Second Life Economy Grows But Fewer Users

By Eric Reuters
SECOND LIFE, April 15 (Reuters) - Fewer new users are signing up for Second Life, but the faithful are spending more time and money than ever inside Linden Lab's virtual world. Second Life's in-world economy is growing at a rate of 15 percent annually, Linden Lab CFO John Zdanowski (writing as Zee Linden) said on Tuesday. User hours, concurrency, and economic transactions all showed robust growth. But even as time and money spent in Second Life swells, Linden's premium subscriber base -- the paid accounts that are allowed to own land on Second Life's mainland -- declined for the fourth consecutive month in March. The total avatar population grew by 3.2 percent to just over 13 million, the slowest month-to-month growth on record. The numbers suggest that a smaller, highly engaged base of Second Life users is intensifying its interest in the virtual world even as Second Life's appeal to new users fades. Zdanowski said Second Life achieved a gross domestic product of US$300 million by the end of March, a larger total economy than real-world nations such as Dominica or Micronesia. While Second Life's economy is still significantly smaller than it was before gambling was banned last summer, the number of financial transactions between users shows relatively steady growth. More money is also circulating through the LindeX, Linden Lab's exchange for converting real-world currency into Linden Dollars, and strong consumer demand has pushed average land prices up from L$6.3 per meter to L$11.5 per meter in three months. Linden has said it will increase its supply of land to put downward pressure on prices, a move that angered some existing owners of virtual homesteads. But even as the overall demand for land surges, there are fewer buyers in the market. Second Life shed 1,656 paid accounts in March, the fourth month in a row more people got out of the land trade than entered it. Total premium accounts stand at 89,875, below last summer's 94,607 peak. Second Life's population at March's end grew to just over 13 million, although that number includes an unknown number of inactive accounts widely thought to be about 90 percent. But in March only 408,000 new accounts were created, the smallest gain in absolute numbers since September 2007, and the smallest monthly percent gain since Second Life's debut in April 2001.