Since announcing our acquisition of Avatars United, we've had a ton of Second Life Residents getting involved and playing with the site. A big thank you to everyone who's been trying it out!

Currently, avatar ownership on Avatars United is not verified (see the site's FAQ) for any virtual world or MMO on the platform, including Second Life. However, now that we've acquired the site, we've already started working on a standard, easy method of verifying ownership of Second Life avatars. You’ll hear more about that soon.

In the meantime, note that Avatars United provides a unique URL for every profile; you can add this URL to your inworld Second Life profile. This provides a definitive way for other users to verify that the profile they see on the Avatars United site really belongs to you. We've asked that all Lindens with Avatars United accounts take this step for the time being.

Please visit the Knowledge Base for answers to all of your Second Life-related questions.  Or if you have a question, the fastest way to get help is to submit a support ticket via the Second Life Support Portal.

For issues related to the Avatars United site, please use the current Avatars United Support Channels.

Thanks for all the excitement, activity and feedback - keep it coming!

Second Life made strides in 2009, as T talked about in his recent blog post, but we still have work to do. There are some big changes ahead this year as we start to make SL more intuitive, more relevant and more connected to the social Web. Today I want to talk about one of the social strategy initiatives we have planned, and tell you about an acquisition we've just completed that will help us in this area.

I've met many amazing people in Second Life and I am sure you have too.  This is a big part of what makes Second Life so powerful.   It's the "social glue" of experiencing an online world together that makes being there worthwhile.  When we talk to the users who sign up but then decide not to stay, they say they left, in part, because they had a hard time finding people to hang out with. Either their friends weren't there, or they have a hard time meeting new ones inworld, or sometimes both.  We need to fix this.

Another part of the "social glue" of any community is the concept of sharing.  Inworld, it's easy to share and we'll make it even easier.  But sharing between Second Life and the larger social Web is not as easy.  As an avid photographer (well, aspiring to be avid), I'd love to be able to easily share my snapshots from Second Life with my friends on other Web services, and be able to watch a feed of the people I'm interested in.  It's a great way to meet new people, find cool things and interesting places to visit.  Sure, I have my own work-arounds for those capabilities, but it's standard practice to build easy sharing into experiences today and that's what we're going to do.  More people will share in more places, and through that more people will discover the wonders of Second Life.

One of our priorities this year (and there are many, from making the experience more intuitive to reducing Lag), is to give Residents new and better ways to connect and share, through features like the following:

• Searchable profiles
• Friend and activity feeds
• Widgets and viral content
• Optional registration and sign-in using credentials from other properties (Facebook, Yahoo!, etc.)
  
• APIs that enable developers to create widgets, tools, and sites pulling from selected SL data feeds
  

Our goal is to extend and support the great work done by so many on their SL-related blogs and Web sites, because they are a powerful network in themselves. We want to give you more tools, feeds, and connection points to build even more richness and depth into the experience of SL.  This is something we only want to encourage. Hamlet did a great post recently about the power of the Second Life "family" of blogs and sites.

One thing I want to be clear about:  The first design principle in this social strategy is respect of your privacy.  We aren't going to take away any privacy or anonymity for those that want it. We are not going to "out" people.  We are not going to force anyone to reveal any private or personal information.  But for those who want to connect their various online identities, we do want to offer that option.  Second Life has always been inclusive, and although there are many Residents who keep a strict separation between SL and the rest of the Web, others wish there was a better way to actively link their SL account to other Web services, and do things like share screenshots, locations, wish-lists, experiences and stories more easily.  Our proprietary stance on naming and social networking hasn't served that second set of Residents as well as we would like, and that's one of the things we'll change and improve. But for those who don't want to opt in to an arrangement like that, nothing at all will change.

To help us do all this, we're excited to announce an acquisition we've just made that will soon start to give Residents new and better ways to connect with each other and with the rest of the world: Enemy Unknown AB is a Swedish company that runs Avatars United, a Web-based community site designed especially for avatars. We're proud to announce that they are now part of Linden Lab.

