Implications of Reparations

If Linden Lab is going to have to pay off people every time they decide to make some change to the platform which throws out old realities, does that mean we are doomed to SL continuing with the same economic model from here on out?

This would mean...

-sims will forever be 256x256 meters.
-tiers will always be the same.
-land will always be static relative to its neighbors.
-changing your land circumstances will likely involve giving profits to a land broker rather than to Linden Lab.

With a few system changes, that might easily be possible with advances in technology, SL could be so much more, with varied environments and the ability to move from one space to another, to associate with your favorite neighbors at will. In other words, a network model.

But if we have to pay people off every time some minor improvement in this direction is made, won't SL just end up in stasis and decay instead?

This is a REALLY good point Ananda.

Terrifying. I hadn't even thought that far ahead.

Improve land privacy option and what then?

Compensate makers of bounce and teleport security scripts...

... wouldn't that be a pisser?

Just a history check: This isn't the first time that Linden Labs has chosen to compensate some of their customers and not others as a result of a mistake.

The height of the 1.5 fiasco resulted in a service credit for all users of Second Life who paid recurring fees.

Users who had Lifetime Accounts, and folks on basic accounts (they weren't free back then) received no compensation, even though they experienced the same amount of pain everyone else did.

This was almost a year ago, and Linden's choice to compensate some players over others did not signal the beginning of the end. Quite the contrary, check the tone of that thread here

While I know there are serious differences between that situation and now - I think the parallels, and the community reaction are quite interesting.

I posted this commentary on another thread addressing the buy back plan and am reposting it here to try to clarify why this situation can be legally distinguished from one where a game feature is merely changed or a one where a bug creates a loss.

The buy back plan is a settlement offer made because there are genuine legal issues related to actions taken by LL. The buy back is not a gesture of preference or special treatment directed for or against any one person or group, and is actually a circumstance that indicates LL willingness to maintain goodwill with ite membership and settle quickly when a genuine legal issue arises.

The telehub legal issue is one of intentional misrepresentation.

During the time frame at issue, August 1 to December 5, telehub sims were sold at auction for a higher cash price than non hub sims. These sims were marketed as telehub sims. The cash profit was taken by LL for these auction sales. AT THE VERY SAME TIME...LL was developing the code in house to eliminate the very same telehubs which were selling for a premium at auction.

Its not just auction buyers who get the buy back offer, its all members who bought telehub land during the time frame that the decision had been made to eliminate telehubs and the process was under development in LL. Had LL announced the elimination of hubs at the time the decision was made, sometime in or about June 2005, then the cost for telehub land would have not remained elevated. The telehub sims sold at auction would not have commanded as much as 2 times the sales price non hub sims brought in.

There were legal questions raised about these transactions during this timeframe, and only during this time frame, from August 1 to December 5, 2005.

The price offered in the buy back plan reflects the average price paid by the purchasers of the sim at auction. That sale price was the actual price LL collected. The resale price charged by those who bought the sim and subdivided it reflected in world market values related to speculation. LL has addressed its portion of the problem related to the potential misrepresentation of these sims as "telehub sims" at the time the auction was held. I use the word misrepresentation in legal sense because the actual code to eliminate these same hubs was under development.

Detrimental reliance arises when one party to a contract reasonable relies upon the word of another to their detriment. It was quite reasonable to rely upon the representation by LL that those sims at auction marketed as telehub sims were in fact hub sims. The vital issue here is that they were not AT THE TIME OF THE AUCTION, in fact actually telehub sims since the procedure was already underway to eliminate the hubs.

This was not a matter of a feature being changed after the fact. The buy back addresses the fact that the sims were sold as hub sims at a time when LL knew hubs were in the process of being eliminated.

The distinction between changing features in SL and misrepresenting a feature as LL collected cash profits on that misrepresented feature is crystal clear legally. They cannot be compared with any honest intellectual effort.

In addition, the TOS excused LL from liability for content loss related to bugs and other accidental occurances. The situation with the buy back elibible hub land concerns an intentional misrepresentation.

If any member feels he or she has a case where there exists intentional misrepresentaiton by LL that caused then a measurable loss in cash damages, they too have recourse. In the meantime, there is no need to become hysterical about the precedent set by this settlement offer. I see it as a very good indication that LL is willing to make good on losses caused by their intentional acts that misled the members into spending money they may not have otherwise spent.

This settlement offer benefits us all when you think about it. Its not a personal statement for or against anyone and I dont really understand the venemous reaction to it. Like any legal matter, where there is a genuine legal issue there is a legal recourse.

Rather than reparation or payoff, this is more like a refund. LL is able to resell the land to another buyer albeit it at a somewhat lower price. That's not the case with any of the other scenarios presented. Land is the only thing LL sells.

I would say 'leases' not sells.

You don't OWN it - and you pay a monthy fee for it.

Two things come to mind Ananda. They don't have to pay reparations every time they make a change. They can be as inexplicably selective as they choose to be. Noone has any rights in this arena except the management of Linden Lab.

But, in fact, Linden Lab isn't paying reparations at all. We are. They're generating money out of thin air that is diluting the exchange rate of the lindens in your pocket and mine. Furthermore, Linden Lab will turn around and auction that land for real dollars. They win; telehub land owners win; the rest of us loose.

That's the price of reparations.

This is the part that really burns me up. Linden Lab makes a piss-poor management decision... all the other users eat the costs.

Well Aimee I have to say I'm a bit shocked to hear that coming from you but Bravo for saying it. I feel the same. Huh maybe you arn't just a purdy face afterall yes I am teasing

Well said.

Khamon is of course correct, as usual hugz.

