Do we really owe GOM ? Inviting estimates of their "profit"

Ok, we've had what seems like months of debate about whether GOM are being ill treated or not, and pages and pages of forum postings.

We've had a statement from them that their entire profit from the start is only US$1200, which certainly attracts my sympathy. That wasn't quite the wording, but it was the effect.

Numbers like this are important for us to understand, with all these "morality" arguments around. We are passing substantial fees to GOM, if we are to understand the morality of our relationship with them, we need to understand what the numbers actually are, and in particular, that "$1200".

I doubt they will show us their accounts. But we can estimate broadly.

My next post here will be my personal attempt to do just this.

If other people see the value in attempting it, I hope they will join in the thread, improve my less-well-informed estimates, and give us some better end-numbers than I can come up with alone. Or give their own independent assessment. So we can try for a consensus at the end.

At the end, we will all have at least some idea whether we owe a huge debt of gratitude to these two for their selfless sacrifice of their time to our interests. Or whether they have been well-recompensed. Or somewhere in between.

If we get it badly wrong, they may even post the real figures to correct our errors.

I don't feel such a public calculation violates GOM avatar's privacy, or any TOS elements. Because the question of what they do or not deserve has been extensively debated here, including voluntary posting here by their avatars, directly on the question of their own generosity and resulting entitlement or otherwise. Including the surprising and sympathy-getting "US1200 claim".

So I feel this thread is both fair and justified, since so many here have tried to make others of us feel a sense of obligation. Without any knowledge of what GOM have been (and are) earning from us, we have no way whatever of evaluating these claims.

Personally, I don't believe in money compensation even if they have slogged endlessly for the common good without any thought of recompense. This is entirely based on my opinions about businesses facing up to their own risk - nothing to do with these two (possibly amazing) people. But that's another question, and many of you disagree. So lets see. I genuinely don't know what we will find. But I will find it interesting.

Estimating their income is easy, from the website. We will need an estimate of hosting costs, an estimate of hours spent per month. An estimate of a fair hourly rate of pay. and any other less obvious stuff.

Lets all convert every figure to a 30-day month. Remember , don't be obsessed with accuracy. Its getting in the right ball park that's important. I suggest for the first shot we exclude any ongoing development or improvement labor. Thats a choice of theirs, and many posters seem convinced they are coasting recently. Lets just look at the existing, operating business. Bringing in the cost of possible unsopecified future improvements will just muddy the water. How profitable is what they have working now, if it got no extra competition, and it just kept rolling along the same ? Not from the beginning. Just calculate on the basis of the last month. That's my question.

My calculation may take me some time. Feel free to go ahead without me. One of my kids might have a crisis, even

To fill in time while the estimators do their estimating ( I hope ) why not amuse yourselves by discussing whether it is immoral for me to suggest we attempt this in public?

I'm sure at least a few of you must feel it wrong for us to seek to know what people are earning from us. Even people who have already posted figures of their own, as part of complaints of ill treatment. Seems odd to me - but go for it..........

This information was ill-rembered from public statements by the pricipals of GOM. The claim was between the two of them, they made $1200 each. They didn't say whether it was USD or CAD, but I don't think the difference much matters. The point is that they were asked by LL to bring L$ to US$ exchange to SL and they did.

One of the factors that goes a long way toward why they are not rolling naked in piles of money is that they suffered paypal fraud to the order of $7000 (if memory serves). Rather than passing that loss onto their customers, they took the loss themselves.

Another way you could make a calculated guess is that LL has bandied about a annual profilt of US$160k (again from memory) most likely from a land broker. As no one can verify this number, let's assume it is an upper bound on profit or else LL would be using GOM as their example to get the money hungry salivating.

Are they owed anything? Who cares? Did they bring currency conversion to SL? Undisputably. Are they lying their asses off about how much they made? Who knows? Is it any of our business? No. Do you have any reason not to believe their statements? If you do, I don't care.

