Linden Loans: what effect would they have?

Ok.. here's a little "thought experiment" I thought up the other day.

So.. let's suppose that LL were to come up with a new method of involving new people in SL. It would work like this:

- A newbie can get a Linden Loan from LL.

- To get one, they must pay US$2 or another nominal sum using their payment info, so it can be validated.

- One Linden Loan per set of payment info, so it's not available to alts.

- The resi then recieves L$10000 or so - around US$30 worth of L$ - for 30 days.

- During the loan period the resi cannot transfer items they didn't create to others, nor can they remove or change their payment info. They can, however, cancel their account.

- If the user is still in SL after 30 days, the US$30 is charged to their card and the L$10000 is removed from Currency Linden's quota for the month.

- If the user decides to quit SL, no charge is made, and Currency Linden's quota stays the same. To do this, they must cancel their account completely, losing the avatar, and they can never register the same payment info again.

Now, there are two questions. First of all, would this have a benefical effect on SL membership? It would give SL a model more like a real "demo", in that a user could see a preview of what SL is like when you do have money available, before having to put any significant amount of money in. It would also have the advantage of fitting into people's budgets better (ie, the real reason for the 30 day trial period: there's time to get next month's pay).

But secondly, would the effect on the overall economy be beneficial? I know that I've mentioned this before - but, it seems that, looking around SL, there are lots and lots of content shops but very little support for that content. Essentially, the Linden Loan system would mean that the economy could not stabilise in a situation where people were coming in, flying through malls and believing in possibilities that aren't there, buying lots of content, then finding there was nothing really to do with with it and quitting - if that situation arose in any great degree, the L$ would start to fall from the extra L$ injected by the loans, thus requiring the economy to correct itself. This could be painful, but would it in the end be beneficial?

so say they did this a year ago, when close on to a million people joined, and how many since, that would be US$30,000,000 for each million new players and all that would go to skins, hair, boots creators, yeah some people would be happy, but not the Lindens LOL

Wow, it sounds like you are trying to invent a WPA (http://en.wikipedia.org/wiki/Works_Progress_Administration) for SL!

State support of massive construction projects may be a reasonable way to recover from a real Great Depression, but RL people can't just log out of a slumping economy like virtual people can.

Wanna fix the SL economy? Fix the system so that customers aren't afraid to buy virtual goods and services. I know I've stopped purchasing stuff in game because I've lost too much to the ever-hungry asset server.

Be really cool the first 12 hours or so, until the $L hits < $1 USD to L$15,000.

I'd think that anyone who can't afford to spend $30 one-time on L$ has bigger things to worry about than not being able to go shopping in SL honestly.

At the end of thirty days, a lot of people would have to decide to quit, or whether their experience is worth thirty dollars. I think it would actually reduce the number of new persons who stick around in Second Life.

Despite the fact that it would likely lower retention, it would probably inject a lot of temporary dollars into the economy, and merchants would take advantage of that.

The artificial influx of Linden Dollars will screw with exchange rates. Merchants who get to keep the Linden Dollars that were on "loan" now have Linden Dollars to cash in. It will drive the Lindex values down.

Linden Lab is better off doing what it seems to be doing with the new newbie avatars. Just buying quality content to give to newbies, so they can participate for free withouth looking like "noobs."

So everyone can make alts with different credit cards than their main is using, then transfer the money over to the main. Free money for everybody!

Well.

The fundamental problem is this: Once the $L spent (for that is what you do with $L) - oldbie land barons and content barons now are flush with the noob cash.

The noob leaves, deciding: "hey, I can skip out from paying for all of last month's now-boring impulse buys if I just click here and cancel!" - and effectively, our service provider is now paying us oldbies indirectly.

Worse, there's the candybar effect.

Once, a researcher got a bunch of kids to do a survey. Okay, no big deal, they did it. Then he got another group of kids to do a survey for a candy bar.

Guess which group refused to do any more surveys, unless they got a candy bar?

Yeap. Can't pass out free candybars and not foster a sense of entitlement.

Strange, huh?

Well, but it's not so much a case of "not being able to afford" to spend US$30, as a case of the value of it not being apparant.

Malachi is very correct to say that asset loss is a major problem for consumers, but a further problem is the imbalance in the SL economy. There is WAY too much content compared to the number of social structures necessary to make that content meaningful. This is largely because the design of SL gives social organisers far less financial incentive than creators of saleable content, but gives them the same (or even greater) costs. Because of that, the only social organisations you see are in the very most popular categories - chat clubs, sex-related, etc. The problem is, for many people, it's these things that define the "flavour" of SL, not the content. Buying a beautiful medieval outfit doesn't define any experience if all you can do with it is to wear it to the same nightclub as everyone else. Of course that doesn't make it worthless, just like real life your clothes are a way of expressing your personality, but it does lower the value a bit compared to the "encouraged" perception of virtual items in SL.

