Gwyn Llewelyn has an interesting article, nearly hidden among the brilliant Uri vanity pieces, bukkake exposes and PN drama, positing that Linden Lab is really "barely profitable" but that it's going to have a hard time saying so unless it stays in a Ponzi-like growth scheme. Uri adds that its business model is merely to experiment and play with software while they make widgets they quietly patent such as to pwn the Metaverse's infrastructure.
I think she's seriously underestimating both their profit and their expenses (and losses), and also completely misses the boat about their true intentions, which are *not* to make a profit. And Uri's part-spoof article that the Lindens are in this for the patents and pwning the Metaverse is also seriously discounting the prevalance of their ideological motive versus their profit motive -- there's no point in pwning the Metaverse with widgets unless it's *for* something. That something is to push their Better World stuff.
First of all, just to do some back-of-the-envelope correctives to Gwyn's math, we have to figure that the Lindens have 12,000 servers (a few hundred more by now) which they collect $295 a month on tier. If you think that's an error, because they still have mainland tier coming in at only $195, and old islands at $195, you're missing the fact that since November, all new islands have indeed been sold for $295 monthly tier, and there are way more of those now than old-tier islands (and possibly even more than mainland, I don't have a way to check that). Furthermore, those few thousands of tiered mainland sims don't fetch only $195, the bulk discount rate for a whole-sim tier, but many smaller tiers that people pay of $25 US for a 4096 -- meaning more like $400 per sim tier. It's hard to calculate how many of those part-sim tiers are out there, so that's why I've simply decided to use the rule of thumb of 12,000 x $295 -- which is still probably an underestimate. $42.5 million per year in tier alone (yes, there is all that Governor Linden land, but no more new continents have it anymore, and in any event, it's an income potential that could be sold.)
Next, we have to figure what they sell those islands and mainland sims for. Let's figure that they can get $2000 per mainland sim -- except not any more, if you look at the auctions, and see they are now back to selling more like $1500 (which is why they raised the opening bid, they're not stupid, and it wasn't to cut the land barons a break, but to cushion their losses after the gambling ban). Still, let's give them $2000 x 100 x 12 or $2.4 million for mainland sims per year, because they sell a fair number of smaller parcels in dollar amounts that often fetch much higher amounts, and the prices could go up again if they print less of them. And let's figure they add 850 islands a month as they did in July (probably a low number) x $1695 x 12 -- my God, that's $17 million a year right there for the island sales!
So add $19.4 from land sales, $6 million for Supply Linden's printing and selling of at least $500,000 in Lindens a month to stabilize the money supply (erm the license-to-transact supply), and $42.4 million for island and mainland sim annualized monthly tier. That's $67.8 million in revenue, not $60 million as Gwyn estimates. Now for costs.