'm at Bare Rose. "L$250? It's a BUCK! It's an awesometastic outfit with everything but shoes in four different colors and it's a BUCK!"

[Francis]

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