Avatars United lets you make some of those connections that I'm talking about above.  It's a great site.  Check it out and add me, T Linden, and others to your friend list. As you do, you'll start to build an activity feed (similar to Facebook or Twitter) that keeps you in closer touch with the people you're connected to in Second Life. This is one of the most exciting things about the acquisition, this ability to reach my friends more easily, with more interesting information (and photos!), and in a more meaningful way. As we go, we'll be adding to these capabilities -- and because Avatars United provides developer APIs, anyone else can add to these capabilites as well.

One thing we're really excited about is the team behind the AU site. Thor Olof and his team bring a wealth of talent to Linden Lab. More importantly, these guys get it, they know that the social needs of avatars are often unique, and they know how to serve them. One exciting side effect of this acquisition is the prospect of having an ecosystem of Second Life apps grow up around Avatars United. The AU team already has an active and growing developer program, and we're looking forward to seeing what the endlessly talented SL dev community can do there. (I'm betting/hoping that a groups app will be one of the first to emerge.) What kind of Second Life apps would you like?  What kinds of APIs would you like to be able to develop on?

In coming months, we'll be looking at the best way to create new services for Second Life around some of the sharing and networking tools that Avatars United has to offer. The AU team is focused on how to extend their platform out to other social networks, sites, and blogs. That will also be key to how we want to connect the expanse of Second Life-related sites, and give them a higher profile on the Web. In the meantime, we invite you to create a profile for your Second Life avatar (or your avatar in another online world), and let us know what you think. As we work to bring AU closer to Second Life, we'll also be helping the company scale its own offering; the AU site itself isn't going away. One of the most interesting elements of AU is that there are profiles from many MMORPGs and online worlds on the site. We love this aspect of AU, and we're committed to keeping this ideal of a place where avatars from multiple worlds and games can come together. While our focus is SL, we will continue to support these communities and keep them engaged. We're looking forward to seeing what kinds of connections people build with the new tools we're working on, both within Second Life itself, and between SL and elsewhere, for those that want it. What kinds of connections would you like to see?

After a really successful Beta period we are delighted to announce that Linden Homes will be launching for all Premium members on February 17th.

Last month we opened a Beta program for a new feature of Premium Subscription that we've called a Linden Home. You can read the original blog post. We invited a few thousand existing Premium members to take part in the Beta and 750 of you took the option of a Linden Home, which is incredible.

This month we surveyed those Beta testers and as expected, we got some great feedback. Happily the large majority of testers told us that they have really enjoyed the experience and value it highly; thank you all for taking the time to get involved. We agree that more variety in house styles would be good, and the suggestions around privacy have given us plenty to work on. We also saw some common themes around building more of a sense of neighbourhood and community in the Linden Home areas, so we're going to be thinking a lot more about how we help there.

So, based on your feedback we are making some changes for the launch itself and working on incorporating the bigger ideas over time. Due to the way that Linden Homes are designed we can add new themes easily over time, and we can make improvements to a house as necessary. We will be talking more about the underlying technology we have used in an upcoming post and intend to make the scripts available to those that want to use similar methods on their own land.

If you have taken a look around the Linden Homes you may have noticed a mysterious control panel on an inside wall. Also new for launch will be the ability to configure the houses via a web page of options, accessed by clicking that control panel. Owners will be able to choose from a selection of different wall, floor and roof textures, amongst other things, giving more variety to the homes themselves.

I'm a Premium member, how will I get my free Linden Home?

From the 17th February all Premium members will be able to have a Linden Home as part of their subscription. If you are a Premium member, we will be sending you an email that will explain how to claim your new home. You will also be able to sign up through your account pages on the website.

How do I become a Premium member?

In addition to a Linden Home, premium members receive a sign-up bonus, weekly rewards, mainland building rights and live access to customer support. If you want to become a Premium member, you can do so through the Change Membership Page. It's very quick and easy. Here are more details on what is provided in the subscription package.

What is a Linden Home?

