Economy Announcement: Removal of Traffic Incentives

The past several months have seen a gradual decline in the value of the Linden dollar on the LindeX currency exchange. Most recently, the Linden Dollar has dropped in value by approximately 11% since mid-February. In response to this decline, and in keeping with our desire to maintain a stable currency exchange rate, Linden Lab has decided to discontinue the payment of traffic incentives to parcel owners. For the most recent month of March 2006, these traffic incentives totalled $4.7M Linden Dollars. Removing these incentives will reduce the amount of new money being created and should be expected to have a stabilizing effect on the value of the Linden Dollar. Following this change, we will continue to watch the economy and make further changes as needed.

We will also be posting a number of different economic statistics in the forums, for those who wish to follow the Second Life economy in more detail. Additionally, Robin Linden will be following up with detailed information and schedule about the traffic incentives.

The overall growth of the Second Life economy continues to be very strong: For the first quarter of 2006, user-to-user transactions in Second Life totalled $4.17B Linden Dollars, an increase of 68% over Q4 2005. Currency purchases on the Lindex for Q1 2006 totalled $743M Linden Dollars, meaning approximately US $2.6 million dollars traded at average exchange rates.

Cool. And yeah, bring on the stats. And thanks for dropping in!

Moderators: I double triple dare you to move this to Notices and Well Wishes

More like move it to the general discussion forum. That would be a first!

Wow, bye-bye camping chairs!

So, how overall would this affect the grid and premium ownership? I'd imagine there would be a lot of reductions in tiers and maybe a few outright down grades to basic accounts, at least at first. Then it should stablize, correct?

Philip, I love you <3
Pity that it took so long to get rid of it. We all told you it was a bad idea in the first place
Bring back the voting stations, LOL.

Good call, well done. Will we still have traffic calculation, just not the dwell payments?

While it certainly is agood sign that the decline of the L$ finally got the attention of our "head of state" - enough attention to warrant some change in basic economic parameters - the measurements taken seem to be very carefully applied. But this is probably a good thing. You don't brutally change basic macroecoomic parameters if you want the economy to thrive.

Still, I wonder what the result will be from reducing the influx of fresh money by 4.7 Million L$ per month, when the total influx by stipends can be estimated to 40 Million L$ per month or more.

It feels good to hear the following words, thoughThis restores some faith into the management of Second Lifes economy.

It was not a bad idea to begin with. It just needed a limited duration in order to be effective as an incentive program. Ending dwell payments at this point is good; LL realizing that future incentive programs need to be bound by predefined time frames is far better.

well here comes the box office . Attention all residents be prepared to pay for your club going and live music etc from now on! First the DI now Dwell Event producers cant and wont be able to just pay for all of your fun with no recompence. Sooooo in short this is a god thing you will all have to buy or at least spend more L to pay for your fun now and maybe the event producers can actually earn a buck or linden as the case may be. Plus events will have to get better to earn your L

Yaaaaaay Phillip!!!

Of course it was a bad idea. Dwell came to replace voting stations as a measure of content popularity. It was gamed before it even began - handing out free money started in the Lindenworld theme park, at the Omega Games casino.

Don't argue with me; I can type faster than you.

This is good news for the productive segments of the economy and bad news for people who like to spend out of their own pocket to make their boring clubs and malls look popular. They can't get a bit of that money back again.

Don't argue with me; I can type faster than you. Dwell was poorly implemented in the fact that it was set up as a perpetual welfarish program rather than a timed incentive plan. But I can't accept that it was a bad idea to implement it for a while to try and foster a bit of inspirational building and advertising on our part.

It was never going to effectively report popularity; that's true. But it did prompt quite a bit of creativity for a short while.

As you are aware, the money supply is the best tool we have to 'manage' the Second Life economy. In the past, when we've been concerned about inflationary trends, we've reduced the amount of new currency entering the economy by targeting programs that were originally designed to incent specific behaviors. As the economy has grown and become more self-sustaining these incentive payments have been increasingly unnecessary to both the health and the culture of Second Life.

Traffic bonuses, the last remaining incentive payment, averaged about 6% of total sources into the currency pool over the last 12 months. However, the contribution percentage is increasing with population growth and in March it was actually 9%.