Are you beating a dead horse? Seems so. To what end? Can I ask how much your income from SL is? No, that would be farking rude. Drop it.

Ok, I've done my first estimate. The result is interesting.

My conclusion is that if they pay themselves US$25 per hour for each hour worked, whether Inworld or out of it, then their current operation is about breaking even.

Weird that it should come out like that. I didn't tweak it to do so. Just made each estimate independently, to see what would happen. Thats how it came out.

Is this what we expected ?
Does it justify the "only US$1200 from the very start". OK $2400.
If the owners are earning $25/hr should we call that profit, or not ?
If not, what would "profit" mean ?

I don't know. You must decide. And we do need the estimates improving, so please help.

In particular, rates of pay. Is US$25 good or bad in their likely situation? Please tell me.......... I just pulled that hourly rate figure out of the air.
What should it be, ie what would we feel it fair to pay them?

ALL the figures need improving.

Ok - Here come the details of the estimates and calculation:
__________________________________

First, my grasp on many elements here is weaker than I would like.
My first attempt is best seen as a possible framework, to ask other people to fill in the figures they know about.
__________________________________

Gross Income:
They have been recently averaging 2500 blocks traded per day.
Commission per block is between $US0.02 and 0.12.
Lets assume an average value of 0.05
Gives a gross income of US$125 per day, or US3750 per 30-day month.
Gross Income estimate US$3750 per month.

Comment: I suggest for now we ignore all the extra fees for extra services, with their associated costs. Look at them later if we feel they are significant. Perhaps we can assume GOM have calculated the extra charges to balance the extra costs, so this shouldn't mess things up much

Expenditure:

Website hosting.
Database size is tiny. Bandwidth is not large, being very low on graphics.

Need some quite clever back-up stuff. But the number of transactions per minute is very small, and probably you could have three independent machines each with a copy of the database, and receiving the transaction data in parallel. With cross checks between them and automatic fall back on discrepancies. Bandwidth is low enough, and acceptable response time long enough, for these three machines to be separately located for further safety. Communications with SL would be done by the lead machine. They might cycle which machine was leading.

Help me here, someone, you can see this is no longer my field. How much would this cost? Need it be this complicated ? Surely absolute max of US$750 per month ? More likely $300. ?

Website hosting estimate US$750 per month

In-World Costs

Tier for terminal land. How many? 200 terminals at 150 sq m each?
30,000 sq m ? Lets be generous and double it to a sim-worth.

Land Tier Costs Estimate US$200 per month .

Comment:
So far its $3750 - 750 - 200 = Net Income US2800 per month. With no labor costs deducted.

Immediately we ask what the "US$1200 profit from the beginning" statement meant. Obviously after charging for their labor. But if we don't know at what hourly rate this was charged, the "only $1200 profit" statement is totally empty of meaning.

So lets estimate labor. Lets assume these guys have no fun from SL, to them it's just one slog. so we need to pay them at RW rates, like we do the Lindens.


Labor Estimates, at real World Rates

I assume that all of these avatar account transfers are done automatically, by the website talking to scripted objects. So what time need be spent in world? Queries, complaints, terminal servicing. Lets guess 2 hours per day in-world ?

Now RW time. Talking to hosting company, remotely administering hosting computers, paypal query fielding. Another 2 hours per day ? Forget other money transfer effort than paypal, as its charged extra.

Total 4 hours per day.

Total Labor Hours Estimate 120 hours per month


Rate of pay
What else could they do ? What is their employability ? Students or finely tuned IT professionals ? Put it closer to "student in spare time" but boosted a bit ?

What, you tell me, $25/hr ? I have little idea. lets go with that for now.

Thats about 25x120 = $US3000. So
Total Labor Hours Cost Estimate US$3000 per month

So lets add it all up.

Gross Income estimate US$3750 per month.
less
Website hosting estimate US$750 per month
Land Tier Costs Estimate US$200 per month
Total Labor Hours Cost Estimate US$3000 per month at US$25/hr


Conclusion:

Roughly break-even. Is this what they mean by almost no profit month by month ? Paying themselves at $25/hour they about break even ?

