Enabling a larger volume of Currency Exchange

Enabling a larger volume of Currency Exchange

Goal: To allow residents of Second Life to purchase L$ currency directly from other residents, using the credit card or payment information already on file with Linden Lab. We believe that the ease of use of being able to use the payment information on file will very signifigantly increase the total amount of currency purchased, which means that content creators in Second Life will have the opportunity to make more money by selling more currency. This seems like an very important goal, given that more revenues for content creators means better content for everyone in Second Life.

In achieving this goal, we want to meet the following constraints:

- Buyers of L$ currency need to be buying that currency directly from other residents, not from Linden Lab. The goal is to increase the amount of money that content creators in SL are able to make, NOT for Linden Lab to create and issue more currency.

- The process of buying currency should be as simple as possible.

- Linden Lab does not want to control or set the price of currency. Residents need to be setting their own prices in selling currency. Like many nations, we believe that an open market which sets its own prices is the best way to handle currency exchange.

- Linden Lab does not wish to restrict or discourage the open buying and selling of currency by anyone. Sites such as GamingOpenMarket and IGE should be able to freely trade currency as is currently done. This is important because it ensures the existence of a competitive marketplace for currency exchange and alternative choices to any single exchange's fees or model.

Given this goal and these constraints, we want to implement a simple system that solves the problem. We want to spend the majority of our development resources on improving Second Life, not on building a currency system.


Overview Plan for Comments

The most straightforward way to achieve this type of system seems to be to allow different currency sellers (for example GOM, IGE, or AnsheChung.com) to post offers to sell blocks of currency at a specified price. LL then offers buyers a simple way to buy a chosen amount of currency by computing the lowest price taken from the seller's posted bids. LL then charges the buyer's credit card, and forwards the payment received to the seller's account. This is the system we are doing work on internally right now.

Town Hall for Review

I'll organize a town hall discussion for this week (week or August 29th) to collect public comments on this system and a general discussion of direction. In addition, of course, feel free to follow with a discussion on this or other forum threads.

Lastly, While the creation of any LL currency system carries the risk of impacting the efforts of other currency trading systems, this is an opportunity to very substantially improve the economy of all of Second Life. Ease of use, less fraud and faster access to currency for content consumers should add up to more economic activity and more content. In addition, under any design, we will continue to support the efforts of existing currency trading sites with the goal of creating a strong competitive marketplace for
currency.

I guess all I want to know is what is the spread going to be? What is LL's profit margin, or what kind of fees will sellers or buyers be charged? I would't mind seeing an in-world currency system, but if it's going to be IN-WORLD, you need to provide the tools and API for competitors to also offer their services IN-WORLD, too. Otherwise you are NOT competing, you're monopolizing on the fact that LL's system will be the only IN-WORLD trading system.

Minimally we will need to charge on transactions to cover the credit card fees which we will have to pay to bill the buyers. Beyond that we haven't decided what rates we will charge. Bear in mind that the amount of money that can be made on such transactions is still very small - today the currency exchange market is about US$300K/month in total trades, so for example a 3% fee means US$9K/month in revenues for the exchange system. This would have very little effect on LL revenues. The main issue is getting more money into the hands of content creators. Open to comments.

My sole concern in this is that buyers should be given adequate warning before the system triggers this sort of charge, where, and for how much.

Many residents (myself included) do not use currency exchanges, and generally would like our identity and finances held separate from such a service. Using the records-on-file presents a slight danger to residents in this regard, especially to those whose accounts are potentially compromised.

Not to downplay the fact this is potentially a great service, of course. I'm just curious at what countermeasures are in place, should we wish to not take part in this system.

I will reserve my "ramifications" questions for the Town Hall.

By only participating in the buy side, this will dampen the impact on the exchanges.

What are the requirements to participate as a seller?

Very good question. Will anyone be able to put their L$ up fo sale, on the fly?

Phillip - I would like you to make one more effort to come to an agreement with GOM. They were your choice from the beginning, and GOM is arguably a founding cornerstone of SL without which today's success would not be possible.

Before proceeding - show us a good faith effort and re-open the discussion with GOM.

Thank you for your serious consideration of my suggestion and I respectfully await your response.

