Content Tax

This discussion must have come up before, but I couldn't find it anywhere on the forum. So here it is (again, or not). I dig Second Life. I love the endless possibilities of an open-ended 3D environment shared with tons of people. At the same time, I hate how SL charges creativity with its monthly fees and prim-limits. I understand why it's there, but as far as I can see, the only projects that can stay up in SL for an indefinate amount of time are those with a businessmodel. As a result, I don't think there's any place anywhere else on the web which dedicates as many CPU-cycles to the shared experience of porn, shopping and gambling as SL does. Although I have nothing against porn, shopping and/or gambling, my sentiment is that the balance is off: there's just too much of that and too little of anything else to do. As far as I can see, this translates directly to the failure of SL to gain traction with the public. I hear a lot of complaining by people who feel the 'buzz of possibility' when logged on in SL but simply don't know where to go. So, after a while, they just leave.

I think that in this world exclusively made up by user-generated content, it's essential that there's more focus on quality content. Be it prettier (and therefore costlier) projects or more interactivity without immediately having to whop out your wallet. I think it's essential for the growth and development of SL that these kinds of projects are coached and subsidized, instead of penalized by steep monthly fees. Giving people more things to do would benefit the SL-experience, consistute an increased growth-factor on the SL playerbase and therefore eventually benefit the entrepreneurs amongst us by introducing new potential customers to the game.

Of course quality doesn't come cheap. Sims are the virtual representation of machines that purr 24/7 to keep up the world of SL. Those things have to be maintained and cost money. So this quality content needs to be paid for.

Considering the long-term benefits of high quality content in SL, I'd be all for introducing a sales-tax on anything and everything sold in SL. Say, 2.5%. To share this effort towards quality content between users and LL, I'd suggest that LL doubles the monthly amount of L$ accumulated through this tax. The resulting budget would be reinvested in special projects for the general benefit of the SL community.

Has something like this been discussed before? Please pay attention: I'm not willing to go into the mechanics of how to spend this new budget! That's an entirely different thread and you're welcome to start it. Right now, I want to focus on the abstract notion of a tax to benefit content. Has this sort of idea been discussed before and, whether or not that's the case, what are your ideas about something like this?

approve.

yes it has

good luck

Your sales tax idea would only hurt content creators and consumers alike and aid in destabilizing the economy. If you want a special place, create it yourself, but why should everyone pay for it?

A sales tax would indeed hurt everyone if it was imposed without other costs being reduced.
The real question I think the thread starter is asking, however is :
"would it be a good idea for LL to make land cheaper and make up the difference via putting a tax on content sales?".

To answer this, we need to answer two more questions...
1) Would this have a net effect of encouraging content development?
2) If it does have this effect, would this effect be positive enough to outweigh the negative consequences (such as the lowering of the price of land possibly causing a big economic shift in terms of who owns land).

I disagree that imposing a tax is a good way to make it easier to motivate creating high quality content.

But you do have a point - sims/land are expensive.

Something I've always wondered - why haven't sim/tiering costs ever come down? Island costs/Tiering fees were calculated in 2003. Back then, a sim had to be supported by a single machine.

Now, for roughly the same hardware cost, a single machine now supports 4 full sims. Why is the island setup/tiering fee still the same? It goes to reason that if the monthly fees were lowered, it would be easier to create and support quality content

Probably because the prices were a loss leader in 2003. LL still isn't making a profit (by their own admission) even now; dropping hardware costs have just helped get them closer to breaking even.

So LL would charge a 2.5% tax on all content, in order to subsidize selected content. Is that what you mean? Tell me why this isn't just L$ redistribution based on someone's arbitrary standards, to the detriment of many and the benefit of a few.

If you don't have a sustainable business model and you don't have the means and/or inclination to fund your activities in SL by other means, why should everyone else foot the bill? Say I'm selling something for L$1000. I don't see why L$25 of that should be taken from me and given to Joe Schmoe who can't come up with a workable business plan. Let Joe Schmoe cough up his own money.

n.b.: If you believe there is too much gambling/shopping/porn and not enough of anything else to do, I suggest that you are not looking hard enough. Get connected with some social groups and you will rarely run out of things to do, unless you are a hermit. If you are a hermit, I don't know what to advise.

Your statement implies the existence of things other than porn, shopping and gambling on the internet. *looks confused*


I think the tax is a bad idea; it discourages money circulation and will just encourage other monentary systems that aren't taxed to spring up (Like the A$) that don't charge a tax on every transaction.

Next problem, the tax collected would be in Lindens.., which are useless to Linden lab. They can make as many of them as they need to if they want to sell them for money. There is a 3.5% "tax" on all USD transactions in SL, so I think LL is better off encouraging money to change hands so it collects in the pockets of content creators and they can get a 3.5% cut when it's sold back to consumers.

ahahahah don't worry they already have plans to do this:

it is called selling L$ on the lindex

with that, I'm sure they'll fund developer programs / etc.