Mar/Cat

I am INDEED the vacuous visage I proport to be! I will not stand for this LIBEL!

oh ... wait ... nevermind

Does anyone have records of this "intentional misrepresentation"? I did hear from one rather biased source at the time that this was going on, but when I checked the auctions page myself I could find no indication of difference in initial price or whether a sim was going to have a telehub on it.

I do find this disengenuous, as all during the timeframe mentioned in the buyback it was well known that telehubs were an unpopular and rather endangered species. Especially to the people who stand to profit the most from this buyback.

katykiwi, the mere mention of legal action, whether justified or not, if it had this effect on LL then we should all be worried. Lawyers will cripple SL if this precedent stands. Laws do not ethics make.

[emphasis added]
Well this would make a lot more sense, since I can't really see LL distributing a lot of cash if it doesn't have to. And if they did market these sims as telehub sims while working to eliminate them, with or without any disclaimer, then they're facing a less than ironclad position in court if anybody brings a suit. Probably far cheaper to refund the premiums people paid than to defend a court case, even if they acted within their rights.

I wouldn't want to have to explain lawsuits to my board of directors, let alone any new investors. I might have to explain the reparations to the board, but it's easier to sell something to mitigate legal exposure than the results of that exposure...

I find myself agreeing with Katykiwi on this one, if LL marketed these sims as telehub sims.

Oh, and as for diluting the L$ to make the payout -- has a Linden said that they will or won't be "printing" the money? I'd suggest they had better not just print the money because then they're also diluting the compensation, which I'd think leaves them exposed again. Since the whole point of this seems to be avoiding legal exposure, that'd be pretty dumb.

Oh yeah -- I'm not a simple caveman lawyer, et cetera et cetera

the implication is that in the future LL will announce anticipated changes when the decision is made, not two months later when the code is ready to implement.

Avoiding legal exposure is a resident rumour as well. It's doubtful that we'll ever know the official reasons LL are paying "reparations" in this case; so any conjecture on the topic is sheer amusement for us. Don't get bogged down in believing anything you hear even if the name Linden follows the post.

Again Jauani, two thoughts come to mind. One is that LL don't know that a feature will ever be implemented even when they're working on it. Heaven knows I hate beating the word BETA to death; but this software is still being so heavily and consistently revised that there's no better way to describe it. Even when a feature seems ready enough to be added to a preview release, there's still a fifty percent chance it'll be cut.

Secondly, and more esoterically, nobody has yet proven a use for this software. People post about practical, real world use; but it's always deep dark contract related can't talk about it, what is it Prok calls it, fanboyz rhetoric that we've been listening to for two years. The fact is, noone truly knows what features might be helpful or harmful to the platform eventually being distributed for general use. Moving to more open protocols, publishing a client API, and open sourcing some modules (if there are any such things) of the code will help solve this problem without LL having to hire thousands of programmers and support personnel.

They obviously know all of this. One wonders if they'll ever actually act on it.

I doubt the amount of money we're talking about is enough to cause anything but a very a minor change in the value of the currency. How many telehubs were there? Since the parcels have to be within 128m of the hub we're talking roughly $10/m for a pretty small percentage of the land in each hub sim. Of that land, how much was bought recently enough to qualify? Anyone care to do the math and see what they come up with?

The implication is that the future of SL will now be dictated by litigation.

Yes, Robin has stated the L$ for the reparations will be newly-created.

Aren't you happy LL is taking responsibility for their actions? </sarcasm>

Katy, excellent point. The differences between settlement of a legal dispute and an "ex gratia" or give-away payment are subtle, but are important. Thank you for taking the time to clarify the difference and elevate the tone of this thread in your excellent post.

Linden Lab "prints" ALL the money, ALL the time. Without LL as the central bank and platform operator, Lindens would not exist, would have no convertibility and no value. Like the US Dollar, which has no silver or gold equivalence except in world markets (based on confidence), and which the U.S. Government and its alter-ego the Federal Reserve creates or absorbs in order to manage the economy, the Linden is under full control of LL. Any illusion that it has obligations regarding the exchange rate or maintaining the real-world value of the "compensation" is a fantasy, in my humble opinion.

I try to keep my fantasies in world. Taking them home tends to lead to odd behavior.

(I posted this in the "content creator's union" thread, but it seems just as relevant here)

I agree with most of what you said. The one thing that still nags at me is the fact that LL really isn't bearing *any* burden at all in this reparation settlement. They're paying class-eligible users out in funny money that they themselves print, that they claim has no value, and that they will actually receive additional revenue from when settlement payouts are cashed out through their service. Correct me if I'm wrong, but when a corporation incurs liability, it's generally for something we don't want them to do again. Allowing them to pay the settlement in new L$ (rather than buying from the market) in no way disincents them from doing something similar in the future -- why would they stop to think about a decision when making and reversing a bad one does not affect then in the least?

In addition, if the auctions were paid in US$, why should they get to pay reparations in their own arbitrarily-printable (by them) scrip?

This is the ONLY POST I have read now in two threads on the issue that makes ANY common sense.

Yes, LL attorney's must have gotten a good laugh over this one. Congratulation to those that pressed for legal action. The buy back will be funded by SL MEMBERS not Linden Labs when they go to buy the Lindens said injured parties will undoubtedly sell on LindeX. As an added bonus, LL will get the user fees incurred for such a transaction.

Well done...excellent legal work. /sarcasm

If my understanding is right 128m radius of the hub is half the sim. Not an inconsequential area.

BUT the real kicker is the timeline. That is where LL is seriously cutting back the amount they payback as probably less than half the plots will fall into this timeline.