Anatomy of a Fail

lets be clear on this. Live Chat took place on 12 Sept 2008. (PS. before the PC's jump down my throat, it was to see what the policy was and related to another RA thread regarding Bots. I never did not had any ambition in using bots.)

Rene_Erlanger: Hi There
X linden: Hello Rene
Rene_Erlanger: I have a business active in SL..I'm thinking my Places Search exposure by adding around 10 bots. I just want to know if i'm alllowed to do so...or if this is gainst LL ToS...as i noticed Adfarming is disallowed...so wondering if that applies to external Bots as well
Rene_Erlanger: i don't want to waste money and electricity on them, if they are not allowed.
Rene_Erlanger: just want to know LL's position as it stands
XLinden: actually bots are not against the TOS, if they are not used to violate the TOS
Rene_Erlanger: i meant on an Estate sim
X Linden: adfarming is unrelated to bots actually and only affects mainland
Rene_Erlanger: i understand on Mainland as they take away resources from others
Rene_Erlanger: and could prevent SIM access
Rene_Erlanger: no these are bots..that would act as traffic to simply boost Places search, as i noticed my rivals have these with their inflated search figures
Rene_Erlanger: so i am free to use them?
X Linden: yes, as long as you don't violate the terms of service, those should be ok
Rene_Erlanger: what potential TOS could be violated by stationery bots in the sky on a Estate sim? just so that i'm clear...they would not have any other functionality
X Linden: copying objects without having permission for it would be one instance
X linden: or using a bot to harass another resident etc.
X Linden: those would be violations
Rene_Erlanger: thanks X Linden...thats very clear to me

Errr...if you're trying to protect the Linden name.... change the last bit of the quote. You say his name >.>

Ooops my bad...miss that one

But the stakeholders *can* be employees. And precisely how is determining a reasonable salary done? Comparason with other organizations? This is not to say there are not organizations that deliberately keep their wages low, or operate on a completely volunteer basis, but that can only be done where you can find dedicated, skilled people who also are sufficiently wealthy that they have the time to run the non-profit and enough money on the side that they can feed themselves while they do so.



I agree, but pre-arranged compensation plans are not that hard to set up.



I agree, but the same can be said for a for profit start up where you need a bank loan.



I agree completely.. I just have a hard time accepting this as such a case. No way to prove it either way, but I bet that LL cracking down on this has a lot more with bots affecting their bottom line by way of requiring extra resources to support than any complaints about unfair advertizing practices.

Are you now talking about cash accounting or historical cost accounting?....both are quite different treatments and it looks like you're mixing them into together.

Positive cashflow generated from working capital is another matter....if you do cashflow forecasting. You normally use that instrument to determine when is the best time to make such capital expenditures...considering the cash amounts for Capex items in most instances

Its different here in the UK....can't use that method here for the reasons i previously stated.

In the UK we typically depreciated Computer hardware during 3 years...some companies might do it 4 years, but rarely 5.

So? That doesn't change the fact that any unrestricted income cannot be arbitrarily paid to them, as profits in a "for-profit" business can.



For the most part, it is based on current industry standard wages and salaries for the position, and the size of the organization. In other words, you're not going to be able to pay that administrative intern 5-10x her normal pay grade per year, regardless of how well she "performs".



Again, so? I said that pre-arranged compensation plans are the way to do it. What I disputed was that arbitrary "bonuses" which aren't part of that "pre-arranged" plan are allowed.



You don't NEED a bank loan for a for-profit startup. You DO NEED to file and receive approval for 501(c) tax-exempt non-profit status.

BIG difference there.



I don't. I don't see, and I don't think they see, the issues as separate, because the reason it is unfair is PRECISELY BECAUSE it cannot scale. At some point, residents WON'T be able to exploit the "tool", and the ones that do will prevent others from benefiting.

As you can see with my converstaion with a Linden posted above. Just replace my name with Phil's.
If Phil felt he could not compete against other SL companies because they were using a team of bots which prevented him making headway no matter how good his products were....he could have seeked clarification from the authorities (in this case the Game owners LL) and asked about the use of bots. It's quite clear in Sept 2008, he would have recieved LL's blessing to use them.......which then cannot be deemed as cheating, if they were used properly without breaking any of TOS conditions mentioned.
Whether it's ethical or not, is neither here nor there at that point in time......that's down to individual beliefs......doesn't stop Phil legally useing Bots to improve his Places Search ranking.