This incentive was originally created to support content creation in Second Life. The reality is that it has never done a particularly good job of recognizing the broad variety of content, and recently the advent of camping chairs has contributed negatively to the culture of Second Life.

Effective May 15, traffic bonuses will be reduced by 50%.

Effective June 13, traffic bonuses will be eliminated.

Traffic information by parcel will still be available to support the popular places listing and the sort functionality of the places directory.

This change will have the most significant affect on groups, who received 75% of the total traffic incentive to split among themselves over the last year. Premium account holders received 24%, and basic account holders received 1%.

For perspective, stipends still account for the largest source of new money into the currency pool. In March stipends totalled $37.7million, or 72% of the sources for the month.

Philip, congratulations on this bold decision!

I fully embrace the day where finally content (in the form of events) will be appreciated regarding its quality — and not quantity. Quality has value; and people are willing to pay for high quality events. This will certainly give a boost on the economy overall, as so many people have dutifully reminded over the past months (years?). Naturally, I personally don't expect any visible changes for the months immediately following June 13, but just gradually over time.

Naturally enough, this will be a hard blow to the ones wishing to earn a "fast buck" without investing in quality, but just in "quick & dirty" make-money-fast-schemes. I imagine that a whole industry of fake events, low-level clubs, camping chairs, dancing pods, and all the sorts of "schemes" to work within the system will simply disappear after a few months.

What I have seen on the mainland is that some of these places have actually invested lots of time, patience, and probably outsourced experts, just to get an attractive environment for people to make-money-fast. I sincerely hope that these places and their owners will now understand that they can take their investment and now start charging for it.

Let's welcome this new stage of Second Life, where quality is directly rewarded — not through subjective "awards" or make-money-fast-schemes, but because residents will simply learn that quality has value — and that they should pay for good entertainment.

Last but not least, let's also not forget the so many existing projects that are able to currently finance (as sponsors) free entertainment. This has always been the case in SL and will continue to be so; there is nothing to prevent people to offer good and free entertainment, if they have other sources of revenue. After all, the same also happens in RL: events are sponsored by companies doing advertising, or simply through donations...

All in all, excellent news

When DI was phased out, there was the promise of something else to incentivise development and non-profit (or not-much-profit) activities. That never happened. Now dwell's gone. Will there ever be anything at all, or is this just an underlining of the idea that if we don't sell goods or services or do land deals, we should just expect to pay more, because that's just intrinsically a good thing?

Not that it actually makes much difference to me (total earnings from dwell: probably as much as I spent on clothes today) but it needs saying.

Apologies for the use of the word "incentivise".

Philip, do you have any plans on reading your own post, realizing that you cut yourself off mid-sentence at the end, and posting all of what you were going to say?

I don't care how important you might consider yourself, but you certainly aren't above being told that this is a stupid decision.

Kindly explain what you plan to introduce as an alternative or compensation to those who provide an experience that isn't money-grabbing, such as a casino, as an incentive to keep playing your game.

Many places in-world need the traffic bonus as part of the delicate balance to keep afloat. This will drive many players out of the game as they simply won't be able to afford to keep going without introducing something to bring in money - which, as most of your game is based around an economy, will just mean less incentive to keep going. When will you wake up and realise that your dream is a failure?

Why oh why do you always take the easiest - and most inconvenient - option? Camping chairs are a problem, so why not tackle that by making it based on activity instead of just standing still on the spot? You have invented ground-breaking technology to make SL work, so why can't you defeat something as simple as a camping chair script?

You know how to find me. I look forward to hearing your answer here or in-world, your choice.

Lewis

Its not dwell thats bad. Its like DI. Its those gaming the system that ruin it. BAN CAMPING CHAIRS.

On the box office note, I, and I am sure many others, will walk away from any box office event that is not top calibre. And I mean -really- making it worth my while to not spend my time figuring out a method or place to stand to keep box offices form being able to remove me. This information will be released as I desire to others unimpressed with content.. in short - make your event WORTH paying for and you will receive enough in donations to keep it afloat even if you don't do it out of the love for the event.

I predict a drought of people attending events and a major sweep upwards in popularity in the games arena.