Merwan


Thread started at:

Request of Phillip Linden


_/_/

Both proposals I have seen published for this interaction are vulnerable to a range of exploits and statistical abuses. I strongly recommend that your designers review at least some of the relevent research before completely screwing up a trivial distributed bidding and transaction processing system. A proper implementation is absolutely necessary to protect the system and the vendors from exploits and statistical gaming.

And if anyone honestly proposes piping large monetary transactions through unprotected HTML scrapes, even as a beta test, just shoot them (preferably with a pink slip taped to a Nerf dart). Even GOM's simplistic XML-RPC suggestion would be a small step in the right direction.

<edit>To put it very bluntly Blaze, you have no idea what you are talking about. Either gain enough knowledge to have an informed opinion, or stick to playing with your little toys where it does not matter.</edit>

How will this effect new services that may want to open up for currency exchange?

https scraping is perfectly safe. In fact, you can find no safer mechanism on the net, given the eyeballs that have been over it. For fun, I'm sure we could add a client certificate to be doubly secure.

As for the statistical gaming.. what on are you talking about? A market is immune to gaming except for people posting FUD on the forums.

Yes, it is possible to make it appear the market is moving via odd ball trading, however, generally the market just laughs at that and says

"Thank you very much for the easy profit!"

LL does not need to talk to GOM. GOM has the advantage of being strictly a money exchange, while LL is here to build a virtual world first and foremost.
It is not in LL's best interest to worry too much about their money exchange system so GOM has a better opportunity of introducing more innovative features in the future.

Edited to add:

This is the perfect opportunity to introduce a new money sink and stabilize the economy. Just take a few lindens off every transaction along with the USD fees, calculated dynamically, in proportion to how far the L$ is from your stated $4/L$1000 mark.

Philip,
I feel you have severely abused your position and undercut the mission statement of Second Life by your hardball tactics of Hijacking the currency trading and in particular your dealings with GOM.

I have never used GOM, not once, but it was a resident created business providing a service.

Why not start selling skins? Animations? Cloths, furniture. whatever. Sell them all, because you feel you can do it better then the residents.

Turn this is into WoW, this moment has made me rethink why I am here at all.

Second Life seems to have jumped the shark here

Philip Linden, look forward to recieving a leather jacket from me in game. It is an act of protest and unsupport, and the symbolism is that Fonzie wore his leather jacket while jumping the shark

The tide has changed. I have only been here a few short months, but it appears I only had a brief window into what was at one time a great concept, but has now been perverted.

I know how this works, btw. A freind of mine irl made a revolutionary technology in the area of meteorology. He had nothing but a couple family investers, a good education, a passion, and lot of man hours to create and perfect what he created.

A national weather company approached him, and said, "Great idea we want it. Here is an insulting offer to buy it from you."

He initially said no, but the response was "Well if you don't sell we will develop it in house and with our our reach and marketing muscle, you will be out of business within the year."

He didn't like it but had no choice but to bow to corporate Americas might so he could pay back his family who supported his idea.

Being in the bay area, and with your "we'll build the landscpe you build the content" approch, I expected more out of you. I guess I am niave. You are a corporation and when you want something, damn the little people you will get it.

Expect my leather jacket. I have some faith, enought to wait and see how this turns out, but my optimism is crushed and I would rather not see the sad shell that will be left of this world if this abuse of power goes on. Ill sell my land, nix my tier, and just collect the stipend for the rest of my yearly subscription and cash it out, ALL THROUGH GOM.

Anyone else who wants to protest this, send one of your freebie leather jackets to Philip Linden so he gets the message about SL jumping the shark. If you don't have one, message me in game and I will send you one to ship off to the CEO.

this is something that LL should already had started.

GOM is not so "open" as it claims. and like usual some love it, others hate it.

i hate it.

some countrys have a nacional bank, that also sells and buys currency, but they don't sell cloths or vehicles. i dont see why Mulch Ennui is so upset.

on Europe we have a central bank that controls the money...


well... there is also USA, where the president controls not only the money but also military industry, and so on...

send him a jacket

Thanks, Philip, for making no mention at all about the matter that seems to have truly concerned a number of people which is not an issue of whether LL is getting into the currency business or even acting as a central bank. The concern was whether LL can be expected to usurp mechanisms and processes developed by players when they are found to be valuable to the community and your bottom line.