And yes I know that there are role-playing sims, but as I mentioned.. there are way too few for the content.

This is what dwell was once designed to support, but unfortunately, anyone who has visited a camping chair farm knows there's a major problem with that. So what I was thinking about, is to find some way of paying or encouraging the social organisers, in a way that is tied to movement of real value (ie, one that can't be gamed, or at least if it is, the gaming is just as useful as the real thing would be). But I don't know what that could be

Also, I think the major block is whether to use RL money at all and hand over you credit card information, not the specific amount. Once you hand over the first 2$, you're "committed", and will easily hand over the next 2 if you find something you like.
And the very idea of committing to some long-term financial scheme seems to run counter to the idea of a newbie getting their feet wet and determining what they want from their second life. For an experienced resident who knows how the world and economy works, it may make sense. For somebody who do not know what SL is, or if LL is even trustworthy with credit card information, it would probably look more like some cleverly disguised pyramid scheme.

Straying slightly from the main topic, but commenting on the above.

How about rewarding social organisers by amending/creating a form of traffic where the value of a visiting avatar is related to the amount of L$ that the avatar has spent anywhere during their lifetime/past_year/past_month?

.... duh!
Nope! It would be gamed by accounts constantly passing L$ to each other.




On second thoughts:
How about a reward system for landowners based on the traffic weighted by the amount of US$ that a visiting avatar has paid *nett* to LL?
It would be in landowners interests to encourage people to sign up for paid accounts and/or to buy L$.

This has nothing to do with boosting newbies' cash flow, however, but a question whether people are willing to pay for "social products".
If they aren't, should LL then support the "social creators", effectively pushing the cost on to all residents in the form of some more or less visible "culture tax", on the ideological belief that the socializing is really what SL is about?
Or do we need a change in attitude in the average resident, towards paying more (or at all) for the "social products" they use?
Or a more club-oriented style where people join and share the expenses of running something they like?
One problem is that SL is simply not geared towards giving a reasonably hourly wage for a job, but runs on microtransactions and sheer bulk. And it's hard to convert a social experience into a mass-marketable form, and equally hard to get residents to cough up anything but those micro-transactions.

I'll pull my "old fart" credentials on this one.

Imagine a time when you couldn't trade L$ for anything outside LL. Imagine people bringing instructional, social, interactive - and most importantly - valuable content into game in the form of hosts, instructors, and event organizers.

This really worked and LL really compensated people in L$ and were likely to drop in on your event as a Linden to see that it was providing a "Public Good". I think a one hour event would pay either $L250 or L$500 to the event coordinator. It worked.

Dwell was ostensibly added as an automated form of event oversight because the Lindens didn't want to look in on their world anymore. It paid out in "Developer Incentives" to places that were among the top ten traffic gatherers. There was one simple flaw: if you are trying to create a system of incentives for creating genuine value in the service arena, you have to put a human evaluator in the loop. Instead, if you put the current dwell system in, close the oven the door and let it bake for 4 years unattended then absolutely nothing comes out the other end.

I don't think that Public Goods can be promoted without human oversight.

What makes L$ so important that a noobie would need $30 worth? (o.o)

To date, I can't even imagine having more than L$1500... And that's on a good 3 week stretch. Sure, things have gotten easier since I've been getting a stipend, but I'm really starting to wonder where all this monies is coming from. (o.o)

Just thinking of the binge-spending problems people could develop from that idea makes me cringe... Look at what people do to themselves with credit cards in RL. Something like L$ loaning could really sour the system fast. (>_<

I would be happier to see more and better quality freebies come out. Obviously creators don't have to give away their quality items, but, seeing stuff like the new library avatars seems much more encouraging to me. (^_^)

I'm afraid your proposed idea would be quite simple for the gold farmers and the like to raid.

They would just go buy a handful of $5 gift debit cards at WalMart, which act just like a MasterCard or Visa for on-line purchases. Then create one alt per each one of those disposable cards. Collect the L$ loan, buy L$ with what's left on the card, then cash out their L$ balance by "buying" a prim from another of their alts. Delete the alt account the same day it was created. Repeat infinitely. Every 50 or so iterations, have the money collecting alt withdraw all its L$, cash out, and delete that one too.

