Second Life Forums Archive - Currency devaluation and the marginalization of small business.

Paulismyname Bunin

Registered User

Join date: 29 Nov 2005

Posts: 243

04-28-2006 12:57

From: Carl Metropolitan

The Swiss Franc went off the gold standard in 2000.

http://tinyurl.com/rk8wr

I accept your point but in real life things are not always as straightforward as you think. There is a lot of gold in the country and regardless of the currency position the markets still perceive the franc to be gold based.

A similar example today might apply to British Airways, the market sees it as a pension fund who happen to own a few aircraft. Or in the past General Motors was seen as a bank who made cars as a sideline -

Argent Stonecutter

Emergency Mustelid

Join date: 20 Sep 2005

Posts: 20,263

04-28-2006 13:10

From: Tiger Clinton

When you sell an item, you are not just dealing with the marginal cost of production. The primary cost to you is the labor you spend producing the product. Just as in real life, Microsoft makes a lot of money per windows xp copy sold. But microsoft has to put up a lot of money upfront to develop the software.

I think you're reading the wrong message into what I wrote.

I didn't say "don't maximise your profits".

I said "don't worry about maximising your per-copy profit".

Think about it. Regardless of the exchange rate, you want to get the most Lindens for your effort as you can. If you can make L$10000 a month at L$100 a copy, or L$5000 a month at L$150 a copy because your neighbor's selling theirs for L$100 so you don't sell nearly as much, you're better off selling your product at L$100 than L$150.

If the Linden devalues from L$300/dollar to L$450/dollar, so that the US$ price is the same at L$150 a copy now as it was at L$100 a copy when you introduced the product... should you increase your prices to match?

Maybe, maybe not. If your neighbor continues to sell theirs for L$100, you'll be making the same US$ profit on each sale... but you'll be making less money in total because you'll only be making L$5000 instead of L$10000. You'd be better off leaving the price at L$100 and making the most money... because it doesn't cost you any more to sell more of the product.

And if you're changing the price anyway, maybe you should consider selling some versions for L$80 and see if you can pick up more sales from your neighbor to make up for the change in the exchange rate. Or maybe if you sold for L$60 most of your customers would buy two and you'd end up making L$120 from each, and take home L$12000.

The point is that the value of the Linden doesn't have any direct impact on what you should set your prices to make the most profit, because there's no cost to selling 1000 widgets instead of 100. If you had to buy prims with US$, now, that would be different... but with "free prims for content creators" you should always try and find the price that gives you the highest total sales regardless of the rate.

Argent Stonecutter

Emergency Mustelid

Join date: 20 Sep 2005

Posts: 20,263

04-28-2006 13:13

From: Tiger Clinton

In terms of banking in SL, it's almost non-existent. How can you have banks when there's no contract law. What's preventing the bank from taking your deposit and running away?

Nothing, which is why I never used GOM or Ginko or any of the other banks... but people do seem to trust 'em, and when I asked around it was like half teh people I asked had Lindens in one of the banks. So obviously there's something that works, for them at least.

Forseti Svarog

ESC

Join date: 2 Nov 2004

Posts: 1,730

04-28-2006 13:49

yumi, well i did simplify things a lot in my previous post so in response part 1 I would say that yes, if you spread the money around thin enough perhaps it would just circulate within the economy and no one would ever need to cash out, but I don't really think that scenario is realistic nor the kind of incentive structure SL needs to scale.

In terms of interest-bearing services, if a person wanted to get interest on a big chunk of money, why would they leave it in L$? Even if there were a few trustworthy services, it's going to be a long time before these services can compete with real-world investment structures such as mutual funds, bonds, equities etc etc etc in terms of the diversity and return vs security mix. So I'm unconvinced on the impact, but willing to be proven wrong lol.

i don't disagree that an interest-bearing service might be useful for small to mid size part-time SL businesses, where the "owner" doesn't really want to bother moving currency around and doesn't need or want the income in RL, but I have no read on how much "currency" this category applies to, so thus have no read on the impact it would really have on supply.

anyway, at issue here is not just managing the supply side, which a lot of threads focus on, but coming up with ways to educate/encourage demand side. of course, that's really tricky... market psychology is a factor and a chicken-and-egg problem between the creation and the purchase of high end content probably exists as well, but i'm hopeful that this will crack as the overall community grows, the underlying technology improves, big projects become more stable/possible, and more professionals take risks on doing something amazing.

