is a dirt cheap L$ good for SL?

i was thinking the following - if for 500 L$ i can easily get a couple of fantastic outfits for my av, what reason do i ever have to buy L$ when my stipend can keep me having silly fun? wouldn't it be much better if instead of 1000L$ = 4 USD, it was more like 1000 L$ = 1 USD?

at an inflated rate an outfit might go from costing 200 L$ to around 1000 L$ and my stipend wouldn't cover the cost. i would have to actually log on to the Lindex to buy L$ of the content creator. consequently the L$ would be better positioned as a proxy for the USD. wouldn't this just push more buyers on to the lindex and make more players part of the USD=L$ game? right now i'm just sitting pretty on welfare. LL is collecting my premium fees and cutting me a juicy cheque everyweek, i'm spending my L$ at the store, but i never rendezvous with the vendor on the lindex. LL is just holding on to the cash i pay for L$ every month.

so what do you think? while we are sharing in the mass hallucination that this "measurement of virtual wealth" has any kind of real value, wouldn't a little inflation give incentive to content creators to make a more compelling world?

I don't think so, people that rely on SL for money would probably raise the prices of their content to compensate. You're only going to broaden the line between the poor and rich on SL if you do that (poor does not have to be relative with their financial situation in 1st life).

In theory, this is a GREAT economic strategy! In practice, though, it doesn't seem like a lot of content creators raise prices to compensate for L$ slides. Overall as a broad group, they just don't seem to grasp that this is the fix, for whatever reason.

I know it's done often in land, but overall I just don't see content (the limited amount that I actually see) getting more expensive as the L$ spirals down, or getting cheaper as the L$ blasts off into the stratosphere from it's latest low point.

I think that a better overall strategy would be to get rid of stipends, entirely. Then, anyone wanting L$ and not desiring to earn it somehow would need to buy 100% of their L$ from content creators and/or service providers in order to consume content and/or services. No more welfare would make the L$ a MUCH better proxy.

That is assuming, of course, that there is enough compelling content and services which most people have a strong enough desire to consume. Sadly I don't think that this is the case. If it were, the welfare would probably be gone already.

Another good way to fix the problem is to bypass the proxy completely with a direct USD transaction processing platform. I suspect that whoever is first to market with such a system will do QUITE well, assuming that enough merchants will use it exclusively rather than also continuing to accept L$. It would definately be a tough road for a while though.

I agree, and must admit that even though I know I should do it, it's too much effort to TP around to each store and adjust (ok, I'm lazy).

I've thought about directly tying my pricing to the exchange rate -- running a query every day and updating my prices. It would require me to use vendors for everything, as unfortunately there is no llSetPrice() function. I've been holding off waiting for Obj->Obj communications, but it looks like that's going to be a while (At SLCC Cory said the functionality is done and sitting in a sandbox on his machine at work ready for him to look at, but the communications is only sim-wide.) [/quote]


Agreed, and this will probably happen at some point in the future when SL is more or less open source and LL just operates the 'primary' grid. At this point, it's my opinion that, as you suggest, the $L proxy must be removed completely. It wouldn't make sense to give each individual private grid/sim owner the ability to mint $L. What you'd end up with is multiple currencies with an exchange rate between LL and non-LL owned grids/sims.



I disagree, I think there is content they will pay for, if There is any indication. It would be a bit of a cultural shift, but SL seems to be growing quickly and with a massive influx of immigrants, a policy shift might be a good idea.

Just great, then we're going to get more beggars. No thankyou.



Wishful thinking... Forgive me if I didn't find evidence even supporting that theory.

If I read Janai's post right, she mentioned the prices rising just like you did. I think that she is right on the fact that a cheaper $L could push more buyers on the market if people raised their prices. I think it would make less people buy stipends as well, which would keep the poor from being poor.

I've never understood why people thought they would suddenly have to spend loads of money if they bought money on the currency exchange. The price has always been comparable to what you pay Linden Labs for the stipend. It makes no sense to me that people can pay a US$ fee and then think they got welfare. If suddenly content creators gave you $L cheaper than Linden Labs, the poor would be rich.

I forgive you.

Watch Cory and Phillip's talks from the SLCC when they come online. They both made it clear that a scenario similar to what I described (Open Source, sims hosted elsewhere, etc) would need to happen for purely technical reasons. To paraphrase Cory: for Second Life to have ~1.2 million users it would require a set of server farms equivilent to what Google currently uses. And Linden Lab ain't going to be able to bankroll that. When it all happens is just a matter of how quickly Second Life grows over the next fews years.

You might also want to check out Cory's paper Escaping the Guilded Cage which has some nice insights into LL's philosophy.

Cheers,
Nic

good point dark. if L$ sellers drove the price of the L$ down, it would mean that the L$ would be cheaper to purchase off of the market. my experience is that currently the biggest demand for L$ comes from new players who need land, clothing and the whole ensemble to settle into the new world. older players rarely buy L$. in fact, i don't think i know more than two or three people in world who are L$ buyers. this is an unsustainable model, always requiring growth. why not adopt an economic practice that is sustainable and growth is an added bonus?

on a side note, is there any footage available for the economic panel at the convention? will thosebe posted? i was looking for links to streams this weekend but couldn't find anything.

I'm assuming it will take a couple days *at least* to get everything up, but I thought that was the plan. Everything was recorded, so it does exist...

This part is not accurate, in my experience. I know probably 15 people off the top of my head who either buy currency now or would by currency, and they are older players. They just happen to be people who are not in the land business or don't make anything. They still enjoy buying items. Newer players are buying basic "needs" to get started, but older players are fulfilling an ongoing need for new stuff. You don't just own one pair of clothes, or one hairstyle, or one pair of shoes generally. I know residents who spend tens of thousands on L$ on shopping each month and buy the L$ they need if they have to. For all the grumbling about having to buy L$, many people came to SL already weaned on the concept from There.

