My Response to the Falling $L Value and If I Lose My Stipend

OK, I've been pondering this very fascinating and brilliant proposal for the past couple of days. Bear with me on this, now.

But before I start, I want to say that one thing that is important, for me, and probably for others, is the sense of fun. To make a gross oversimplification, games are fun; running a business isn't necesssarily fun. Now my running my business on this game is extremely fun for me! Yet I also feel these changes, and the direction SL is going in, tend to reduce the fun factor in a way.

How the plan would affect me personally:

Yes, it would reduce my fixed costs! What would happen is I would I would pay my tier, and never buy Lindens. (Just as I have never bought Lindens.) I would still have my income, and I would still buy some textures.

But due to psychological phenomena, I would buy fewer things from other people. I can't really articulate how this works, but the $500 a week has gone from being what I survive on to "extra" in a way. As in, "Well, go ahead and buy that texture bundle! You sold two houses and got stipend today!"

So I would become mingier with myself with my money. Because having to buy Lindens has, for me, from the beginning, been synonymous with "failure". Failure to play the game; failure to win the game.

When I first joined, I realized how impossible it was to make money, and how impossible it was to have a land and a business when you are just a basic member. So I made it my own game to beat LL at their own game, and amassed enough money, even as a basic, to own land from Nexus and Adam, and to start my own shop on rented property. Having "won" that game, I then went ahead and became premium. The $500 was a considerable inducement for me to become premium, along with the ability to own land.

Anyway, yes, I would be pleased to save money with this plan. But - I would overall probably spend less.

How the plan would affect LL:

If indeed they want to remove all the game from the game, and just make it a totally cold-blooded money thing, then this would be a sensible thing to do; I can see the reasoning in that. If they haven't thought of your plan yet, they should!

The only fly in the ointment is, as I've said before, there's a lot to be said for the steady income from premium accounts. I think maybe that $10 a month from the premium account holders amounts to more than you maybe think it does.

And of all things in LL, it is the most stable source of income for them. People think twice before dropping back to basic. (Not just because of their land, and their stipends, but just because it's psychologically difficult for various reasons that are more intuitive than I can easily articulate here - just that it IS a dropping down; a lesser commitment.)

Once hooked into premium, one gets hooked into land; and from there, hooked into additional tier. All that adds up to stability for LL. I would guess they aren't at the point yet where they would feel they could take a chance and part with all those relatively stable monthly premium fees.

How this plan would affect others:

I think, first, many of them would be like me, and just save their money. It works to content creators' and LL's benefit that people get the idea, since the buy-button is right there in the game, that they are buying Lindens from LL - not from other players.

Because I think a lot are like me: Hell, no, I'm not going to buy people's Lindens just so they can turn around and take them back from me when I buy their goods, and then sell them back to me or the next guy again!

Obviously, this kind of thinking works against me as a content creator. But I think it is understandable thinking.

And then - back to the fun factor I mentioned first - it's much less fun to buy money for what you want than to be given $500 to buy things with (even if you don't know who you are buying them from).

It's easier, and more fun, to think, "Oh, I will be getting $500 next week - or $50 - and I will be able to afford that new outfit then." Instead of thinking, "Well, do I want to spend three dollars and fifty cents for a bunch of pixels?"

So given that many people have that mindset (particularly about online games), we should see less purchasing. It will be the nickle-and-diming thing that was a major drawback of the online game There. There is a major psychological difference between paying for your premium account and stipend (your entertainment) and having to think of real dollars and cents with every pixel item you're considering buying.

I expect to see less purchasing just from this removal of the $50 stipend for new basics alone.

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Yes, I do think this plan would work. And I think this plan would be right up LL's alley! Probably something they hope to accomplish soon. (Though I don't expect much trade-off/compensation, if any, for loss of the stipend.)

But what will happen - not just with this plan, but with the way LL is going - will include, as I see it, the following things:

1. Reduction of the working middle class - those people, like me, who have small family businesses, as it were. Our customers will dwindle, due to the psychological factors listed above.

2. At the same time, no problem for the outside people who come in, with big names and big budgets, who aren't even interested in making a profit (and by profit, I don't necessarily mean whether or not people cash out). They can either offer their stuff free, or if they charge, will already have such a big name (think Coca-Cola) that people will think it is "right" for them to charge.

