GOM Question re: LL Competition - Important Issue!

Based on the leaderboard, IGE has something like US$150,000 sitting in $L. IGE doesn't work like GOM. The $US85,000 or so sitting in Zeppi's account actually belongs to residents. Who does IGE's $L belong to? Who thinks its a good idea to sit on US$150,000 in $L? If LL monopolizes $L trading, wheregoes IGE?

If LL tries to own $L tading, then there will come a choice between paying out substantial US$ or letting the US$/L$ exchange rate go into the toilet. Hmmm. Wonder which way that choice would go.

I think there is more to this than meets the eye.

Buster

Why would IGE dump their L$ just to get revenge on Philip? They'd be moronic businessmen.

Besides. If they want to sell their L$ to me below market value, I'd be happy to pick it up.

"addressing the question of ways in which the company can monetize the immense time residents spend online."

I wonder what they mean by this - start charging us by the hour to be on SL?


The problem with this analogy is that in these cases, Microsoft, for instance, is competing with outside companies and outside developers.

Here we have the Lindens deciding to compete with their own subscribers, whom they encouraged to develop all this stuff and told them it would be their own. The "little guys" in this case are US.

And all those "functionalities they deem to be at the core of their business" - well, they should have deemed them so in the FIRST place, instead of telling the players to yeah, go ahead, make them yourself, it's your world.

What's next?

And yes, I agree with you that it makes for a wobbly platform to build your business on. In fact it's NO platform to build a business on.

In the case of GOM, seems to me like they got the players to build all that and make it run. Then they invited them in to discuss exactly how all that was done, as a sort of giant free consultation. And now they will do it themselves, and ruin GOM in the process. And the other companies now providing these services.

Maybe I got this all wrong, but that sure is what it looks like to me.

coco

Well, I've kicked this particular ball around with a few people and the general consensus is that, IF GOM's assertions weren't true, by now there would surely have been a robust denial by LL - which I haven't yet seen.

Having slept on it and given the situation some thought I still stick by my earlier comments about possible motivations being:

A desire to take more control of the economy

and

a touch of 'punish the bearer of bad news'

However, thinking about it, to some extent GOM may have bought this upon themselves...

Consider for a moment the new 'improved' GOM interface - I personally found it extremely confusing after the previous straight buy/sell approach. It appears to have been created expressly for the convenience of the 'day trader' segment of GOM users.

What GOM really needed was a clear and simple interface that showed nothing but the current best buy rate and volume available at that price, and a simple 'put what you want to spend in here' input field.

Then they needed to be able to accept cards directly without all that PrayPal faffing about.

By all means feature an 'Expert' button giving access to all the bells and whistles for traders, but a really simple and easy to use interface that any new user could instantly purchase L$ through was, and still is desperately needed.

However, GOM don't seem to be that worried about the small inexperienced buyer - until that is, LL threatens to take that segment of the market away...

In fact GOM looks as though it's not too interested in SL - other than as a source of a commodity (L$) on which it's system depends.
For instance, I recently offered terminal space in a developing project to GOM, Ginko, SLB and SLEX - guess who still hasn't installed a terminal? And it's not just me, others have had this happen too. It seems GOM just aren't terribly interested in building an in SL presence...

As a new user I bought my first L$ from IGE, at a fairly high price, because I, a) didn't know any better. b) was intimidated even by the old GOM interface. c) thought IGE's simple clear interface looked more professional and trustworthy - remember I was NEW...

Given the path GOM have chosen to go down on the new interface it's not completely surprising that LL, having stated pretty clearly they were interested in a simple 'one click' (really stupid term that, but I get their point) interface, have decided to go it alone.

Of course that in no way excuses the fashion in which they have conducted themselves. Sadly the tendency to do what the hell they want and damn the consequences is not entirely alien to them, so it's not really surprising... And I don't think people - the bulk of users who don't use the forums, don't run businesses in SL, aren't developers - are going to leave in droves when they realise what LL can and will do to people who have invested time and money in SL, because it won't affect them very much, if at all. Most won't even be aware of what has happened...

A few developers/business people/forum users will be dismayed, some may leave - but the negative effect on LL's bottom line will be negligible - especially if they can control the economy better by manipulating the exchange rate... So from LL's position it probably makes a lot of sense.
It also shows quite clearly that King Phil is not the warm concerned cuddly altruistic individual he likes to be portrayed as... Think Bill Gates - not Mother Teressa, if you must do business with LL!
Sure, SL is a pretty wonderful thing and King Phil is the guy behind it - but then Word is a pretty good word processor too...