Your missive at the start of this thread looks nothing so much as stage magician waving his left hand while the right hand is busy undermining the work of the currency brokers who gave the L$ a real value. Your content creators are a little too smart to fall for that sort of misdirection and a little leery of section 5.3 of the Terms of Service which allows you own anything that any content creator invents that you like.

I trust you got my "developer incentive" that I dropped on you in world. Your actions continue to have a depressive effect on the will to create content for your blank slate of a world, be it from usurping the currency market to permissions bugs that thwart commerce.

I was asked an incisive question last night in-game that helped me clarify my own disposition as to how I could be so derisive of LL on the forums and yet spend much of my game time as Live Help, or at The Shelter, or even offering up my property for a Building 101 class when the classroom sim was out of prims. My answer: "because I really like the people, I even like the LL personnel, but I can't stand the corporate policies that seem to flow from [Philip's] imperious actions". I have little doubt if you could "monetize" my helping others in your world, that you'd try to; I'm glad that's likely really hard to do.

OK, I've read a bunch of threads on this, and I am having trouble understanding what the problem is.

According to Philip's description, LL is interested in becoming a payment broker for SL members. Not a replacement for GOM, a replacement for PayPal, with better integration with the viewer.

How is GOM's business model affected at all? They alreay take payment via multiple payment brokers now. I don't see anything in discussion from actual LL employees that indicates that anything will break GOM's current sysyem, or prevent them from clearing transactions through the new LL mechanism.


Arashiko

Philip,

serious questions:
If I sell currency on GOM now, the US$ gets put into my paypal account and I can use the funds for anything I want. I can keep it there to buy things with my paypal account or transfer the funds to my bank.

Under the new system, how will I get my US$ if I decide to put up my $L for sale directly and not through a 3rd party? Will it go into my SL account for credit against future LL purchases like land fees and memberships or will it be credited back to my credit card? Either way, that is not direct US$ that I can use. It is just lowering my SL balance or my credit card balance. Will you offer bank or paypal transfers?

Opinion:
From your stated goals, I do not see why this system is needed when there are ample 3rd party options in IGE, GOM and Anshe and anyone who wants to sell on eBay. I have used GOM and IGE and find no problems with their services as they exist.


Make the game more stable, give us better land controls. Not this. Why are you wasting your limited resources on "fixing" something that isn't broken? I am not happy about the direction you are taking with this.

But, as I have said before, you have one of the best drugs on the market, so you can pretty much do whatever the hell you want until you break it completely. I will keep playing.

I think this should answer your question:

Our thinking: 1. you can sell L$ and then have us send you a check or transfer to you the US$ balance. 2. You can leave the US$ generated from the sale as a credit in your account.

Being able to use US$ as a credit to your account is a useful option because then we avoid one credit card/paypal fee in transferring the money to another account.




The rough development effort to add the system we are discussing is about three weeks of time for one person (and we've done some of that work). We have around 20 people at LL who could do this kind of work, so this is a pretty small fraction of our development efforts. Given that we might double the amount of currency people are buying (and therefore double US$ returns for content developers), it really seems worth doing.

(both bold emphasis mine)

Right ON!

I have also been asked that very same question and you've expressed in that last paragraph...what I've been trying to express for awhile. Thank you for that! For the most part LL employees are just tryin to do they jobs and whatnot.

As for the first part of your post - spot on!
As for philly's post maybe its because I'm half alseep but WTF does THIS actually mean? --->

"Overview Plan for Comments
The most straightforward way to achieve this type of system seems to be to allow different currency sellers (for example GOM, IGE, or AnsheChung.com) to post offers to sell blocks of currency at a specified price. LL then offers buyers a simple way to buy a chosen amount of currency by computing the lowest price taken from the seller's posted bids. LL then charges the buyer's credit card, and forwards the payment received to the seller's account. This is the system we are doing work on internally right now."

