One fundamental question appart from the drama

Ever since EBay appeared I asked myself one question: where is the limit for capitalism?

Please don't get me wrong: I am big fan of capitalist system and free market. As long as there is competition.

However, those market platforms like EBay are one special kinda biest. Why? Because they become monopolies. At some stage all buyers and sellers use one platform, brought their content and traffic to that platform. No other competitor would have chance to compete, even for free, even with better system. Somebody effectively owns one standard and does not have create much new value, but can just tax everybody using it. Effectively at EBay you pay money for content that users of EBay brought to EBay.

One similar case is Microsoft, even though slight competition exist there. But it is marginal. The content many people brought to Windows allow Microsoft tax most PC users with high profit margin.

Now in Second Life community we face advent of web commerce. And I think it is similar to EBay. There will, sooner or later be one web platform most people will be using. And I think only one. Once this platform is standard and in use nobody will bother switch elsewhere. It will become one monopoly. You can watch EBay step by step increasing their fees and profits. The same would likely happen to SL web commerce. That is nature of the service and this particular market. Monopolies owned by somebody mean that some person can simply tax people indefinitely.

So I ask question: Shouldn't whatever platform becomes used for SL webcommerce be owned by the community as a whole? Or by Linden Lab? Or at least the data that users provide and that tends to create those monopolies? I mean, all that listing content that people enter, shouldn't it be public domain and available as e.g. XML data to whoever wants provide similar service?

Any thoughts on this?

This is above my head, but I do know this: Greed is Good.

Yes, it's called the network effect.

It isn't Ebay's cool functionality that makes it so popular, it's the fact that as it grows it simply becomes exponentially more influential.

However, they are getting some competition from Google / AOL / MSN / Amazon / Yahoo via "AdWords" so things are probably changing.

As for an open source data standard, it would be really nice for the community. SL needs to give us a way to export TGA files en masse and programmatically, though.

Hmm.

Anshe, you're about as big of a monopoly in SL as they come, what with your staggering majority of land sales/auctions.

Pot to kettle, black, et cetera.

LF

Anshe is not a monopoly, she has ZERO pricing control and no network effect.

There is zero barriers to entry for someone to come along and compete with her.

Please go to the wikipedia and do a research on Monopolies. Just because someone massively provides a service (that anyone can just as easily provide), doesn't make them a monopoly.

i think fundementally this game is leisure time. if i want something in sl, i want it pretty immediately. unless it's something very valuable like land, i doubt i would use an auction site. unless ebay creates an sl friendly web mediation like slexchange or secondserver, it will remain very inconvenient for sl users like myself. infact, i find shopping in world the most convenient:

using my shopping preferences as an example - nephilaine and hosequeen both have very low lag stores which feauture all of their latest inventory. i much prefer going in world and browsing there. every thing is immediate and feels more fun. similarly i've done some shopping for my male av at jonquille's. once it's loaded, it's just way easier and more immediate than slexchange. and since the only store i know for francis is in lag city, i just buy her products directly from her in IM.

low lag in world beats web based shopping. merchants! control your lag!

I'd rather see a private business be this "singular hub"... even with a unique market position there is still a level of efficiency and customer orientation that doesn't occur with "public" institutions. And it's more fair because say what you like about e-bay, they don't use guns to force people to pay for their service, even if someone doesn't use it.

The economics of why this happens can be explained, but I don't think this is the place, and in truth, there are a lot of conflicting theories. Most of those theories are foolish and used to create strife in RL. Let's not bring that here. (someone will anyway, I'm sure... lol)

But suffice it to say it has to do with market distortions caused by various monetary/financial factors and certain direct interventions into the economy.

Either way though, if one of these "monopolies" gets too inefficient or abuses it's position too much, competition will arise either directly, or through substitution goods, or through the black market if necessary.
The airline industry, auto industry and "music industry" are great examples from RL. And RL is hardly a free market. In a free market, this would happen even more fluidly and rapidly. It still takes time for information to spread through the market though. Markets don't mature instantly. Over time, our means of transmitting market information will also improve, accelerating efficiency and competition in the marketplace.

