BREAKING NEWS From GOM

Tell me Dnate - what is 'fair' value for a website that facilitates trading of virtual currency created entirely within a world completely owned (and created) by a private company that expressly denies its worth in the TOS?

Most games would have forced them to shut down immidiately or risk serious concequence. LL allowed them to establish a significant presence-- In my opinion to the detriment of any possible development of an ingame system which surely would have been much more accessible and safe (for everyone but LL) from the start. I'm not sure how much more 'fair' they could have been. Both parties got something that was mutually benificial for several years! Yet it is clear this decision has come back to haunt them now by such immature behavior as we have seen over the past 24 hours and does not bode well for the many more responsible players who wish to interact and do business with LL in the future in other novel ways. I can only hope LL keeps an open mind.

It seems to me that once linden lab had grown beyond the point that GOM was able to effectively service the SL community (having to verify each trade manually, no updates to service and no reason to update, nil customer support, inability to integrate with SL on their own etc) If GOM got cocky and demanded significant continual profits from what was essentially a gift from LL in the first place...... I'm glad to see them go. You can be assured they will be replaced.

My SL experience tought me a lesson early on that I can share for those that are less fortunate. You might want to think about securing some kind of contractual guarantees from the start if your doing business completely within the domain of another entity rather than attempting to blatantly sidestep corporate TOS and leech off other people's hard work and clientele in a relationship of convenience, don't you think?

But that is where this system is different. I would agree with you for most other games, but in SL case, LL went to GOM and ASKED them to devolope this system. I don't know what would be a "fair" offer, but GOM did not see the offer that LL gave as one. It is too bad that it had to come down like this, I wish I knew what went on behind those closed doors.

Trading money openly is not agaist the TOS of SL. If I remember correctly, it states that it is allowed. SL is very different then most other systems, that is why this is different then most. How do you know that GOM was cocky? Have you seen the offers? No updates? What was the partial fill then? Have you ever even used the customer support at GOM? I have, many, many times and I have always been happy.

The manual varification was do to the bugs in the system that was used, a known issue in SL. I am not sure how you can blame GOM when it was a SL bug. GOM helped pioneered the web site to game interaction with the in world ATMs. They started as having to do everything by hand, and as SL grew, and improved, they used the tools that were given to them to integrate into SL. I think at least part of the blame lies at LL feet for not give GOM the tools that they needed to integrate more so into SL.

GOM can not be replaced. We are not just losing a service, but two respected community members that came with an exchange service.

Here is an excerpt from the GOM Forums, where Jamie appears to flesh out the story a bit on what happened. Isnt it interesting how the Linden's were clearly interested in employing them, up until they moment they met them? =P LOL.

Just hearing him talk about being giddy over access to the SL databases makes my skin crawl.

Could their rejection have had something to do with them telling LL they wanted and expected to earn full-time profits from the project and be compensated for their 'R&D' work? Hahahha. Only they and LL know for sure.

Jamie goes on to say that not only were they offered a similar stock options package as all the other (real) developers, but cash as well! Naturally his response was that it "wasn't even in the same order of magnitude that we would have expected. [...] the offer was insulting". If that isnt cocky, I don't know what is.

If you are interested in reading more than just this short except click here.

Hey, can someone explain to someone who hasn't read nearly as much as he should have before asking this question (me)...

Why is the L$/US$ exchange rate higher than it was earlier today, in light of recent events?

Surely it should be plumeting?

If what I have been reading is correct. It seems a lot of people are *buying* in the fear that they will not be able to buy lindens again for a while. If that is true, it would make the cost go up. This is my guesstimate based on what I have been reading.

Since GOM is closing, IGE et al. are going to be the only places to buy L$ until LL get their version up. So, looking at what the selling price is at these places, GOM is riasing to these levels as people stock up on cheaper L$.

I don't follow. What do you mean? As I understand it, GOM is one of several currency exchanges, others being run by people such as Anshe and Apotheus. GOM closing just means that until LL gets their exchange set up, people will have to use the other exchanges, or eBay, or whatever else.

There should be pressure from both sides. Sellers want to dump it while they can, as we have seen. However, buyers will also want to buy it while they still can. (I guess a lot of people don't realize that GOM isn't the only exchange.)