How does this make us feel. Is paying them US$25/hour generous or mean? Should they be grateful, or should we ?

Further Questions:

My guesses are very crude, but they give us a starting point. Can more knowledgeable others please refine these figures ? Hosting. Work hours. Rate of pay. Is this what we expected ? Does it justify the "only US$1200 from the very start. Is the owners taking $25/hr not profit ?

I don't know. You must decide. And we do need the estimates improving, so please help.

Also, of course, its always possible I have made a silly calculating error in the above, rendering it nonsense. I'd be really grateful if someone would check.

So if one guy is left doing it alone, he is making US$36000 per annum on these very rough estimates, and working a 30hr week. Is he lucky, or are we ?

Are these hours too high, or do you think it takes less ? Is the rate of pay much higher?

Or the other way round ?

Was it worth all the development time they invested to create such a job for themselves ?

And of course - the BIG ONE. Having done all this, and earned all this, do we owe them compensation if competition, introduced for our benefit, reduces their earnings ? Because it is we, not LL, that would pay in the end.

These forums prove, Introvert, that at least a vociferous minority care very much. Perhaps, then, I am addressing them, not you.
I personally think we owe nothing to any business which faces increased competition for our wider benefit. Unless perhaps they were callously and flippantly given no warning of change when it would have been easy to do so, but even then I'm not sure. For me risk is at the heart of every business endeavour.
But I still find these estimates very interesting, since GOM has been the centre of such intense discussion for so long. Had you not noticed this?

You are forgetting many other factors. They have had fraud against them. The volume was no where near where it is now. They also had account in other games for a while, and I know that is not free. The fee structure is not what it has always been. All of these factors need to be taken into account before you assume what they make. I think they get more traffic then you think they do. I bet the cost of running the business is much more then you calculated. I know nothing, but why do you insist on rehashing what has been stated time and time again? Just because you believe something does not make it true. You know what they say about assuming things....

Interesting extra points you raise, Dnate - thank you. Its true it is beyond our estimating powers to reconstruct the whole financial history back to the beginning. I see that you may think that makes the exercise useless, but I do not. The question of whether thay are making money this month is limited, but I think it has relevance for those into the moral debate, and for the level of sympathy many people are willing to give them..

But you are right, if there was a $7000 loss which had to be covered by what is effectively a loan, then servicing/repaying that loan should be factored in as a charge against the business in the present. How long ago was this ? Could we estimate it ?

I personally dont think the result of any of these calculations has any bearing on the "compensation/morality issue". For me, its simple. If they are making enough money for them - keep going. If not enough - stop. If competition worsens, re-evaluate. Continually innovate as necessary.

But other people feel there is a big moral issue here, and have debated it at huge length. Largely (it seems to me) without the information they need to judge it. I just feel that the debate needs some numbers if it is to have any rationality. I am asking people to help me supply something more than what GOM themselves chose to supply. So that the debate can be more informed.

If you really think that it makes no difference if GOM are making $1M per day, or pouring out endless losses, then I agree with you. But many don't. They see them not as businessmen facing a bad fall of the dice they chose to gamble with, but as wronged martyrs.

Some numbers hre could offer some hope of an impartial perspective amongst all the emotion and disagreement.

And the "compensation issue" is significant, because potentially there is a queue of applicants in the wings.

Remember, GOM dished out the first number on their own profitability, not me. It influenced peoples feelings (as was probably meant), and it stimulated my interest and concern for more rational and informed debate on the issue. Hence my attempt here.

No other motive. I'm a bit obsessed with striving for rationality.

I think it is called obsessive interest in something that is none of your business.

Please post *your* Form-1040s for the past two years including all supporting documentation or shut the fuck up.

I have another way of estimating the commisions collected. Again this is from incomplete data. I don't have an opening date for GOM, but I've inferred from posts that they opened in the fall of 2003. So I'm going to assume they have been open for 2 years. If they have been open for two years with 2.64M$US traded and the .05 commision you have decided upon as an average, then they have made US$66,000 per year on average before expenses. I hate not having all the numbers to something, maybe someone can correct my numbers.