Everything but the number on the debit card could be bogus. And they would make at least a $25 profit on each pass. Same scam that killed First Land. People would make Premium alts with a debit card, buy and sell a parcel of first land, cash out all their sign-up L$, and delete the account. Your proposal would be far more profitable for them to raid than the First Land scam was.

Unless LL had some method in place for actually verifying that the person creating the account was real, and really was a newbie, it just wouldn't work.

I think Des has it exactly right: this would be a huge subsidy to the already successful, with probably a negative impact on anybody trying to start out now--although that has such dismal prospects at this point that we may be near the Utter Futility Asymptote.

As an (inflationary) economic shot-in-the-arm, it might work for a while. Inflationary because this would dwarf the regular currency infusions of Supply: deducting it from the "quota per month" would have Supply running a massive and ever-increasing deficit unless it were accompanied by some huge new sink (tier payments in L$s, maybe?). At least that would be the result if the program were successful in generating new sign-ups--99.9% of which would leave after transferring their account balance to a Main registered with different payment info.

We have had this discussion before I really think you underestimate the populace of SL. There are literally thousands, if not hundreds of thousands of places where RP goes on, but most you and I will never hear about, because they are simply a small group of close friends and associates getting together. RP doesnt' require a 7 Sim world to happen. It can happen on the 2048 meter parcel next to the shoe store. RP is going on every day, in ever corner of SL. And while people may hop in and out of different styles of RP again and again, some things remain universal. People aren't buying all the content just to look at it (well, maybe some are, but..), They buy it to use it, because they have a need for it.

Your definition of what RP constitutes is a little too rigid.

I'd have to say, not a good idea, I believe anyone who wants credit like this would have to link it to a RL credit card anyway, so you are just using the credit card to pay off your credit card trick.
Better would be to just have everyone after 30 days payment verified in some way, as at the moment it is too easy to create infinate numbers of alts.
Giving everyone the right to be 100% anonymous just creates problems and people have no fear of consequences to an avatars actions.
The economy is stagnant, people are just not putting cash into the system, multibot camping just encouraged new people not to do so. People are taking money from the piggy bank, but not many are putting it back in. Tier payments don't count as they never enter the inworld economy, and you can discount a lot of money paid by tennats if it's being used to cover tier.

I know this you've mentioned this before, and I don't deny that it's true - but there still isn't evidence that there's _enough_ of it. Yes, some people get brought into small "roleplays" run by one or two people on small parcels but I think it's going a bit far to assume that this suffices for the hundreds of people joining each day, or that it will continue to do so, or that they are retained by that experience for any length of time.. The only time I've really heard about one of these, the people involved left SL to continue playing on Yahoo chat, because graphical content wasn't that important to either of them so why spend the money? That isn't good for the economy.

People have mentioned various reasons why the Linden Loans system wouldn't work and they're fair enough. I don't really want to get into how to stop them being gamed because the real issue was to find a way to prevent the "failure sticking point" arising where people are coming into the world, buying content without realising the limits on its use, then cutting their losses and quitting. At the moment, this is a "failure sticking point" because the economy will go on fine with it as long as sufficient new people come in to repeat that cycle, so there will be no immediately obvious signs that a change is needed - until the bubble bursts and there's huge economy problem.

I should add I'm also not claiming that this situation definately does exist, only that it's something that we ought to be checking for. I'd really like it if something like "L$ spent <x> days ago, whose spending users have now gone inactive", for several values of x, added to the economic statistics.

The problem you have identified is one of lack of good information, easy-to-find for the new user, written in language that a new user can understand.

The Second Life webpage extolling the marvels of the Second Life economy has no information available for surviving the Second Life economy.

Linden Lab would be doing a great service for itself to put together a simple consumer survival guide, linked prominently to the main web site.

Education to residents, prior to their participation in the Second Life economy, is the only solution to the problem on which you are focused.

The idea of the $30.00 USD loan might be to give a little 'play money' so new users can experiment and learn by doing, and as such it is an innovative idea. However, the result may be that after losing the $30.00 USD in the SL economic cesspool, the only lesson a new resident may learn is, "It isn't safe to spend money in Second Life."

The information would prevent people feeling cheated, but the result would be that the money would not be spent, which could damage the economy even more. It would be nicer to fix the problem than to just tell people about it.

I agree, fixing the problems is the best thing to do.

But better consumer information is actually part of the fix.

Better informed consumers will make wiser decisions with money, meaning they will spent less on over-priced products and outright rip-offs. That gives them more money to spent with quality, honest merchants.

