Should LL raise the exchange rate?

That makes you a businessperson by my definition, which admittedly is rather arbitrary. And a bit misleading because folks who neither make nor spend would be businesspeople by my definition! o.O

I considered basing it on whether your net money flow was buying Lindens or selling them, but that would leave me out as I neither buy nor sell Lindens.

I probably should just have used "I consider myself more of a ..." and left it at that. I'm not sure which I consider myself, really; I don't think I'm a typical businessperson or consumer.

My apologies.



By your argument, LL should decrease tier, and it would have the effects you intended without the havoc it would wreak on the rest of the SL economy. However, it might wreak havoc on LL's bottom line. In any case, that's a decision for LL's CFO to make.

Ignoring the current fiscal crisis, decreasing tier would create a bonanza in the SL economy. More people would be able to justify holding land, and would buy things to fill it with. More businesses would find a positive cash flow and stay in business, due to both decreased costs and increased revenues.

Taking the fiscal crisis into account, just the right amount of tier decrease would maintain the economy as it is.

However, another approach would be to do nothing and see what happens. My prediction: SL economic indicators will fluctuate but it won't be the end of SL. A downturn, in keeping with the rest of the world, but perhaps offset by the fact that SL is incredibly cheap entertainment, if you want it to be.

One significant difference between the SL economy and the RL economy is that LL charge their fees (tier and private island support) in US dollars, not in Lindens, and people buy things using Lindens.

If everything used the same currency, then the Real World examples might apply. While the costs stay constant, a cheaper Linden Buck would just cause the prices on everything to have to rise. What you get isn't a stimulus to the economy, but rampant inflation.

If LL were to switch so that tier, and island maintenance were in Lindenbucks, THEN you could start playing these sorts of games with the economy...

The most well-known example of it being used that way is the MSP system that Microsoft used for the Xbox 360. You can buy MSP with multiple different currencies, but it isn't an even multiple for any of them.

There's some discussion of the base problem in some papers by Nick Szabo: that if a customer can easily notice that they're spending 15c on that dress, they'll naturally try to work out if it's worth the money, like people always learn to do when spending real money.. but when accounting for the value of (even a minimal amount of) mental effort spent working that out, the dress costs them far more than 15c. This is perceived by them as the micropayments system being a hassle and they stop participating. I yet haven't found anywhere that documented the now-standard solution, which is to sell the micropayments currencies in single big batches (so you don't think about whether the 15c dress is worth it, you think about whether another L$2000 is worth it), and then stop that thought process again by either a) making the math too much bother, or b) having the user think "well, I have that money as L$ now, so I have to spend it in SL." (Of course for SL that isn't really true but people act as if it is.)

It is not that hard I would say.
Main cost in SL is tier, which is payed in dollars. Many estate owners let residents pay their rent in lindens, but in the end they pay LL in dollars for their sims.

So what happens if we give out more linden for a dollar? Lets say 25? Simple, prices would go up 25%, because tiers still have to be payed. Land costs are unimportant in the long run as they are once, it's the tier that regulates our economy, imho.
So, I rent my commercial land on an estate. My landlord needs to pay 295 per month to Linden. So to get that cash, he will need to rise my rent with 25%, else he would loose money.
So I will have to make 25% more. Knowing people get more linden for their buck, it makes sense to rise my prices. People still can buy the same item for the same amount of RL cash, after all.

So in the end the people buying lindens do not gain, as they still get the same for their dollars. Who gains then? No one probably, we just devalued the currency.

As for the exchange Linden-Dollar, that makes perfect sense. LL is US based as are most of their costs. The fact that for people like me (Europe) that is not always a good thing, is irrelevant, I knew I was signing up to a US based platform.

True. If I sell something for L$270 it's because that $L270 equals about US$1. If the $L exchange rate changed significantly I think most merchants would adjust their prices to keep pace with the changes.

Keep in mind, that for all but a very tiny percentage of Second Life users, that every dollar spent related to Second Life is an entertainment expense, a luxury.

Even for most SL businesses, the point of operating a business is to have fun, and not to earn money.

Even for the SL business that actually earn something that looks like profit, for the overwhelming majority, it probably is not as much as they would make by spending the same amount of time in a real world job.

Being a pure luxury, spending on Second Life is always going to be the first thing to be cut from someone's real life budget, and the last thing to be added.

Thus, the Second Life virtual economy cannot be manipulated in may of the same ways as a real life economy. Second Life isn't a necessity like food or shelter or transportation. It is not a semi-necessity like television and internet. It is pure luxury.

Manipulating the Second Life economy within the Second Life economy will not increase spending. Spending only increases based on (1) whether people have disposable income for their entertainment budget and, (2) they do not perceive that they have better things they can be doing with the money they spend on SL.

So increasing the perceived value for money makes SL more attractive.

Hence, new features.

Ya true. Point taken.

ooo! thats sneaky. I never thought of that =)