Stipend Benefits VS. Costs

Stipend Benefits

1. People can receive : US$1.79/week worth of content if they are premium
US$.18/week worth of content if they are basic

This value is going down all the time.



2. Premium members get several things worth US$:Minimum value of being able to own 512 meter2 if the person owns over half a sim is US$18.28


This means a person is getting at the very least a US$120.28 / year value
for a cost of US$72.00-US$120.00/year.

If the person is business savvy, they can make a much larger value than US$120.28 from nothing more than a premium account. Also remember that the value these things are worth does not go down just because the stipend is used to buy things in Second Life. Those things would of cost US$ if the person didn't have a stipend.

3. New people are encouraged to stay as they are getting a great value. These people may be future customers of people who make money by selling $L on the currency exchange.

4. People who will only stay in Second Life if they get their US$.18 or US$1.79 per week do not leave Second Life.

5. Upswings are still possible as growth of new high spending customers can outweight the growth of the amount of $L in circulation.

6. The pressure for the $L going down causes volatility on the market allowing people who can change their prices fast to make greater amounts of money than the competition.

Stipend Costs:
1. Those who have earned, won, or been given money loose at least US$.18 worth of money per person every week, since the people are given at least that much money through Linden Labs instead of them.

2. Business becomes harder as time goes on, because of the money supply increasing faster than the population. Every month, on average, it takes more $L to pay the US$ fees it costs to run a business in SL.

3. There is constant pressure for the value of the $L to go down until the value of the Premium account equals the average amount payed by all premium members.

4. Confidence in the $L decreases as the value of the $L continues an overall decline.

5. People feel they are entitled to at least a free 18 cents a day. People also begin to feel that if they spend money on a premium, they should get things worth more than they paid for.

6. Volatility of the market makes it hard for anyone selling anything to find the most efficient price to set their goods at.

This is my personal view of the costs and benefits of the stipends. I'm looking for other people's views of the costs and benefits of the stipends, and I also am interested in hearing opposing opinions to my own ideas. I know I'm beating an old issue, but stipends are still an issue that we are going to have to face for possible elimination eventually. We may continue to have people clutch on to the stipends as if they were better things than they actually are if we don't sit down and look at what their actual costs and benefits are.

Uhhhh The Last I checked, it cost the Lindens NOTHING (That means Zero, Nada Zip 0.00) to make Linden dollars. All they do is go to the computer and punch in a number like 2000 and whoosh they have 2000 lindens. Cost absolutly nothing.

So, if the Lindens wanted, they could give US$225.00 Lifetimers 2000 lindens a week pay, Preminum members 1,500 lindens and basic membership 1000 lindens...

And it would be NO skin off the Lindens Back. It would cost nothing at all. The only labor involved is punching in the numbers into the computer.

No problems at all

I don't know, if this comment is meant as parody or you are playing devils advocate here, Magum. But just in case someone else is not getting your subtle signals, too:

You know, that it costs the goverment of the US (nearly) NOTHING, 0, (zero), nada to print new money?

(Coins have some worth in relationship to their "value", paper money or "electronic money" that only exists in accounts has no intrinsic value at all.) The days of the gold backing are long since gone.

And don't forget: it would make a lot of people (voters!) with no understanding of the economy incredibly happy - at first - to get a check for 10,000 US$ every week from the government. Still, not even the most populistic government in its right mind would do that. Why do you think, it does not?

Let me take the guesswork out of it: because it would be a very bad idea and exactly the same people who would applaud this move in the first time would be those who suffer most in the coming time of devaluation/inflation.

Of course you could argue that the basic fault is the convertability of the L$. "Lindens should never have allowed trading the L$ currency against other currency! No trading no worries about value!" ... Hmmm. But they did. And they did it with a purpose.

There are many virtual worlds where trading the inworld currency is not a big issue (although it always happens). These games are different. SL would be different without this feature, too. Maybe you would like it better. Maybe. But the fact remains, that the owners of this platform want another kind of system.