Also, as SL continues to grow, I don't think you will find the population of older players to be so developer heavy. As more and more casual users come into SL, now with an easy way to buy L$, there will be many who won't pursue anything creative, or won't be able to succeed as readily in a crowded market.

I think the model is completely sustainable, and continues to heavily in favor of buyers. This will only increase with easier availablity of L$.

interesting observation. i wonder if perhaps you might also know 5 times as many people as me? i started a poll to test out your theory.

i share your observation of There immigrants. i think that is why last year when they came in droves, we saw a 6 dollar block for a short period, as these players settled into SL. as for outfits, i question how much shopping an average player can really do in one week? these outfits do collect too, remember. eventually we all have hundreds of them and shopping isn't as big of a past time. (perhaps in this case i'm just an anonomoly).

this is also a very interesting point. i think perhaps as older players get even more refined in their skills, newer players might be intimidated to enter the content creation business, but fundamentally i think the biggest draw of SL is that anyone can come to SL and build their own fantasy world, and that new players will always relish this oppurtunity to the same degree as now. this will remain to be seen with time.

i'm not sure what you mean by this. do you mean that that a high L$ is in favour of L$ buyers and that it will continue to go higher or do you mean the opposite? i'm not sure how it is in anyones favour that LL gives players L$ in exchange for USD to pay content creators for goods. in a sustainable model, where can the content creators go to sell these L$ that LL mints? (particularly while YOU are actively killing the "photo" sink with your snapzilla! )

For me, when the economy spirals down, it is just so much work to change all the prices in all my vendors that are all over the world. I'd rather just stop working in SL and just wory about creating for my own fun than go through that headache.

heres a diagram that shows how consumers have a choice of buying L$ from LL or from the Lindex. i tried to create similar conditions for the consumer and found that for a heavy consumer, it is beneficial to have alts instead of buying L$. L$ deflates because LL increases money supply as if each account represents a player, when in fact all of that money is played by one player.

also note that LL is in competition with the LindeX (content creators) in the selling of L$.

I don't know about the economics part, and I'm too tired to try to figure out what all you said now, but I can tell you that yes, there are people who just love to shop!

And outfits start looking old, and houses start looking old, and somebody comes out with a nifty new gadget, and etc. etc. etc.! People love to shop just like the love to move around.

A lot of people just view this shopping, and buying of Lindens to do it (or to buy more land) as just part of their entertainment budget. After all, lots of people waste lots more in Vegas for the entertainment value!

coco

I am an older(54 years) resident and am interested in SL as a vehicle for making simulations and demonstrations for my RL students. So I spend a lot of my in world time fumbling around with scripting...(currently struggling with vehicle scripts so if you are ever terrorized by a large dragonfly it is probably mine **eg**). That said I don't have time to think about designing my own clothes- why should I when there are so many talented clothes designers out there. In terms of my time budget and goals for using SL it is cheaper for me to buy a bit of bling or some cool boots with a sexy pose because I like to look nice even when I am working and yes I do like shopping on occasion. Were I to buy Lindens it would be to buy more land, not specific content at this point since I am butting up against my prim limit.

I wonder if cheap Lindens is even the issue. It seems that content is the problem; namely that there is lots of good content at reasonable prices in dollar terms. And I think that is because most content providers really are not making content to make a profit. Were the Linden not dirt cheap, yes there would be fewer Lindens/$, but I dont think that in itself will solve the content problem and content prices in Lindens would eventually fall and content providers who want to make $$ would be right back in the same spot.

Would eliminating the stipends help? Well lets see....there would no Lindens coming into the economy via stipends, fewer Lindens/$ so the cost of my fancy sexy posture boots goes up. OK so more content providers start making sexy posture boots because it is relatively easy to do and the price comes down. Or I decide to make my own because it is so easy to do. For awhile content providers might benefit-after all if Lindens are expensive then when they sell me a 300L pair of fancy boots they do get more when those Lindens are converted to $,but eventually this sort of inefficiency will work out of the system and content providers will be again right back where they started.

Content is basically a commodity within SL; content providers make content for other than economic reasons and these two factors keep content prices low relative to the dollar. The real limitation is land, or rather prims, and so were to I buy Lindens it would be to buy land (read prims) not content. Very very few content providers are going to make real $ via SL within the SL economy-and that is not going to change whether or not Lindens are cheap or expensive relative to the dollar as the market will find its own level. What content providers will do is use SL to add value to their RL economic situation. For instance designers who take their games as we see happening from SL to other platforms, teachers who use SL for designing simulations and training systems-we see this happening already and this is what I am here for, artists who use SL for inspiration- I paint by the way and use SL in precisely this way.

SL is a vehicle for adding value to real life, via entertainment and as a stimulus for creativity that connects to RL, so from my way of thinking whether the Linden is cheap or not is probably not relevant.

Simone

ok people may love to shop but the verdict is in: link
old players do not buy L$ as frequently (based on the arbitrariness 1yr age conferring old)

while the greatest demand for L$ is from new players, the greater population is old players (that's an intuitive assumotion). and old players like myself are just coasting on stipends. when i buy something from someone, my L$ are not a proxy for the USD because i never go back to the Lindex as a buyer. i buy my L$ directly from the mint.

here's an updated chart showing the result for a player not using any tier, and using the remaining money exclusively on the Lindex. still the best result is buying L$ from LL, not from the Lindex.