A False Economy? Lindens Fight for Economic Stability

by Alphaville Herald on 11/01/05 at 9:41 pm

by Matthias Zander

Bonus decreases. Ratings price hikes. Event support disappearances. These three things that could be seen as catastrophies are the Lindens’ latest solution to the less-than-beautiful economy of Second Life. Robin Linden took the time to speak to a crowd of around 100 SL residents onthe afternoon of January 11.

“We think it’s important to keep a close eye on the economy,” Robin told the gathering of avatars, some of whom carried signs protesting the changes.

“The changes are pretty simple, and are meant to do a couple of things,” she explained. “First, to manage the flow of money into the SL economy, and second, to start to deal with some of the problems we’re seeing in events and in ratings, the economy being the main issue.”

Her comments were met with so much chatter from the crowd–some in protest and some in support–that Robin often had trouble making herself heard. But eventually she was able to get across “the facts.”

Here is how she laid it out:

Robin Linden: 1. rating bonuses will start to ratchet down starting next week
Robin Linden: rating bonuses account for about a third of the money going into the system each month
Robin Linden: 2. event support will be discontinued except for classes and such
Robin Linden: 3. it will cost L$25 to rate someone
Robin Linden: 4. there is no change to any fees you currently pay for land or membership
Robin Linden: 5. there is no change to weekly stipends payments, which are by far the largest source of Linden currency

Robin’s five “facts” can be grouped into two different categories. The first three state what IS going to happen. The final two state what is NOT going to happen.

First, rating bonuses will begin to decline. This is the amount that each user gains per week above their base stipend because of the ratings they have received over time. For premium members, this is anything over their $L500 stipend per week, but for basic account holders, it is anything over the low $L50 per week that they are entitled to. The figure that has been stated by the Lindens for this decline is 50%. The speed of the decline has not been stated, only the fact that it will happen and that it will begin starting with the patch that is to be released the morning of January 12th.

Second, event support will be discontinued besides “classes and such.” This essentially means that if your event is not educational, it will not receive any funding at all from the Lindens. Perhaps we shall soon see “Pimping 101 at Club Lotsa HOs” popping up on the events list instead of “Come Dance at Club Lotsa HOs” from now on. Hey, as long as they teach something, this vague term will apply to it. Perhaps the Lindens need to work on developing an exact definition of this.

Third, the price of ratings will increase from $L1 to $L25. Now, while this may seem like a good thing, all it means is that the people who are currently far ahead in the ratings will never be reached. With it costing 25 times more to rate someone, those people in the top ten have secure places unless the Lindens decide to wipe or reduce ratings, something that Robin said would not be done at this time. This also means that you have to think harder about rating someone because you like their clothing. Do you honestly like it enough to spend $L25 telling them that?

The two things that will not be changed in these changes are pretty similar. There will be no increase or decrease in the price to use Second Life. This includes land tier fees as specifically asked by multiple audience members. The actual stipend amount given out per week will also not change. This means that those who currently have a basic account will keep getting only $L50, plus their reduced bonus, each week. The effects of this could be astronomical, making it so that the rich of Second Life get richer while the poor get poorer.

The changes were inspired by concerns among the Lindens that Second Life’s economy had been growing out of balance. Money supply has indeed been rising in recent months, and there is also concern about property prices.

The announced changes had a significant impact on the price of the Linden dollar compared to the US dollar today. Yesterday, a bundle of $L1000 was trading on the Gaming Open Market for US$3.78. During the meeting with Robin, the price rose to US$4.00 per bundle of $L1000. In response to a question from the Herald, Robin indicated that the Lindens’ target price for the Linden dollar is just that, US$4 per L$1,000.

But the rise of US$.22, while seeming small, is actually quite large compared to historical fluctuation patterns, and there is some concern that fears of changes to come will lead to an even higher US$/L$ exchange rate.

SL residents have been comparing this announcement by the Lindens to the announcement that There.com made on May 21, 2004. This announcement that their product would no longer be supported eventually led to the downfall of the There system in the eyes of most. Only the future will tell whether or not the decisions made by the Lindens will have a positive or negative impact on the system. All that we can do as users of Second Life is to express our opinions to the Lindens in an informative and respectful manner so that they can obtain accurate feedback on what they are doing.

The Herald has secured the promise of an interview with Robin Linden, but it remains to be seen when that will take place. Robin told the crowd of almost 100 residents gathered at Stage 4 today that she would be back in-world over the next few days to field more questions, complaints, and even some support, which was also to be heard at the meeting. Changes to event support did not stop a protest meeting that was planned for 6:00pm on Tuesday, however.

Continue to expect full coverage of these changes from the Herald in the hours, days, and perhaps even weeks to come.

Comments are closed.