It doesn't cost the Lindens anything, but it costs their customers money. If Linden Labs cost their customers too much, they will most likely stop paying their teir and premium membership cost. This wouldn't effect their whole customer base, but when you consider that it looks like half of their land owners are out for a profit, it would effect enough that they would be hurt by real US$ loss in the end. (Note: I have no idea what the exact amount of ratio is between commercial and residential land owners. You can fly around and look yourself if you want to get an idea of how much money Linden Labs would lose if they made their currency worthless.)

Actually, they didn't. Someone else did and LL bought into the idea.

Yumi, I know of the many grudges some residents bear against LL because they "GOMed" GOM. But I was not talking about the implementation of a currency exchange (which was GOM), but about officially "allowing", even encouraging to trade the L$.

For a long time many companies maintaining MMORPGs and similar platforms explicitely forbid trading the inworld currency and prosecuted those who did. (Some still do.) Linden Lab did not do this. This was innovative and had a massive influence on the society of Second Life.

The "idea" of a currency exchange itself is not very innovative. And the trade of online games currencies is probably as old as online games with a currency - or only slighly younger.

Linden Lab did not forbid the exchange of US$ for L$, but they did not initiate it either. Just because they didn't stop it doesn't mean it was their idea

Except that the more stipend that LL gives out, the less people would need to convert RL cash into $L using Lindex, and the less commission LL would receive. So indirectly, it would have a cost attached.

It might cost nothing, but that doesn't mean that it would breing no troubles.

The economy has sources and sinks. Sources (stipends, bonuses, gifts, etc) are sources. The money just appears, BAM!
Sinks (upload fees, ratings fees, transaction fees, etc.) are sinks. Money just dissapears. It's important to understand that money exchange is neither a sink nor a source. Money is held in or paid by some alt account(s) designated for this purpose.
The balance in the economy depends alot on the relationship between these two entities. If everyone started recieving 10,000 Ls a week for free, you can probably expect seeing upload fees shoot up to 1000, ratings 250000, etc. The inwolrd price for objects would probably rise. At least for the new creations. Not to mention the oh so popular US$/L$ value...

I tend to - politely - disagree. An idea can come in so many forms. It can be an idea to do something (maybe something that no one else did), to do something different or to not do something (maybe something that everybody else does).

If you talked to the top execs of competing platforms 3 years ago, they would have all agrees that it is an idea, a crazy idea. Some might still believe it.

Not so simple. There are Linden sinks in the economy: every snapshot, every upload, costs L$10. Groups cost L$100. Reputation points cost L$25. On the other hand dwell provides a net increase, though a much smaller one per person. In any case there is, at the moment, a net increase in the number of Lindens in the economy at any given time.

A better way to deal with this would be to add more sinks to the economy. A "sales tax" of a few percent, taken straight out of large transactions and calculated weekly for small ones, wouldn't significantly discourage spending but would act to pull Lindens out of the economy, without discouraging your potential customers from playing.

A simple sales tax actually would be the easiest way to add an effective L$ sink to the SL economy without introducing absurd features like food or decaying goods.

Be very careful with such suggestions, Argent, if you love your (second) life. Most residents seem to get allergic reactions when they hear the word "tax", massive ones.

You are right, it isn't quite so simple as the few sinks we have take some money away too. I doubt people really spend as much on our few sinks to counterbalance the stipend. I know the difference between the value of my premium account and the cost to me is greater than what I spend on sinks. They are destroying some $L though.

I do think that some a sink source system should exist, but the more I think about it, the more I wonder if the stipend is a very good source to use. Many have brought up the point that you want to keep people here until they want to pay for Second Life.

I would be more in favor of a higher initial balance than a eternal print of money to be distributed to everyone. The stipends snow ball. If we just grew the population in initial balance, then the amount of money per person in the world not be changed that much from population growth alone. Keep a few sinks and the traffic bonus that can be changed as needed behind the scenes with no anger from residents to deal with the fluctuation Linden Labs wants to try to control.

The stipend doesn't change the amount of money per person, it changes the amount of growth of money per person. Every new person brings at least another 50$L per month of growth to the money supply. You don't want your money supply growing exponentially compared to the population. Sources and sinks are great, but stipends are eventually going to send things out of control, if they haven't already done so through the numbers we have from GOM.