The economy is broken...

You didn't address this point: The money is out of circulation only temporarily - and probably less temporarily than if most of us who sell on GOM were to spend it in-world.

Obviously you missed the point. If you go to a Ford dealership, you are more than likely going there for the purpose of purchasing a Ford made product (which by the way, if I remember right, Mazda is either a Ford owned company or Mazda has a lot of its shares own by Ford). I am not going there looking for any other product. The same can be said of MacDonalds.

Your analagy borders on the ludicrous, but I understand the point your trying to make: Corporations should not be concerned about their customers. They should only be concerned about their philosophy and building the bottom line. Gee, what a noble and endearing concept.

Even if temporarily, although no more temporarily than with IGE, the money is still out of circulation. That is the central point of what I stated regarding selling the L$ on either IGE or GOM.

No. The point is, people are coming to SL expecting a game, but LL isn't making a game. They're making an infrastructure for a "vritual reality" in which the "residents" can construct a world.

You need to re-read what I said. The market involved isn't relevant.

No, I read your statment and found it a bit interesting that you would think that by spending money in SL, through purchases and such, that you are taking money out of circulation when in fact, you are circulating the money.

No, my point is that before a company has customers, they generally have this thing called a mission statement, that defines what it is that they are trying to do.

Sometimes, they need to modify the service they provide, because they decide enough of their customers are unhappy with certain aspects of their business that it is in their best interests to do so.

If you read what Philip and company have said about where they see SL going, I think you're going to find it is getting farther away from what you seem to want, and it will probably continue to get farther away.

If we want SL to be the real metaverse, I believe they're going to have to go even further in the direction they're going now.

- Jon

*sigh*
No, I'm saying that that money ends up in the hands of someone who will spend it faster than I would when I sell it through an exchange. If I were to spend it, it would sit and wait for extended periods of time - months perhaps. I note this with many of those who produce content in SL - we're spending more time making content than shoping and playing.
Exchanging L$ for real-world currecny not only encourages the content creators, but puts the L$ back into circulation faster. THis should be a boon for all.

But isn't that what you're doing when you buy USD from IGE or GOM?

You're spending L$ on something (USD) that someone else is putting into SL.

- Jon

Exactly - money changing hands to buy goods and services to allow someone else to buy goods and services.

Thus a given ammount of money can provide far more then its total monetary value in Weath creation. Since far more virtual goods change hands.

Better the money temporaily is held by GOM or IGE then the content creators hoarding their money becuase they cant sell it.

Without the money being echanged the economy becomes stagnant.

Okay, so we paid to get into the movie. Doesn't mean the popcorn's free.

BTW, if the day or two my L$ sit on GOM before someone buys them hurts the economy, I can't imagine what horrible damage you must think I'm doing by saving up L$ for a month or two and letting them just sit around in my av's account inworld.

It seems this issue comes up a lot. I believe the problem arises when folks get tied up in the idea that the Linden Dollar is just “play money”. It’s fine to call it that, but we have to realize that TREATING it like play money may not give us the results we hope for. Let’s look at an example (pros at economic theory can skip this section):

If Linden Lab cared, they would raise our stipend
You currently get 500L/week which currently purchases two outfits at 250L each. In the name of making Second Life a more enjoyable place, lets say Linden Lab bumps the stipend to 2000L/week.

First thing you notice is that consumers are able to purchase four times as much stuff (party for consumers!). Content creators will also notice their sales will increase (party for content creators!).

Next…everybody has more money in their pocket! This means there is less need to purchase money on the Gaming Open Market (GOM). The reduced demand for money means the exchange rate drops. While 1000 Linden dollars used to cost 4 dollars, it now only costs 1 dollar (they just can’t charge 4 if nobody is buying!).

Content creators also notice the drop in exchange rate. While creating and selling 1000L worth of clothing/cars/etc USED to bring in 4 dollars USD, it now only brings in 1 dollar. This is where the party ends and the hangover begins. People who make the items that make Second Life fun now find that the incentive to spend hours of their work has now been cut by 1/4. Each content creator will have to decide between accepting less money for the same work, quitting the content creation business, or… raising their prices (ominous music).

