Poor economic decisions within LL

Mostly, I have refrained from saying bad things about LL. And I'll continue to try and bite my lip, But a few things I would like to know, maybe other residents can help me understand the method to the madness LL often displays

The Economy in SL has been on a decline for over a year now, lately its been a excerated rate. the strongest market in SL which is the land market has been abused so badly, that private estates are worth virtually nothing.

Part of this reason is that LL never seemed to care about the gaming and abuse of the land sales search, the primary advertising mode for buying and selling land. Another reason is the gross satuaration of mainland in SL. Comparitively, the mainland mass has tripled in size with maybe a 10% increase in population in that same period, inturn decimating both the mainland and estate market.

My qualifying question is... Will LL ever realize they NEED a expert economist on the payroll too help them avoid destroying what they have created. Seems alot of bonehead actions have been implemented over the past year, and it doesnt seem LL cares a tiny bit about thier "investors". Why is this? indeed estate owners make up about 80% of LL's investment capital, why are they not focusing on caring for theses people?

I dunno... they have a new CEO. Let's wait to see what changes get made.

myself i am starting to think they want the world to actually fix it's own problems like this..
how we would is beyond me..
but like the real world there is nobody but the people in it that can fix it..
just a theory of mine is all..
it's about all the sense i can make of it really lol

They use a lawer instead

Jackson, symptomatically I do agree with you (re: people abusing search) however their economic plans aren't as terrible as they might seem, if we can believe this data at all.

http://secondlife.com/whatis/economy-graphs.php

Sure, I don't agree with their every move.

But looking at the *very* long term picture, I can see method in Zee's madness. Righting the ship when he first came onboard, lowering entry costs, land and LindeX price management.

I'll also make a statement that I won't further explain - chalk it up to me being FIC and crazy - but I think they have a LOT more data than presented in those charts, study it carefully and the dirty secret is that a lot of regular people are making a TON of money in here. And quietly doing so - off forums, out of the public eye.

I think you'll be jaw-droppingly shocked if the amount of money people make on the grid is ever revealed.

No, I'm not going to back that statement up, but sooner or later the truth will out itself, just remember that back in May 08 Des crazily made a statement like this.

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Land... Mainland is approximately 20% of the grid. Seriously, it's not that big of a threat - what we are looking at is *each other* drawing down the land market. All the private estates in competition.

To LL and most of its residents the land market is irrelevant. and hopefully the only investors LL cares about are the ones on the board. If you're a customer and making investments in land then that's your problem.

Screw the land market.

The "saturation" of the mainland is a good financial decision.

For LL what counts is the amount mainland owned by residents as this gives tier.
The amount of owned land has increased proving the policy of selling lots of land cheap works.
Also if you are a land owner, having some yellow land near you is nice as it means not everyone is squashed up together.

So its good for both LL and the land owners who just want to own their land and use it in peace.

I do agree the search is completely abused, and it doesnt take a brain surgeon to think of solutions to prevent the abuse. For example you can prevent the campers and bot abuses of traffic simply by only counting premiums in traffic.

I don't know from my end when I see people selling and buying land example 512m lot in West Haven for equivalent of 200 usd or more it makes me think as long as there people who can spend that type of money Linden Labs has it made.
Add the Island sales, Linden Labs I think probably has it working for them and why would they need to change it just cause some business/ land owners in SL aren't making enough money?
Their bottom line involves there own income flows and profits to keep grid open. As I recall there is no promise for anything else in regards to the residents ever was made that they too will get wealthy.
Some have made money here and yes it is good PR but most of us there is no guarantee.
Part of what the profits Second Life gets is from those who have money to burn and I bet some of it was based on residents making bad investments.
Either way LL makes money.

You can see from this graph the ratio of mainland to islands and how it has grown since Oct. 2006. I had to make this graph on my own spreadsheet as its not one LL provides, but it is based on the statistics that they publish.

Clearly, the vast majority of tier payments LL receives comes from island owners. Focusing on selling more islands also reduces LL's customer service hastles, because each island sim is owned by one customer, whereas on the mainland, one sim may have dozens of owners all clamoring for customer service.

Because of this I have been speculating for some time that LL has intentionally neglecting the mainland in favor or selling islands. Islands work more efficiently to increase LL tier while reducing their customer service overhead.

Reducing the front end cost of buying land, regardless of whether its mainland or islands, also encourages more people to invest in land and in larger pieces of it then they may have previously, which then locks them into paying tier to LL.

The costs of tier quickly equal or exceed the front end cost of buying the land. So LL can easily drop the cost of new islands to a break even price, knowing they will make it their profit up in the long run.

