Unconsumed: Just 465K of Second Life's Active Residents Spend L$ In-World, Under 200K Spend USD$10+/Mo in L$

Here's a quick stat snapshot of Second Life activity in-world last month, mentioned last week over the departure from SL of metaverse developer Rezzable, but worth restating here. While some 750,000 or so unique users are logging into Second Life a month, only 465K of them, about 60%, are spending any Linden Dollars -- and less than 200K of them, nearly 25%, are spending the Linden Dollar equivalent of USD$10 or more a month. This pattern has been generally consistent over month-to-month. Last April, for example, total paying Residents were about 461K; paying over USD$10 in Linden Dollars, 197K. So for various reasons, a significant minority of Second Life's user population are simply not participating in the virtual economy at all; surely this is the greatest challenge for both the Lindens and in-world entrepreneurs. I put the question to them: what's the best way to SL into a fully engaged economy?

Comments

[Patchouli Woollahra]

These statistics fail to account for any SL work done that is paid through outsideSL means. As much as I would like to wonder how the picture changes after this is taken into account.

There's also the occasional visitor that we get: the one who comes in simply because some event is happening, but has never been in SL and has no intent to continue afterwards, and keeps to that plan later.

The trick is to derail as many of these folks. Some may call it ebil - I just call it The Master Plan. :D

[Valentina Kendal]

Look at the numbers another way. If you take the middle of each bin as the average that those users spent in a month, then calculate the average amount spent by a user last month, is comes out this way:

- of people who spent any money, the average spent in a month was $74US/month

- of all 750K users, the average spent was $46US/month

I don't know how that compares to other online games, but that seems like a pretty good number to me, considering the RL economy and that you are just getting 0s and 1s for your real money

[Gwyneth Llewelyn]

I prefer Valentina's approach to look at numbers ;)

Also remember that spending online is pretty much a cultural thing. You can watch this very simply at a live music event: Americans will be very generous with their donations, Europeans less so, and some Europeans (country name withdrawn to avoid accusations of xenophobia ;) ) will simply refuse to pay for everything they can get for free elsewhere. As the shift moves from a wider international audience with different consuming habits, it's normal that the average spending rate will diminish over time.

What can Linden Lab do about it? Mmmh increase RL advertising and promotion on countries with cultures with a high consumerist approach and are simultaneously very, very generous with their money :)

I'm not being serious, of course :)

[radar]

I doubt this has changed significantly over the years, in fact it may have increased if anything, but all these companies that thought they were going to get rich in SL apparently saved their spreadsheets for after they decided to leave, rather than before.

As far as business that is paid outside of SL, in RL money, that's obviously going to be potentially more lucrative per expenditure, but repeat and/or sustained business is unlikely for most (if not all).

SL is increasingly becoming home to people who are not creators and simply want the social aspect. I suspect a lot of them dump some money into wide hips, prim boobs, oiled up skins, big hair, and then aren't really worth much more to in-world content creators after that.

[CyFishy Traveler]

Sooo, 75% of people who ARE spending money are spending more than $10 a month.

This in a world when you don't HAVE to spend money on ANYTHING if you don't want to.

I'm sorry, what was the bad news again?

[Iggy O]

Just saw an advert in the UK, on television, for the Sims. Why have I *never* seen an ad for SL? Ever?

[Todd Borst]

What's the best way to SL into a fully engaged economy?

Provide value.

This is certianly easier said than done. Given Linden Lab's profit model, improving in-world economy is probably not their priority.

Most of their income comes from land rental, then premium accounts, followed by LindeX and xstreetsl.com. Just like retail land owners, rent gets paid regardless of how poorly your business is performing. If your business closes down, you "sell" the land to someone else who can pay the rent/tier.

[Nightbird Glineux]

What would these numbers look like if you add paid accounts and tier, minus stipends?

[anna gulaev]

Does that chart show linden dollar purchases or does it show resident-to-resident transactions. Big difference, and doing some calculations and comparing to other linden figures it appears to be the latter.

Valentina, the numbers do not say people are putting $46/mo on their credit cards. That's the cumulative total of residents passing money back-and-forth. Remember when two avatars horribly inflated the numbers for a month passing money back & forth with scripted objects? To some degree, that happens every month.

There is no good measure for how much hard currency gets converted to linden dollars for spending in-world, but maybe the total lindex volume comes close. By that figure, with 750K active residents, the average is about $13/mo, which is still pretty good.

The problem is, we don't know how much of that goes back to LL as tier, so, we don't know how much *residents* benefit by money spent in-world.

[Valentina Kendal]

anna - yes, that's very true. although sadly *I* put at least my $46US on my credit card each month ;-) No mater how much stuff I manage to sell, I still end up buying lindens (did someone suggest shopping??)

[ArianeB]

Rocketboom did a video interview with Philip Rosedale about the economy of SL with the recession going on in RL.

He says that membership wise, SL is growing faster under the bad economy, and more people are playing (hey its free!). But, players are generally spending less Lindens than they used to under economic bad times.

However, player growth is growing faster than per player expenditures are declining. In the end, Linden Labs is seeing more income now than it did a year ago.

[Arcadia Codesmith]

Open the floodgates. Give us your poor, your tired, your huddled masses yearning to be free. Once they're here and settled in, make sure the very best eye candy gets dangled before them. And make the "buy L$" button nice and big and obvious.

You may not move the percentage pointer up a hair, but if the gross number of residents goes up, the percentage doesn't matter that much. Make the pie higher... urm, bigger... whatever.

[Renmiri Writer]

I personally think the Linden price model is what is killing the SL economy. You can only own a sim if you spend $1,000 and then $290 a month. When 15,000 prims costs the owner 100,000 linden a month, selling stuff to pay for it is mighty hard. How many SL merchats can boast they sell $100K lindens per month ?

The best a sim owner can do to cover tier is is to rent land at even higher prices, to try to recoup the initial $1,000 a bit. This makes land very expensive and trickles down to stores that are forced to either sell expensive stuff - which you know it won't sell every month - or sell thousands of low quality junk to be able to cover rent.

Most people don't break even, and the few who do can't realy count on being able to do so tomorrow. If you come to SL trying to make money, or at least to notsink money on it, you will end up leaving.

Those of us who stay have resigned ourselves to losing money :p

If Linden would alt least allow anyone to buy their Homestead / Low prim sims without requiring them to buy the $1,000 dollar sim first, I think that land prices would go down a lot and you would see quality improve, as people would be able to afford building time consuming stuff.

[Dwayanu Weyland]

Renmiri, think you are overly pessimistic, and I don't see Linden $ model as ruining SL.

My first two business attempts were failures, yes, I was clueless in a business sense. But I learned and my third attempt grosses around $L 2,500 / day, covering tier and misc plus RL Xmas. All without putting any money in to SL other than 1st year Premium fee.

Agree if clothing store or club, you're mostly screwed by quantity and quality of competition. But there are ways.

Is well supported IMO by SL, to find product, find customers/audience, and differentiate differentiate differentiate. ...and market your socks off ;-) ...lots of elbow grease ('teleport clicking' ? ;-) If it was easy, everyone would do it, and it wouldn't be worth much.

Like, maybe, unionize musical performers (saw that recently ;-) Or, the folks who used to farm camping bots, tho not very PC IMO. Or, heaven protect our necks, whoever invented Bloodlines. Or, have you seen how Abyss sells it's skins.