Francis alot of the newer machines are being used to setup single sims on though. Alot of the older ones have a few sims on them and some of them have performance issues because of it =/. It kind of varies depending where it is. I think most private islands are in fact 1 machine unless they are linked directly in the surrounding area in which case you usually own it. Land fee's may be expensive but thats why ya make sure ya can afford it . If ya dont want a full island or cant afford one dont get it. There is reasoning behind everything in SL wether we realize it or not.

I'd rather them not just charge what costs are because development costs money and they have emloyee's to pay as well. I dont want to see a lapse really. And taxation really wont help anyone. LL takes a cut of the L > USD trade's which works out fine. Taxation on items really just blah. Doesnt work well in other games either really.

I don't see the connection between taxation and better content.

People who want to make better/innovative/prettier things are rewarded - by increases in sales as more people find and buy it.

They also are already 'taxed' - someone who wants to make a high quality clothing item has to upload more times than someone who says 'near enough is good enough'

Likewise for animators.

Someone scripting content has to invest more time in writing, testing, debugging.

Again, likewise for building.

Even without the issue of who decides what is worthwhile and what is not (who benefits from this 'tax') I don't see how this will magically equate into higher quality content.

If someone has a project that is worthwhile, they will find a way to have it supported. If something truely NEEDS subsidizing, and the community thinks it is worth it - it will be subsidized.

I mean think about it - if something was that amazingly important to keep, people would throw down some L$ to keep it around. If the community itself doesn't think its important enough to take action to preserve, why should it be forced to?

If something fades away (and SL is amazingly transient) - then maybe that was meant to happen.

If people take the time to be truely innovative and progressive, and strive to make better and better quality content - they will reap the rewards.

SL already collects huge tax revenues...

1. Land Tier Fees = Property Taxes

2. Upload Fees on Content Creation = Value Added Tax (VAT)

I agree with the position that SL is a user content created world. You choose where you live, what you buy, build and create.

There are hundreds of private developers in SL spending $L's everyday to create high quality content. Granted, there are also residents spending $L's everyday to create 'not so high quality content". But, that is their right to do so, regardless of creative abilities and tastes.

I support keeping the $L's circulating inworld versus creating just another sink hole for LL to siphon $L's out of the economy and stifle creativity by laying on addtional costs to the content creators... the "Tax" paying residents.

Hopefully, after the OP has been in SL for longer than a few days, they will begin to understand the SL model better. If the OP is a newly created Alt and trolling..... reel me in, you hooked a big one.

Well, no, I wouldn't say that at all - often, innovative and boundary-stretching content has no sale potential at all, or very little, and while it can help raise the profile of the creator if they have other things to sell the rewards don't justify the time spent purely in economic terms. Thankfully people who make such things are not usually motivated by commercial interests, and the outlay is not actually that great - even the tier for a sim, compared to the costs of other serious hobbies, is bearable.

On a more general point, the idea of tax on transactions has been raised many times before but usually falls down on the implementation. You would have to tax every instance of anyone ever giving money to anyone else for any reason, and that is the sort of measure that ends up with tea in harbours or tear gas on the streets, or their virtual equivalents.

I disagree - walking the road less travelled can be be very rewarding both personally and economically.

I've also seen people motivated both artistcally and economically. Although I'm motivated by 'what's fun', it is no less or more powerful that of people motivated by profit.

Motivation is only 'what gets you going' - it is the means that works towards the ends of creation. And I don't think the creative process is tied that closely to the motivation - it is entirely seperate.

Hmm.

While I admire the concept and agree that yes, a business model is pretty much mandatory to have anything survive in here, this is what will happen:

1) Everything will sell for $L 1

2) Everyone will take paypal instead

3) Access to buying things for $L 1 will be controlled by web servers, when the paypal payment is processed.


Essentially, it would allow SLExchange and SLBoutique style businesses to get everyone around the tax.

Well, that's not what I am saying - it *can* be profitable to be innovative, and motivation is motivation wherever it comes from. There are plenty of examples of that around in all worlds.

What I am disagreeing with is really the converse to that, that innovation and creativity and general goodness *will* be rewarded. That just isn't true. They might be, they might not; the market is not based on the idea of favouring innovation or creativity, and in many cases favours conservatism.

Yes, quite, whenever we have the freedom to communicate we will get round tax, and LL doesn't have the ability to investigate people for tax fraud and lock them up for it. Either you completely kill that freedom (and also kill a whole load of other things, and likely SL itself) or you have to find some other sort of currency sink.

Who said anything about goodness and niceness? I don't see that mentioned anywhere.

I know what you're saying - I just don't agree with it, my personal experience has been the opposite.

creating a better quality product did lead to increased sales.

making new and innovative content has not only done the same thing, but also assures you the position of the 'go to guy' for something noone else has provided.

So uhmm. In a nutshell, everyone pays the tax and then LL decides who gets (part) of this collected money as subsidy, for creation of 'interesting content'.

Wasn't there enough drama around the recent SL View program picks to show just how well this sort of approach works out? >>;

Creating a better quality product doesn't always mean that it's actually innovative, though that's one potential method. It could in fact mean making it more like the mainstream, so that people don't find it so weird. The RL music industry is probably the examplar there. Innovators have to fight to survive, and if they're lucky they'll get money out of it - more likely someone will bastardise their sound to make something more commercially successful and all they'll get is a few mentions in the history of music as "inspirational".