^
That

You are confusing a cash flow statement with an income statement. Capital equipment is disclosed at net book value on the balance sheet. It only affects the income statement to the extent it is amortized in any given year.

The concept of amortizing capital assets is to assign the cost of their purchases over their useful lives. The same principle is used for tax purposes. In Canada, the rates are legislated. From a quick visit to the IRS site, it looks like the IRS let the taxpayer use their own estimate of useful life.

Regardless, the costs are recognized over time, not in the year of purchase (unless the useful life is one year or less).

This has even less to do with bots than a discussion of non-profits, lol.

I wasn't specifically talking about either, just the simple concept of net income (or "profit" is "equal to the income that a firm has after subtracting costs and expenses from the total revenue". Expenses include operating, capital, and financing expenditures. If you have $1000 total revenue, and have $500 operating expenses, $200 capital expenditures (I know that the amount doesn't qualify; the scale of the numbers is small to keep the numbers simple for exemplification), and $100 in finance expenses (loan service, etc), then you have $200 net income that is available for dividends or retained earnings.

Even though capital expenditures are not considered expenses at the time they are purchased, but instead expensed through depreciation, when they are purchased, they do come out of net income as expenses for the purposes of determining dividends and retained earnings. In effect, their value is "tied up" and unavailable for dividends or retained earnings, unless they are liquidated as the result of some form of arbitrage, as via bankruptcy or receivership.

Point is, when a NPO spends money on capital equipment purchases, it isn't paying dividends or any other expense, planned or arbitrary, with that money.



Irrelevant to what I said.

No, I'm not actually. You're completely misunderstanding what I am saying.



It doesn't change the FACT that the money used in the acquisition of those assets is UNAVAILABLE for dividends or retained earnings at the point it is acquired.



Yeah, but it is fun to perpetuate, no?

But they do not have to be 'arbitrarily paid' for there still to be a profit component. The shareholders are still being paid.



I am not aware of any actual formulas.. just generally that salaries of other companies are used as guidelines. In practice, managerial salaries bear a resemblance to actual perfromance in a similar way to major league salaries do to performance.. somewhat, but still often arbitrary.



What's to dispute? If the pre-arranged plan is set up intelligently, it can still equate to a very similar thing, even if it means a year delay for the 'bonus.' But even without bonuses, the exec gets paid. If the organization does better, the exec can argue (likely successfully) for a raise.



No, you don't.. but unless you have a lot of savings, you do. Starting out with a loan is really rather common. The exception would be low overhead businesses such as many service businesses, but if there is any inventory, or equipment needed, the money for it has to come from somewhere.



Not sure what you are trying to say here...

Are you saying it is not fair because one person might have more computers at home than someone else and therefore could field more bots?

The same questions were asked of Lindens in chat about microparcel adfarming, cutting, and extortion. Their answers were the same, too. "If it doesn't violate the ToS, it's fine".

Well, it wasn't fine at all, and made a huge frickin' mess that has taken a lot of people, INCLUDING the Lindens, a lot of time and money to clean up. It also doesn't make the perpetrators any less despicable or responsible for their actions. While LL didn't retroactively punish anyone for their misdeeds, it doesn't change the plain and simple fact that they were such.

If anything, it is a non-sequitur which proves that asking a first-line support person a question they are not prepared or educated enough to answer is hardly a tacit approval of unethical behavior.

Agreed
i think Talarus is mixing up all his accounting terminology in one big pot......it ends up looking like a lot of waffle at the end of it.

It doesn't matter what Linden Labs says. They are not arbiters of morals or ethics.

Why not use the correct teminology then....capital expenditures are quite different than the the cost arising from said capital expenditure.....which would be a "depreciation charge". Its that item which is included in the Income statement or Profit & loss statement (here in the UK).
You're muddying the waters by including Balance Sheet terminolgy in Income statements (or Profit & Loss a/c)

The rest is correct.

Not in a non-profit organization they aren't. They aren't being paid dividends, which would come from net income, rather than being salary expenses taken OUT of gross revenues to come up with net income. A VERY big difference, even from an accounting standpoint.



I'm not either, but the ranges are fairly well-established for many roles, which was the point. Pay someone too far outside the range, and flags go up.



