Monday, November 5, 2007

Number of "profitable" Second Life businesses up 10 percent in October

It's really hard to get any kind of true numbers about how many profitable Second Life businesses there are, but Linden Lab does regularly publish one. Whether it's entirely useful is a much-debated question, but it's what we've got.

The number is the so-called "positive monthly Linden dollar flow" (PMLF) statistic, which spells out how many unique Second Life users there are who are bringing in more Linden dollars than they're spending.

First, the October numbers are out, and for the month, there were 49,156 people with PMLF, according to Linden Lab. That's up 10.1 percent from the 44,631 it reported with PMLF in September. More impressive still is the 157 people who showed PMLF of more than US$5,000 in October, up 13.8 percent for the month.

So, things are looking good. The 10.1 percent jump in total PMLF is significant, because it's the biggest jump since May, and shows that the negative number that happened after Linden Lab shut down casino operations did not extend to the whole grid. In fact, the October PMLF numbers show, business in SL is in fine shape.

Now, of course, no one really knows what PMLF is. On its Economic Statistics page, Linden Lab notes that, "PMLF (Positive Monthly Linden Flow) looks at the flow of Linden Dollars into a unique user's account BEFORE Linden Lab Charges are applied to the account. These numbers EXCLUDE payments or receipts related to the sale or acquisition of land (since theoretically these represent investments and not business receipts). All numbers are rolled-up among avatar 'alts' to the Unique Customer Level. Businesses that are operate Linden Dollar exchanges are excluded. Note that some businesses accept payment outside the Linden Economy (e.g. via CC & Paypal) and those numbers are not included in these reports. "

Parse that however you like, but it does seem true that you have to discount what people are paying for tier fees from their income. And that probably does significantly affect the number of people who Linden Lab counts as qualifying for PMLF, especially on the low end.

Still, the rate of growth is probably not affected, and so regardless of what the raw number of people with PMLF, I think we can safely say that the rate of growth is valid. I think.

And if so, this is good news for anyone wanting to run a profitable in-world business, something that you can learn how to do if you read my book, The Entrepreneur's Guide to Second Life.

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