From: Second Life Blog Economic Key Metrics for October and November 2007 Quote from the site - Key takeaways: In November, we had another slight reduction in overall Logged In User Hours (our first drop was back in August) that is related to the Unplanned service outages. Overall economic metrics continue to trend slowly upward, including the Lindex exchange figures and resident-to-resident transactions.

From: Second Life Blog Financial Statements For Everyone! Quote from the site - Many Residents use Second Life in a professional capacity. As such, being able to both keep and present detailed records of financial transactions is vitally important. To help you with this, we’ve added a new page to the “Your Account” section of the website: Account Statements.

From: Second Life Herald Op/Ed: Financial Myth Busting Edition Quote from the site - When Ted Castronova wanted to study a virtual economy, he decided against using Second Life. A number of people thought that was foolish because SL already has an economy. But SL is not like other MMO economies for two reasons; the LindeX makes asset prediction impossible and residents do not make predictable economic choices.

From: The Dewey Blog Second Life Quote from the site - A recent blog entry on foreign exchange rates elicited the comment/question, “Where would you class the Linden dollar?” The answer is that the Linden dollar is classed in 332.4 Money, given its including note for “other mediums of exchange.”

From: Wayne Porter Ebay powers Second Life and Live Gamer and Twitter Blackjack Quote from the site - Mashable reports on a new service that finally gives gamers what they want- a free economy of sorts. Backed with $24 million in VC from Charles River Ventures, Kodiak Venture Partners, and Pequot Ventures, LiveGamer went live targeting MMOGs with a platform to trade virtual goods. Andrew Schneider and Mitch Davis, (ad startup Massive sold to Microsoft) Live Gamer brings a sense of respecatbility to trading virtual goods. Suddenly that +3 Vorpal Blade of Troll Slaying takes on new and potent economic meaning.

From: SL Capital Exchange SL Capital Exchange to replace SkyRanger Hammerer Quote from the site - It is with some regret that I report to you that SkyRanger Hammerer has been relieved of his duties as SL CapEx Compliance Officer and is no longer an employee of the SL Capital Exchange or its parent JT Financial.

To be very frank, the MAJORITY of companies now listed are out-of-compliance in some manner or other - either via Errors and Ommissions in the requisite monthly Financial Reports (at MINIMUM an Income Statement AND Balance Sheet) in a GAAP-compliant format submitted no later than 10 days following the last day of each month, or in the mandatory WEEKLY UPDATES CEO’s are expected to file.

From: SL Reports Press Release: Goldflake comments on WSE notecards Quote from the site - The World Stock Exchange (WSE) has been distributing a notecard to the users registered at their website. While we commend the intention to inform and educate the users, we strongly disagree with section 3 (Banks and Exchanges) in the aforementioned notecard.

First off, the WSE claim to hold a 95% market quota is a joke at the best and we refer you to this post written by an independent and unbiased observer .

From: Orient Lodge Analysis of Second Life Exchanges Quote from the site - People have questioned how this 95% market share is calculated, and I must admit, I have no idea. So, I thought I would do a little digging into data available from the different exchanges. The International Stock Exchange (ISE) appears to provide the most detailed data, which can be aggregated.

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Recently there have been comments and blog posts talking about the expected price increase of the tier rates from $195 to $295, SecondLife Insider has a post on it today, and the blogpost at Second Life says there have been many comments about it. Linden Labs said previously that the prices would be good through 2007.

After a town hall meeting with Zee, LL committed to giving residents a minimum of 60 days notice before they change pricing plans on them. This contradicts other reports that the inflation will occur in November. All signs point to some time after the 1st of the new year. It would be nice to receive clarification from them, though! Source: LL to raise tier rates from $195 USD to $295 USD “soon”

In a response on the Second Life Blog, Robin Linden says there will be no price increases in Q4, but you can expect a price increase next year, as they are already looking at it.

We have no immediate plans to raise the ‘grandfathered’ island pricing. This doesn’t mean it won’t change at some point, but certainly not in Q4.

We are evaluating changes to the configuration of premium /basic subscription models and to mainland tier pricing, but have no specific plans, and again, we don’t expect anything to change in Q4.

We are also reviewing some pricing changes on the LindeX associated with rolling out more international payment mechanisms, but the variety of global payment mechanisms make this very challenging, and we don’t expect any changes in Q4. Source: No Q4 Pricing Changes Planned

With the prices of computers and web hosting going down, you would think price increases wouldn’t be necessary, as they should be making more money per sim now, but I can’t say that for sure.

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Just read this press release that said Millions of Us, Inc, has hired Peter Phillips as their Technical Director. What does this have to do with Second Life? Peter Phillips was the creator of the LindeX currency exchange in Second Life. The press release also said the The Economist recently praised Second Life’s economic system for it’s “sophisticated management mechanisms”.

Millions of Us, Inc., an agency specializing in virtual worlds, has hired Peter Phillips as Technical Director. In his previous position at Linden Lab, Phillips designed and implemented the “LindeX” virtual currency exchange and essentially acted as central banker for the virtual world “Second Life.” Second Life’s economic system was recently praised by The Economist for its sophisticated management mechanisms.

As it develops trading systems for virtual goods on multiple platforms, Millions of Us will benefit from Phillips’ experience as manager of a major virtual economy and its component trade mechanisms. He will also lead the technical team at Millions of Us, helping the company’s clients achieve rapid entry into various virtual worlds with their virtual assets — including goods, celebrity avatars and themed content. Source: Creator of Second Life’s Virtual Currency Exchange Joins Millions of Us as Technical Director

The only thing I could find on the economist was this article talking about the Ginko bank collapse, A credit crunch in cyberspace - Trouble in paradise, which didn’t sound much like praise, as it mentions propping up Second Life currency if growth slows down.

Yet even before Ginko’s collapse, public opinion had turned against Second Life. This was in part because of the media backlash typical with an over-hyped technology, but also because reality has intruded online. Many users experience this parallel world as a lonely one, despite the existence of 7.7m registered residents as of June. Only 10% of new users are still active after 30 days and at any given time only between 20,000 and 50,000 are logged on. Most corporations hardly attract any online visitors, which is why some firms have already closed their branches. Real money is being made by only a happy few.

Still, Second Life is unlikely to experience the same hard landing as the market for sub prime mortgages. In fact, compared with other virtual worlds before it, Second Life’s economy and its currency have been tightly managed. To ensure that the Linden dollar does not stray too widely from an exchange rate of L$270 to the American dollar, Linden Lab uses a set of monetary instruments, allowing it to inject or mop up liquidity. It also intervenes on a Second Life currency exchange, called LindeX, which even features automatic circuit breakers if trading gets too frantic.

The real economic policy tests, however, are yet to come. Will Linden Lab be willing to prop up its currency if growth slows down (which it apparently already has begun to do) or if many users start selling their Linden dollars? Will the firm, which so far has preferred a laissez-faire approach, introduce regulation, to avoid further bank runs, say? If Second Life has trouble answering such questions, it can take solace from the fact that they are proving pretty tricky in real life too. Source: A credit crunch in cyberspace - Trouble in paradise

Obviously these guys are tooting their own horns about hiring the master of the Second Life economy, and since it hasn’t collapsed yet, I guess they can. I won’t be investing in any bank or Stock Exchange until we get one backed by real world money, like the Japanese bank mentioned here, Mizuho Bank to Launch in Second Life, if they indeed to connect their bank to Second Life.

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