Being a proven innovator may well lead to more inquiries regarding producing other products, as one has shown that one is capable of being adaptable and creative, but that's not what the original point was - creating something new and interesting and so on in itself does not (necessarily) lead to financial reward. One can capitalise on that, sure. But that's a separate process.

Great point Francis. For example:

March 9, 2006
IBM on Thursday said it was adding more systems, including AMD-based servers, to its Express portfolio and cutting prices in the Americas by up to 6 percent on some servers to be more competitive against Dell and other rivals.

February 10, 2006
Sun Cuts Prices Of Galaxy Servers
One typical midtier 4200 model, loaded with two 2.8GHz CPUs, now carries a list price of $5,795, down from $9,235 at launch. Lovell said the cost of add-on components such as memory also has been reduced.

Server Pipeline, May 08 2006
Dell lowered its guidance for its first fiscal quarter Monday as the build-to-order PC maker struggles with pricing issues and competition in the server arena from AMD-based systems.

Server Pipeline, February 14 2006
IBM is knocking 50 percent off select middleware sold with its quad-core pSeries servers in an effort to bring price parity to its multicore server offerings.


June 07, 2006
Dell's new servers will increase performance by 150% or better over existing Dell severs, and reduce power consumption by 25%, he says. "That is not all driven by Intel's new designs, but by a lot of effort Dell has put behind these platforms to look at them holistically," he says. That has included new fans and power supply designs, as well as improved management capabilities.
Dell is introducing the PowerEdge 1950, 2900, and 2950 servers, which are all available immediately, and the 1955 blade server, which will be available in July. The 1950, 2900, and 2950 are priced starting at $1,749, $1,749, and $1,849 respectively. Pricing for the 1955 will be announced when the system is available. Hand says the 1955 will be compliant with Dell's existing blade server chassis, allowing for direct replacement or a mix-and-match of blades.


The last time I remember a server cost figure from LL, it was when they were justifying the price increases for island estate set-up and monthly server maintenance fees. Plus, I am certain the above prices from Dell are 'retail'....and negotiable based on the customer's quality, and quantity of an order.


Sure wish Linden Research, Inc. /would/ go public. Then we would have access to the Prospectus', 10Q's, 10K's and other corporate matters.

"Something I've always wondered - why haven't sim/tiering costs ever come down?"

Because maybe Lindenlabs aren't in the black yet? They are a young company, after all.

Musuko.

Of course I realize that if there is any place that this suggestion would raise objections, it would be this forum. After all, of all the boards, this is where the stakeholders in de current economy reside. However, I'm a little amazed in how dominant the current businessmodels and the value of the L$ have become in defining the world of SL. It wouldn't be hard to reach the conclusion it's the lauded economy of SL that's keeping it from reaching its potential.

The original post adressed a problem: the quality of virtual entertainment (yes, games) is surpassing the content offered by SL in an amazing pace. Graphics, storylines and depth: in these days of the XBox 360 and PS3, these things are measured along a very different scale than they were three years ago. SL is lagging behind and needs to catch up to keep its appeal to prospective players. Or it can fold, cater to a number of established regulars and see its active number of players dwindle to a handful in time.

The L$ is directly linked to the entertainment value of SL. If the majority of the current players decides to leave SL, there's not much of a market left. In the same reign, if SL becomes (even) more fun, more people will start to play and the value of the L$ will rise. The issue laid out before you is that currently, a lot can still be done to improve the entertainment value of SL. This is not only something which would clearly benefit all, but very much a necessity to stay a player in the billion-dollar arms race that is the games industry. However, exactly because of the individualist economy of SL, you would need new mechanics to make the whole of SL more fun. Innovation is not something you can leave to a few individuals. This has been tried and proven not to work. The major reason for this is the extreme cost of maintaining a low-returns project, but this detail is actually not very relevant in underlining the fact laid out in the original post: we have ourselves a problem.

The suggested solution was to siphon a minor amount of the daily cashflow and put it back into innovating content. I recognise that this particular mechanic may not be the exact answer to the problem. But the problem of SL having too little competing content is there and it needs solving. Very little of what I have seen in the replies have actually adressed this problem. Instead, we're immediately talking about tax evasion, unfair competition and baby hermits. So maybe I inserted my original point from the wrong angle and need to rephrase: Does SL need to update its quality of content to 'keep up'?

Three years into the business plan and not showing a bottom line? Particularly in this fast paced and unforgiving industry sector.

Plus, the venture capital investors will demand profits and 'return on cash' in the short term. A 4-year return on cash goal is not uncommon. So, 1 more year on the orginal VC infusion. And 2 more years on the most recent infusion.

My guess is that LL needs to get the overhead down, particularly in the area of fixed costs. While at the same time continue to take every cost opportunity, especially on hardware, licensing fees and staffing.

Huge downward pressures on pricing in the server market, plus an analysis of staffing levels is always a very good exercise in identifying cost opportunities.

All of which falls to the bottom line. Well, unless you spend the savings elsewhere.....

This is not a worthwhile question, because there is no such coherent entity as "SL".