King Philip Initiates Pro-Active Action To Combat Growing Inflation. Yay!

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King Philip has spoken and saved us!

Praise be!

This is the right move for several reasons:

(1) economic stabilization
(2) currency depreciation
(3) fairness to new members (horizontal equity vs. vertical)

The elimination of this giant "slush" fund to earlier residents will be iminently more fair to new and future SL residents who pay the $72/year (or more) for Premium accounts. This combined with the opportunity for all residents to buy L$ conveniently treats all residents the same going forward.

I would not be surprised to learn that most of these ratings-based Linden stipends were being offered on GOM anyway...

ok this idea good but, i see a bad thing, what if non of the basic account holders buy any l$ meaning that the creaters could lose alot of money from people not buying what they sell...meaning less people will sell things because its not worth there time, not saying this will happen it could go really well,

i love the idea and i am a basic account myself, i can live off the 50l$ a week, and just makes me want to build and sell things more now

Once there is no positive effect on stipend from ratings, I wonder if ratings will come down in price... since there would be no monetary bonus from receiveing them, why would they need to cost money? Heh.

I agree with Psyra. They probably shouldn't cost anything, especially if they are planning to remove the negative ratings in the next version.

Probably no decrease as it is a "sink" to rate which would cause inflation again. Also this is a bad move I think. Rating Stripends was L$ paid to users and I think that applied to both Premium and Basic users. This means those that buy your products will buy them slower. It's like removing your weekly stripend (50 L$ for basic and 500 L$ for premium) but the ammoutn just varies from person to person.

At least it will help keep the money supply from growing as fast. We need more users to really allow this to work.

Woohooo, time to go buy some Lindens before the price goes up.

This coming from a man who thinks IGE selling off 40 million will have no noticable impact on the linden rate or the economy

Hmm, there are low prices from large blocks of Lindens being sold verses news that Lindens are about to be made scarcer over the next few months with a possible increase in the volume of trades over the next year. In other words the price is low now and will probably be higher next year. That doesn't sound like the time to buy to you?

Pfffft.... less stipend money. Gee.. inflation. The map is white with land that isn't selling and the only price I've seen rise in the year I've been playing has been the cost of rating someone. LL is going to stop paying out any $L except that which it has to and mark my words they will start trying to cut that out in some form eventually.

New players are the ones who buy things. Old, established players don't. I've learned to build so if I need a couch, I'll just make one rather than go buy one even though I have plenty of money in my account. That first bit of cash that newbies get is a lot of content creator's bread and butter. The rating bonus then becomes a lot of player's only income other than the stipend. Basic accounts are no longer able to increase their cash except through purchasing Lindens with a credit card. Well most people with basic accounts don't have a lot of extra cash laying around, if they did, they likely would not be basic. Now they can't even get an extra few Lindens through getting ratings. Ratings, I might add, that have been damned hard to get and any that have been earned since Feb had to be worked for.

The way to really get more money to content creators is to get as much money as possible into the hands of those who are most in need of buying things and before they settle into their circumstances. (ie a player spends his initial cash customizing their avatar and buying their first land then realizes $500L a week won't buy much so they basically don't shop much and gets used to not having much to spend) I would suggest two things, offering a basic plus account and an option to buy Lindens on signup. The basic plus account would be $45 and is essentually a $9.95 basic account with a $500L a week stipend for the first year. (renewable at market rates the following year) No land included so LL doesn't have to provide bandwidth which offsets the cost difference in $L. The second idea is to offer a button at sign up that allows the new player to buy extra Lindens at the very start of their time on SL after the trial period. Newbies entering SL with $10,000L in thier pockets will do a lot more for the economy than pushing them into the cold the way they do now.

I dont think its true that older players dont buy things I am regular shopper and am always looking for new and differnt thing to buy that I might enjoy. Whilst I do and can create many things I still like buying things and that is not going to change.

Many people I know also shop quite a bit not everyone wants to spend their time building it really depends on why and what you want out of SL. Some people have a limited time and prefer socialising to building.

Its been stated for some time that stipends were going away so it should not have hit anyone as a suprise. People will adapt to this am sure and it will not bring shopping to a halt.

Well, that is true for a lot of folks and yes shopping will continue for those who have money. Inflation doesn't stem from stipends and rating bonuses, it stems from LL printing money as needed. Simple economics really.

Since LL is out to make a profit, they aren't about to start buying up Lindens so they are basically going to stop paying out so they don't have to print more. They are kinda stuck paying the stipends as it is a part of the deal when you sign up but they can cut out everything else. They will cut out the stipend entirely if they ever figure out how. The problem is when you look at the difference between 40,000 registered players and barely getting 4000 players to show up at any one time (and how many of that 4000 were alts?). Being a pauper in heaven just plain sux and they will wander off to go play WOW or whatever PDQ. I know, I've seen it time and time again. Its kind of telling when you are bombarded by newbies begging you for money. Using GOM or IGE is quite daunting when you can barely figure out how to teleport as a newbie.

As multi-use property owner and manager, I have noticed that the economy for the last several months in SL has been stagnant at best, deteriorating at worst. I can understand the fears of LL that inflation is creeping in, however, when you remove almost 20% of the money supply in an already week economy, isn't that a bit frightening?