I think I may be one of the few people that loves number crunching as much as you.

Well actually the income of a company that you have money at stake in is not really considered not to be your business. We aren't investing in GOM, but our money is involved in a service they provide.

The income of an individual or company that you have no money invested or tied with is none of your business. The two aren't quite the same thing.

If you have doubts about whatever L$ you have put up for sale on any currency exchange or any other investment, then remove them. You don't have the data that you want because they choose not to disclose it. Such is the privilege of a private firm. If you find that you try to pull your L$ from a broker and are unable, that might be interesting and "newsworthy" but so far I've not seen any reports of that.

You can come up with hypothetical numbers all day, but to what end? Let's assume that GOM is raking in $100k/day profit: how does that affect your serivice? Would you then condem them for screwing you? If so, pull your sell orders and find another exchange.

If you make a divination that they are losing $100k/day, then see above about finding another exchange.

For that matter, why don't you try to fantasize about the net profit of Linden Lab (another private firm). Not only do they hold the "key" to your L$ wallet, they have your land and your inventory; moreover, you can't choose another custodian of your wallet, land, and inventory as you can with exchanges. What, LL won't give you their financials? Bummer.

In actual fact, Introvert, They are probably next on my list. I am a "stakeholder" there too.

GOM currently hold quite a chunk of my money, Introvert (in a different name). Do they hold any of yours ?

I don't really quite feel we're calmly discussing issues here, you and I. Do you feel we are ?

Grand ! Of course, $66,000 (kicking self).
We just need better estimates of hosting costs and likely hours spent and we are beginning to get somewhere. Anybody know how many terminals? Is a whole sim too much ? Mind you, that particular cost is down close to noise level really I guess.

Development costs are a tricky one which me might want to estimate later. But we can't fairly lay them all at the L$ door, as this was a multi-currency effort where the other currencies went belly-up. Hold on, was the $7000 fraud all with L$ ? And was there income from other currencies before they were closed down ?

I love this detective work.

I even sit on a bus or train and calculate the whole thing out in my head, trying to suss out the "business model". Estimate capital costs, seat occupancy, staffing levels, the lot. See if I can see why the prices are what they are. Passes the journey time beautifully.

I think every child should be taught this. Now you KNOW I'm crazy.

Come on. Dark - play guessing more ! Hosting costs ? We need someone who knows more about that, don't we ? I mean the multi-computer fault recovery back-up stuff.

Actually I do fantasize about what Linden Labs is making, but that is another story. I did not say I thought GOM was in danger, I said that it is my business what shape their company is in. I didn't say they have to give me the information I want when they are private. I said I don't like missing it. They have the choice to tell the numbers or not when they are private. If they don't, then it doesn't make me nosy to guess about a company I have a stake in. I'm not digging through their personal files. I'm crunching what numbers I do have.

I don't think GOM is screwing me, I actually think they are getting less than they could honestly. I don't think they are in danger until LL makes an exchange. I don't claim my estimates are based off of solid numbers. I'm just guessing about a company I have a stake in with the numbers I have.

Wow, alot of do's and don'ts in this post.

Well, Zeppi only contributes 1295 land to his group, this would be 1177 after the group bonus. That means the his contribution costs about US$15/month, which is US$180/year. The ATM's could be on other people's land that just want people to go to GOM when near their stuff for sale.

The Hosting costs is easy, they registered with the company Name Scout www.NameScout.com. I assume that with the high traffic that they see, that they are paying the high end rate of 119.45 / month which is US$1433.40 / year plus US$45.00 for the domain registry through this site. They state on their site that they list prices in USD.

