Now, this one's had me laughing for an hour. Valleywag's so quick to jump on an anti-Second-Life story (maybe because of their trailing Alexa ranks, one can only speculate) that they're actually trampled by that pet pony of theirs: Misleading figures and hype.

In fact, as hype pieces go, this one is nonpareil. It takes the SL hype, and exaggerates it to a point not even the media believes, then compares it to outdated circumstances in a vague and unverifiable report allegedly (but apparently actually not) made when the Second Life economy was less than a tenth of its current size. Way to compare Buicks to boysenberries there, boys. Apples and oranges are virtual clones by comparison.
To put a frock on the pig and magnify the hype, their analyst is 'anonymous' (or as we prefer to call him, Randolph Harrison). What Valleywag quotes is a paraphrase of this piece right here, published six months after the period it claims to describe (yet based on an exaggerated version of the current media hype du jour), and vague enough to be largely unverifiable. There's truths in there, certainly, but very deceptively phrased ones, and chunks of the material are no apparently no longer current or accurate. Note that it is not the same piece that Valleywag is quoting. They are disarmingly similar, but the version printed by Valleywag gives obvious lie to the analysis (more on that further down).

Go take a read. Some of it will certainly give you a laugh if you're familiar with Second Life's economic and exchange system as it stands. Further, if you read closely, you'll see nothing to suggest that Harrison has even ever logged into Second Life and experienced any of the things he is talking about. There's enough misconception in his opening paragraphs to suggest that he hasn't done so and that he hasn't any hard data to back it all up. In fact judging by the evasiveness used when reference to exchanges, it's even possible that there isn't any.

Mister Harrison speaks about the Lindex, and has a nifty screen-shot of a single day's worth of public market data -- but did not apparently use the Lindex that he mentions. He talks about a private exchange, and has a precise figure, but can't seem to recall the date, or the name of the exchange. By his own figures, he tried to cash out more than 3% of the then total currency in motion at once, and was distressed when supply and demand worked ... well, the way supply and demand do.

Best of all, Harrison claims to have done this study six months ago prompted by "given the fact SL was supposedly producing virtual millionaires." -- Of course there were no virtual millionaires in Second Life then -- Anshe's so very recently made the grade (Harrison takes the time to call Anshe a whore before he's done). Harrison's piece looks like just a manufactured controversy piece (or, perhaps, he is just very easily confused by numbers and simple economic matters).

"Interestingly, no legitimate, real world corporation has earned net profit from SecondLife activities." -- Randolph Harrison.

I'm sure that all you 'illegitimate' (ie: that Harrison is simply discarding out of hand) companies that are making a net profit (even a small one) are probably a little amused at that -- or insulted. Choose one.

Maybe Harrison got the data for his conclusions by reading Valleywag to whose piece this anonymous analyst links. Speaking of Valleywag, they add nothing of value, except for adding a little schoolyard disparagement to lead into the excerpt of their portentious anonymous report. Still, you can read it here if you've nothing better to do.

I'm not sure if Valleywag or Harrison has earned the dunce's cap here today -- Harrison's material is pretty misleading, I think the cone of shame goes to Valleywag for actually buying it. Or maybe this is to see how gullible reporters are.

I hope to god nobody paid good money for it.