This is a new feature of the Premium subscription package. Along with a L$ stipend, additional support and a free Mainland tier allowance, all Premium members will be able to opt to own a free Linden Home using their free Mainland tier. The homes themselves come in a variety of themes and designs, and are placed ready for you to move straight in! Remember, you can only have a Linden Home if you are a Premium member.

We are providing Linden Homes because we want to help residents to experience the benefits of owning their own home in Second Life. Land can be complicated for new and existing residents to understand, so Linden Homes is designed to be an easy, predictable and safe introduction to land.

If you'd like to take a look at the Linden Homes for yourself, here are some SLurls you can explore.

Elderglen infohub:
http://slurl.com/secondlife/Elderglen/128/128/29

Tahoe:
http://slurl.com/secondlife/Buckeye/207/32/29

Shareta Osumai:
http://slurl.com/secondlife/Kagero/142/147/29

Meadowbrook:
http://slurl.com/secondlife/Bowston/123/91/51

Second Life economy totals $567 million US dollars in 2009 - 65% growth over 2008

Gross Resident Earnings are $55 million US Dollars in 2009 - 11% growth over 2008

In 2009, the rest of the world caught up with what Second Life Residents have known for a long time - that virtual goods can be a very good business.  Headlines about a billion-dollar plus trade in virtual items appeared in the mainstream press, but in many cases the articles focused on the platforms that create and provide virtual goods to their users, not on the users themselves.

And this is what sets Second Life apart: our users create, merchandise, and sell virtual goods as part of the largest user-generated 3D virtual goods economy in the world. By any measure - number of items, transactions, dollar value, revenues earned - Second Life is the leader. In 2009, Second Life Residents earned more than twice that amount -  US$55 million - while the total size of the Second Life economy grew 65% to US$567 million.

And all of that is due to the creativity and innovation of the Second Life Residents.

By way of comparison, real-world global output is forecast to have declined 1.1% in 2009 (see the IMF World Economic Outlook report, October 2009). The Bureau of Economic Analysis will post figures for the US economy for Q4 and 2009 on January 29th, but their most recent forecast was for the US economy to have shrunk by 2.7% in 2009.  Despite a challenging macro environment, the Second Life economy did quite well to grow in 2009.

Before we dive into the numbers for 2009, we want to acknowledge that last year was an economically challenging one for many people in the real world and many Second Life Residents.  Some Second Life Resident businesses faced hard times while others flourished.  Our focus is to work hard in 2010 (and beyond) to increase the number of Second Life Residents, so that the Second Life economy will continue to grow, giving all Residents the opportunity to benefit.

Here are the highlights for the Second Life Economy as a whole in 2009:

Financial

•      User-to-User transactions in 2009 totaled US$567 million in 2009, growth of 65% over 2008.
•      The total amount of virtual currency in circulation reached L$6.95 billion, growth of 23% over December 2008
•      The US Dollar value of L$ in circulation totaled US$26.5 million in December 2009
•      Sales of User Generated virtual items on Xstreet SL, reached L$1.6 billion or US$6.1 million, growth of 74% over 2008   

•      The total US dollar value of all Linden dollars traded on the LindeX™ currency exchange in 2009 reached US$115 million in value,  7% growth over 2008

•       The total US dollar value of all Linden dollars traded on the Xstreet SL™ currency exchange in 2009 reached US$1.5 million in value, 169% growth over 2008

Usage

•      Residents spent 481 million hours in Second Life in 2009, 21% growth over 2008 
•      User hours lost to downtime as a portion of total user hours were down 66%, to a best-ever low of 0.19% for the whole year 
•      Monthly Repeat Logins reached an all-time high of 769,000 in December 2009, 15% growth over December 2008
   

Land

•     Resident-owned regions reached 23,900 in December 2009, up 6% over December 2008
  
•    Total Resident-owned land (including Mainland) reached 1.85 billion square meters in December 2009, up 7% over December 2008 

While the overall Second Life economy grew in 2009, it's clear that some Resident businesses had strong sales, while other Resident businesses struggled.  In 2009, success in Second Life, as in the real world, was not evenly distributed. As in the real world, economic survival is far from guaranteed. However, in 2009, many Residents had significant gross earnings.

