SLExchange Joint Statement - APO & MER

I don't act.
I don't react.
I TROLL!

I'm astounded that, for the very first time, I actually agree with something Blaze says. I'm digusted by the lynch mob that formed at the very slightest rumour of wrongdoing. No evidence is necessary to lynch a longstanding member of our community -- just rumour and a behind-the-scenes campaign.

I've read the forums for as long as I've been an SL resident, and for once I'm disgusted by the mob mentality. No facts were presented. Nothing but a one-sided, vicious campaign to get rid of a business competitor. And no one questioned that.

As a matter of fact, no shopper or merchant was ever harmed by the dispute, except by Ulrika, whose vicious campaign impugned the reputation of not only the owners of SLX, but also every merchant who uses SLX... all a based on rumour and all against her business competition.

I'm very disappointed in SL in general for the lack of independent thought, and the willingness to crucify someone on the very slightest of rumour.

Does anyone get the impression that certain people continue to press dead issues because of forum anonymity? (edited).

*stops to sell cricket bats*

Ummm.. Flipp isn't talking about a tax, he isn't a government.

From my understanding, SLBoutique would provide a service and charge a fee. The fees pay for server lease, maintentance, the initial coding and maintanence, etc. It hopefully provides whoever the partners are with a reasonable profit incentive to keep the service going.

I think it's nice that a per sales fee would be charged instead of a flat rate. You only pay if and when you sell. The cap is nice too. Few people selling objects are going to do many sales over $500, but when they do, keeping those extra lindies will be nice.

If the bulk of the sales are in the lower range... and you don't charge, or charge too little to meet your operating expenses, then the cost of the business is unfairly shifted to those with higher ticket items.. even if they have fewer sales.

If you shift the cost of operating the service to the higher ticket items, which typically require more hours of work to create, and are more skill intensive, then you discourage the people willing to make that kind of time investment by unfairly taking a larger chunk of their earnings.

In boxes?

Problem with that is it costs just as much for them to facilitate the sale of a $20,000 piece of land as it does a $25 item. And 10% of $25 is only $3, but they at least get something for their effort of building and marketing the site.

After speaking with my attorney, he agrees that a strongly worded Terms and Conditions agreement is the way to go, specifically saying that Linden Lab will be notified of any nefarious activity. This is now in place on the site, in the "Account Information" section. Because of this, the site has been change so that the only required fields are (a) User Name (b) Password and (c) Avatar Names. (You can link multiple avatars to a single account on SLboutique.com)... no personal "RL" information is required.

Ulrika, this is a service commission, not a tax of any kind; Surreal is correct. That said, I do really like your idea about support for group project. I will test out some technical possibilities for this. It may also require a slight ToS tweak. I will investigate this.

For now, I'm keeping the STARTING rate at 10% with a maximum of L$50. There will be incentives that will lower this percentage commission rate site-wide and a per-account basis in the future, but those will require more planning that I have had a chance to perform thus far. My initial thoughts are to reduce the percentage commission rate for users who include exclusive items only available on SLboutique, or free items, which would naturally drive more traffic than items also available in world. Any thoughts on this?

Keep the suggestions coming, I'm listening! I'll make an officially announcement about the opening within several days; thanks to the early adopters for giving me some additional testing!

Regards,

-Flip

Naturally, you are not a government.

However, service fees are functionally equivalent to taxes and thus have similar affects on individuals and economies. I always discuss service fees in terms of taxation as they remind middlemen to think beyond concepts such as bulk discounts and consider secondary affects related to relative pricing and personal income. I feel the Lindens neglect this when it comes to the effect that land-tier prices have on the in-world economy. (That's a different thread.)

Thanks for the good word on the splitting of sales. Collaboration is something I do a lot of and would find such a feature absolutely invaluable!


Intuitively, I feel like this percentage is too high, however I'd have to see your costs and projected income to be sure. Will they be open?

If I were to select a method of taxation, I'd seek a deeper understanding of price points (poisson distribution) and sales volume (zeta distribution). What you'll find is that most products tend to have a price of about L$100 (the mode of the poisson distribution) and some items sell for a lot while some will sell none (zeta distribution). I've noticed this zeta distribution in my vendors.

