On the subject of a State vs Commerce Policy...

The issue of how LL should behave in current and future situations where 'community features' (such as the L$ exchange) has come up vociferously recently.
As suggested in the Town Hall meeting, this situation will come up again, and thus the issue of 'policy' in handling the balance between state and commerce arises. This is particularly fascinating because, while on the face of it, it seems to relate directly to the issues of big vs. small government in RL, nevertheless the fact that SL is a metaverse and people can opt out of that particular reality with rather less drastic consequences than in RL means that governmental decisions can have much more short-term effects. People can choose to 'vote with their feet' and opt out of a world (going elsewhere perhaps - like moving country), or simply giving up on the genre altogether. In RL we have politicians who might perhaps set out their differing views and policies in manifestos with a chance (at least) that differing policies can be measured by the popular vote, and at the very least, voting patterns and national cultural/political sensitivities provide a backdrop to what is possible and how soon change can be manifest.

I suspect that part of the problem with SL is that the period between a causal event and an effect is still relatively short. Add to this the need for LL to be mindful of the need to augment the world in order to compete on a technical basis with other online worlds, and you get a quite tricky balancing act for our benign autocrats, the Lindens. In general, though it seems highly desirable that if the 'government' choses to centralise access to some services or resources that have previously been developed and offered by residents, then behooves them to:
1) Offer an acceptable compensation for the 'nationalisation'
2) Develop a 'public-private' initiative that really allows the public service to integrate with the private ones (including newcomers)

The latter is probably the most healthy in the long run, although it may cost a little more in time (consultation, development of the software to facilitate the integration). I think that it's also the most sustainable in terms of continued confidence in the society and viability of commercial innovation.

In terms of the current controversy around existing currency exchanges and the proposed LL 'simple exchange', the argument goes something like this:
GOM/IGE et al: We innovated currency exchange and in doing do supported and enhanced the community. We offer a superior service and believe we still can and should be able to in the future. Undermining a viable SL business model is counter-productive to the goals of SL.
LL: ...but access to this service is still too complicated. We need something simpler, without bells and whistles (which you may continue to provide), but with greater accessibility/convenience for all SL residents

In seems to me (but what do I know), that LL should pay the cost of "not thinking of this sooner" (though by all accounts GOM was off the blocks pretty soon). Perhaps, they should build an interface that at least offers redirection to 'Full-service Exchanges', right there in the client UI where the user might go to make their currency transaction. Let any group who registers (maybe who are 'licensed' by LL) appear in the list of full service exchanges along with a description that lets these folks differentiate themselves to a user. That way, the services can advertise their key differentiators and hopefully even invent new value-add in the future as the new situation settles down. This approach would seem to at least have a go at what is probably the most striking aspect of LL encroaching on a resident developed _service_ : that of accessibility (they can simply eclipse the resident service that otherwise has to try hard to advertise and compete).

Into the future, one might imagine how a continuation of this sort of behaviour could help. There will always be stresses and strains as rules are changed and people have to realign/evolve, but in general the difference between LL taking over a service and some existing content is that the former is a continuum (with some unknown, but clearly very debatable net future value). Thus, although every situation would need individual consideration and discussion, if LL feels the need to offer a version of an existing service in the future (as opposed to just enhancing the world's firmament) they should consider how they can divide the requirement into a 'core' offering (like basic 3rd party insurance) and what can be left for others to add value (like fully comprehensive insurance). They should aim to promote the extra services alongside their new basic service whenever this is feasible - or at least until the community has had the time to readjust and be knowledgeable about the high-end alternatives without this assistance.

It would be interesting to see if LL still advertises the other exchanges. I myself would still buy from the exchange with the cheapest rate, and sell at the exchange with the most expensive rate. What makes me excited is the idea that more new people will learn about currency exchange quicker if LL makes an exchange. LL has already stated that they won't stop other exchanges from existing. Linden already advertises the other exchange sites, the only question is if they will continue. It is only speculation that other exchanges will disappear. We don't know yet who will have the cheapest service fee. We don't know if all exchanges will have trades at the same rates. We don't know if GOM trading will start allowing new things like short orders. We don't know alot of things. No coffin has been nailed shut yet.

They won't have to stop other exchanges...they will die on their own.

If any of the other exchanges sell on the linden site they will have added their % onto the sale in order to make money and then you will have to pay a fee to the lindens for using their system...this will cut out all middle men as residents will be buying and selling directly with other residents...the coffin may not be nailed shut yet but the viewing has already started and the coffin closes soon after.

As a simple fact GOM has a feature IGE doesn't have, and IGE has a feature GOM doesn't. I don't know anything about the other exchanges, so I won't incorrectly describe them. GOM has an inteface for trading that makes it easy for residents to trade directly with each other through the market they have set up. IGE has the ability to convert the currency from many other games and change them directly into Second Life currency. Both exchanges offer something the other does not without even bringing in the fact that at different times more money can be made on one of the sites depending on prices. Neither of these exchanges have put the other one out of business.

Just because there is another exchange with the feature of being integrated with SL does not automatically mean death for all competition. As long as the other sites continue to offer currency exchange in innovative ways they will survive. The only way LL could actually force these people out of business is to not allow them to trade, which LL has already stated that they will still allow 3rd parties to trade. If the other exchanges go out of business naturally, it is because Linden Labs made a currency exchange better than the existing ones. In other words LL won't be the one to put the others out of business, it will be residents who decide which exchange they want to use.

I thought LL had made it pretty clear that their system will retain links to the full-feature exchanges.

I see no reason why LL should be cheaper, just more convenient and simpler for the less sophisticated user. I like GOM, and suspect that I will keep on using it. It's elegance appeals to me.

At least - I hope I get the chance to keep on using it. The site is suddenly unreachable for the last hour, and they have over US$200 of my money. Feeling slightly worried.

I missed the fact that they will keep the links to the other sites. Thanks for pointing that out. LL doesn't have to be cheaper. My point is that if it isn't the other sites might survive just by charging less than LL in service fees. I'm only trying to say that the competition is not dead in the water. There will be things they can do to continue being an exchange that is used.