Here's a look at 2009 - through the lens of the US dollar value of gross earnings made by Second Life Residents during the year.

In 2009, Second Life Residents in the aggregate earned approximately US$55 million in real money, growth of 11% over 2008. This represents the sum of all US dollars transferred "out" of the Second Life economy by Second Life Residents, and into PayPal accounts, and then to bank accounts and wallets. We call this figure "Gross Resident Earnings" and it represents the sum total of processed credits for Second Life Residents.

This works as follows: when a Resident business accumulates a Linden dollar (L$) balance through the sale of virtual items or other economic activity, they can sell their Linden dollars to other Residents on the LindeX or the Xstreet SL Exchange, creating a US dollar credit on their account.  Note that we are not including activity from third party exchanges as LindeX and XStreet SL exchange comprise greater than 90% of credits processed.

When a Resident with a US dollar balance on their account moves that balance to PayPal, we record and track that amount as a "processed credit." Taken as a whole, "processed credits" are a reasonable proxy for Gross Resident Earnings, as they represent surplus Linden dollars gathered by a Resident business and turned into US dollars.

In 2009, US$45 million of "processed credits" came from Second Life accounts and US$10 million came via Xstreet SL accounts. Note that many Xstreet SL merchants also have significant inworld businesses, and use Xstreet SL to collect earnings from their inworld businesses as well as their Xstreet SL businesses, accounting for the fact that processed credits on Xstreet SL are greater than the volume of the Xstreet SL Marketplace and Xstreet SL Exchange.

In 2009, the bulk of the US$55 million (95%) were "net proceeds." Net proceeds represent the total processed credits for a given account less the US dollar value of Linden dollars purchased by that account. The L$ purchased by that account could represent a first investment, reinvestment of profits, a trading balance for a currency trader, or personal spending in Second Life. The implication is that Gross Resident Earnings are USD revenues above and beyond L$ expenses.

Note that Resident businesses have real-world expenses (like salaries or rent or food) that they might pay using US dollars - so this figure is not a measure of the profits from Second Life businesses - only a measure of Gross Resident Earnings. Gross Resident Earnings also does not capture the value of assets that remain in Second Life, such as Linden dollar balances, land holdings, items for sale, etc.

Let's take a look at the Gross Resident Earnings figures for 2009:

•      Gross Resident Earnings (processed credits - as described above) totaled US$55 million
  
•      Gross Resident Earnings grew 11% over 2008 
•      US$45 million of Gross Resident Earnings came via the LindeX 
•      US$10 million of Gross Resident Earnings came via Xstreet SL
•      The Small Business segment* represented 47% of the total dollar value of earnings 
•      The Small Businesses segment was the single largest portion of Gross Resident Earnings 
•      More than 50 accounts earned more than US$100,000 each
•      The top 25 accounts, as a group, earned about US$12 million  
  

*The small business segment is defined as a Resident business owning between 0 and 2 regions or less than 1 mainland region.

Roughly 98% of the Gross Resident Earnings (US$55 million) in 2009 are from accounts with recent activity, where activity is defined by one hour spent in Second Life during December, current land ownership or current premium status. This suggests that the majority of Gross Resident Earnings in 2009 are from active, current Residents, not from the liquidation of in world assets.

Out of respect for our Residents, we will only publish this information in the aggregate and only on an annual basis.

Let's take a look at the annual trends for the overall Second Life economy.
Looking at 2009 overall, we can see that the year showed growth in the key metrics of the Second Life economy.

User-to-User transactions reached US$567 million in 2009, up 65% from 2008 - The total of all transactions in Second Life reached a new high in 2009. The sum of all of the transactions in the Second Life economy equaled a total value of US$567 million in 2009. Year over year, 2009 shows good growth relative to 2008. See the Q4 drill down below for a quarter-by-quarter trended view.