What I would do is tax based on both of these curves. With respect to the poisson distribution of prices, I would create three tiers of taxes, the bottom tier would have no taxation (inexpensive items), the middle tier around the mode of the poisson distribution would be taxed fully, and the top tier would be taxed an additional luxury tax. With respect to the zeta distribution, I would tax all items partially to reduce the burden on artisans, until they had reached a certain number of sales and then I would increase the rate. Only two tiers are needed, really.

This will have the affect of encouraging low-price items and reducing the burden on those with low-volume sales. The bulk of the income will then come from high-volume objects at the most popular price. It sounds difficult but the coding is quite simple.

Finally, the real opportunity you have here is in creating open infrastructure. Open source your list of agent keys as it grows! Modulate sales prices to determine optimum price points for different items and feed it back to your clients. Provide drop in scripts for people who want to design their own vendors. I could go on and on. (I often do!)

~Ulrika~

Let it DIE, damnit!

Anyways, back to reality.

Yes, I agree that 10% is way to high.

Make it lower and you'll find that not only do you get more customers, but a greater degree of trust as you are actually attempting to compete on something other than just the bad reputation of your competitors.

Ulrika wants Flip to look at something to do with distributing fish and not take a fee from people who cant sell their gear (Cause people with successful ideas should always carry the inept don't you think?) next he's being told 10% is too high. Well, I not only trust Flip and Jenn with my personal details but I'd trust them with the keys to my house. They are setting up what will no doubt be an excellent service with two completely trustworthy people at the helm. 10% isn't so bad is it?

You know, sometimes I sit back and reflect when I read posts like this.

And I have to wonder.

Just how BIG are some people's noses?

I mean, it seems that they are EVERYWHERE and into EVERYTHING.

As grandpappy always said...

"If you find your nose in other people's business without an invitation, time for a bob job."

I don't think he was talking about sex.

edited to add: Not a reply to HH's post.

I resent that!

3% isn't so bad either.

By the way FlipperPA is pretty neat! He's sent me several IMs to discuss ideas today. I just love that kind of attention from the business community. He can have my house keys too! (and as soon as multiartisan splitting is enabled, my business as well.)

~Ulrika~

For reference, I think Visa's surcharge is <4% (isn't it 2%?) and they're insured. GOM is 3%.



Clearly, you know all these long math words. You must know what you're talking about. (I had a prof once who was explaining a light power distribution function, and he used the phrase "...blablabla forms a partition on unity." When asked what the means he said, "It means it adds up to one. Why use english when we can use these long math words?"

First of all, aren't zeta distributions monitonically decreasing? The data you doesn't seem to follow that. You might try a Weibull distrubtion. It's more free-form and can capture characteristics such as a "bump" in the curve.

At any rate I've seen sales data that doesn't behave in the manner you describe.

Also, I don't understand why you expect price points to be poisson. Poisson distributions are memory-less. I would expect prices to have characteristics more associated with heavy-tailed distributions.



I disagree with this pricing structure. The overhead of processing a transaction is constant, regardless of item cost. I don't see a reason why any merchant should have to supplement the sales of another.

Also, this is SL. They're all luxury items.

*Trys to stalk off, but trips over his nose.*

That sounds about right! Let's hope the market drives down the overhead on these sites.

Someone who wants to talk about math! *swoon*

Zeta distributions are not monotonically increasing. However, z(a) goes to infinity for a = 1, so it's not technically accurate. I should have quoted the empirical version, called Zipf's law which gives a similar distribution.

I looked up the Weibull distribution (I haven't heard of it before) and it looks right too (for beta < 1.)

I feel intuitively that the distribution would be poisson. There will be few items in the L$5 to L$45 range, many in the L$45 to L$150 range, and fewer still as the price increases. Maybe after these online systems stabilize we could have a peek at their data!

Standard linear thinking in a nonlinear world.

The volume of top-selling products could be several orders of magnitude higher than that of slow-moving products. Because of this, the taxation of slow-moving products becomes an insignificant contribution to the total revenue earned by the site. Thus shifting their tax burden to the higher-selling goods will lead to a significant reduction in taxes for the slow-selling goods and a very tiny increase in tax burden to the higher-selling goods. I do that right now with my top-selling chicken hat. I made plenty of money on it, so I reduce my share to spread the wealth.