Most markets go through phases:
Phase 0 - no firms generally known to provide the service/good, but there is a demand for it.
Phase 1 - wide open market, as people realize there is a demand, but it's still risky
Phase 2 - a few firms start to make consistent gains, competitive pressure is high, but market leaders are emerging
Phase 3 - a sort of oligarchy develops as competition kills the less efficient firms
Phase 4 - complacency sets in, there is competition but it is "unseen", unknown to the market at large.
Phase 5 - some of the plans from phase 4 come to fruition, the market leaders at this point are getting hammered. (it is at this point that many will run to the Govt for protection/contracts if possible)
Phase 6 - go to phase 2 but move faster (and faster, and faster... until an enharmonic resonance between firm entry and exit is reached) - this actually goes to 4 instead of 2 if the Gov't steps in, leading to economic malaise.

Right now, microsoft and ebay are at phase 4. Enterprise-wide linux is pushing microsoft really close to phase 5.
I would say the club scene in SL is sort of between phase 2 and 3 right now. You would know better than I where the land market is.

oops. sorry I got carried away. I like economics.

the standardization will be apparent when we see a service that adds our listed items individually with whichever auction company has been producing the highest final bids for those types of items. it'll also search and compile results from several auction sites for buyers. the sites that stubbornly refuse to standardize will begin to die off at that point.

philip rosedale might finally be known as the "father of the metaverse" if ll manage to produce & licence a distributable server product with an open source client. if they don't somebody else will and they'll get all the glory.

EBay prevents that. They block any attempts at automated listing by pattern recognition check or how is called.

It is true what blaze say: I have zero monopoly effect. Everybody can compete with no level of entry to market. It is 100% competitive, both land and mall business. I provide service myself. I don't let users provide service to each other and tax them via the database system I made them use.

What Alicia said is exactly not true if network effect is strong enough. Of course one could always conceive extreme situation when monopoly falls. But this is like I would say in one country with dictatorship people have power. Of course at some point when things get really terribly desastrous people will start revolution.

How I understand, however, quality of western system should come from competition. Competition between politicians and political groups and competition in market between company. Once you reduce that competition by adding level of entry to market things become worse. In American politics you see how money and media access (or lack of) greatly reduce access to political market and practically limit competition to two parties. In economy I also see myself end up with little choice and at merci of companies like EBay, Microsoft, PayPal etc. When EBay or PayPal or Microsoft raise price I don't really have anywhere to go if I want access to the content/network that developed around them.

This is why I believe one should always support competition and work against network effects when possible.

As to Jauani: I don't expect EBay enter SL market now. I would rather expect one new provider create network effect and become SL web commerce monopoly.

This is untrue... there are multiple programs to list hundreds of auctions at a time....Ebay even runs one themself called turbo lister.

I understand that, but I still maintain that in a true free market (like SL, unlike RL) there is unseen competitive pressure that prevents things like that from lasting very long.

Hmmm...
Anshe's posting raises a question I have been wondering about.

I have never bid on a land auction, but have heard rumours that the big buyers use their financial muscle to keep would-be competitors out.

I hope this is wrong, but lets be clear, it would be easy to do if they colluded.

Heres how it would work, if they did it, (which I dont say they do).

For each significant land sale, they would privately agree which of them (the big 6, say) will buy it. This person puts in a maxbid which is way over the economic rate, knowing that none of the others will push them up toward it by doing the same.

This relies on the members of the club being rich enough to take a loss now and again, when some cheeky newcomer sticks his/her nose in. But overall, the long-term suppression of new competitors would obviously pay far more than these occasionall losses, needed to teach others they cannot make money.

This is an old and once widespread business practice, though now in many countries illegal (the hidden collusion that is).

This is what I have been told is going on between the land barons.