At this point I'd say that, if GOM do want to pursue the market LL clearly have in mind, they need to seriously consider:

1. Adding a simple 'new user friendly', 'buy only' interface to their site, preferably as the default with an 'expert' option button pointing at the traders interface
   
2. Organising proper credit card transactions instead of the current PrayPal lashup
   
3. Integrating those facilities into their inworld ATMs
   
4. Flood SL with GOM ATMs
   

OK, long rambling post - sorry, couldn't condense my thoughts any better...

Excellent! points Buster.

If LL proceeds, they best be prepared to take IGE on head to head and, be certain they are (LL) financially secure enough to withstand other external unanticipated market consequences.

What, they think Sony and others are not watching this unfold?

Just watching this unfold from the sidelines, I can't form an opinion until action is shown by LL in regards to what their proposed plan is to implement a clickable purchase option from the client. As for the GOM pioneers, there has been risk all along, and this is a big one that could work to their disadvantage obviously.

I also think the typical forum regulars who tend to overanalyze, look for a "Linden conspiracy theory", and are waiting to expose some major plot to seize the world by LL need to sitback and wait until we have details from all related parties, including seeing LL's new features that could or could not replace markets created like GOM. I don't take this as a sign that all user content that works will be taken by LL.

I haven't seen anyone touch on this point: There have been so many threads about the Linden and it's "perceived vs. intrinsic" value. Perhaps this is a move to solidify the value of the in world currency. Could provide a stable value that actually benefits content creators, their IP rights, and give them the ability to place value on things that are stolen, resold w/o perms, etc. Also, this could be a necessary step to draw in more in world businesses that can support people without first life incomes. By integrating the transaction, it definitely defines value on our content.

Who suggested IGE would dump their L$ "for revenge"?

My question is: WHY are they holding them in the first place, and why would they continue to do so?

Business minded people are not soap opera characters. They make decisions based on cost/benefit. Change the odds, change the rules, change anything in fact, and they recalculate.

Buster

IF LLabs is indeed pulling these bullshit shenanigans, you're going to see a LOT of pissed off people, as well as a ton of developers throwing their arms up in the air, not wanting to develop for a company that will just copy and paste their hard work into their client without any due compensation.

You're also going to see a gigantic anti-monopoly/anti-shitty-behavior campaign in SL, educating the masses on the backhanded attitude of LLabs, courtesy of me.

Again, if this is true.

Considering the Lindens are being mum on the subject, and considering the GOM guys, I wouldn't doubt it.

*prepares the presses*

LF

Maybe we can get Hamlet to write a story on it?

Again, if this is true as has been presented by GOM, I'll also add my energy and efforts to a grass roots effort.


Possibly starting with identifying who the "beta-testers" are and making sure GOM is directly involved with the new client to certify that none of their code has been replicated.


_/_/

Seems to me GOM has plenty of media contacts!

All we know so far that allegedly LL is developing an in-house currency exchange to match buyers to sellers. If that's true I can understand why GOM is upset since it would be a direct competition... with that being said, if LL decided that the best thing for them to do was to add currency exchange to the service rather than depending on third parties (which doesn't seem unreasonable), how else are they going to do it besides set up a buyer/seller matching service? That's what a currency exchange is.

Sucks for GOM, no doubt... but calling it theft? Claiming a right to compensation? I can't go along with that no matter how highly I think of the folks at GOM. Even if this is true, it's not theft and it's not even underhanded. It's LL adding a feature to SL. Should they be hamstrung on adding features becaue it might compete with a resident business? If LL implements point to point teleports should the makers of ROAM be compensated? I add makeup to my skins for people for a fee because the SL feature set doesn't allow them to do it themselves. A change that will allow them to do that is already in the works. Should I be compensated because a portion of my buiness model is going to be rendered obsolete by a new LL feature? Get real. I feel for GOM but if it's true they need to just suck it up. Offer a superior service and people will still use it.

Good points to ponder, Doc, all of them. Helps me see the possible LL side of this.

