Second Life gets millionth user = Increases in worth?

SecondLife breaks one million users!

I saw this while I was explaining how Second Life worked to a friend, so I grabbed a screenshot. Linden Labs noticed it too of course. This coincides nicely with the 300th millionth mark of the U.S. population two days ago (16th Oct 2006).

Let’s legitimize the figures a little…
Since we can have multiple AVs (avatars) in game, it wouldn’t be too difficult for a small group of users to create numerous registrations (like how you would Googlebomb?). As such, the population counter also shows the number of active residents in the last 60 days, which is just under half of the total population, at about 405,931 users. Still not bad. Interestingly, at my last refresh the total number of residents was about 1,005,000. Less than half an hour later, the registrations increased by another 9,000 users. Makes me wonder if the peak in signup was due to the million mark as if someone was hoping to get a prize (e.g. iTunes millionth user), or if some recent media event triggered some urge to sign on (can someone investigate?).

Will Second Life be worth even more?
Intrinsic to Second Life (SL) is the ability to build and own virtual items (e.g. designer clothing, houses, gadgets, etc). If we measure SL’s worth based on virtual items alone, we should see an increase in transactions, which should make for a thriving economy. At this point, the LindeX (SL Currency Exchange) stands at $1,000L for US$3.98. For those of you who still think that virtual items aren’t worth anything, take a look at the amount of money spent in-game… after conversion, it’s US$429,060 per day (US dollars, not Lindens!). Developers at Linden Labs know how important it is to appraise their virtual world, that’s why they’ve released a torrent of frequently updated market data and economic statistics to help auditors and researchers along.

You can’t be serious… right?
It’s no surprise that the IRS now wants to figure out how to tax virtual items. Indeed, with virtual property increasing in worth, what happens when say your server hard drive crashes? That’s where insurance companies come in… Nationwide Insurance already covers digital media such as your iTunes audio files, so there’s really nothing to prevent them from insuring your Second Life inventory if they ever felt like taking that business.

Alright, so how do I make money in Second Life?
Learn to build. I think that’s the most fundamental way to earn money virtually… by building interesting items useful to anyone. There’s a whole designer fashion industry in SL as reflected by the beavy of SL fashion mags available (e.g. SecondStyle and LindenLifestyles), but you can also make eBooks, music, vehicles, houses and so on. There’s a very good pricing guide on the Fashionista blog where author Celebrity Trollop graphed and analyzed economic data for September 2006, which included two new metrics, transaction count by amount and monthly Linden spending distribution. If you’re lost, the author essentially realizes two pricing points: “If you’re a content creator looking for some guidance about how much to charge for your designs, the sweet spot seems to be a price under L$200 [… and …] people who are on a budget are really on a budget, and those who aren’t tend to spend quite a bit more Lindens per month than the average user”.

I’m interested in finding out alternative ways of earning money in Second Life. So far I’ve seen those money chairs and trees used to increase the popularity of certain islands, but if you’ve found something truly disruptive in terms of increasing your AVs’ finances, do drop a comment!

UPDATE: Woah… we’ve seen a lot of media attention on Second Life recently, but this latest article by New York Times hits it home. In “A Virtual World but Real Money“, NYT reports on the thriving industries in SL, including how it is fast becoming a three-dimensional test bed for corporate marketers, including Sony BMG Music Entertainment, Sun Microsystems, Nissan, Adidas/Reebok, Toyota and Starwood Hotels. It’s a seminal piece on the economics in Second Life.

2 thoughts on “Second Life gets millionth user = Increases in worth?

  1. Kevin,

    Re: the “Legitimize the Figures” section.

    You note that the 60-day unique login number was 405,931 yesterday. What you’ve missed is that the number of new accounts created in the past 60 days was 432,538. i.e. 19,559 *greater* than the number of logins.

    This means that a minimum of 5% of all accounts registered will never even try out SL. This number is probably closer to 10%.

    A little more statistical grinding will reveal that roughly 22,000 of the accounts that existed on August 17th (60 days ago) have logged in since then. That is, roughly 4.2% of the 524,000 accounts that existed on that day have been in-world over the past 60 days.

    What does this mean? In all likelihood the stated population number is driven by a large number of new sign-ups, the majority of which simply don’t stick around, and the true number of SL users is far less than that given by the 60 day unique login figure.

  2. Tom: Thanks for the insight. Like it or not, those numbers seem to make sense.

    I didn’t note this, but I expected that the 60-day time period would be a little generous in terms of active SL residents, since it is likely to include users who choose to drop off (e.g. after realizing it wouldn’t run for them or it’s too difficult to control)

    True story: Second Life is quite processor intensive. I had a friend try signing on the first time using our lab computer but the program refused to launch, citing that our graphics card was too weak. If SL were to reach a market of non-gamers, I doubt many of their computers would be up to speed as well.

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