Possibly people are anticipating a higher rate at the LL exchange.

Thanks guys, *goes back to reading economics for dummies*

haha we are all economics dummies here. Just some recognise it and others don't

I think what he means is that rather then a free market with all the buyers and sellers setting prices. We now go back to a more traditional retail model where the company or individual that runs the exchange sets the prices. Eg IGE.



Well the panic is probably due to the fact that all the other exchanges are more expensive to buy. On average its about $3.98 on IGE for example to buy one block of L$, compared to say $3.5 on GOM (At time of writing and not including fees).

So I think you are seeing people panic buy before they are forced to buy L$ at a more expensive price.

Its the final dead cat bounce on GOM as it were.

I think a couple of reasons, Those large chunks were removed that forced it to go low again the other day, which were around 13-16mill i believe or however much anshe said she had posted, will have to see when she reappears on the leaderboard tomorrow, another thing the current "for sale" price is still much cheaper than what most if not all the other sites are offering to sell currency at, that accounts for the buyers, and those selling are liking those rates as they are more than the likes of ige are paying, if they are on a good sale tariff at gom.

It's not plumeting because the supply of cheaper L$ -- compared to IGE etc -- is suddenly removed from everyone's palette. Anyone who recently wanted/needed L$ could buy in a market where cheap supply exceeded limited demand.
After Sunday, a person who needs L$ will be forced to pay fifty-five cents more per thousand through the currency sellers than would have been paid through GOM a week earlier. Without trying to conjecture the probability of it, I wouldn't be very surprised to see GOM sell prices rise to just below the IGE rate between now and Sunday evening.

Also driving the price up is perhaps an uncertainty that LL can produce a competent and bug-free open market system on short notice. Until then, supply will be in the hands of only a couple organizations whose selling prices are limited only by competition amongst themselves for buyers.
One might speculate that if it takes a long time for LL to put a competent and bugless GOM equivilent online, then sale prices from IGE etc could gradually rise while they're the only games in town.

Either way, the idea for anyone who might need L$ near-term will have been to get them now while they're cheap.

Finally, assuming a future Linden exchange allows any user to sell L$ at a seller-determined price, first-day opening sale prices will probably be just a point below whatever the IGE etc rates are.
An invester this morning could pick up L$ at $3.20 per thousand from the panic sellers, with the potential of selling in a $3.90 neighborhood near-term -- perhaps more if the currency sellers raise their prices while LL struggles to get it's act together.

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Hotline post ...

Robin's reply was pretty revealing:

1. IGE account is frozen - after they apparently had listed 13 mil on the market.

2. Robin noted that announcements - including the one about the changes to selling L$ starting - was announced by GOM, not LL. Can someone verify this?

3. LL is husling to get this done.

(Thanks to Robin for being so candid.)

No, I was referring to the original announcement of the new L$ selling system.

I've not found any reference to an LL in-house currency exchange prior to the bolded excerpts below (though it's late where I am, and might well have missed something)

Using keywords "currency exchange" in both SL and GOM forum searches, the apparent data trail inception point is an 08/16 question from Ricky Zamoni to Linden Hotline re: the job posting for an LL VP of Finance

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which asks:

"Do you have any intent to leverage your position as the 'owners of the world' to move into the exchange of US$<->L$, the web shopping scene, in-world streaming ads or similar 'infrastructure' type endeavours (as opposed to skins, scripting, etc. -- 'content' based businesses), in competition with user-created businesses? Do you expect that such a move would have a 'chilling effect' on future resident-created innovations?"

Phil's reply appears generic, tentative, and unspecific to my eye, and to deliberately bend the actors in such a hypothetical currency exchange back to "SL producers" rather than to SL, while simultaneously retaining the option for itself:

"SL is a platform that relies for it's success (at least in part) on helping people make money. So if we compete with users in doing that, the platform goes away. So we'll only get involved in a business if we think there is some clear benefit to the overall community that only we can provide (because we can change the source code or do the billing or whatever). Addressing your specific examples:
"Currency Exchange: I think we need to somehow figure out ways to make it easier for casual or first time users to buy currency more easily from other users. This seems like a huge opportunity for SL producers - it seems to me that if currency exchange could happen with one click for new users, there would probably be US$300K or so in new income for producers - overnight. That would be really cool."