As for the grass roots thing, count me in, too. Maybe that won't be necessary, though. Maybe LL will rethink the whole deal, and do something GOM (and other interested parties) consider more fair.

coco

Wow.. such wild speculations. Everyone always hopes for the worst. I'm starting to waste more time reading this ridiculous forum than playing the game, which is sad. But nonetheless, here are my contributions to it:

Don't think so small. There are loads of great ideas for ways that SL can monitize the system for all of us without charging a per minute fee. Making it easier to translate L to US is one of those ways. Another is to link RL products to SL and visa versa.. so that in world you could buy a RL purse which would come in the mail, and you'd get a matching SL purse for free with the transaction. That's a bigger way to think.

My guess (see i'm guilty of speculation too) is that LL probably intended to be in the L trading business all along. I for one would certainly love to be able to go to a LLabs 'bank' in world and make a transaction. I'd also trust it over a 3rd party process which really seems rather complicated. Right now I need to buy L but have been putting it off.

Yeah I guess once perspective is that they waited for GOM to beta test it and now their doing it, which screws GOM. But another perspective is that it is a fairly obvious idea and they would probably still be doing it now even if GOM never existed. I seriously doubt that LL broke their IP rules and are stealing code from GOM. That would be anti-trust. To make a user-friendly solution they would have written it a little deeper in the code and not in LSL.

Lbank was an obvious idea and is much needed. LL didn't need GOM's market tests. Also, keep in mind that this was a complicated real world business negotiation and there are always two sides to that. No matter what each of the parties says in a public forum like this, there's no telling how it all went down. Don't expect Phillip to jump and respond to every rumbling that happens in the public forums, no seasoned CEO is going to do that.

Honestly, I don't think that LL has a choice but to compete in banking because they have to maximize their bottom line. Without LL being profitable, SL could disappear completely and then all your $L would be totally worthless. There have been many great points brought up in this thread (and the other threads started by blaze) about why LL needs to control the market.

For one, just a few threads down people are complaining about the US value of the L. So how can LL do anything about that when they don't even have a stake in the exchange market? The GOM market is totally dependent on the buyer and seller's percieved value of $L. Also, as I've said before, any time a Leaderboard holder tries to offload a mass amount of $L, the US value will go down. It's simple supply and demand. People have been asking for a money sink, well if it costs like 5% of your transaction to sell $L, there's a healthy sink that actually can make LL a profit.

Also.. if they lock in the trade value at $4/1000L (plus fees). You no longer need a sink.

Who's to say that the GOM price and the LBank price won't be different, and therefore competitive. If the fee structure is different, GOM could still have a place in the market. Just because LL has a bank, doesn't mean you have to use it.

I imagine Sony is busy running their own extremely successful exchange and enjoying the profits from it.

I'm wondering if tools are being confused with content.

That said, I will withold further comment until I see what is actually going to happen. To do otherwise would be to add more speculation to a subject that is already fraught with it.

Reading back through time, I have come to realize that this was always the plan. I don't know why we didn't see it to start with. This comes from a town hall back in Oct 2004:

You: Salazar Jack: The idea of providing an inworld interface for exchanging Lindens and US dollars, or buying Lindens directly with our credit card has surfaced recently, any comments on that?
Philip Linden: That change is lower priority... clearly people have ways to do that now. Bug fixing most important.
Philip Linden: But long term, we figure there needs to be some ways to exchange currency better than creasting a new account at a website...
Philip Linden: but not feeling like we need to have that tommorow.
Philip Linden: folks in that thread get confused...
Philip Linden: we aren't talking about LL selling currency,
Philip Linden: but about whether we should figure some way to do what is done today straight from the UI
Philip Linden: and in a way that works for a newer user with less time and interest.
Oz Spade: Not like There? But more like GOM through the interface?
Philip Linden: Right, like GOM in the interface.

What Nolan's said has been on my mind since this started. I don't really consider GOM/SLBoutique/Snapzilla or any of the other websites related to SL content. They may contain SL related content, but they're more like tools. And Like blaze, I'm afraid that any useful tool that we create for SL has the potential to be absorbed/duplicated by Linden Labs.

This is the best piece of advice posted so far. All we really have at this point is the post by Jamie and some vague mentions of adding $L-$RL conversion in the future by Phillip. The truth is that we'll probably never really know exactly how the meetings went down between LL/GOM because it will be a case of he said-she said, and the only people that were there had a big stake in the outcome.