Ok so content creators raise prices. In hopes of getting back their original profits, content creators now charge 1000L for that outfit that used to be 250L. You find once again that your stipend buys you two outfits per week, so you post in the forums that the Lindens need to do more to make SL fun . They raise stipend to 10000L per week. Wash, Rince, Repeat.

It gets more complicated actually. Raising the stipend doesn’t really cause a static effect on the value of the linden dollar… It’s continuous! That is to say, if the Lindens feed 4 times as much money into the system EVERY WEEK they must also REMOVE four times as much money at the same time. Otherwise the amount of money floating around would increase and increase until eventually it became worthless (If the Lindens cared they wouldn't be giving you worthless money!). What must the Lindens do? They increase the cost to rate people, to upload sounds and textures and other fees. I think it’s safe to say a move like this would result in another “why do the Lindens hate us” thread.

If the Lindens cared, they would impose price caps on products!
Ok, so you increase stipend but to prevent inflation you stop content creators from raising prices. This essentially forces content creators to work the same amount for less money. I think we can visualize what would happen. Some content creators would continue to work. Some would work with a far more casual attitude towards their business and towards quality. And many would simply stop producing things. It wouldn’t be the end of the world, but you would find a reduction in quantity and quality of the very items you are demanding.

OK Fine… but in other games the game company provides content and we don’t have to deal with all of this.
If Linden Lab thought it would keep you happy, they would hire a team of content creators so you have all the cars, clothing, guns, and bling bling you like. But remember these content creators will earn a salary and that cost would eventually be passed on to you the consumer in your monthly SL bill. Even worse, at the end of the day you would be paying more money than you pay now.

The reason is that currently our non-professional content creators work for cheap. Real cheap. If you were to compare how much money content providers make in SL vs. the amount of hours they put in, you would find that they work for MUCH less than minimum wage. They also don’t get insurance, any sort of job security and their presence in SL does not generate human resource overhead for Linden Lab. None of this would be true if LL hired professional content creators. At the end of the day the cost of these employees would end up, one way or another, on YOUR bill.

The bottom line
There are certainly alternative methods of running our economic system, but when you propose these methods you need to address the questions "How will content get made?" “What happens if we simply print more money?” “What happens if content creators get less for their time and effort?”

Linden Lab is constantly focused on maintaining an economic balance that will make Second Life the most fun for the least amount of money. That is to say, they really ARE trying hard to make the customer happy! Hope this helps.

Aimee, I envy you your communications skills.

What she said...

- Jon

Well said Aimee

I think these points apply to all these threads about Stipends and Events Subsidies also.

In the End the L$ has to be worth something to the people who provide the goods and services.

Aimee rocks.

*Very* well said Aimee! Great post!

Aimee, its a good post, but that isn't the way inflation works.

Economic inflations isnt caused by more wealth per se, but by more wealth chasing the same number of goods, or the same money chasing fewer goods - you cna easily have inflation even when cutting the money supply!

So say we double everyone money. will this cause inflation? Well, only if the supply of goods stays the same. Now what happens in the real world when you get mre income? You either save it or spend more. Isn't much point in saving more in SL, so it would get spent. People would just buy more stuff, or more expensive stuff. Not a likely source of inflation there, since we have no good supply problem as in actually making widgets.

Now as to the problem for those selling stuff. Sorry, but I dont quite see why everyone else has to be por in order to protect their income! yes, if there are twice as many L in circulation, the $/L ratio will probably halve. But since there is no incentive to save, twice as many L will be spent,so it averages out. In fact, doubling income may not double the amount in circulation, people will still be saving for thing sthey cant afford

Now clearly there is a limit - we cant keep on increasing peoples cash, eventually they run out of thing sto buy. But I dont see we are anywhere NEAR this yet!

Actually, it would be an intersting academic excercise to see just what DOES happen!! I odnt know if anyone has actually done the excercise of seeing what Money Supply and Fiscal drag have on a VR economy...it might work quite differently from the way they do in the real world.

SL, by design, was created with the intent that the users who create content will be rewarded with real life money. That is the way it is meant to be, it is not broken.

If you do not feel you have enough $L and need more, you have the option to buy them w/ RL $$ from other users. Since the inception of SL, that has been the design.