As for labor, I would be suprised if they have been able to do customer service and site maintenance at 30 hours a week, ecspecially in the beginning, but since they have said in the past that it is part time, I'll go with the estimate of 30 hours a week. With 52 weeks in a year, that means they are making US$20/hr a peice if the two of them are the only ones taking the money. I think there was some mention of investors at one point, I might be wrong. If they have investors, then they could be making much less than US$20/hr a peice. At US$20/hr a piece, they are each making US$31,200 per year. That is actually a very low salary for a computer/business savvy person. If they are college educated and experienced, they should be making much more then that from a job.

And by the way, I'm the type of person that tries to teach two year olds what a hyper-cube is. My relatives hate me for their two year old knowing that there are eight cubes in a hyper-cube when they themselves don't even know what a hyper-cube is. People think I'm crazy too.

Well I am not goig to get into number crunching, but did they not say in their original public complaint letter that they were getting close to making enough for one of them to do this full time? I would also think alot of thie processes are automated so times per day now probably is not 4 hours a day.

It wouldn't be our busines and no one would even care but they keep putting their business in the streets and people are only going to speculate. The "we only made 1200, we do it for the people" but in the same breath "we will fuck anyone over if we don't get our way" was all brought on my them. They opened the flood gates and should be ready for the flood.

Kindly point out where "they keep putting their business in the streets" as a look at the last month's worth of posts by Ricky have talked about things like offering Katrina Support conversion commission-free, responses to queries about how GOM operates and their anti-fraud protection measures, and responses to incorrect assertions made about GOM by various people including yourself who has openly declared dislike for GOM for reasons unspecified (or that I'm too lazy to track down).

Please point out where where anyone said "we will fuck anyone over if we don't get our way" or that that they do it "for the people". The closest I've seen to your invective was that they started as hobbiests, were invited to trade L$ by Linden Lab, were never trying to do it as an altruistic act, but were also hoping to make a few bucks off of it (as do many hobbiests).

Indeed, I think this August 30 post How come no one's talking about GOM? is rather more indicative of the "they keep putting it in the streets" than any thing else the last month or more. And I should like to note Ricky's statement in that public stoningdisclaimer: no connection at all to GOM, I don't even use their service. but I do think that there's been a hell of a lot of kicking them around without cause and I find that more than a little nasty.

Can I have the link for that? Who is being quoted?

Errrm...The title of that thread was ironic, Introvert. Didn't you realise it meant the opposite ? At the time it was surrounded in the list by GOM threads.

Changing subject - I know the initiator doesn't own a thread, but I am not too happy with the direction it is beginning to head. Please don't anyone descend to personalities, unless in a deliberate attempt to get the thread closed or removed. Which would be underhand.

It seems to be happening because some feel these estimates are intrusive and wrong to attempt. Respecting these concerns, I address them thus:

GOM chose to open the topic for discussion by posting "profit" type figures in the context of justifying complaints of ill treatment.

That was an ok thing to do. Provided they don't mind us addressing the very same question, and examining it.

And certainly, GOM chose to take the whole "ill-treatment topic" squarely into the public domain, and that is where it squarely must remain, as I am sure that they accept.

But there is no need to paint them as villains. By all accounts they are a couple of really nice, well-intentioned, hard-working guys. As are many, many here without hope of any compensation at all. And I haven't seen GOM threaten anyone. So please, can we just keep this particular thread for number crunching and refining the guestimates. Attacks on anyone can easily go in another thread.

Boy its a good thing they don't have any telephones. Its a good thing they never have to buy or replace any computer equipment. Whew, so good that all software is free. They sure are lucky they never encounter any fraud. Boy are they glad they don't have to buy insurance. Its a good thing business bank accounts are free. So glad they are in Canada, where electricity is completely free.

If it weren't for all these lucky breaks they would not be so rich.

It is an attitude they have had for over a year. They play on the emotions of their customers and make thei private business dealings public in an effort to gain public sympathy.

I don't think so. A weekend separated it from the initial flurry of threads on the issue. (I'm not positive, but I think the original poster had been out of town for a few days.) As is common, a furor dwindles down to a "that is soooo last week" level of activity.