Improving the SL Economy?

It's become clear through most of the threads I've read that SL's economy has been in a slump. Land prices are way down from where they were last winter, merchants are complaining about decreased sales, and growth of premium memberships has reversed itself, apparently because so few people see any benefit to it.

So if a premium account suggestion counts as a feature proposal, I suppose I'm putting this in the right place. I certainly don't know where else to put it.

1. Stipends, currently $300/week. From what I'm told, they were once $500/week, then $400/week, before decreasing to current levels. Increasing everyone's stipend may have a harmful effect on the value of the Linden dollar - but what if stipends were increased for premium members on their one-year anniversary date by $50 or $100, up to a maximum of $500? It might provide some incentive for people to stick around and spend a little more money.

2. Land tier, which is where LL appears to get a lot of their money. If what I'm hearing is correct, people are abandoning land back to LL instead of continuing to pay the tier on it, since they're having such trouble selling it. Would people be more inclined to keep their land, or purchase additional land, if tier was decreased? What if everyone were to get a free 1024 sq.m. allotment with their premium membership instead of 512?

How about decreasing the tier costs for recreational users (meaning less than half a sim)? Not to sound harsh, but I'm against further discounting tier for full sim holders, since they're getting a bargain compared to paying for an island every month. And I would venture that the vast majority of people who pay that much land tier for land in multiple sims are either making income in real estate, or cutting ad farms, and don't need additional incentive for land ownership.

Any comments? Suggestions? Flames? Rants?

-Raising stipends wont really help the economy, since the decrease in the value of the Linden will hurt content creators from whom shoppers buy things.

-I don't know how many "abandon land" you can always get a landbot to buy it is you go low enough. A lot of people have wanted teir to go down for years though.

The only way to really help the economy is to get more Real Life People who have Second Life accounts more interested in Spending RL money on Second Life Things.

So any efforts should be geared at convincing people spending their RL money is worth it.

Since playing with L$ dollars does nothing to grow the economy.

I like the idea of rewarding long service. Raising the tier-exempt land holding to 1024 sq metres after a year (or even 2 years) of premium membership would be good. It would stimulate the land market and encourage more adventurous small buildings.

Which is great for people interested in buying land. In any case it's not necessarily a sign that the economy is "in a slump"


Which means what ? That the customers are stupid and should be orbited until they know better ? That merchants are somehow entitled to ever-growing sales ? SL economy is built atop a central bank with a monopoly money, therefore business cycles are inevitable, this is basic Austrian Econ 101.

So, yes, this is a sign that the economy is, indeed, in a slump, OK. But about a century of economic thinking indicate that the L$ itself could be the cause.

In any case, merchants who want to sell have to offer things that people want to buy. There is *no* getting around this.


Yup. It's not that people are wrong or too stupid for their own sake, but that the premium membership is not attractive enough in current circumstances.


Or it could do what it tends to do in the real world everytime in similar circumstances: make everything proportionnally more expensive and keep the economy "in a slump" for good.


Now you're onto something. LL is a seller involved in the SL economy just like the residents, whather they admit it or not, and if they want to keep selling more they'll have to make their offer more attractive.

Now, I think inflating the free premium tier isn't the right solution (for LL and for land traders). However rationalizing the tier (although discounting tier for large land holders is useful for a number of reasons, the major discrepancy between continent and private island is a major disruption), and diversifying the land solutions, might just prove to be right.

I must admit that I am one of the people who has been taking advantage of the decrease in land prices. You can get some really nice land for a reasonable price now! I'd buy more if tier cost less.

I don't think, though, that giving people a 'raise' on their stipend on their yearly anniversary date would necessarily crash the value of the Linden dollar. It wouldn't be everyone getting more money - just people who have been around over a year. The true oldbies already get $500 stipends.

What's the point ?

