What is Linden Labs' liability?

It's AMAZING, the number of economic geniuses we have on these forums, eh?

I don't see how starting their own exchange stops gold farming. Surely you can sell "farmed" L$ on Lindex as easily as you could sell it anywhere else.

What stops farming is the game design, where it just isn't realistically possible to farm for long periods because currency isn't generated every single time a monster dies. Well, I suppose, you could create a bunch of basic accounts on different credit card numbers, buy a small block of land and have all the accounts stand on it for hours on end to accumulate dwell, but you'd have to create an awful lot of accounts to make enough money to cancel out the Premium fee or tier on the land.

$1200 barely covers the price of a server. $195 a month buys you the software(past development time), maintenance (sysadmins), support (liaisons), unlimited bandwidth and future development time (free software upgrades).
A normal website hosting company gets Apache FOR FREE!
They did not invest years of development time in Apache.
Apache doesn't need fancy high-end computers to run well, anyone can host a website on a 10 year old computer, so modern computers can be used to host a zillion websites, as long as they're all low-traffic. Especially because the web is stateless, as in, your website is NOT running unless someone's there to look at it.
SL "sites" are constantly running and you can't put an awful lot of content on a server.
Even assuming you have really small disks because they have to be high-performance SCSI, 40 or 80 gigs is still one HELL of a lot of content for a website, while you can go through the default 15,000 prims in a month or two of building.

(Did you know LL is still not turning a profit btw?)

Their greatest liability? Themselves. Or is that a handicap?

Simple... the fact that most people in general are honest and would like a legal avenue to do business. Look at Everquest 2 and the "exchange" servers. Perfect example. If you give them the legal way of doing it most players even the ones would of done it against the TOS would take the legal option. Case in Point. I bet LindeX gets more business than IGE does for L$. Also on that IGE site, Second Life Currency is the only game that it's selling it legally in game. All the other games they sell for are breaking the TOS of those games.

EDIT: plus yes SL doesn't have the mechanics for heavy gold farming, but it was a solution to head off any possilbe chance of it happening now or in the future. You never know what LL might introduce into SL in the future.

Wow. I was rated just yesterday. I feel really special now )))

Thanks for explaining.

L

There was a point where LL was accepting lindens for tier payments. I don't know if they're still doing that, or if anyone ever made their tier payment by that method when it was available. As I remember, the exchange rate you were given by LL was not as good as IGE and it was before GOM had started.

If I understand it correctly now, when you sell your L$ on Lindex, it puts a USD credit on your account. And when its time to bill you for the month, if you have a credit on that account, part or all of your bill is paid by that credit balance. Of course if you sold your L$ you dont have to keep the balance on the account, you can withdraw it to paypal.

yes eggy that caught my eye as well. We as customers aren't just paying for server resources, we are paying for software as well. The fact that not all users of second life pay to use that software is a marketing decision.

Hi Eggy,

Where did you get the info that SL is not profitable? I'd really love to see a company profile on them .

It's been stated repeatedly by the Lindens themselves. LL is still very much in "startup" mode.

This may be unpopular, but where is the proof? From where I'm standing they have a license to print money

L

And like - say Italys or Uzbekistans of former years - would only be shooting themsleves in the foot by "printing" money at whim. But this space is too small for an analysis of the effects of runaway inflation caused by indiscriminate minting of fiat currency.

As for proof, as a privately held US firm, their books are open to only them. There is no reason to doubt their word on their profitability (few firms would want to publically state they are in the red) so we have only their statements and some guesses at their expenses and revenues. My educated but, largely out of my posterior, estimates put their operating expenses around US$8M/annum and their revenues around $3M to $4M.

That is a pretty serious annual loss ... where is the funding coming from? And I thought my 'SL' business ideas we're unprofitable.

L

Well, LL's costs are under control, and fairly linear, but the subscriber base is exponentially growing. At some point in the near future LL is going to break even.

LL's got some very big names giving them VC. Philip himself has probably put in a large chunk of his personal fortune. AFAIK LL is in a controlled burn right now, and isnt in any serious trouble yet.

This whole economic discussion is quite interesting. Now if I was only good at economics!

One thing I like about LL & SL is the whole $L system. It's not bad compared to another "Virtual World" I tried. Ever try THERE? Sort of the same as SL, only the last time I tried it everything you did was charged to your credit card. Want new hair? CHA-CHING! Want to buy a new outfit? CHA-CHING!!! I really wasnt into racking up debt on a credit card to play this thing & got out once the trial period was up.

LL is at least allowing people the opportunity to stay "in-world" without spending RL currency: Building, teaching, SL Jobs, etc. So I'm happy with that since some folks are on a tighter-than-tight budget.

Ok, thats just my 2 cents.

Carry on!