3. Reduction of home-grown entertainment. There seems almost to be a desire on the part of LL to quash this, given that they removed the stipend for events, removed dwell, removed D.I., and give people a hard time on the events calendar for yard sales. (Next up - give the clubs, sex events, tringo, etc., a hard time.)

Now why would they be doing this? Why discourage the home-grown entertainment? Well, you might as well ask, why discourage the home-grown businesses?

Because - those things are not LL's focus anymore. They have served their purpose and grown the world; and those of us involved in them are probably not going anywhere anyway at this point, because we are now invested in the game.

So, if they make things "all business" with "less fun," then that actually serves their current focus, which is to bring in outside businesses and prestigous academic institutions.

In fact, there is really no problem for LL if the Linden dollar becomes totally worthless, because those outside businesses and other concerns don't NEED the LL dollar.

In fact, allowing the Linden dollar to plummet just enables LL to call for more draconian "emergency" measures; measures they actually want to do anyway - like getting rid of stipends.

4. Fewer people owning land and paying tier; more people renting land from land barons.

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From my personal point of view, which is what you asked about, your plan seems fair to me. I would be able to choose what I want to pay my money for, as you mention, rather than just paying for and getting the (ever-more worthless) stipend whether I want it or not.

But the whole thing would be less "fun" for regular players. And I believe indigenous content creators (of both physical content and non-physical entertainment and services) will suffer from lower sales as these measures are put into place, regardless of how fair they are, or if they were as fair as your plan would be, in compensating for the loss.

coco

Actually, that has been proposed, Magnum. I remember somebody suggesting that when people are born into the world, they have to choose whether they want to be a content creator or not.

coco

Guys, don't forget that at this time, LL makes (I thought it was about $800US but it's actually closer to) $1,700US off of Lindex ALONE, A DAY, just off the %3.5 and $0.30 fees. That's more than 8,600 premium annual accounts, or more than 5,100 monthly accounts paid for a year. If stippends were cut, that would only lead to more $L being traded through Lindex, which means that these profits would go up. Yes, even if people leave SL, many more will still come, simply because you can't find the types of content, interraction, experiences, and freedom that you can find on SL. So, although I doubt stippends, especially for premium accounts, will be cut any time soon, claiming that the loss of premium payments would be a very heavy hit on LL's profits is perhaps a bit of an exageration.

We need to organize a Stipend Loving demonstration to go along with that Linden-burning one they are going to do at the Governor's mansion.

coco

LOL

Just to support what Cocoa is saying, I run a business small enough to see the daily variations. My best sales days since I've kept records: Tuesdays by some distance, followed by Saturday, then it reduces to no significant variation. About 1/4 of my income from that business comes on a Tuesday in fact. I'll lay odds that the bigger businesses see this too, although perhaps not as dramatically as I do, since they'll have more regular customers and new releases on various days too.

Occam's razor rather strongly suggests the reasons for this are that when people get stipends they go out shopping. I know that I tend to regard my stipend as fritter money now, but when I was first in SL I tended to regard it as essential so I could buy the next whatever it was. I would, and did, stare longingly at things until I could afford to buy them.

Cutting stipends may, indeed probably will, have the short term effect of reducing the exchange rate. The longer term impact on content providers is harder to determine, but if the content providers suddenly find their sales falling... well they'll cut back, close shops etc. the land barons will find a glut of land and so on. There aren't any simple answers of course, and the cut stipends brigade are probably right in the short term. Maybe that's all they want, screw the system 'til it screams and collapses, maximise profits now. Wasn't that called asset stripping? I thought it was an outmoded way of acting, but oh well.

"Maybe that's all they want, screw the system 'til it screams and collapses, maximise profits now."

May I repeat AGAIN: people relying on the L$50 stipend are not buying my L$400 products. They are not buying Dominus Shadows. They are not buying Luskwood Avatars. They are not buying KDC pony harnesses or LVS collars. All of which cost considerably more than L$50.

The people who buy these things are buying or earning Lindens to do so, and they will continue to do so as long as those people create the content that they enjoy.