Giving free money has never made people richer. Either you fool people into thinking themselves richer, and it just incites them to do less work, which produces less wealth and makes everyone poorer in the end ; or you don't fool them, and you just end up disrupting the market by distorting prices for as long as the information about increased money supply has not gotten across, which rewards speculation over innovation / competition, which in turn diverts work from productive stuff and makes, once again, people a bit poorer in the end. Maybe you know what the word "stagflation" refers to, historically ?

Oh, and I'm one of the oldbies getting 500L$ stipends I've lived through the crazy days of wild L$ rate fluctuations and the never-ending talks of "decrease the L$ supplies" and "put more L$ sinks". Personnally I think LL shouldn't have decreased stipends in the first place, and just let the L$ inflate to the level it was trying to reach at the time (~360 L$ / USD).

As for making Premium accounts more attractive... What about giving Premiums a nobility particle in their name ? Discord de Cult. Or Discord McCult. Discord O'Cult. Discord el-Cult.

Or Discord von Cult. Hmmm, ominous sounding !

I don't like it either, but a bad economy is necessary from time to time to filter the market. It's inevitable, natural, makes people more creative and products better.

Increasing stipends might have entirely the opposite effect of what is proposed.

People may feel even less inclined to buy Lindens off the LindenX if their stipends are larger.

Which will only make things worse.

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The "SL economy" is based on one thing => getting people to part with their USD.

Its not really a self sustaining economy, its not really a micro-economy, its none of that nonsense.

Its an engine to take the money from those willing to part with their $USD for Virtual Goods (land, content, services).

If people wont spend REAL money on SL, the wheels fall off.

Perhaps I am not being clear. The point of the stipend increase for long-time customers would be to entice them to keep spending their USD on premium membership, and potentially more USD on tier. It's a psychological thing - so people feel like they're getting the equivalent in Linden dollars back in exchange for continuing their premium membership, which is paid in REAL MONEY.

Look at the proportion of premium memberships to basic memberships. I'm not talking about a whole lot of Lindens all of a sudden flooding the market. It's really a small amount in the major scheme of things. More of a 'make the residents feel better about giving us their hard earned real cash' sort of thing. Of course, fixing bugs would make us feel better too.

A better solution would be to reduce the gap in price between smaller tiers and larger tiers. If you look at the prices you will notice that as you purchase more land, the tier cost per square metre goes down. Therefore, you pay the MOST tier per metre on a plot that is 1024 square metres is size (your free 512 + 512 extra requiring you to be on the first tier level), and pay the least tier per metre on full-simulator purchases.

This is great for encouraging people to buy /more/ land along the lines of "Oh, for only 50% extra I can get twice as much land" or whatever the actual figures are. But it doesn't help get people into the property market in the first place, since people who only own small plots of mainland are penalised by the tier system.

Meanwhile, land-rentals are a more affordable option, since the people renting the land are going to be paying the "cheapest" tier (cheapest per square metre) and thus can sell off small plots of land for less than you would have to pay as a premium member. It simply isn't competitive for small-land owners. Only people like me, who like to have full-control of their land with no reliance on any 3rd party, will buy smaller plots of land, and even then, I'm up to owning 4096 square metres, which is better value than the 1024 square metres I owned before.

If you want to encourage more people to go premium and own mainland, then it needs to be made more affordable to do so. If we assume that LL make enough money off of land-renters who are paying the better value tier, then there is no reason to try and make more per square metre from the premium members who want to own a little piece of land for a home.

Better still would be to remove tier, and simply pay a fixed rate per square metre of land that you own.

Another potential idea is to offer loyalty points to people who buy/sell L$ on the Lindex, as each transaction makes LL money, then the loyalty points would simply be a small cut of that profit. The points would work like many loyalty systems in retail stores; you get points for every X L$ you buy or sell, and when you get enough points you get a redeemable coupon which you use to reduce the cost of future Lindex purchases, or you can use to reduce the cost of a tier payment or such.
At the moment our accounts have an L$ balance, and a USD balance. A coupon balance could be added, thus when you wish to purchase something requiring USD, then it is first taken from your available coupons. If you wish to purchase something with L$ but don't have the funds, then your coupons can be traded in for L$ which may allow you to continue the transaction.
Loyalty points can then be made a premium only feature and attract people to premium accounts in that way.