I'n not normally given over to conspiracies, but in this case perhaps they know what they are doing, at least in their own self interest. I agree they don't seem to care what impact this has on the customers who have invested in land.

What kind of economist? A Keynesian? An Austrian School? Chicago? A Marxist?

I hear G.W. Bush will be looking for a job in about a year.

An Austrian School would be good.

I agree totally.

I think they are applying the current beliefs just like the democratic capitalist system.
Let it look after itself and all will be fine. LOL
It works fine, some say.

IMO opinion the new CEO was chosen towards eventually having an IPO for LL. (2+ years maybe) LL is fattening itself up, more sims (over 20,500 at the moment), more tiers more bottom line profits. They really not interested on what the end user does with their land or estate. They never made any promises from the outset to people wanting to play a land baron.

They know there will always be buyers for their auctioned mainland SIMs or Estate SIMs, There's enough people going into the land market with their eyes shut!....and many will be stung in the process, all the way down. A lot of existing SIM owners have lost resell value on their SIMS.....and even small plot owners (mainland & estate) have seen their lands devalued over time.

I worked at Organic Inc when Mark Kingdon became our CEO.....so that's what my prediction is based on!

But Desmond, do you think those graphs are really indicative for what they say, or what they might not ? I am not so much presenting an opinion as wondering......things like concurrent users can be affected by limited time "trial" accounts, and resident owned land by the void sim offers....with the overall economy also reflected in land sales to & from...

For example, I worked at a very large bank in IT...our daily funds transfers on one machine would run over 100 billion US dollars, but it recorded transactions coming and going from both sides...."buy" one way, and "sold" coming back....with both adding to total.

I tend to seem anti Linden, in truth it is a wonderful effort, I have a great time here when it works...but I kind of also tend to wonder if they really grasp they are dealing with real money here in what I am perceiving as a development playground without much...hm, direction.

Last I looked, LL does employ a game economist*. However, Exxon-Mobil also employs economists, but their economic interests are not aligned with their customer's interests, either.

*http://lindenlab.com/about/management#z

M shouting: "I am just a patsy!!"

laughs

Ok I deserved that

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Djamila, it's true, you can't really prove anything from those particular graphs. I pointedly didn't name my sources.

But bottom line I truly believe that this platform, though not perfect, is pretty darn good for business when put in context.

Consider just about any other platform, and how tightly controlled they are. Warcraft, Eve, a number of others limit economic possibilities because they fear the disruption of 'game play'. No such thing, here.

Or take a game like Entropia. Still a game, really, and they sell 'licences' to people like Anshe to do bank-like or exchange-like functions.

True, it's possible that you might come up with a service or feature that may be "GOM'ed" (integrated into the platform) and 'lose' that way. But overall, there's no nonsense about making $L, selling them on LindeX and cashing out. It works. It's real. You aren't considered a 'gold farmer' or 'black market' or dirty, unless you are violating United States law (gambling, unlicenced financial schemes).

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For what it's worth, nobody needs to believe me, but then the cynical have no need to listen to what I type - just watch my spending. It's as easy as opening the grid map.

I've acquired five regions in the past couple of months, and have three more in development which have been announced publically as far back as Oct 2007. Plus potential expansion planned for 2009.

There's no way I'd be doing *any* of this if I:
a) feared open source grids (a threat to the discount end of the market only)
b) had concerns about the CEO (Phil's on the board, things won't change radically)
c) had little confidence in Zee (pro tip: listen to what this man says in meetings)
d) thought consumer demand may bottom out (look at the standard graphs)
e) feared an out-of-nowhere, flawless competitor (who!? I'd buy stock!)

And besides, there is no FIC.

*lights cigarette and slowly gets back into black Cadillac*

A single spark will ignite an entire forest fire.

Hmm if he's good, I don't expectr any changes for at least a month til he's investigated all the aspects of the business before renovating it.

Unmitigated capitalism.

*nods knowingly and pulls off the rusted doorhandle of her subcompact. nods again and hits her head on the closed window attempting to climb in. nods one last time as she walks around to the passenger side*

Here is a Metanomics conference about the current "state and future" of SL..a video including a talk towards the end by Zee Linden countering some points brought up about the stability, issues and about the metrics.

Basically the two guests are calling it "dire" and Zee Linden says it is doing great.

The most important economic indicator to LL is their bottom line.

The in-world economy will always be secondary to that. No matter who or how many residents lose money over a decision thats painful (such as Island pricing changes).

It all makes more sense if you think about it from that perspective.