It really bugs the shit out of me when philly says something like that. He mentions at the end if this paragraph and I believe two other times in his whole post how LL is diverting a ton of development resources and energy towards (yet again):
1) "fixing something that isnt broken",
2) Ignoring ongoing SERIOUS problems for something that sounds suspicially like he done just woke up one day a couple month ago and decided to he wanted to get into the SL money biz somehow,
3) Making residents extremely uneasy and possibly setting a precedent - whether unwittingly or not - (can't decide which is more scarier) for butting his head into kick ass user content and either -

a) ripping it of gently like the snapzila photos on the front of the website. yeah he STOLE that shit from Ano, and just cuz HE seemed aimiable about it don't make it right (specially the method of the swipe seemed to have alerted its creator AfTER the fact).

b) Or trying to do some sorta similar copying ish unneccessary stuff like what's going on right now with this current situation.

I'm done rambling on this issue because I don't understand exactly what it IS philly is trying to do this time, but the simple fact remains what I DO understand is the ONE THING HE DIDN'T EVEN BOTHER TO ADDRESS IN HIS LONG WINDED POST: content creaters beware.

Thank the Big Ass Crystal the shit I create is way too fucked up wierd for LL to wanna snag on. Have a nice day.

Um ... someone logged in under the wrong account?

I will assume you are Philip (well, that alt is shot!):

<I removed my rant about how you can't possible do this and test it in three weeks. Someone is blowing sunshine up your chaps, man.>

If I can sell directly to other users through your system, how does that not eliminate my need to use any of the 3rd parties for run of the mill transactions? How does this not put you in the same business as them?

If you are trying to encourage people to buy lindens so they can buy things from the content creators, you already have a system in place for that. It is call premium accounts. If you buy one at the quarterly or yearly level, the lindens are cheaper than on any exchange and you get the 512 of land tier to donate to any group you want. I use this system to get my "walking around and buying airplanes money". If I need to buy land or some other really big ticket item, I go to the currency exchanges.

Also, have you considered the customer service nightmare you will have with this? Right now the exchanges handle it. Once you set up this system, you are the face people deal with, not them. Let's face it, your customer service is spotty at best. Adding this will only make it worse, as the exchanges response time is usually within hours, if not minutes.

I will grant you that this is a cool idea, but you already have people paying you a lot of money every month that are asking for so many other more important features. Given that we already have an effective 3rd party system for this, I don't see how it warrants this new feature at this time.

I really hope, as a designer and a long time subscriber to SL, that any 3rd party sites such as GOM or IGE are NOT going to be involved with this.

Can anyone say monopoly?

or Microsoft?

Oops, yes 'Yvette Gupte' was actually me - a test account I made yesterday to go through the new account pages. I've switched back!

Alan, respectfully I disagree with your assesment of the importance of this capability. The process of signing up at a third party site to buy currency is incredibly indirect and I don't think anyone could argue that if as a new resident of Second Life you find something that you want to buy that is in excess of L$1000 or so, that you are actually likely to do it.

Let me reply in a few minutes with some stats that may be helpful in explaining my thinking that there are many more people who would buy L$ if it was easier.

Since the economy is one of the things that makes the world go 'round and you have access to all the data, I look forward to reading them since I don't understand the importance of this being added so quickly as opposed to some of the more pressing user issues. I would also be interested in how you are planning to deal with the customer service part of this feature.

I do think you should consider more marketing of the benefits of the premium accounts as a way to support SL and get cheaper Lindens. Many basic users are spending a lot of money buying lindens they could get with their main character and maybe an alt or two at the quarterly or yearly level.

We may not always agree, but I appreciate having el presidente listen and respond.

As I mentioned earlier, here is a rough statistic to support my assertion that making buying currency really easy will signifigantly increase the market size for content creators:

In the last month, there have been about 22,600 different people in Second Life who have bought something in-world.

In the same period, there have been about 2,300 people who have purchased currency from the two biggest currency sellers.

So the fraction of people who have bought anything who have purchased currency is about 10%.

My assertion is that if currency purchasing is extremely simple, that number can be greatly increased. I think this data roughly supports that assertion. More importantly, though, I think that a rational examination of the current process for buying currency suggests that only a fairly small set of residents will be so motivated to buy currency.