I've actually created JIRA issues for these, and they can be found under a new meta-issue to be found here:
http://jira.secondlife.com/browse/MISC-763

So you say you want to go the "fool them" way. It's the road that goes down faster. Still no cookie, though.


You win.

It's really quite above board when the amount of Lindens people get in their stipends is roughly equal to what they've put in through membership fees. That's what's supposed to make them feel better about sticking around and continuing to pay their hard earned cash for premium membership. Don't we want people to feel better so they stop whining on the forums?

Oh wait, you are Discord. By definition, maybe not.

At any rate, I kinda dig Haravikk's loyalty points idea. And replacing tier fees with a straight per square meter cost would be very advantageous to smaller land owners, which is the other goal I was trying to move toward in my first post.

Okay so you are thinking more premium memberships = Better Economy.

I'm not sure the LL finances portion of the economy is the weak side.

From what I see the weak side of the economy is the very flat Amount of USD flowing through the LindenX. Translating in less money for Content Creators and Land lords. Reducing Second Life's profitability to in world businesses.

Maybe we need to define what we mean by a bad "Economy" first.

Since the LL making more money off premiums is not the same thing as the economy.

The best way to improve the economy is for everyone to go buy a big chunk of L, and clean out their favorite creator. Relying on LL's 'welfare system' isn't going to do it.

If you like the ideas and think they'd work then please do vote for the JIRA issues! Just follow these links, if you aren't logged in then the log-in is your SL username and password (always check your address bar is for a secondlife.com web-site before entering it though!):

To vote for a decrease in the pricing difference of tier (or for a pay-per-square-metre system) please see this issue:
http://jira.secondlife.com/browse/MISC-765

To vote for a loyalty-point scheme, please see this issue:
http://jira.secondlife.com/browse/MISC-764

And if you want to see premium account improvements then please vote for this issue (note; you don't have to vote on any of the above to vote for this one, as it calls for improvements but doesn't specify what, but if you voted for the above then do vote for this one too please!):
http://jira.secondlife.com/browse/MISC-763

If you like the ideas but don't think I've got one of them quite right then do comment either on the issue or here! Premium accounts have been undervalued for a while now and it'd be nice to see an influx of new premium players, especially since it means more payment verified players.

Um If i am not mistaken this will cause a even greater div between the land piggies and the have not(s). Prices will raise even worse then they did earlier.

You'll have to explain that one as I don't see why it would matter. The "land-piggies" own enough land now to be paying a minimum tier per square-metre, if everyone paid the same amount then it should mean smaller land-owners are better off, and more able to increase their holdings without having to double them (which may require them to over-invest).

The way I see it the tier system seems to encourage risk taking, which with the recent Ginko fiasco I'm not sure is necessarily a good thing. Since tier goes up in 'double' levels, it makes no sense to upgrade your tier unless you intend to purchase the full amount of land that the new tier-level entitles you to. Thus you end up with more than you need and possibly more than you can actually afford, in the hopes that you can shift some of it and make money from it. Otherwise you're forced to stay where you are if you aren't confident about doubling your earnings.
It just seems like it increases the potential for people to go "What the hey, I'll buy a sim, I'm sure I can make the money I need to cover it" and then find that they in fact can't and have to try and sell it off, ending with a significant hit to their business, if it survives.

However with a pay-per-square-metre system you can purchase what your profits allow you to purchase and expand as your earnings increase, rather than having to take leaps and risks all the time. The option would of course be there for those who want it or think they can pull it off.
It would make it much easier to start-small and expand, rather than having to have a lot of capital to start with in the hopes that you can make it.

I think you have completely missed Discord's point here. If you give them more L$, then the value of these L$ will decrease and then "their stipends" will not significantly more be "roughly equal to what they've put in through membership fees" than before. It does not work.