_____________________

Argent Stonecutter

Emergency Mustelid

Join date: 20 Sep 2005

Posts: 20,263

04-28-2006 14:21

From: Forseti Svarog

at issue here is not just managing the supply side, which a lot of threads focus on, but coming up with ways to educate/encourage demand side.

More variety! I mean, there's just so many kudu someone can buy. One, really... how about some impala, okapi, springbok, blackbuck...

Carl Metropolitan

Registered User

Join date: 7 Jul 2005

Posts: 1,031

04-28-2006 16:34

From: Paulismyname Bunin

I accept your point but in real life things are not always as straightforward as you think. There is a lot of gold in the country and regardless of the currency position the markets still perceive the franc to be gold based.

Translation: Don't bother me with facts, I am waving my hands really fast.

Tiger Clinton

Registered User

Join date: 25 Apr 2006

Posts: 42

04-28-2006 17:23

Here's the conflict of interest that I talked about.

LL is a business and it's here to suck as much money from SL as possible, like a good business should. So everytime someone joins and pay for the premium service, that money goes directly to LL and in return LL gives you free L$. In effect, real USD leaves SL and worthless L$ is created.

LL as a business knows this is the right thing to do for it's shareholders, but LL as the custodian of SL knows it's not the best thing for SL and its inhabitants.

LL is cashing out of the SL and debasing L$ at an increasing rate. The more users join, the faster the debasing. If there's no will to change this, sooner or later L$ will collapse. The same thing happened to Roman empire a few thousand years ago, to brazil in 1997 and argentina in 2002. There are plenty of RL examples out there.

The problem for LL is that the success it's having in attracting new users to SL also leads it to its own downfall.

---Tiger

Shaun Altman

Fund Manager

Join date: 11 Dec 2004

Posts: 1,011

04-28-2006 19:07

From: Ashes Arizona

SL is a very interesting platform for online business.

The problem largely is the constant devaluation of the Linden Dollar.

The game, since August of last year, has gained close to 150,000 new accounts.

This would, in theory, create a larger demand for the Linden Dollar, and increase the value.

But because of the platforms open ended nature, the largest amount of Linden Dollar purchases focus on relatively few products.

Because of this, the largest amount of developers in the game are held solely and totally at the mercy of the major market developers in the game.

Monthly profits, for the average SL business, run in the range of 50 - 300USD. This is a good thing, it gives the developer some return for their efforts, allows them to maintain their tier. And puts money back into the economy on expenditures and expenses as well.

But the richest people in Second Life tend to work in high exposure, generalistic markets that don't deal with the genre specific limitations a specialist designer works in.

So whereas well over half the designers in SL are making 300USD a month or less, there are a few superstars in the development community that are making upwards of 5000 to 10000USD in a month.

Taking nothing away from them, or their success, it is unfortunate that my business, and the businesses of my friends are constantly and totally devalued by these big money developers as they constantly dump millions of Lindens on the market monthly for conversion at higher and higher rates.

Because of this....at the beginning of May..I have to raise my prices to match the rate of inflation. Which will also further limit my business...and continue to keep me from making a fair profit simply because there are a limited amount of people in the world with millions of Linden dollars to dump on the market constantly at ever increasing rates to ensure they move their money first.

Captialism is well and good, but the Linden market is completely unregulated. The Lindens must institute a system of regulation which drives the value of the Linden dollar in a realistic fashion. The constant inflation of the currency market by a small percentage of the developers does nothing but limit the ability of new developers to find a justification for their efforts.

The simple facts are that the Linden market requires regulation, and your sell value should be determined not by YOU, but by the amount of Linden you are selling on the market.

There must be a currency tier implemented, or by June of 2006 we'll see the Linden dollar at nearly 500L to 1USD. And that will force the small business/small developer out of the market entirely....or force the entire economy to regear its pricing in response to the level of inflation.

And a constant process of inflation and adaptation is not evidence of a growing economy. It is a provenance of a foundering economy and does not deliver honestly or realistically on the grandiose claims of "gold in them thar hills" that you read about in the nationally published articles that expose this simulation to the non-gaming public.