What amused me was that none of the Lindens, including Phillip, had sufficient balls to state how much currency was in circulation at the start of quarter one and end of quarter one, the total volume of both sales and purchases and a detailed breakdown through Lindex, together of course with a detailed statement outlining (of the currency created out of thin air) how much was stipend, and how much was various welfare and incentive payments.

Phillip, I have been reading AFX news summaries on company results day for too long now......you know those first 5 minutes when you have to decide if the wool if being pulled over your eyes..... before the share price drops like a stone.

It would have been better if you were frank, stopped digging a hole for yourself (and having a big ego), and said the whole thing was a total cock up, you were uncertain of the future of the Linden, and would be reviewing moves to move the economy onto a dollar or gold based currency which would mean in world inflation would no longer be an issue.

Regards

Paul

My business, Marlin Engineering, has been providing L$500 per week to help sponsor a weekly building event at The Shelter for the past couple months.

I've said this before, and I'll say it again -- if you want money for your event, do what people in the real world do - get some corporate sponsorship. I know for a fact that I am not the only business in SL doing this, and I'll bet there's money to be made facilitating these kinds of sponsorship.

- Jon

Ummmm, why do you feel you need compensation? Last I checked, most everything provided by SL to do is relatively free of charge (minus the uploading fees). The only things that will now cost you money are the other user-created content which, IMHO, is the way it always should have been.



The dream isn't a failure as you put it by a long shot. SL is developing its own social classes, just like the real world, and as much as some people like to think of it and treat this place like a game, it is so much more than that to a lot of people. Sure, we'll see a decline in people who are the freebie hogs, the ones who expect everything to be given to them on a silver platter without any effort.

Honestly, you want compensation for the things you build or the places you make? Then it's time to start charging land parcel passes. If what you've built is truly unique or special, then people will pay it. If it's not, but you've built it for your own enjoyment, then you shouldn't need compensation for that. If there's a situation where compensation is needed that doesn't involve being hungry for free money, then please point it out to me.



People have been gaming dwell LONG before camping chairs were even a thought. Back in 1.0, three of my friends and I were paid $L directly for staying in an area of LindenWorld in order to increase this particular ride's rating so it could stay on the next month. Before then, owners of places like the Edge gave out huge sums of money to attract the crowds for their listing to be highest and to get the highest dwell bonus.

It all comes down to the fact that people are willing to pay for the high listing in the popular places listing, and I honestly don't see this changing anytime soon. I've seen camping chairs paying out L$1/10 min and people sit on those for days. That's about the cheapest form of advertising there is to this day, and it's proven to work. So yes, some places will die out. Others will see this as "advertising expenses" and move on.

Either way, I think there is a lot of good that will come from this in the long run. I've been wrong before, but I still see SL in the hippie way I saw it back in 1.0, and I'm so very interested to see how this experiment goes.

Who ever thought a world on the computer could make economics fun?!

It wasn't about the camping chairs foremost, that's a fringe benefit, it was about how much money was entering the economy. To presume a CEO is going to contact you personally is the height of arrogance. And once again, you have a negative outlook.
And his dream a failure? I don't think that's a fair statement at all.

For sure.

I'm absolutely fascinated to see what this does to the big clubs and malls that rely on dwell.

I mean, sure, they're going down, but what will replace them?

I predict a couple of months of chaos and desperate manuevers and lots and lots and lots and lots of yard sales. Like every other event a yard sale as the big clubs/malls/casino's try anything to cover tier.

A smattering will try to charge admission and fail miserably as all the price of admission gives you is a colorful dance floor. People need more than that if you're paying to be entertained. Wouldn't you? If I pay $20 or $50 an hour to enter a club, I damn well expected to be entertained, not just hit my dance animation and listen to a dj!

I expect to see a consolidation of many aspects of SL. There will be fewer malls, but the survivors will be bigger. Imagine Walmart.

Clubs will be smaller I think, and more numerous as they stop trying to be all things to all people and center on niche positions. Clubs in the next 6 months will be smaller and simpler and cater specifically to a set clientle, offering entertainments geared toward their individual customers. On smaller plots easier on the tier payments.

Casino's .... well, I imagine the survivors will have to pay out a little better to keep enough customers gambling.

This will be as big an upset to SL as the change we saw with 1.1 and I can't wait to see who comes out on top and who falls to the wayside.