Will the L$ ever be as cheap again as now?

After reading this post I checked the pricing page on the Second Life website and it looks like it is true: there is no mention of a stipend for Basic Accounts anymore.



While I don't know if this only affects new accounts this change will put a massive throttle on the influx of fresh money. My rough estimate is that 35% to 45% of all fresh money enters the economy through stipends for basic accounts; some 20,000,000 L$ every month.

Even if this change would only be effective for new Basic Accounts, it would still result in a dramatic reduction of fresh money in the coming months. SLs population is growing at a rate of 20% per month currently. This means more than 100,000 new accounts in the next three to four months. These would be elegible to 20 Million L$ in stipends every month under the old pricing plan - or to 0L$ under the new.

Demand for Lindens isn't necessarily going to be increased by this change. Basic members who are going to buy Lindens were already buying them. In fact it is likely to be reduced over the long term as the number of new players is reduced... new players buy a lot more stuff than older ones... because inventory doesn't wear out.

They'd do better removing the "Free Account" option completely, and go back to charging for Basic accounts.

Has it been confirmed yet whether or not this was a mistake or omission?

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SL answers

So, just a webpage error. the L$20,000,000/wk continues to flood in. So, yes, L$ will probably continue to be as cheap as it is now and even cheaper in fact. Understood.

Second Life would be the first economy in history where halving the speed, at which the money press is running, does not result in adding to the (perceived) value of its currency.

Interesting "error", where the page was edited at two different places and the only resulting change is, that there is no mention of stipends for Basic Accounts anymore.

Let's see.

It is true demand for Lindens do not increase if you cut the supply, but there is a basic economic principle that says the price of something will increase as supply goes down. L$ move in a circle from buyer and seller. If you constantly put more $L in the market than what the sellers are putting back into the market, then the value of the $L decreases for the very reason you mentioned. Demand doesn't go up, so the US$ being given to people get spread out over a greater amount of $L. That's what we know as a decrease in price.

Now it is also true that if people don't come to Second Life and spend their money in the first place, that demand can decrease. I'm not really sure the equivelant of 20 cents is going to chase that many people away. I mean, come on. It is only 20 cents. That is so small that I doubt it even effects a person's decision to buy something from me or not.

I would agree that it is a strange mistake. It seems to be a confirmed mistake though.

Erm, you're talking about supply, I'm talking about demand. They're both parts of the equation.

This kind of belt-tightening can temporarily increase the price by reducing supply. Temporarily because it would only take a fraction of the basics upgrading to premium (which would be good for Linden Labs, but irrelevant to the economy because premium fees don't go into the Linden economy... they go to LL) to produce the same supply.

But it's also going to reduce the demand longer term.

And there's better ways to reduce the supply.

I don't know what you're selling, so maybe you're out of their budget, but I do know people who get by on their Basic stipend, and begrudge every time they need to buy money for luxuries. If they need to pay for things like photo uploads from LindeX...?

It is possible it could be even cheaper. I think the recent influx into SL is due in large part to the stagnat market in the mmorpg scene. Nothing realy new or inovative has been done.

Like most things of this nature if it does not evolve fast enough with technology people will loose interest. There are those that do stay because there friends do. However there are those like myself that have a group of people they have hung out with through several years of different types of online entertainment. With us it is our friendship that endures not the environment. I have small group of about 9 friends that have transferred from environment to environment since 1994 as an example. We will move on if the environment does not hold its interest.

Right now since I am new SL to me shows immense promise. The game engine is old by todays standards but I did see something promising with the new engine.

One big gripe I have so far is the network atency issues. Being a gamer more than a socialite. Now since I have been online gaming since 94 and a little before that I am used to dealing with the lag. However, my tollerance will not hold much longer before I move on.

The market as far as clothing houses and other things. Is already being saturated. Granted I do how to make most things in this world but what is defined as high quality items and low grade is a thin margin. If one is low on cash and has enough time they can build anything without much formal education. Now this is good for the growth but bad for the economy itself. Because right now I can go looking for just about any given item and find quite a different price range from L$ 0 to L$ 5000.

Like someone mentione things don't wear out. That is only part of it. Another is unattended retailers. You make something your done and you put it in your shop and thats it. You do not have to even login anymore.

Again since I am new I am probably online more then some of the other users. When I go shopping though I would say 90% of the stores I go in to the owners are not even online. The last time I checked this is the first online environment that this is even possible. Some of the biggest retailers I have seen, there online status is barely existant when I come back.