The previous are my opinions, not declarations of wisdom or telling anyone what to do. But as a small business developer myself, I am seriously feeling the pinch of the constant devaluation in the market. And my options to adjust to it are actually negative to a consistent growth of my business. A 100L increase to the prices of my products...to adjust to today's Linden market would hurt my sales more than it would help them.

So I'm simply stating, that either the Lindens must find a way to regulate the value of their currency...or the developers and speculators that are making the largest percentage of the capital in the game must start regulating themselves when it comes to converting Lindens back to cash...because the constant capping of the market at a new high rate with millions of Linden is an unending spiral and there is currently no way for the demand for Linden to actually match the constantly inflationary rate.

Something needs to be done. Raising our prices to stay afloat against a constantly inflating Linden dollar is not going to be a positive answer for the specialist developer.

If you are concerned that L$ is too cheap, buy every L$ below the price you'd like to see it at and hold indefinately. Maybe, over time, you will realize gains beyond this expense through better exchange rates. Probably not, though.

The point that I'm trying to make is that the Linden is simply overvalued in the imaginations of the populace. LL currently offers the best rate for L$. They'll sell you L$361 for $1.00 USD. ANY better exchange rate than that, which you're able to get on LindeX due to this flaw in popular thinking, should be considered a blessing.

_____________________

Regards,
Shaun Altman
Fund Manager
Metaverse Investment Fund

Tiger Clinton

Registered User

Join date: 25 Apr 2006

Posts: 42

04-28-2006 19:23

If LL is willing to set a cap on the amount of L$ in circulation, I am willing to come in and support L$. Other wise why would anyone want to? The growth of the SL depends on the speed at which L$ circulate not on the absolute amount of L$ outstanding. An SL economy with 1bil L$ circle 1x a year is the same as an SL economy with 100mil L$ circling 10x a year.

---Tiger.

Rael Riel

Registered User

Join date: 22 Apr 2006

Posts: 31

04-29-2006 06:30

Am I correct in stating that land monthly payments cannot come from L$ (I think that was quoted earlier). If LL allowed 1/2 of monthly payments to be L$, they could in effect take L$ out of circulation. Just a thought from a NewB.

Kyrah Abattoir

cruelty delight

Join date: 4 Jun 2004

Posts: 2,786

04-29-2006 06:55

the problem is simple:

LL want $$$ for the services they provide because its what they use to pay bills:
--membership
--private sims
--tier
--auctions

L$ is used for:
--inworld object/serv ice payments
--cashout

L$are created:
--when a resident subscribe
--in small quantities every week

L$ are destroyed by LInden Labs:
--uploading fees
--listing fees
--classified
--lindex transaction fees

basically Linden labs will make L$ paid servic es when the cost of this service for them is not significant (classified, listing upload), since the have to cover theyr spendings and make a profit, everything else will be paid in usd

what could help:
land reverted to governor is second hand land its actually a bonus for LL to auction it off in USD it SHOULD be auctioned in L$ since the initial costs are already paid.

the problem also is most of the sinks are on totally optional stuffs, i could easily make an account that never contribute to any sinks while get new printed L$ every week

we have two world that are fighting, the real world of Linden labs as a company, and the virtual world.

To have an ideal economy in sl we would need something like this:
You pay Linden Labs for accessing SL, and that's all you get (like any mmo)
You get a L$ pack at the beginning, or maybe the first months

ended, the Number of L$ inworld would depend of the amount of residents, a fixed money volume would ensure no problems of loss of value.

The problem is we haven't an economy dynamic enough to roll fully by itself (its like we produce always less energy than we absorb) it mean there is not a high enough incentive to buy.

Maybe SL isn't yet impressive enough for the casual resident to motivate him to exchange real money for play money

_____________________

tired of XStreetSL? try those!
apez http://tinyurl.com/yfm9d5b
metalife http://tinyurl.com/yzm3yvw
metaverse exchange http://tinyurl.com/yzh7j4a
slapt http://tinyurl.com/yfqah9u

Tiger Clinton

Registered User

Join date: 25 Apr 2006

Posts: 42

04-29-2006 07:02

Rael,

There's no way LL will let you do that. To LL, L$ has ZERO value. Why would they accept that! You can not report L$ as revenue in the real world and all the L$ in the SL is already recorded as revenue by LL.

