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Saturday, January 06, 2007

USD Spent

Second Life is something of a phenomenon, in the way few - if any - virtual worlds have been since their inception, two decades ago. There's considerable debate as to quite why this should be, and somehow we always come back to numbers. Numbers are easy and quantifiable. Or are they?

Well, as we've seen lately, no. Everyone's talking about numbers, and what they mean and what was intended by them. Some of the numbers are making sense, and some of them tell a surprising story. Growth is what most people are stuck on, but with the aid of Tristan Louis, we're going to talk about money.

Tristan's 7 Million

As Wagner James Au pointed out, Tristan Louis presented the results of tracking Second Life economic data - Something I don't track myself, keeping mostly to population figures, signup rates and concurrency.

Now, Tristan's data is lovely, though I disagree a little with his 7-million projection. I've currently got that pinned on my calendar in September/October 07, rather than the April 07 that Tristan's got down.

I'm pretty conservative in my estimates, however, and Second Life has always grown ahead of my predictions, so somewhere between Tristan's date and mine.

Moving money

One interesting thing Tristan's seen in the data is the movement of money. There's a figure on the Second Life front page that lists US$ Spent Last 24h. Now, don't forget that Second Life is a virtual world. You didn't, did you? Good - it'd be embarrassing if you mistook it for a real place with it's own borders and laws.

Now, that virtual nature makes things a little tricky, what that figure specifies is the transfer of funds from one account to another, whether or not goods change hands, or a service is performed, or the money is handed back. More than once, I've gotten into a cash-match with someone who has given me L$ for something I'd intended to be free. They give me L$. I give it back, demurring. They hand it to me again, "No really." ... and so on. Every one of those transactions counts.

The way money moves in Second Life with tip jars and alternate accounts and refunds means that probably about half of the value given is double-counted. That would leave us with roughly 75% that we could count on, but let's go the highly conservative route and say a mere 40% of that figure represents actual meaningful transactions, where there's a net change in the distribution of funds that is inline with the stated figure.

Averaging out Tristan's weekly samples for December 2006, and then applying our own conservative 40% figure to it, we get a daily movement of L$ equal to $269,848 USD.

Consulting Linden Lab's figures for December 2006, we find that 534,738 accounts logged in during that period. Reasonably assuming a relatively flat distribution, that yields 17,249 logins per day, which gives us a very respectable motion of currency within the system of $15USD per account per day.

That's a lot of currency in motion, there might only be somewhere between 42,400 and 58,000 premium accounts in Second Life right now (Estimate by applying November's growth rate to the population figures current at the end of November to yield the as-yet-unknown figure for December 06) but that just serves to increase the interest factor in the number.

Let's say SL is a try-me virus, as some have said, and decide that 90% of the accounts are statistically insignificant from a cash perspective (free accounts, with no payment information starting with no money). That means we're talking about $156USD per account per day. Does that make you feel any better? Taking the conservative view and all, I mean - Or did that just make your eyebrows go up?

We're not just talking about virtual gold-pieces or somesuch here where you get a cease-and-desist order for trying to trade in them. The L$ largely goes around in circles like regular paper and coin currencies do. A certain amount is manufactured by Linden Lab, but most of this is moving the regular way - by convincing someone to part with it for your product, service or charity, and those L$ can quite reasonably be turned back into US Dollars on the exchanges by selling those L$ to people that want them.

On the Linden Lab Lindex currency exchange in the last 24 hours, there was demand for almost 42 million Linden Dollars ($156,700 USD).

It's hard to go back to the old sources about the choice of the term Resident for Second Life signups, as most of those sources end-of-lifed over the last six months, however there's still a surviving reference, but there seems little point in wrangling about the intended meaning of the term.

Second Life isn't riding a wave of hype because of perceived growth, or imagined popularity. It's riding the wave because something's actually going on in there. There's actually a lot of things, but most of them aren't directly quantifiable by numbers. The numbers are just the teaser.

And if you don't want to understand, well you won't. That rule's not exclusive to Second Life.

Dr. Heywood Floyd: (Looks through the written data) I don't understand this. If this data is correct, then there's something down there. (No response) It can't be correct.
Vasali Orlov: It is correct.

-- 2010, Odyssey 2.

2 comments:

  1. Just a point of clarification: the 7 million resident figure is a most likely (based on averages of the growth rates). Realize that, under my conservative projections, the data would point to roughly 3.5 million residents by the end of April. This number seems to be in line with your (as you said yourself conservative) estimates :)

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  2. Ah, of course.
    Beginning of september, based on the last 14-day signup average, but I wouldn't put it past being end september either.

    Still...SL always beats my conservative estimates.

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