If you heard the president last night, you know -- or at least you've been told -- that the U.S. economy is on the verge of collapse unless we authorize a massive bailout.
Read and received, Mr. President. But what do we do about Linden Lab? The privately held maker of the virtual world Second Life is watching its virtual economy wobble as ours teeters. Notable statistics:
- The average spent per square meter to acquire virtual land in Second Life has declined from 1.9809 in August to 1.8378 month-to-date in September. (As expressed in the virtual Linden Dollar, Second Life's virtual currency.)
- User-to-user transactions fell year-over-year in both the first and second quarters of 2008.
- The average exchange rate for the Linden dollar fell from 267.4 in July to 266.8 in August. Not exactly the sort of freefall we've witnessed with the U.S. dollar, but not great, either.
And in an art-imitates-life moment, Linden in January banned virtual banks from operating in Second Life because of risks to its economy. The irony? Real-world banks -- fine institutions such as, say, Wachovia (NYSE: WB ) and Washington Mutual (NYSE: WM ) -- were made exempt from the rule. Quoting a statement from the company made at the time:
Usually, we don't step in the middle of Resident-to-Resident conduct -- letting Residents decide how to act, live, or play in Second Life. But these 'banks' have brought unique and substantial risks to Second Life, and we feel it's our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse -- leaving upset 'depositors' with nothing to show for their investments.
Is Hank Paulson stealing from Second Life? Is Linden Lab founder and chairman Philip Rosedale ghostwriting for Ben Bernanke? Unbelievable.
Fortunately, not all the news is bad. Linden is still seeing outrageous usage growth. Subscribers spent 48% more hours in Second Life in August than they had the year prior.
Corporate usage is also up. Toyota (NYSE: TM ) gets prospects to try its Scion using Second Life. Thomson Reuters (NYSE: TRI ) has established a Second Life bureau to cover news from the virtual world. And Starwood Hotels (NYSE: HOT ) has tested designs of its new Aloft brand in Second Life.
And yet none of this prevented a virtual banking crisis. Will Linden be due for a bailout if it gets worse?
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