This results in less financial rewards for uncompetitive and dishonest merchants, and they start dropping out of the economy. With sufficiant rewards for quality and honesty, more quality and honest merchants will be encouraged to participate.

A better-informed consumer is a more confident consumer, and more likely to spend, less likely to cautiously clutch her purse. Successful transactions within the economy provide more encouragement to participate more (whereas unsuccesssful transactions discourage participation).

And Linden Lab dishonesty abuot some of the problems in Second Life would be better PR than they might think. A entity that admits its flaws up front is more trustworthy than an entity that promises the moon and fails to deliver. It is far better for a business in the long run to give customers reasonable expectations, then exceed them; it's bad businees in the long run to set unrealistically high expectations then fail to meet them.

It is a necessary component of a healthy free market that consumers have access to good information about the market. Consumer wisdom is the best market regulator.

The trap for a lot of new persons participating in the Second Life economy is that they bring too many of their real life consumer assumptions to Second Life. The mere availability of good market information to consumers in real life is such a good market regulator, that consumers benefit without needing to do a lot of hard research work before participating.

In real life, assumptions such as "higher price indicates higher quality" work fairly well- not perfectly, but fairly well. In real life, it is a fairly reasonable assumption that merchant competition has probably driven prices of a certain item to such that prices are nearly uniform across merchants. In real life, consumers often assume that the availability of recourse (lawsuits, BBB reports) will keep most merchants honest; and if the consumer is nonetheless treated dishonestly, real recourse is available to remedy the situation.

Those real life assumptions that work fairly well are disasters in the Second Life economy.

Simple consumer education, I think, does solve some of the problems in the Second Life economy.

Simple consumer education makes the $30.00 USD loan idea more viable in the sense that better educated consumers are more likely to make wise choices with that loan, be happier at the end of the trial period with the purchases, and thus be far more likely to what to actually pay the $30.00 to keep the results.

Why would i loan out $30.00 USD, until you like SL enough to pay $30.00 USD?

Beside, the thrill of earning or buying your first few linden, its fun, it was for me

A premium account with a stipend and some land tier works just fine.

better to have more people helping new players learn how it works....

Am I wrong?

I don't think the "loan" idea would be effective for reasons that others have already said - too easily gamed, would result in artificial cash influx, destabilizing the $L, and most importantly, wouldn't accomplish the goal of retaining customers.

If item acquisition is someone's motivation for playing, you can easily acquire in the order of 10K+ items of free items. If quality is more important than quantity, how's a 30-day and under newb supposed to know what's good and what's junk?

Some have noted that people play for socializing, role-playing reasons, and hence those who facilitate those activities should be subsidized by LL for it. That doesn't work for me, although I have no objection whatsoever whom LL chooses to subsidize. It does seem that if socializing is your preference, there's a lot of good, cheaper alternatives.

I'm pretty much in Malachi Petunia's, the "old farts" camp. Although I'm not an old fart when it comes to SL, I am an "old fart" when it comes to online games. I'm pretty much burned out on social drama stuff, and if I wasn't, I could find lots of places to do it.

What SL offers that is unique to anything else out there is the opportunity to make things, and a showcase for showing them off.

So I think LL should make having a premium account more valuable than not having one (if only to give them the cash they need to keep SL running), as well as pay those who are essentially teaching us how to use in-game tools that LL itself doesn't bother to teach us.

Buying cool things works too, but as I said, a 30-day and under newb isn't going to know what's worth buying. It'll be just another "freebie" to them.

In this same vein, I also think there's a major disconnect between LL's business model (which discourages subscription accounts) and other MMOs.

In other MMOs, people who buy in-game money with real money, as opposed to gaining in-game money through their efforts in-game, are hugely despised. The people who sell in-game money are despised even more (worse than prostitutes and their johns, because the prostitutes/farmers compete with people who are just playing for fun for resources, which isn't fun, then spam us with their sales pitches, which isn't any fun either).

I joined SL because of my husband, and he showed me how to camp for money (which is pretty much dried up now), and it took me months to figure out that camping was nonsense, that it was OK in SL if we bought $L, which we can easily afford (but never did so in another game because it's considered cheating!!!! And would feed the horrid farmers!!!)

So people who are bored with other MMOs (as I am currently, until something new comes out), have a hard time adjusting to SL. When I first started playing SL, it was unthinkable to buy $L! Because it's viewed as very scummy (cheating) in other MMO's. But money gained via a subscription, that's obviously legit.

But it's not financially advantageous to subscribe to SL.

I'm ok with that now, and with buying $L. But it took me a long time to be able to do that, coming from an "old fart" MMO background.