---Tiger

Yumi Murakami

DoIt!AttachTheEarOfACat!

Join date: 27 Sep 2005

Posts: 6,860

04-29-2006 07:37

From: Forseti Svarog

yumi, well i did simplify things a lot in my previous post so in response part 1 I would say that yes, if you spread the money around thin enough perhaps it would just circulate within the economy and no one would ever need to cash out, but I don't really think that scenario is realistic nor the kind of incentive structure SL needs to scale.

Well, it doesn't have to be spread out so much that "no-one ever cashes out". It's just that the number of creators, and the extent to which they buy from each other, has a strong influence on the amount of L$ cashed out.

Kyrah - I think it's it's very wrong to say that "all you pay for when you subscribe to a traditional MMO is access to the servers". That's not true at all - the game designers in that case have adjusted, managed, and designed the game experience for you as a coherent whole. That doesn't happen in SL, and that is IMHO by far the biggest problem SL has appealing to "consumer" users. SL depends on its community, and it's a very good community, but even though the SL party is full of friendly people, when 1000 more strangers come in we can't guarantee that every single one of them individually is going to enjoy themselves. The greeters and mentors try their best and do a very good job but they can only go so far. We say "make your own enjoyment" but if they have to do that then they have stopped being a customer and become a creator. A traditional MMO game can guarantee enjoyment (of the type it offers) end-to-end because of the coherent, managed experience.

Argent Stonecutter

Emergency Mustelid

Join date: 20 Sep 2005

Posts: 20,263

04-29-2006 13:38

From: Shaun Altman

The point that I'm trying to make is that the Linden is simply overvalued in the imaginations of the populace. LL currently offers the best rate for L$. They'll sell you L$361 for $1.00 USD. ANY better exchange rate than that, which you're able to get on LindeX due to this flaw in popular thinking, should be considered a blessing.

That's a slight oversimplification. If you have a need for more than L$500 a week now but you don't have a good case for committing more than US$72 to Second Life over the long term, the Linden can be worth more than that rate to you right then. And in fact if the Linden was never worth more to anyone than that it wouldn't be worth anything on LindeX because the internal supply would satisfy the demand.

But, yes, over the long term, L$361/dollar is the "prime rate" for the Linden and where the market will tend toward.

