Could Linden Lab L$ Sales Actually Help Us?

Please keep in mind that this is strictly an example. I don't know if Linden Lab would or wouldn't do specifically this, and I don't really want to discuss if/why they would or wouldn't. What I'd like to discuss is if something like this would be perceived as beneficial to the economy. With that in mind, let me give my example.

Let’s suppose that tomorrow, Linden Lab began selling ALL new land for L$, with a starting bid of L$250,000 per sim. In addition to that, let’s assume that they began denominating ALL tier payments in L$, at a rate of L$250 per dollar. Then, they began listing ALL of the L$ that they earned from this on LindeX, at a rate of L$250 per dollar, rather than the best rate.

If we assume that there are only 1,000 sims, on average owned by four land owners at the $75/mo rate (I’m obviously being absurdly conservative here, this is in no way close to the real figure), the tier alone would bring in L$75,000,000/mo for Linden Lab. This is MORE than they pay out in stipends, and we haven’t even begun to talk about classifieds, uploads, land auctions etc. In other words, most of the L$ in existence would end up parked on LindeX at a rate of L$250 fairly quickly.

What is most interesting about this scenario, is that since we would be paying our fixed expenses in L$ at a pre-set rate, we no longer have to cut each other’s throats on LindeX to make tier. From that point onwards, we’d only need to sell our PROFITS on LindeX, whenever we felt like it, at a rate of L$251 or so. Whenever we’re not feeling like it, LL is soaking all of the additional buying power that we no longer need and converting our L$ tier payments into USD. Through this, consumers acquire more L$ to pay producers. All of this activity occurs without LL ever printing a single new L$ to sell on LindeX, and they’re even able to monetize some things that wouldn’t otherwise be a revenue stream for them.

To me, a scenario like this seems like it might be win:win, leading to great economic stability and prosperity. What do you think? Keep in mind that, discussions of if/why LL would or wouldn’t structure their L$ sales in a manner like this contribute nothing to the thread. Let’s just focus on whether or not this specific scenario would be good for the economy in general. I think it might have some promise.

Great idea, Shaun. It would be exciting to see them do this.

omg Shaun just a quick overview or your idea and i cant not find any fault in it. this would be a tremendous boost to the economy and prevent the linden from crashing like we have seen recently.

Great Idea

Here is the one big problem with this theory...

If LL accepted L$ for payment, they would have to sell L$ for USDs
on LindenX. Which makes Linden Labs susceptible to the currency decline.
And just think, do you as the Company President want to risk your firm's
health (what little there is) on the risk of requiring players buy your Linden
Dollars so you can pay the electric bill, employee salaries, etc?

It would be great from a user's point of view. But from King Philip's
throne, it would spell the end of Linden Labs. But it would be great to
see Linden Labs at the mercy of their own flawed economics.

Live and Learn...

LindeX constantly proves how much L$ it's able to turn over on a monthly basis. If I were in a position to be able to soak up most of the L$ in circulation, then it's definately a wager I'd give consideration to making. Plus, the industury would be forever changed. A virtual world company billing it's clients in it's own currency would really be breaking some new and interesting ground.

If the company running the game have no faith in the economy or the value of their currency (which, remember, they are the ones who decided it could be exchanged for US$ as part of the game, not some 'backdoor trading' on Ebay), then what hope would anyone else have for it? Remember that the economy is their biggest selling point, to the exclusion of pretty much everything else when it comes to advertising.

Lewis

Well Shaun, if things worked out perfectly and that is how LL ran it, then there could be some benefits. I've actually been pondering the same idea for the last day or two. However, I fear that the LL management has a history of questionable judgments. LL strikes me as a company full of excellent programmers, and questionable management. Not that I think I could manage it any better as it is full of intricate pitfalls... but that is why I'm a programmer and not a manager lol. In the end though, I doubt LL would be able to stake their future on the L$. It just doesn't appear to be stable enough for them to be able to do so.

I foresee in this system LL putting up for sale around 800mil per month at 250, and residents putting up, let's make a number... 100mil per month at 251. I just pulled these numbers from my head, they are just hypothetical.

Now... what if the total demand is around 820 million per month to pay tier and such? Residents will sell 100percent of their lindens almost immediately every time at 251, and be quite happy. But LL will have 80million unsold. After two months, 160million unsold... after 5 months 400million unsold.

LL has loan payments, salaries to pay, etc... they'd be making ten percent less in real US$ than they are now. If they plan for that, and sell at 275 while charging tier at a 250 rate maybe they'll be happy to just destroy ten percent of their currency so it doesn't build up. I imagine it could work... but this scenario needs to be part of the plan.

Lewis... I believe that Linden Labs doesn't trust the SL economy
enough to stake their own paychecks on. If they did, then it would
send a clear message the SL economy will be watched over with care.
But as long as the SL economy does not financially impact LL as a
real world corporation, then LL has no motivating factor to take care
of the SL economy. Sure, they might pay some lip service to minor
issues like sinks, dwell, etc.. But nothing that would impact the overall
current structure of money supply, stipends, land tier payments, etc...

Even though the L$ has been going down the tubes for almost 2/years,
LL has not implemented any policy changes to reverse the slide. Until
there is a crystal clear Cause/Effect that LL implements, in which they can
point to X="Policy Change" than yielded Y="Long Term Increased Valuation"
of the Linden Dollar, all we can only assume is that LL is not serious about
reversing the L$'s decline.

The highest valuation of the Linden Dollar was about L$170-L$175 back in
Aug/Sept of 2004. Since then, it has been a downward fall with only
brief periods of small upward gains.