I have absolutely no idea if this is true or false, but it is perfectly possible. For this reason I think that the cries of "no monopoly in land is possible - its a free market" are utterly naive and invalid.

An effective exclusion of others IS possible. By collusion between big players sharing the cost of the losses it takes to kill newcomers. They wouldnt need to pay each other anything - they would share the cost simply by taking turns at who puts in the high bid. The collusion neednt even be frequent - just an initial agreement of some simple formula or sequence which assigns each auction to one of them.

Can anybody tell me - is this indeed happening in SL ?

Can Anshe, for instance, put her hand on her heart and say that she has, and has had, NO collusion of any sort with the other big bidders?

I for one would feel reassured to hear it.

Please remember - I am NOT accusing anyone of anything. Just pointing out how it MIGHT be done, and hoping for reassurance that it ISNT.

I don't know who you are mister "one post" but I'd be very interested in talking with you more. Send me a PM, IM, or email.

~Ulrika~

Yes, I am on my own since months. This can easily be recognized by watching auction history and see me bidding against all the other major land buyers. There is absolute and brutal competition on land market. It is currently decided by who works fastest, spends longest hours and knows pricing best.

Guh!

You can't collude in an auction, unless you are trying to help the seller by shilling.

ARGH! brain imploding from rampant economic ignorance ... must .. resist ... insulting language.

No, it doesn't happen much because they're all sniping at each other's throats!

Seriously, I had one experience with this where an individual who used to buy a great deal of land (maybe still does under another name?) IMed me to ask me not to bid on a lot she wanted for herself to live on. I was skeptical, but as I wasn't planning on bidding on it anyway I said "Sure". Through another IM, I learnt she'd also requested the same of another high volume bidder.

She put the lot up for sale within 24 hours.

I'm far from being one of the "big six", and apart from Anshe, that circle tends to change members quite frequently (or at least, alt names!). All it would take would be one whistle blower and that would be that.

I'm not sure about them cornering the market though - obviously there is the factor of being 'first' and very visible.. but I think others can still compete by innovation... it's not easy but it can happen.

Alta Vista used to be one of THE search engines on the web... I talk to people now that have never heard of it. There was a time when people would ask me 'What is Google?' when they saw me use it... Now it's been 'verbed'.

With Second Life though - the tools are at your disposal to compete easier... and then of course there is the 'self imploding drama grenade' - another thing to factor in... I don't want to flog a dying horse, but I thought SLExchange was HUGE, and going to be one of THE things to watch..... Things in SL can flip on a coin.

I thought SLExchange was gonna be an "Ebay" - Now I think it's gonna be an "Alta Vista".

Siggy.

And on the e-Bay news...

1. They raised their prices and pissed off their users.

2. They didn't meet market speculation, so their stock dropped.

3. They just hired a big HR executive.

4. And rumour has it that they are losing market to Amazon.

Sometimes, it doesn't pay to be numero uno.

Yeah, it really doesn't take much effort to realize that even Anshe will be replaced one day.

But you have to admit it is a fun process to watch.

Also the arguement could be made that since she hasn't truly harnessed the 'network effect' in her own business, that her baron skills are falling short, even with all the sign spam, lol.

Ulrika
More mister "first post" than mister "one post". In view of the "hectoring bully" appellation, I think I'll pass on your invite. You may want to abuse me, and that's not my thing, lol. IM me only if U wanna be nice please.

Anshe
Thank you, I am reassured.

Blaze
Though not everyone would choose to express it in such an insulting tone, the erroneous view you express is widely held (I could say by the unthinking). That is precisely why I explained so laboriously and in such detail exactly how it can be done. Rather than just emote, it would be more instructive for you to explain, if you are so confident you are right, how the scenario I postulate would not work. Taking a loss to bankrupt potential competitors is widespread practice, and it applies in auctions as well as anywhere else if you have adequate financial muscle. You do need more disparity of resources than in other situations, due to the zero cost of entry to the auction ( the competitor doesn't need to buy a bus fleet), but in SL land auctions the disparity is large enough for concern.