Don't think for one second that people will stop wanting things just because they can't get them for free any more. They will buy Lindens to be able to get them, and they are buying Lindens...millions and millions of them a day.

If people don't want a product now that they can't get it for free, they can't want it very much, surely?

Musuko.

Coco thankyou for your thoughtful reply. Ironically you've caught me just as I've thrown my hands up in despair and sworn off posting in this forum for the time being, but this I will definitely reply to.

I actually agree with many of your observations. I very much see many sides of this whole discussion. I think there definitely is a psychological effect on spending habits as a result of stipends. I view my stipend pretty much as you have been - the amount of your SL income that you feel totally free to be frivolous with. In fact, for a long time, I have lived by the rule, that I would only spend my stipend on fun stuff. Money I've earnt, I approach entirely differently. The last few weeks I've cut loose and spent a packet, but generally, if I've earnt it it gets saved, pays tier, or gets reinvested (rez-foo!). I can totally relate to the perception of the stipend as fun money.

Many may well think twice about their spending if they had to buy all their Lindens. They are more directly aware of how much they're spending. I've never thought the idea of ditching the Linden and transacting directly in US$ was a good idea for this very reason. I don't think it exactly encourages spending to be reminded of exactly how much real money you're parting with every time you make a purchase. The stipend definitely counteracts this.

It also makes for an easily marketable package. 'Hey, an income comes with your membership' couldn't really not work well, especially if you only have so much you are able to or willing to spend on any one form of entertainment, and especially in your first few months of SL when you're finding your feet and deciding how much you want to put in. And it's definitely a 'nicer' way to buy your Lindens.

You're spot on when you say people tend to be loathe to drop premium, therefore it is a fairly stable revenue stream. It probably would feel like a drop, the name itself implies status - 'premium'.

If there is a change, many of the things you have brought up may well have an impact, some may be short term, while people adjust, and some may always be. Many of your points are how people tend to think about money and spending generally. I do think there is one huge counteracting force that shouldn't be ignored, however - that people in SL seem to love consuming. It's pure escapism for many, it's fun, and people just love buying new stuff here. They always want the latest thing as well. People want the latest hair, skins, clothes, they want new avis, new toys, all the time. And people are always making new, desirable innovative things in SL.

Whatever happens in the future, generally I believe that most people in SL absolutely love it it so many ways, and will be here come what may. There is nothing else quite like it, and that works strongly in LL's favour, as does people's overall passion for SL. The depth of feeling on the stipend issue pays testament to this. They may re-evaluate some things, time, money, but by and large they'll stay. And residents coming after any change will know no other way.

I'm not arguing that. Actually I'm in favour of stopping the L$50 stipends because I hope it will encourage either more buying on Lindex, more premiums or more content, or some combination. More premium members strikes me as good (even with the increased money supply from stipends) because it's more people with a stake in SL.

I suppose I didn't explicitly state it, but I'm a premium member and paying tier at the sim level and supporting Coco's contention that although I don't rely on my L$500 to pay my tier or similar, I do tend to spend the stipend, if it went I would change my shopping activities.

I was also pointing out that in my experience, with some hard data to back it up, it rather strongly appears that others shop when they get their stipends - I find it hard to believe that's all premium members, but you never know - if that behaviour is correctly analysed then killing all stipends will probably result in a loss of sales (maybe just for me, but I doubt it somehow). If that's true, taking a step to remove all stipends will probably lead to short term improvements in the exchange rate, but the longer term changes are rather more problematic to predict. I'm not saying you wouldn't prefer to make US$200 a month rather than US$190 a month for the next two years, or whatever numbers you want to put in. But would you rather make US$190 a month for the next two years, or US$210 a month for three months and then (potentially) US$50 a month for the next 21?

One consumers complaints here:


/108/e3/110154/1.html

In the case of community avatars and Gorean-type items, most people seem to buy them with money gotten from friends in the same communities who have a vested interest in new members joining. Often these friends are content creators or Premiums.



And this is where you are wrong. People are not born into SL with a desire for SL stuff. When they first rez, SL is a new kind of entertainment and/or creation platform that they are trying out and they don't yet care about the appearance or status or possessions of their av. Starting to care about that is the "addiction" which comes later

As the luskwood founder in charge of the vending, and maintenance of the machines, yer wrong.