Currency devaluation and the marginalization of small business.
Paulismyname Bunin Registered User Join date: 29 Nov 2005 Posts: 243	04-28-2006 12:57 From: Carl Metropolitan The Swiss Franc went off the gold standard in 2000. http://tinyurl.com/rk8wr I accept your point but in real life things are not always as straightforward as you think. There is a lot of gold in the country and regardless of the currency position the markets still perceive the franc to be gold based. A similar example today might apply to British Airways, the market sees it as a pension fund who happen to own a few aircraft. Or in the past General Motors was seen as a bank who made cars as a sideline -
Argent Stonecutter Emergency Mustelid Join date: 20 Sep 2005 Posts: 20,263	04-28-2006 13:10 From: Tiger Clinton When you sell an item, you are not just dealing with the marginal cost of production. The primary cost to you is the labor you spend producing the product. Just as in real life, Microsoft makes a lot of money per windows xp copy sold. But microsoft has to put up a lot of money upfront to develop the software. I think you're reading the wrong message into what I wrote. I didn't say "don't maximise your profits". I said "don't worry about maximising your per-copy profit". Think about it. Regardless of the exchange rate, you want to get the most Lindens for your effort as you can. If you can make L$10000 a month at L$100 a copy, or L$5000 a month at L$150 a copy because your neighbor's selling theirs for L$100 so you don't sell nearly as much, you're better off selling your product at L$100 than L$150. If the Linden devalues from L$300/dollar to L$450/dollar, so that the US$ price is the same at L$150 a copy now as it was at L$100 a copy when you introduced the product... should you increase your prices to match? Maybe, maybe not. If your neighbor continues to sell theirs for L$100, you'll be making the same US$ profit on each sale... but you'll be making less money in total because you'll only be making L$5000 instead of L$10000. You'd be better off leaving the price at L$100 and making the most money... because it doesn't cost you any more to sell more of the product. And if you're changing the price anyway, maybe you should consider selling some versions for L$80 and see if you can pick up more sales from your neighbor to make up for the change in the exchange rate. Or maybe if you sold for L$60 most of your customers would buy two and you'd end up making L$120 from each, and take home L$12000. The point is that the value of the Linden doesn't have any direct impact on what you should set your prices to make the most profit, because there's no cost to selling 1000 widgets instead of 100. If you had to buy prims with US$, now, that would be different... but with "free prims for content creators" you should always try and find the price that gives you the highest total sales regardless of the rate.
Argent Stonecutter Emergency Mustelid Join date: 20 Sep 2005 Posts: 20,263	04-28-2006 13:13 From: Tiger Clinton In terms of banking in SL, it's almost non-existent. How can you have banks when there's no contract law. What's preventing the bank from taking your deposit and running away? Nothing, which is why I never used GOM or Ginko or any of the other banks... but people do seem to trust 'em, and when I asked around it was like half teh people I asked had Lindens in one of the banks. So obviously there's something that works, for them at least.
Forseti Svarog ESC Join date: 2 Nov 2004 Posts: 1,730	04-28-2006 13:49 yumi, well i did simplify things a lot in my previous post so in response part 1 I would say that yes, if you spread the money around thin enough perhaps it would just circulate within the economy and no one would ever need to cash out, but I don't really think that scenario is realistic nor the kind of incentive structure SL needs to scale. In terms of interest-bearing services, if a person wanted to get interest on a big chunk of money, why would they leave it in L$? Even if there were a few trustworthy services, it's going to be a long time before these services can compete with real-world investment structures such as mutual funds, bonds, equities etc etc etc in terms of the diversity and return vs security mix. So I'm unconvinced on the impact, but willing to be proven wrong lol. i don't disagree that an interest-bearing service might be useful for small to mid size part-time SL businesses, where the "owner" doesn't really want to bother moving currency around and doesn't need or want the income in RL, but I have no read on how much "currency" this category applies to, so thus have no read on the impact it would really have on supply. anyway, at issue here is not just managing the supply side, which a lot of threads focus on, but coming up with ways to educate/encourage demand side. of course, that's really tricky... market psychology is a factor and a chicken-and-egg problem between the creation and the purchase of high end content probably exists as well, but i'm hopeful that this will crack as the overall community grows, the underlying technology improves, big projects become more stable/possible, and more professionals take risks on doing something amazing. _____________________
Argent Stonecutter Emergency Mustelid Join date: 20 Sep 2005 Posts: 20,263	04-28-2006 14:21 From: Forseti Svarog at issue here is not just managing the supply side, which a lot of threads focus on, but coming up with ways to educate/encourage demand side. More variety! I mean, there's just so many kudu someone can buy. One, really... how about some impala, okapi, springbok, blackbuck...
Carl Metropolitan Registered User Join date: 7 Jul 2005 Posts: 1,031	04-28-2006 16:34 From: Paulismyname Bunin I accept your point but in real life things are not always as straightforward as you think. There is a lot of gold in the country and regardless of the currency position the markets still perceive the franc to be gold based. Translation: Don't bother me with facts, I am waving my hands really fast.