 

User-to-User tranasactions on Xstreet SL totaled L$1.6 billion in 2009, up 74% from 2008 – In its first year under the Linden Lab banner, XStreet SL, the web marketplace for Second Life virtual goods, had gross sales of L$1.609 billion, or approximately US$6.1 million. This is the sum total of all User-to-User transactions on the Xstreet SL Marketplace.

This represents 74% growth over the previous year. XStreet SL remains small by comparison with Second Life's inworld marketplace overall, at approximately 1% of the US$567 million Second Life economy in 2009.

 
  
Trading activity on the LindeX reached US$115 million – The volume of exchange on the LindeX, the marketplace for Linden dollars (L$), the Second Life virtual currency, reached US$115 million in 2009. This is 7% growth compared to the previous year.
  

 
User hours reached 481 million in 2009 – Second Life Residents spent 481 million hours in Second Life in 2009. This represents 21% growth over 2008. 
  

 
  
Monthly Unique Residents with repeat logins peaked at 769,000 in December 2009 – In December 2009, Monthly repeat logins peaked at 769,468. Year-to-year, December 2009 repeat logins grew 15% from December 2008 repeat logins. This is a monthly figure for December, and is an all-time high for Second Life.
  

 
  
Resident-owned land expanded to reach 1.85 billion square meters in December 2009 – In 2009, Resident-owned land peaked in December 2009 at 1.848 billion square meters.  This is a 7% increase over December 2008. If Second Life were a physical country, it would be larger than Hong Kong, Singapore, and many Caribbean islands.
  

 

Q4 2009 in Detail
Turning to Q4 2009, the Second Life economy performed well, despite the ongoing impact of the Bot policy on total user hours and concurrency.

Highlights of Q4 2009 included:

•      US$153 million in User-to-User Transactions, 53% growth over the same quarter last year 
•      A new all-time high and continuing rapid growth for the Xstreet SL online marketplace 
•      A new all-time high in Monthly Repeat Logins, at 769,000 in December 2009
•      3.1 billion Voice minutes, up 15% from the same quarter last year   
•      Resident-Owned Land reached an all time high of 1.848 billion meters 

Total user hours continued to trend downward in Q4 while peak concurrency remained flat.  This decline stems from a decrease in user hours contributed by heavy usage accounts (300+ hours per month per account), primarily from a continued decline in Bots. See below for detail and read about the policies here.

Let's look at the numbers for Q4 in detail:
 

User-to-User Transactions peak at US$153 million, up 53% from Q3 2008 - The total of all transactions in Second Life reached a new high in the quarter.  The sum of all of the transactions in the Second Life economy equaled a total of US$153 million in Q4 2009. This is 2% growth over the previous quarter and 50% over the same quarter one year ago.

 
  

Total Xstreet SL sales reach a new all time high in Q4 2009 – In its fourth quarter under the Linden Lab banner, Xstreet SL, the web marketplace for Second Life virtual goods, had gross sales of L$485 million, or approximately US$1.9 million.

This represents 15% growth over the previous quarter and 81% growth over the same quarter one year ago. Xstreet SL remains small by comparison with Second Life overall, at approximately 1.2% of the US$153 million Second Life economy in Q4 2009.

 

Trading Activity on the LindeX – The volume of exchange on the LindeX, the marketplace for Linden dollars (L$), the Second Life virtual currency, reached US$29 million in Q4 2009, representing 1% growth compared to the previous quarter and 10% growth over the same quarter a year ago. A portion of the trade in Linden dollars has migrated to the Xstreet SL exchange as well as third-party exchanges, which we believe is a contributor to the flat trend in LindeX volume.

  
  

Monthly Unique Residents with repeat logins reached 769,000 in December – In December 2009, Monthly repeat logins peaked at 769,468. Year to year, December 2009 repeat logins grew 15% from December 2008 repeat logins and were up 2% over September 2009.

While the number of total unique logins (including users who log in to Second Life for the first time in a given month) is higher, we use repeat logins (which captures all unique returning users who have logged in during a prior month) as a metric to track the number of users who are engaged with Second Life.