Now I understand Linden wants to keep these places going because they flesh out the world. But lets get real. I am no economics guru by any means, hell I can barely balance my checkbook. But this system is seriously flawed.

That is what I'm saying though. If you spend US$1, you have over 5 weeks worth of basic stipend when you buy on the Lindex. Is US$1 a month really a huge deal to people. I know there may be some people that every dollar counts, but I think it is a minority of people that will really truly be hurt by the loss of under US$1.00 a month.

If they really want to keep the Linden from devaluing, then they could simply increase the $USD charge for large plot land use, then use those extra dollars to repurchase Linden. From what I can tell, the biggest source of Linden to $USD conversion pressure is from merchants who have made Linden with their creations and want to convert it into real rewards. Nothing wrong with that.

An increase in large plot land charges would force larger malls and developments to increase the charge for their space to the vendors. This might sound like a hit to the vendors, but it might not be if they are not having to fight a sliding value every time they try to convert to $USD.

The only losers in this secnario would be the large house owners and renters who do not have any commercial income to offset the increase in expenses.

Catnip

Yes!!!! Why?

Torley's reply really doesn't answer anything. Didn't say it was a mistake, didn't say changes weren't in the works, only that the stipends were still being paid. This is likely true but it would also be true up until Monday afternoon when they post an announcement saying stipends were no longer bein paid.

It may not be any time soon but the free account will eventually lose the stipend.

That is not exactly true. He describes "what is". He just refrains from talking about future plans. As we all know, Lindens sometimes don't like to talk about that.

And I agree that the answer was very cleverly phrased.

It's a big psychological hurdle to cross, especially for people on a small or fixed income. Like the college students who are such a large part of the population. You're looking at people who have a computer because they need it for homework, who have a free internet connection from their dorm room, and who budget "eating out" instead of using meal tickets at the quad.

I'm not arguing that this SHOULD be a problem, I'm saying that it IS a problem. Whether they're "hurt" by it doesn't matter.

Oh, and these college kids? When they leave college and get a full time job and suddenly have lots of spending money... they'll drop gobs on LindeX. I remember feeling rich because I could go down to the mall and spend twenty bucks on stuff just because I wanted it.

And THAT is why cutting the stipend now will reduce demand longer term. People's situations and attitudes change, but if they're not playing SL because they're pissed off over a token amount of money they're going to be spending that money somewhere else.

Or start charging, in Lindens, for new features instead of giving them away for free. You want 'ragdoll' physics on your avatar? That's L$50/week, thanks. You want an enhanced script editor, L$10/day. Teleporting your vehicle instead of taking it into your inventory and re-rezzing it? L$1/jump.

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In my opinion, increasing fees to keep a stipend is more of a deterrent in the long run. For a stipend not to hurt the economy, you have to take away about as much money as you give out. Do you really want to be charged every time you jump, just so you can get the illusion that you are getting free money? It rewards you to take the money and run. Why would I play a defunct game, when I can just take the cash they give me every day and let them keep all the little petty fees they want to charge me.

Things are just so much simpler if people get out of the concept that they *should* earn a play paycheck, because this is a game. This is not the same as a game, where you get an income just because you are playing. The money in this game has real life value, so why are we still treating it like game money? Would America ever support your giving US$2.00 (freshly minted dollars) to all tax payers, and US$.20 (freshly minted dollars) to all people that have tax exemptions, and then charge you for driving down the street so that it doesn't effect the economy. Why go through all that trouble? You have to destroy the money too, otherwise you will crash the economy.

Which is, of course, an assumption.

I don't want to be charged every time I upload a picture, but I don't mind being charged to upload a picture, so long as the charges are small and appropriate. Charging a similar fee every time I teleported would be a different matter.

And churning the money around is economically useful. If the $50 for four Basics is paid for by my paying L$200 in sales tax as I spend the L$5700 I get from LindeX that month, that's churn.

What are they worth if you don't spend them or cash them out?

This has nothing to do with what they deserve, it has to do with encouraging people to play. Even if they don't spend any money, they're still there making the world a world. Think of them as extras, and consider that 20c a week is WAY under Actors Guild rates.

There are better ways to do it than just handing out a flat stipend. The reputation bonus was one, but instead of scaling it so it wasn't profitable to abuse it LL turfed it completely.

Err, they actually hand out a lot more than that, and charge me a lot mroe for driving down the street, and it seems to work.