The headline is all over the Net today: whether Second life is a Ponzi scheme. It’s a sensationalistic headline and tagline for an argument that isn’t actually about SL itself but about how some folks may be using SL. As Mark Wallace says over at 3pointD, “a more scientific inquiry would find that what SL’s economy resembles is that of a small developing nation.”
That said, this is the most scientific inquiry we’ve seen in a while. And some good points are raised.
I commented a while back on someone’s blog that the volume of L$ transactions within the world as a metric wasn’t a measure of the total wealth generated in SL. It’s a measure of liquidity; if one guy buys something for $20, then the person he got the $20 buys something with it too, it shows up at $40 in that figure. Net gain to users as a whole may well be zero.
In practice, we’ve always seen that RMT traders have divided very cleanly into haves and have-nots. Anyone reading Play Money: Or, How I Quit My Day Job and Made Millions Trading Virtual Loot surely noticed that there were no millions involved, and alot of shady dealings. The anecdotes referenced in the “Ponzi scheme” article are what you might expect: money laundering, cyberprostitution, outright fraud, and usury.
The bottom line is that going into SL, or indeed any world, purely on the basis of RMT and money to be made is probably a bad idea. The reliable returns for the average Western person just aren’t there in any of the worlds. This doesn’t mean that the world operators are necessarily running a pyramid scheme themselves, and I think it’s irresponsible to say so. But it does mean that anyone looking to make a buck should assume they are the sucker, and be pleasantly surprised if it turns out otherwise.