Tiger Clinton Registered User Join date: 25 Apr 2006 Posts: 42	04-28-2006 17:23 Here's the conflict of interest that I talked about. LL is a business and it's here to suck as much money from SL as possible, like a good business should. So everytime someone joins and pay for the premium service, that money goes directly to LL and in return LL gives you free L$. In effect, real USD leaves SL and worthless L$ is created. LL as a business knows this is the right thing to do for it's shareholders, but LL as the custodian of SL knows it's not the best thing for SL and its inhabitants. LL is cashing out of the SL and debasing L$ at an increasing rate. The more users join, the faster the debasing. If there's no will to change this, sooner or later L$ will collapse. The same thing happened to Roman empire a few thousand years ago, to brazil in 1997 and argentina in 2002. There are plenty of RL examples out there. The problem for LL is that the success it's having in attracting new users to SL also leads it to its own downfall. ---Tiger
Shaun Altman Fund Manager Join date: 11 Dec 2004 Posts: 1,011	04-28-2006 19:07 From: Ashes Arizona SL is a very interesting platform for online business. The problem largely is the constant devaluation of the Linden Dollar. The game, since August of last year, has gained close to 150,000 new accounts. This would, in theory, create a larger demand for the Linden Dollar, and increase the value. But because of the platforms open ended nature, the largest amount of Linden Dollar purchases focus on relatively few products. Because of this, the largest amount of developers in the game are held solely and totally at the mercy of the major market developers in the game. Monthly profits, for the average SL business, run in the range of 50 - 300USD. This is a good thing, it gives the developer some return for their efforts, allows them to maintain their tier. And puts money back into the economy on expenditures and expenses as well. But the richest people in Second Life tend to work in high exposure, generalistic markets that don't deal with the genre specific limitations a specialist designer works in. So whereas well over half the designers in SL are making 300USD a month or less, there are a few superstars in the development community that are making upwards of 5000 to 10000USD in a month. Taking nothing away from them, or their success, it is unfortunate that my business, and the businesses of my friends are constantly and totally devalued by these big money developers as they constantly dump millions of Lindens on the market monthly for conversion at higher and higher rates. Because of this....at the beginning of May..I have to raise my prices to match the rate of inflation. Which will also further limit my business...and continue to keep me from making a fair profit simply because there are a limited amount of people in the world with millions of Linden dollars to dump on the market constantly at ever increasing rates to ensure they move their money first. Captialism is well and good, but the Linden market is completely unregulated. The Lindens must institute a system of regulation which drives the value of the Linden dollar in a realistic fashion. The constant inflation of the currency market by a small percentage of the developers does nothing but limit the ability of new developers to find a justification for their efforts. The simple facts are that the Linden market requires regulation, and your sell value should be determined not by YOU, but by the amount of Linden you are selling on the market. There must be a currency tier implemented, or by June of 2006 we'll see the Linden dollar at nearly 500L to 1USD. And that will force the small business/small developer out of the market entirely....or force the entire economy to regear its pricing in response to the level of inflation. And a constant process of inflation and adaptation is not evidence of a growing economy. It is a provenance of a foundering economy and does not deliver honestly or realistically on the grandiose claims of "gold in them thar hills" that you read about in the nationally published articles that expose this simulation to the non-gaming public. The previous are my opinions, not declarations of wisdom or telling anyone what to do. But as a small business developer myself, I am seriously feeling the pinch of the constant devaluation in the market. And my options to adjust to it are actually negative to a consistent growth of my business. A 100L increase to the prices of my products...to adjust to today's Linden market would hurt my sales more than it would help them. So I'm simply stating, that either the Lindens must find a way to regulate the value of their currency...or the developers and speculators that are making the largest percentage of the capital in the game must start regulating themselves when it comes to converting Lindens back to cash...because the constant capping of the market at a new high rate with millions of Linden is an unending spiral and there is currently no way for the demand for Linden to actually match the constantly inflationary rate. Something needs to be done. Raising our prices to stay afloat against a constantly inflating Linden dollar is not going to be a positive answer for the specialist developer. If you are concerned that L$ is too cheap, buy every L$ below the price you'd like to see it at and hold indefinately. Maybe, over time, you will realize gains beyond this expense through better exchange rates. Probably not, though. The point that I'm trying to make is that the Linden is simply overvalued in the imaginations of the populace. LL currently offers the best rate for L$. They'll sell you L$361 for $1.00 USD. ANY better exchange rate than that, which you're able to get on LindeX due to this flaw in popular thinking, should be considered a blessing. _____________________ Regards, Shaun Altman Fund Manager Metaverse Investment Fund