Normally, even when I disagree with you, I consider your points well-reasoned; here it seems as if you are intentionally and repeatedly missing the point. Have you read Zeppi's account of the interaction? It doesn't appear so.

The issue is not one of cutting a market segment out of existence as in your example of LL obsoleting your lucrative skin business. The issue is that LL asked GOM exactly how they were running their operation with a potential partnership in the offing, set an LL developer to work on duplicating that function and told GOM to take a hike. If one wanted to use your example in a more analogous manner, it would be like LL asking you to show their modellers how to make better skins and then using that information to generate their own skins and make them part of the default Library.

But in this case, anything that would make your customers be able to buy your wares even one click simpler would be a boon to you. Moreover, were LL to set the bid and ask rates for L$ it would likely shield your RL income from the vagaries of the free, open market currently available for L$.

It is okay to have a bias, even a protectionistic, self-serving one. And yes, I know, none of this has yet been enacted, and we're obviously not going to know until it is and given LL's historic lack of openness if they decide to not do it we'll never know. That doesn't invalidate that even the expressed intention to maybe do this was rather backhanded.

In response to Phillip L.'s thread:
Enabling a larger volume of Currency Exchange

I have posted the following message at:
Request of Phillip Linden

"Phillip - I would like you to make one more effort to come to an agreement with GOM. They were your choice from the beginning, and GOM is arguably a founding cornerstone of SL without which today's success would not be possible.

Before proceeding - show us a good faith effort and re-open the discussion with GOM.

Thank you for your serious consideration of my suggestion and I respectfully await your response.

Merwan"

I just read through this, including the thread started by Philip: /20/b5/59309/1.html

With an easy to use, fast and safe trading platform integrated with SL that allows everybody to buy and sell L$ directly, I can see absolutely no role whatsover left for IGE nor GOM in Second Life. There is no use for third party to play intermediary. This also applies to currency service at ANSHECHUNG.COM. It does not matter that Linden Lab itself will refrain from buying and selling L$. Unless LL charges really high fees the L$ service business is dead. Just wanted to make this 100% clear.

Oh come on Anshe, your analysis skills are better than that.

First, let's assume that Philip decides only to give 3 exchanges access to the market.

Ok, now if you want to sell your L$ .. where do you go? Philip has said, rightly so, that they will not buy L$.

So you have to go AC, GOM, or IGE.

Now, AC.. you might decide to use this as an opportunity to market your website better and not charge anyone anything for selling their L$. I'd be surprised if you did. GOM and IGE are unlikely to take that tact.

More likely what is going to happen is that you guys will form a cartel with the understanding that if you push it too hard, Philip will simply open the doors and let someone else in to bring the margin down.

What will be interesting is how they decide to order the sellers in the UI. Alphabetical? Hmmm.. Probably not! Hopefully it will be randomized and you will get 1/3 of the revenues.


In many ways, I think you are most likely to benefit in this scenario as you going from low market share to 33% market share.

*busy thinking Blaze might be right about that*

*gets confused again over economics*

coco

There is a very big flaw in Philips proposal.


What Philip is proposing in simple terms.
IGE posts to LL that they have 10 Million L$ for sale at $4 / 1000
Anshe posts that she has 2 million for sale at $4.15 / 1000
LindenLab put these prices in the system.
Noob Avatar wants to buy more L$ so he presses the 'buy L$' button in the SL interface.
It asks him how many he wishes to buy.
It shows him the best price from the "approved" suppliers.
The L$ is transfered, the supplier is paid direct by LL, Noob Avatars CC is charged direct by LL (including a transaction charge and commission)



The flaw? GOM is NOT a currency seller. GOM is a website. GOM does not set any prices and so GOM cannot 'post offers'. *edit* GOM does not own any L$ to offer for sale.

Flaw #2 The prices offered by IGE and AC already include cover for payment charges, you'd be paying twice.

Now that Philip has clarified the situation, I can't help but agree with Anshe and Merwan.

It may make perfect economic sense for LL, and allow me to sell my excess of L$ easily and quickly, but as a scripter that's not what I was waiting for at all. This is indeed GOM's functionality (or rather IGE's, if seller and buyer can't set prices) duplicated and integrated into the SL client, bypassing all-third party exchanges.

Is there even a way to automatically sync GOM's buy and sell orders into this new integrated L$ market ? Will I be able to sell land / tiers in RL currency entirely within SL ? If not, then that's not what I'm waiting for.