Ok you explain how it will make a level field for everyone? In thoery maybe. But the fact of the matter it will work in the opposite manner. Unlike the RL Investment world, people don`t ( many don`t`t look at Sl as a free market money making.) " the ave person"They buy without care and soon after dump pieces of land once they feel ( oh its only a game. ) Who buys it? the land piggies. Hence no matter how you level the playing field the result more less well result just as it is now. The common users buys a piece of land then says " HEY i had enough" they sell and leaves. The land piggies still get the land at a lower piece as more then less happens. + - 0.

Why is it so hard for everyone to understand that I am not advocating an immediate blanket stipend raise for all premium accounts? Hell, that wasn't even my most important point - I was more concerned about land tier. I was suggesting giving small stipend raises for longevity on anniversary dates, not wholesale giving everyone a $500 stipend right now and crashing the L$ value. Besides, LL tightly controls the value of the Linden dollar and has for quite some time now.

I am now convinced that 95% of the people on these forums are here to either bitch and moan about the same things over and over, or purely for the love of shooting down other people's ideas without suggesting any useful alternatives.

I'm gonna go over and vote for Haravikk's JIRA issues and bake some cookies. Clearly I'm wasting my time here.

Please read the part of my post you didn't quote =/

Who it goes to later on is irrelevant; the fact is the users still have to pay for it in the first place, and pay for it for so long as they retain it. Many might drop the land because they feel that it's costing them too much, yet if it cost even /slightly/ less than it does now, then more of them may be inclined to keep it. Even if it ultimately goes to "land piggies", having more people actively buying land (and the premium accounts required to do this) is a good thing.
Furthermore, SL is not "only a game", many people are here trying to set-up businesses, or using it as a social hub and feel that the friends they have here are worth the cost of setting up a little place to gather or sell things. Higher tier per square metre for the land they need means it is MORE difficult to start-out a business as it's comparatively more expensive to start small and grow, and starting larger requires capital which implies a certain amount of risk.

I still fail to see how it would work "in the opposite manner" as that would imply that people would somehow end up paying MORE even though prices were reduced, or that people would more put off by affordable prices than larger ones. Neither of those make any sense =S

Right. But the size of the increase matters not.


Err, no. Not at all. All they can do, at the moment, is stop the L$ from appreciating (the opposite of depreciating) when there is too much demand for it, which happens to be the case since they reduced stipends and added some fees last year or so. Or alternatively said: they can only push one way by participating in the exchange personnally. If people stop buying L$, there is nothing they can do to stop the L$ from depreciating. Absolutely nothing. It is us, people buying and selling L$, that control the value of the L$, and no one else ; in fact LL can only play the game on the same rules, by selling L$ just like everyone else. If you want a RW example of how governments, however strong, cannot in any way or shape "control the value" of their money see Myanmar or Zimbabwe.


So you don't like being contradicted ? Fine, go elsewhere.

In the meantime, Discord proposed an interesting suggestion for making Premium subscriptions more attractive, by giving them access to unique SL name customization options. Your proposal for tier arrangements also fall into such useful ideas.

Zee's quoted as stating that if the L$ starts deprecating they'll accept tier payments in L$ as an economic sink until things stabilize again.

Not that I wouldn't want last year's L$350/$1 back .

it could just be that most creators make things that sell a limited number of times. for instance clothes and skins and that new joinups have gone considerably down.

Land prices are right where LL wants them. I believe they are trying their best to control the price of land the same as they control the value of the L$.

If people are abandoning land back to LL they are plain stupid. Atleast set it low enough for an instant sale to a bot rather than take a total loss. This has nothing to do with not being ablle to sell. This is just sheer ignorance on the part of the resident IMHO.

Lower tier for small time land owners and not the bigger fish is not only unfair, but will be even more damaging to the quality of mainland since it will be filled with even more tiny parcels of trash and eyesores.

Just my 2L$ worth...