Tiger Clinton Registered User Join date: 25 Apr 2006 Posts: 42	04-28-2006 19:23 If LL is willing to set a cap on the amount of L$ in circulation, I am willing to come in and support L$. Other wise why would anyone want to? The growth of the SL depends on the speed at which L$ circulate not on the absolute amount of L$ outstanding. An SL economy with 1bil L$ circle 1x a year is the same as an SL economy with 100mil L$ circling 10x a year. ---Tiger.
Rael Riel Registered User Join date: 22 Apr 2006 Posts: 31	04-29-2006 06:30 Am I correct in stating that land monthly payments cannot come from L$ (I think that was quoted earlier). If LL allowed 1/2 of monthly payments to be L$, they could in effect take L$ out of circulation. Just a thought from a NewB.
Kyrah Abattoir cruelty delight Join date: 4 Jun 2004 Posts: 2,786	04-29-2006 06:55 the problem is simple: LL want $$$ for the services they provide because its what they use to pay bills: --membership --private sims --tier --auctions L$ is used for: --inworld object/serv ice payments --cashout L$are created: --when a resident subscribe --in small quantities every week L$ are destroyed by LInden Labs: --uploading fees --listing fees --classified --lindex transaction fees basically Linden labs will make L$ paid servic es when the cost of this service for them is not significant (classified, listing upload), since the have to cover theyr spendings and make a profit, everything else will be paid in usd what could help: land reverted to governor is second hand land its actually a bonus for LL to auction it off in USD it SHOULD be auctioned in L$ since the initial costs are already paid. the problem also is most of the sinks are on totally optional stuffs, i could easily make an account that never contribute to any sinks while get new printed L$ every week we have two world that are fighting, the real world of Linden labs as a company, and the virtual world. To have an ideal economy in sl we would need something like this: You pay Linden Labs for accessing SL, and that's all you get (like any mmo) You get a L$ pack at the beginning, or maybe the first months ended, the Number of L$ inworld would depend of the amount of residents, a fixed money volume would ensure no problems of loss of value. The problem is we haven't an economy dynamic enough to roll fully by itself (its like we produce always less energy than we absorb) it mean there is not a high enough incentive to buy. Maybe SL isn't yet impressive enough for the casual resident to motivate him to exchange real money for play money _____________________ tired of XStreetSL? try those! apez http://tinyurl.com/yfm9d5b metalife http://tinyurl.com/yzm3yvw metaverse exchange http://tinyurl.com/yzh7j4a slapt http://tinyurl.com/yfqah9u
Tiger Clinton Registered User Join date: 25 Apr 2006 Posts: 42	04-29-2006 07:02 Rael, There's no way LL will let you do that. To LL, L$ has ZERO value. Why would they accept that! You can not report L$ as revenue in the real world and all the L$ in the SL is already recorded as revenue by LL. ---Tiger
Yumi Murakami DoIt!AttachTheEarOfACat! Join date: 27 Sep 2005 Posts: 6,860	04-29-2006 07:37 From: Forseti Svarog yumi, well i did simplify things a lot in my previous post so in response part 1 I would say that yes, if you spread the money around thin enough perhaps it would just circulate within the economy and no one would ever need to cash out, but I don't really think that scenario is realistic nor the kind of incentive structure SL needs to scale. Well, it doesn't have to be spread out so much that "no-one ever cashes out". It's just that the number of creators, and the extent to which they buy from each other, has a strong influence on the amount of L$ cashed out. Kyrah - I think it's it's very wrong to say that "all you pay for when you subscribe to a traditional MMO is access to the servers". That's not true at all - the game designers in that case have adjusted, managed, and designed the game experience for you as a coherent whole. That doesn't happen in SL, and that is IMHO by far the biggest problem SL has appealing to "consumer" users. SL depends on its community, and it's a very good community, but even though the SL party is full of friendly people, when 1000 more strangers come in we can't guarantee that every single one of them individually is going to enjoy themselves. The greeters and mentors try their best and do a very good job but they can only go so far. We say "make your own enjoyment" but if they have to do that then they have stopped being a customer and become a creator. A traditional MMO game can guarantee enjoyment (of the type it offers) end-to-end because of the coherent, managed experience.
Argent Stonecutter Emergency Mustelid Join date: 20 Sep 2005 Posts: 20,263	04-29-2006 13:38 From: Shaun Altman The point that I'm trying to make is that the Linden is simply overvalued in the imaginations of the populace. LL currently offers the best rate for L$. They'll sell you L$361 for $1.00 USD. ANY better exchange rate than that, which you're able to get on LindeX due to this flaw in popular thinking, should be considered a blessing. That's a slight oversimplification. If you have a need for more than L$500 a week now but you don't have a good case for committing more than US$72 to Second Life over the long term, the Linden can be worth more than that rate to you right then. And in fact if the Linden was never worth more to anyone than that it wouldn't be worth anything on LindeX because the internal supply would satisfy the demand. But, yes, over the long term, L$361/dollar is the "prime rate" for the Linden and where the market will tend toward.

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Currency devaluation and the marginalization of small business.