~Ulrika~

Ulrika,

I think you've misunderstood my post. Let me rephrase:

1) I don't want to talk about math. I know some math. I don't think there's enough data to come up with any meaningful observations.

2) The Zeta and Zipf (Pn ~ 1/n^a) distributions are decreasing functions.

3) At first I thought you were using the math incorrectly. Now I think we must be looking at different data, because what you say and the numbers I see bear absolutely no correlation.

4) It is not your right or responsibility to steer the economy or market. In particular, I don't want anyone else choosing for me how best to "share the wealth." I have my own beliefs and I prefer that what I do reflects those values. For instance, I have never looked at SL and said, "we need more items priced under L$100". I think what SL could use are more items of high quality, both closed and open source.

5) I also think 10% is a bit stiff.

Of course not. *sigh*

That's right. z(a) = Sum(n = 1,2,3,...) 1/n^a converges for n < 1. Volume as a function of goods ranked by volume in my sales gives a Zipf distribution. Intuitively, I feel this will be the case for all vendors in SL. We could contact Adam Zaius and ask for some raw data if you're interested in deeper understanding. (I might just do it anyway.)

It looks good to me. Check out my vendor again, you'll see a Zipf distribution clearly.

It is my right (personal freedom) and responsibility (professional oath) to share insight into problems and discuss them with the community. Aside from hurling insults, it is the fundamental reason that this forum exists. I am always amazed (in a bad way) that the libertarian attitude of SL seems to stop when it comes to thought or speech.

~Ulrika~

Ulrika, without any understanding of economic models, I think that price in SL tends to be dictated by the following factors:

1. Avatars do not need to eat, drink, sleep or be sheltered from the elements in SL. Rent and grocery bills are unnecessary. All purchases are for business, luxury or creativity, and pretty much geared towards either having fun, improving one's business, or making oneself more individual/expressive.

2. Avatars don't have to have a job. They get $50 or $500 per week, rain or shine, depending on their account level. Thus, $50 and $500 are the "sweet spots" of marketability, because if an avatar particularly wants a product, it's the most that they can pay in a given week without having to "save up" or exchange funds through GOM.

3. While the permissions system does to a certain extent protect creators/merchants, there are NO enforced patent or intellectual property "laws" within SL. If one person comes up with a great idea that hasn't been done before, it's often not terribly hard for others to "suss out" how it functions and make a newer, better, faster, smaller, cheaper one.

4. There are no materials costs in SL, only labor costs. Houses don't require lumber or masonry. Vehicles don't need steel or have to pass emissions or safety standards. If someone is the sole creator of an object, they don't even have to profit-share, and they own as many copies of the item as they care to make.

5. Occasional bugs in the system or deliberate violations of trust result in permissions-free "products" being distributed freely or sold by others.


Overall, prices are determined by the newness/age of the product, exclusivity, and current sales. I think that the greatest motivation for merchants to lower prices comes from one of two sources: Either it isn't selling well enough, or worry over the chance that one of the GNU-churchgoers in SL will get in a huff over the price and create a similiar free or cheap one. I recently advised the creator of a fantastic, though expensive product in SL to lower his prices drasticly for this very reason, and I predicted to him that if he kept his prices high, it would not take long before someone else came along and made a free version "on principle".

Just a gentle reminder to please refrain from personally attacking someone who you don't agree with on the forums. Continual personal attacks will result in informal or formal warnings, and to a banning from the forums.

Just a reminder that it is NOT 10% straight up.

Its 10% per transaction with a cap of L$50... AND...

There will be incentive programs which can be used to either temporarily or permanently reduce the 10% figure, such as having a certain number of free items on the site, a certain number of exclusive items, and so forth. These ideas are still being flushed out. So if you're interested in getting a lower percentage, there will be ample opportunity.

Regards,

-Flip

This thread has been hijacked.


_/_/

Let's unhijack it, birthday boy!

How are things going with you and Apo? I'm interested to hear if your deal was renegotiated making you an employee, your status was reinstated as 40% partner, or if you're liquidating the company and dividing the assets. I haven't heard a word from anyone, so do tell!

~Ulrika~