We sell a significant portion of our avs to people who save up for several months, or use a combination of their saved up cash and help from other friends who are also on L$50 stipends

As to what socially that proves or disproves thats not for me to say, but don't attribute to us factually wrong information please.

People are actually saving their stipends for 18 weeks just to buy a 3 dollar avatar? o_O

While not working, living in their parents' basements, taking showers sporadically, and complaining about lack of significant-others while having terrible social skills. Obsessive, yes.
(We're talking about furry AVs, right?)

You summed it up quite well, sir. Wonder if anyone ever considered shutting down the Lindex completely. It seems all this craziness started with GOM (slightly) and accellerated with the Lindex. Perhaps getting rid of exchanges and LL setting an arbitrary rate on the linden (or selling to non-exchange type places like IGE) might stabilize things?

Friend of mine made the fire with flexprims, so not only is the texture animated, the fire sways in the wind and gives off light. Very nice.

Ooo pretty

yup, most get little hand outs here and there, the old camp chairs, event prizes, friends as well, but some do just stay the course and buy an av each time they can afford them...

overall i think currently in society there is just too hard a 'split' between the real world and 'a game'... people will work for 20 hours in 'the game' to earn what for them may very well be half an hours overtime RL...

*ALOT* of people right now do not ever want to spend a dime in SL that they did not 'get' in SL...

Is that sustainable as a meme? no its really not, could you imagine in the virtual universe of 2056, 50 years from now, someone saying 'pay $2.50 for a FAKE outfit? HA RIGHT!'

heck 50 years from now a significant portion of the worlds population may make their living from 'fake' jobs in 'fake' worlds... imagine someone in 1956 being told their grand-child would be able to take a computer out of their backpack, and talk to 20 people scattered all across the world, at the same time, in a 'virtual' world that did not actually exist... they would have laughed at you...

There is a slowly changing meme that RL and 'VR' are different worlds, I think starting really with SL, and probably many many more things to come, that is going to change.

What I don't understand about the "end stipends" argument is that everyone will lose out - including those shouting for it, both through reduced income from guests and reduced money for them to cash out.

The only possible way I can reason someone voluntarily taking a cut in income for themselves is because by doing so, it will give them an advantage in whatever way they are planning to try and take over the market to maximise their profit and screw everyone else.

Lewis

Oo i never thought of this I have to go try it.

There is no advantage to removing them but some people are only looking at that lindex which i think should be taken away thrown out the window because of the amount of money trading occuring. At first i liked the ideas of the banks etc starting up after looking at how crazed people are getting over a game currency i'm beginning to think it was a bad thing to introduce.

Feh, you're CRAZY! How can you carry around a 2 ton steel computer and a box of punch cards in a backpack, unless you were superman or something. And how do you talk to people all over the world with that? Snail-mail the cards? Haha, right. Feh says I.
(yeah, I've used one of those)


Cut stippends so my fake holes in my punch cards don't loose value!

Experimenting I used the following numbers:

Softness: 1.0
Gravity: 0.3
Drag: 1.5
wind: 1.0
Tension: 4.0
force x,y, and z: 0.0

They tend to stay upright, swaying with the wind. Beautiful suggestion, Maklin, thank you!

seconded. If no one gets stipends, every single person in SL who does not wish to 'purchase' L$ to buy items (in my estimation something between 2/3 to 3/4) will no longer be among people's customers.

What that will mean is 75% of your business will evaporate, so unless you think this kind of move is going to raise the L$ to 75 to the dollar, you are *SERIOUSLY* barking up the wrong tree.

There is work needed on the economy and on the current money flow through it, eliminating the majory of the SL population's propensity to spend stipends on cool stuff they like, is *CERTAINLY* not it

(and that number is one hard learned thruogh nearly 2 years of successfully vending what are considered some of SL's higher tier items. Take away people's stipends directly, and you don get a more stable economy, you just get a smaller one)

Has anyone considered that the Lindens are aware that taking away stipends will upset many current customers, but are thinking that long term, new customers won't have that expectation and won't care.

In other words, lose some customers today to make a change they deem beneficial in the long term.