Following up the next day, 08/17 Jeckyll McHenry to Linden Hotline appears to answer his own question from the 08/16 post (in bold, below):

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"I'm sure you recall, Philip, the proposals we sent you for APIs to give new users better access to L$ purchasing. We already have the infrastructure in place, a well-established client base and a reputation for providing high-quality service. I don't see - nor was it ever really explained to us - how you building your own exchange service from the ground up (based on all the R&D we've done over the past year and a half I might add) is a "clear benefit to the overall community". The way I see it, the users get exactly the same service regardless of whether it's you or I that implement it. The only real difference is that you're talking about introducing a service that will be extremely detrimental to the business that Tom and I (two members of your community) have built."

08/25 Ricky Zamboni to Linden Hotline addresses the above as the subject of his post. From the first paragraph "...you are in the process of attempting to re-create what we have built in order to set up a competing currency exchange...", and includes links to the two posts above.

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I've found neither explicit nor implied mention of an SL run currency exchange prior to the 08/17 post, though again, it's very possible I might have missed something. Hope this helps.

Those questions were asked to try to get Philip to clarify in public what Jamie and Tom had already been told personaly.
There followed a few days of speculation, with assorted GOM forum posts by the traders trying to work out what was going on.
Jamie follows up with the following post on 8/26 in the GOM forum thread "Are you really sure they're dumping you out in the cold?" (General forum)


Posted: Fri Aug 26, 2005 6:38 pm Post subject:

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(Please accept my apologies for being (relatively) tight-lipped until now. It wasn't until last night that things became crystal clear for us.)


Until we raised the last set of questions in the hotline forum, LL's plan, as explained to us by Philip (in email and over the phone), was to build a system that allows users to put their L$ up for sale through the SL web site. Other users would be able to do a single click purchase through the website or the client. This system would match buyer and seller, charge the buyer's credit card and automatically deliver to them. This system is almost complete and ready for what they're calling "beta testing".

If my description was unclear, let me say it plainly: the system described is a direct duplication of GOM's functionality with the addition of credit card billind. And this is taken from communications with LL - it is not speculation on our part. You might not believe it, but that's your choice.

LL has had someone working on this carbon copy of our market for a couple of months now. His name is Peter. I'm sure he's cruising these forums. Say 'hi' Peter. Don't be shy! For the record, I have no problem with what Peter is doing. To the best of my knowledge, he's a fellow developer - not a policy-maker.

When we raised the issue in the hotline, Philip wrote to us saying that he was sad we couldn't make things work out between us. We responded reminding him of what had happened to that point.
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Jamie then goes on to explain the full history behind the situation with LL which went back several months.

The first direct announcements were done by GOM. But, if you read back though the town halls, going back almost a year, you can see that the idea was there, and was being worked on. I suppose it became official once talks between GOM and LL broke down, for the final time. We will have to see if Philip is really right and we bring in more users, or if maybe the issue is not as clear as he thinks it is.

Bummer dude. Shoulda gone for stabilizing the L$ and beat LL at their own game.

But hey, I can understand. Sometimes, things just become too much of a hassle. Despite my personally disagreeing with your business model, GOM was good folks. You supported your clients and bent over backwards to resolve hassles. Not many organizations can make that claim these days. Best wishes on future endeavors and projects.

Very valid concern Hiro. However, something interesting occurred to me:

With GOM out of the picture, we might see more direct selling on SL (ie, resident to resident sales). While that has it's own set of potential rip-off nightmares (especially with LL refusing to intercede in such things), it will be interesting.

Ancient Chinese curse: May you live in interesting times.

I'm working on a currency exchange of my own. It'll have a floating price that varies with the amounts of L$ sold or bought. I'll see to make it open source when I think it's secure enough.

Hopefully it'll beat the LindeX on fees

If you create an open market Jesrad, I hope you don't make the same errors GOM made (ie, no regulations to prevent market manipulation). To be honest, it seems to me repetition of an already-made mistake that caused severe destabilization of the L$ to start with.

How do you decide what is market manipulation, and what is market autoadjustment ?