To pedantically answer the question in the title of the thread - yes.

Your model seems one of the more obvious ways it could, and I'm sure there are others.

If you rephrase the question as "Will Linden Lab L$ Sales actually help us?" My answer is a big "I don't know." It depends on lots and lots of intangibles, including to my shock partial agreement with RDB - if they make good decisions then yes, bad ones then no. As yet we don't know what the policy and the drivers behind the choices will be, and from what Robin's and Phil's posts seem to be saying they don't know yet either - they're still considering their policies. I'd like to think that there will be a dialog about the choices for releasing L$ for sale, at least before the final decision is made. LL has a variable track record of this, but seems, mostly, to be doing it better over the last few months than before that time, so this time I won't hold my breath, but I will travel with hope.

The Company is already at the mercy of their economic policy.

Consider: I'm paying 826 USD a month in tier and I offset this by $L sales from customers.

It won't matter much if I get wiped out before the Company does - if one of us gets hurt, we both get hurt in short order.



What Shaun's idea seems to do is tie the $L to a more immediately stabilising influence in the economy - land tier. Less room for speculation, less room for panic.

Agreed, there are some details - such as if digital content sales someday dwarf land tier and we end up selling mostly between ourselves (admittedly unlikely).



As it is: the incredible power, and the incredible flaw in the Company vision is one and the same - empowering individuals.

A single individual can:

- build a business empire that makes them first life rich

- crash the grid in short order

- reserve spots in the land store to obstruct or bleed the constructive

- start a ponzi scheme and destroy faith in an entire economy when it fails

- extort 100 sims of land via creating ugly properties on 16m parcels

- bring in the Feds by using SL as a thinly veiled gambling platform


Shaun's idea with perhaps some tweaking can reduce some of that risk - it's worth exploring.

You know you love me Eloise...

Second Life Needs Commodities to get this economy running.
Without commodities, there are no price signals to regulate the
Hot/Cold economy. And without this self regulation factor, the
economy runs out of control.

Here are some ideas for SL Commodities:


a) Upload License Commodity. Forget the per upload fee.
Issue a finite number of upload licenses and then allow those
licenses to be traded on an exchange. Users who need to
upload pictures and the like, must have an upload license.
If they do not, they have to purchase one at the Second
Life Mercantile Exchange for whatever the going rate.

b) Maximum Prim Build License. (same as above)
c) Music/Video-Play-Land License. (same as above)
d) Max Number Per Month L$ Transaction License. (same as above)


What these commodities do for SL is they indirectly get
people to buy Linden Dollar denominated assets in SL. And that
creates a demand for Linden Dollars. You can't listen to your land-radio
if you don't 1st buy Linden Dollars to purchase a license.

This causes a rise in the Linden Dollar. Much like the real world,
where everybody on the planet needs to buy US Dollars in order to
purchase Barrels of Oil, since that is the currency they are trading in.


Cmon LL, do something drastic for a change. When that $11/million
runs out, you'll be wishing you could have done this... So draft up a
plan in the next Executive Meeting to tweek Second Life to have
commodities which force players to buy Linden Dollars...


The benefit

Wow those must've been good days to sell.

I'm so tired of the same junk on stipends being rehashed over and over and over. It's boring and repetative. This thread presents a sound alternative to screwing around with stipends. I've outlined here how LL selling L$ directly on LindeX can lead to a sound and sustainable economic policy in which all are able to prosper.

Let's talk about this instead of stipends. It's new an interesting.

Lets talk about how we can go about creating a 2nd currency
which is accepted in the game and its supply is tightly controlled
by a group of people. Creating value in the money supply and
having a trading site which pars the Linden Dollar with the
New Currency.

Vendors who accept the new currency need a widget which
processes transactions for goods purchased. Screw the Linden Dollar,
lets create a new SL currency.

This just won't work, for a number or reasons which should be obvious. With that in mind, there's no need to spin the thread. Let's just stay on topic instead. If you'd like to talk about that other thing, start your own thread and I'll visit it to discuss why it won't work.

so if your account was short on L$ you'd automatically be billed the USD amount at the exchange rate of 250L$/usd?

sounds good to me. doesn't change anything for residents tier wise but sounds like a big loser for LL.

personally i think they would do better marking that the rate at 2500L$/usd as they are currently moving towards.

What you are talking about sounds like just plain sinks; more ideas for how to implement sinks in the economy to drain the amount of L$ and increase its need (increase demand). I agree with Shaun in that land should be the biggest sink in the economy, since it would dwarf any losses due to licenses. Conversely, one can also balance this out by reducing the supply on the other end. Yours is a nice idea, but it's one of very many, and there will be way too many complains that it would now actually cost money to enjoy most of the game, PLUS it will bring back something very similar to the prim tax that used to exist in this game, where to bring each prim into existance would cost you $10l. That was fought against and was taken away, with it reducing testing, innovation, and creativity being the biggest argument against it.

It's not a sink, because the L$ never leaves circulation. LL bills you in L$ rather than USD, and then sells the L$ on the open market for USD. The theory behind this is that the tremendous amount of L$ they'd soak up through their billing activities would cause the rate to stabalize at whatever rate they've decided to sell their L$ for.

Oh, um, DOH. Didn't notice the part where he said "limited." I thought he was talking about Lindens selling these licenses, not establishing a few of them and causing people to go all Road Warrior, fighting for the limited supply of them.

Ooh you were quoting RBD! I thought you were responding to my post. Sorry. I should really read more closely.