The "dispute", as you put it, would come about from an arbitrary payout at the time earnings were revealed and, since, being "arbitrary", it wouldn't have been part of the compensation plan, couldn't be paid out at that time. If that necessitated a re-evaluation of an executive's compensation plan for his future compensation, that is fine, as long as it doesn't get flagged for other reasons.



Depends on the business; many small businesses are started from savings. Mine was; the other 3 I helped set up were; no bank loans involved. Lots of businesses don't need bank loans or, indeed, a significant amount of money to get started.

The point is irrelevant anyway, because one is OPTIONAL, the other is NOT, despite your protestations to the contrary.



No, in this instance, I am saying it is not fair based on the fact that the eventual resource demand problem will prevent other people from being able to take advantage of it, because the PLATFORM will become exhausted long before a significant percentage of businesses COULD exploit it.

Because I wasn't speaking to an audience of Accountants, but to average SLer, who doesn't know their income statement from their chart of accounts.

Likewise, I wouldn't start off using 100% precise and correct IT terminology talking about a SL viewer issue, either.

However, if someone wants to go to that level of detail, I'm game, but I don't think it is purposeful to chide me over it.

^^ This

oh I know, thats exactly what i meant, just worded it differently. i was a district sales manager for a hugeee corporation and yes, often times i went home at the end of a lonnngggg day feeling pretty icky about some of my methods. but it made them money, made me money, and more times than others, made people happy with what they got after whichever method was used to reel them in. In SL theres really no strong arming, but yes false advertising, false traffic, notecard spam people and all that stuff happens. people may bitch about it but i guarantee alot go take a look at what it is they got or heard about. curiosity killed the cat, but in this case brought a person to your sotre, and possibly a sale. then it trickles down "hey thats a great product, whered you get it?" done, another sale.

I wish advertising was honest, but you'll notice most of the small mom and pop places that are honest and true to their ways, dont go any farther than a small, nice place. not downing them at all but inorder to hang with the big dogs, you gotta stop peeing like a puppy.

Disclaimer : I think it's well known what i think about Bots. I never used Bots, I don't like Bots and happy that LL have banned them......now if only they would enforce their policy, I'd be much happier

Having said that...

You can spew as much venom as you like....as it stood in Sept 2008, LL would have given Phil their blessing as regards to using of Bots to game traffic numbers. As long as the Game owners deem it ok, it really doesn't matter how the Utopian 2nd Life world should be seen through the eyes of Talarus Luan. If you didn't like the way LL governed that particular policy...you basically had 3 choices.

It's still ok to have a sex orgy outdoors on a Mature sim in full view of everyone. Again it doesn't matter what personal view points are at the time....because as of today its still allowable and doesn't break any TOS conditions. Now in a month's time with a new LL policy change that same scenario becomes an AR offence .....so you'll be able to fire off AR's to your heart's content!

No difference for purposes of calculating return on investment. Take a finance course. The only difference is how they are taxed, but they both are forms of return on investment.



And my counter is that the range is suffiently large as to be close to arbitrary. The bigger question is whether the organization really is filling its mandate or not. If it is simply funneling donations to an employee, then it would likely lose its status, but in that case there might also be other issues (such as whether donors were defrauded). It would not be a matter of trying to make a profit, but of defrauding people with a non-charity, and/or an attempt at tax evasion.



Question for you.. you have dealt with a start up non-profit. Have you dealt with one losing its status over the employee compensation (rather than actual performance, or failure to actively pursue its mandate)? Keep in mind that the wages paid, regardless of whether paid to non-owner or to owner are still taxable as personal income. The tax exemption status only applies to the non-profit itself.



Again, it depends a lot on the nature of the business and the entry costs to that industry.



Where the entry costs are high, it is not 'optional.' If you have a viable business plan, and sufficient collateral (such as a house), then a business is possible, whereas without those, a business would only be possible if the house was actually sold.



Umm.. except if the costs to LL were not an issue, then there would be no resource demand problem, so it comes back to what I was saying.. this is about LL's bottom line.

Cost reduction does not merely increase LL's profits, it also makes expansion more practical.

If you want to hang with the big dogs, get the hell out of Second Life and start making real money in the real world... because NOBODY in Second Life, not even Anshe Chung, is making the kind of money you need to get past the "mom and pop" level.

I have a RL job and do quite well in RL, if that was meant for me, if not, no worries then.