The value of the $L is determined by the user's who buy them and by the seller's that sell them. Increasing the stipend would increase the amount of $L in circulation and certainly create a devaluation in the $L compared to the $USD.

Great post Aimee.

Daemon, you have this part right. LL is very careful to balance stipends with the sum of new users and money sinks (ie) 10L$ texture uploads. The current goal in the economy is to see the Linden dollar hover around $4 USD. Which it has for several months since the stipend cut and rating price increase.

If it ain't broke, don't fix it.

Id just like to touch on this topic. I believe that if you want to buy something that someone else spent maybe one or two hours creating then you better be able to compensate them. If that means getting a SL job and working then so be it. You can't get anything for free, and shouldn't expect it. The L$500 most people get is enough to let them live comfortabley. You won't be buying a mansion any time soon, but you can buy a lot of things that you DON'T need, but would like to have.

Now, as far as the jobs go. I have seen countless other jobs offered in the help wanted section that no one has claimed. Scripting, building, hosting, managing, designing, planning, consulting. You name it. it's there. As a business owner myself I know that most SL'ers don't want to work. They want to come in to SL and just be able to enjoy what other people have created or bought for free without having to spend maybe a couple hours a week working. This is perfectly fine, most people in SL have a real job and don't want to work a second virtual one. If they don't want to work a SL job then they need to use their RL job to support the items they want by going to GOM or IGE.

I have posted several job offeres and have yet to get a genuinely interested person that was willing to work. For my events I pay my hosts, which doesn't have to take off clothes, or anything of that nature $200 per event plus a commission of sales from the casino. I know this isn't a great deal of money, but if you think about it, you can make your whole $500 stipend by hosting one event.

I also have job openings for scripters. This position is salary paying anywhere from L$500-$2,000 per week depending on experience. So as you can see, the economy isn't broken. Just most people don't want to spent their time off of work in RL to come into SL and work.

Myself, I am currently looking for a RL job since I was layed off. So I have the time to run my own business and employ people. But I can imagine not wanted to come home from work and then jump SL and work some more. Although, if I wanted to buy something that I thought was nice, then I most certainly would work for my money instead of coming to the forums and complaining about not having enough.

Oh, and a quick way to make some money, sell your first land.

No wonder "people dont want to work", you're offering between $2 and $8 dollars a WEEK.
I gotta eat you know. No one sane should work for less than L$1500 an HOUR... that's around minimum wage. And I've seen people offering up to L$5000/hour

I didn't say I had the best wages, I know I don't, and in time I hope to be one of the best paying people in SL. But I was making a point that you can earn much more then the L$500 a week LL currently provides.

I have seen jobs for general labor which any one can do. I see people posting that they are scripters and looking for work, or they are learning and would like a project. Well, here I am offering more then my current profit in SL.

I hope with a few new ventures im following that I will be able to pay those rates you list and more. Right now I have 1 good employee and one good friend that helps out a lot. My employee is paid on time all the time and compensated bonuses whenever possible.

As soon as I can i'm going to pay back my friend for all the hours he has spent working on ideas with me.

But my original statement still stands, most people don't want to come into SL to find a job. They want to come here and have fun. So those people need to buy their L$ from a third party site.

Jobs are out there, all you need to do is either look or ask someone. Most business owners have positions open or know someone who does. If you don't want to work for someone you always have the option of going into business for yourself, it really isn't as expensive as most people think.

I think the economy is slightly broken as lots of events providers (and land owners) subsidise their SL businesses with RL money.

sub·si·dize
tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es

1. To assist or support with a subsidy.
2. To secure the assistance of by granting a subsidy.

Out of curiousity, whats wrong with supporting your business in SL? If I run two businesses in SL and use one to support the other, does anyone care? Didn't think so. I in fact do this. I have several businesses and use them to support each other. What difference is there between one business to another or one life to another?

Everyone is always so worried about what everyone else is doing. No wonder there are all these so called "barons" and "monopolies" in SL. Everyone is running around bitching about everyone else instead of doing something productive.

Why not just worry about what you do and how you can make your time more pleasurable instead of snooping around and developing this ideas that already go against everything SL is about.