There are better ways to tighten money supply without removing a portion of the weekly stipedns that quite a few rely on:

1. As suggested in other postings in the forums, charge a listing fee.
a. L$25 for non-commercial events
b. L$50 for commercial events

2. Increase land listing fees from L$30 per week to L$50 per week.

3. Increase classified ad fees from L$250 for every two weeks to L$300

As these are fees paid to SL, it takes L$ out of the economy, but at the back end and not the front end.

I also find it interesting that LL would implement this money supply tightening at the same time it is planning to incorporate a system where it becomes the money broker in the currency exchanges, thus being able to extropolate even more fees. Nice slieght of hand there, Philip.

Arent both things supposed to stimulate the economy? if there is less money in circulation and you make it painless and easy to buy wont that help the economy?

Oh that would _definitely_ affect things, but it should be viewed as a market correction instead of an outright devaluation. I can't help but think that them having _that_ much currency stashed away hasn't caused the value to overinflate in the first place. I mean, L$40M is enough to blockade pretty much anyone else selling currency on OGM for weeks on end judging by their current volume.

It ain't gonna be pretty, but it's probably rather necessary.

Its a misnomer that IGE is selling off L$40 million. A misnomer happily spread around by the queen herself who has thrown her hat into the ring of support for the Lindens to supplement their income by garnering fees through becoming a middle man for the currency exchanges. This queen has never liked IGE and has no love for GOM, as her own currency exchange failed miserably.

IGE has always had large numbers of L$ to sell to those who wish to purchase them, without having to calculate the fees of purchasing through GOM. The price that IGE is selling L$ for is about the same as the current rate of exchange on GOM.

Back to the question at hand though. Doesn't anyone else see that LL, through this latest move to tighten the inworld money supply, is forcing everyone to go to the exchanges, through LL, so as LL can make more US$ through fees? Or is everyone being blinded by the queens misdirection?

Well, I don't know about most of you but I havn't received a rating in forever because they cost so much. In addition, most of my previous ratings are almost gone because of the 6 month rule so my rating stipend is pretty low anyway, however, I do feel there is a move towards the direction of removing player stipends all-together. I am an older player and while I can build I don't usually have the time to create my own content without giving up the social aspect of SL which is what I enjoy most. I REFUSE to buy $L from any source. I just can't justify spending even more money to buy game money which I will not see anything as a result of in RL. I work too hard for my money. The ammount that I pay now for membership and land tier is no more than I would pay for another big MMPORG like Starwars Galaxies or Everquest, so I'm ok with those fees. Would I have bought $L as a newbie to get some decent land and to shop for a decent wardrobe? possibly even probably, but then I would have stopped. As it is I've taken a HUGE cut over the last 6-8 months in my pay since the 6 month rule on ratings went into effect and now play less often because I have to save up for a few weeks before I can go get the things I want. Then again I play SL as a form of entertainment, relaxation, and socialization..not a second business, not that there's anything wrong with that.

I say go ahead and take the rating bonus as most of us won't have any ratings to speak of soon anyway, however....give us a bigger stipend so that those of us that choose not to turn our free time into a second job can still enjoy the content that so many work hard to create!

I wonder. If people are getting less stipends, then perhaps they will want to spend more time learning how to make stuff, and more classes will be taught. However, if people make more stuff, they may buy less stuff, which could be bad for less-established business owners. Guess we'll see.

I bet we see more classes, more freebies (first attempt items by new creators) and more newbies as folks use referral money to replace some of their stipend earnings. Easier access to Linden at the ready is a good thing I think (took me about 2 weeks to get a veriifed paypal to buy through GOM, and by then I forgot what I had wanted the extra Linden for!)

Well, since SL has naturally mirrored RL in alot of ways, isn't it about time the Lindens bring in Corporate Advertising? Just kidding =P

I agree with what Kath said, his POV is about the most sensible one I've read thus far ^^

After rereading the Philips town hall logs and this latest announcement it has dawned on my that LL is trying to balance the economy with out hurting thier big supporters. L$6.8 Million is a drop in the inflation bucket. Going by historical numbers the economy gained L$18 Million in the last reported month (the last reported month data was 8 months ago).

If LL wanted to decrease the sources they could attack the dwell bonus but that would hurt their constituants.

The above suggested modifications to the other sinks are a good idea.

But hey, greed is greed, who am I to complain?

The suggested use fee hikes mentioned here would do very little. An insignificant drop in the bucket and would tend to stiffle their use. Short of some sort of universal tax there isn't much of any way of removing the vast amount of cash already in circulation and what is being pumped into the system every week.

Easiest way to pull down the money supply? Allow players to pay their tiers with $L at slightly lower than market rates. They could make this a temporary policy so as not to run themselves out of business. Perhaps put limitations such as you can only do this twice a year and you must have paid tier in $$ three months prior, etc.

Or they could lease land using $L, providing a sim for temorary lease would be a great idea. There is a lot of unsold land that is losing tier money anyway, why not remove circulating $L and get some use out of the land.

LL can't do that because it will affect THEIR cash flow.

It's not a misnomer ...it's fact....IGE has stopped taking sell orders and I highly doubt they will be buying lindens anytime in the near future...They would be fools if they did.

And your last statement is exactly why. Why would anyone buy from any exchange on LL's website knowing that they would be paying 2 service charges...one to the exchange and one to LL.

It is still a misnomer as what IGE is trying to do is not have too many L$ in supply. They currently have too much supply and therefore don't need to purchase any L$ at this time. Once their supply drops enough, then you will see them purchasing again.