 
  

User hours reached 113 million in Q4 2009 – User hours declined in Q4 when compared to Q3 2009. This decline is attributed overwhelmingly to a decline in user hours from accounts that spent more than 300 hours logged in to Second Life each month. See the chart below (User Hours by Usage Band) and the SPOTLIGHT of the Q2 2009 Economy Blog post for an explanation of this dynamic.

The Q4 figures show a 5% decline when compared to Q2 2009, and a 1% increase when compared to Q3 2008.

   
The Impact of Scripted Agents, a.k.a. Bots

Scripted Agents, commonly known as Bots, can be helpful tools in Second Life. When used appropriately, they can improve the Second Life experience. However, some Bot usage is in violation of our Terms of Service.  In 2009, we started taking action to mitigate the usage of Scripted Agents that are in violation of our policies, in particular Bots used for the purpose of improving the results generated by the Second Life search algorithms. Since September 2009, we've been gradually increasing enforcement of our policies, and as a result, have been seeing declines in total user hours.

In October 2009, We asked Residents to register their Bots, and we can now report that these Self Identified Scripted Agents (SISAs) account for about 1900 logins/day.  Each SISA accounts for about 420 user hours/month. Per quarter, SISAs taken together account for  about 2.4 million user hours. The implication is that a small change in the number of Scripted Agents has a big impact on total user hours. While some might express concern over the overall decline in user hours, we think the outcome is a good thing.  If you haven't already, please register your bots.

   
User Hours by Usage Band -  This chart illustrates the impact of Bots on user hours. The chart shows user hours contributed by accounts grouped by the number of hours of monthly usage. That is, the data shows the trends for the total aggregate user hours in a given month for all accounts that spent more than 300 hours, 201 - 300 hours, 51 - 200 hours, 4 - 50 hours, and 0 - 3 hours inworld in that month.
    
The declines in user hours are a function of the downward trend in user hours contributed by accounts with 300+ hours spent in Second Life each month. For accounts with 300+ hours/month, the average hours/account/month is about 420 hours per month. That amounts to 14 hours per day, every day of the month - a usage pattern which is more suggestive of a computer than a person.
    
In terms of unique accounts in each grouping, the number of accounts in December 2009 increased across all segments (when compared to December 2008). There was only one exception: accounts with 300+ hours/month of usage shrank by about 20%. Despite the decline in unique accounts with 300+ hours/month, there are still thousands of accounts in this segment, which accounts for the phenomenon that many Second Life Residents experience - which is that the Bots are still a significant presence in Second Life.

     

        

Second Life Residents use 3.1 billion voice minutes in Q4 2009 – Total Voice Minutes grew 15% compared to Q4 2008 and declined 1% compared to Q3 2009 . This metric measures all VoIP minutes across all types of voice sessions – Resident-to-Resident calls, group voice chats, and local voice. This metric measures the total minutes that the "talk" button is depressed or locked "down" for Second Life Residents, signifying a user choice to enable voice to talk to another Resident.  On average, all of the Residents who connect to voice connect to a new channel each 15 minutes, accounting for roughly 100,000 individual audio spaces in Second Life.

It's clear that voice has become a mainstream capability in Second Life - as more than 60% of Second Life Residents are using voice at any given time, and Residents marking on average 25 hours of voice usage per month.

   
   

Resident-owned land expands to reach 1.85 billion square meters in December 2009 – In Q4 2009 Resident-owned land increased to reach a total of 1.848 billion square meters.  This is 2% growth over Q1 2009 and 7% increase over the same month one year ago.

         
Homesteads advance in Q4, Full regions maintain, and Open Spaces decline. – Total Private Regions  owned by Residents reached 23,965 by the end of Q4 2009. This represents an increase of 2% over the previous quarter end in June of 2009. In Q4 2009, the number of Homesteads grew 5%, the number of Full regions were flat, while the number of Open Spaces declined 4%.

     

 

A solid Q4 and 2009 for Residents,  and for Linden Lab - Though enforcement of Bots continues to affect the trajectory of user hours and concurrency, the resilience and commitment of Second Life Residents and their businesses are evident in the growth in logins, User-to-User transactions, voice minutes, and private regions.