PR Stunts Japanese Style

by Pixeleen Mistral on 31/03/07 at 3:12 pm

Netage Purchases 150 Million Linden Dollars

by Onder Skall

Netagelogo_lNetage Capital Partners has joined forces with Meltingdots to create a bridge between Japanese business and the virtual world. Most companies just build an island. These guys, though… they don’t mess around.

Promised services to the Japanese business community include an OEM registration page and a currency exchange, as well as the general “build a sim from nothing” services. So far they’ve started with Meltingdots Island, but then decided to keep things liquid by grabbing L$150 Million. At the current exchange rate that’s just over US$550,000. At least, that’s what the press release says…

I think we need an economist to weigh in on this point. The Lindex only does around 60M of volume a day (that’s L$ moving both in and out) and doesn’t show any particular spike in activity over the last month. Obviously transaction limits on the Lindex would prevent this kind of purchase anyhow, as it would move the market far too drastically. One would think that this kind of purchase would move the economy somehow, even if it were done over the course of a few days. Regardless, if this purchase did happen, the money came from somewhere other than the Lindex.

Either it never happened, or this serves as some kind of proof that the Second Life economy is far more liquid than some have assumed . There are many other possibilities here, but I’ll leave further speculation for the comments. Weigh in on the following:

Was this purchase actually made or is this just PR fluff?
How might someone purchase that much L$?
If this did happen, does this imply anything about the SL economy?

14 Responses to “PR Stunts Japanese Style”

  1. Doubledown Tandino

    Mar 31st, 2007

    Purchase never happened

  2. Economic Mip

    Mar 31st, 2007

    Well Onder, you ask I answer. (Yes I do have more of an Economics background then just the name.) First off I highly doubt that they were lying. If they are claiming they have L$ 150 million, they’ve got it. Questions about how wise having that amount of currency on hand aside (if you want that info you had better request that I write an article) your primary question is how on earth is this possible? Well here is the rather unpleasant but honest answer: This is a big company, and falls under the Enterprise Level 4 trading limits. This means that within a 30 day period they are allowed to purchase $1.28 million in Lindens. What strings they pulled to get to level 4 is currently unknown, or if they are actually at a level five or six. (These levels should, based on the size of the current world exist, but there is no information on them.)

    Also, one of the primary assumptions of the valleywag article is that big companies are able to cash out at a lower rate then the general public, and that these huge companies are making and spending far more money than average.


  3. moo Money

    Mar 31st, 2007

    I’m calling April Fools on this one.

  4. Warda Kawabata

    Mar 31st, 2007

    Suppose they had received the necessary permissions to buy that many linden dollars. It would have shown up on the economic tracking data that LL provides. Massively so.

    It has to be all talk.

  5. Neo Rebus

    Mar 31st, 2007

    There’s also the SL Exchange currency market. There was a *hyooge* currency purchase there last week (sometime on the 27th).

  6. Nacon

    Mar 31st, 2007

    Maybe they meant as a intendedly plan to invest that much ahead of time, it’s Japanese, what else?

  7. Prokofy Neva

    Apr 1st, 2007

    Onder, companies don’t pay in Lindens or buy Lindens. They buy in regular RL currencies. A development company would be paid outside of SL completely by check or PayPal or something for an island and their services, as would LL. So they may be just using the equivalent figure of what would be valued for the services.

    If you’re saying they claim they bought that many million Lindens, then either it’s for PR purposes, or an April fools, or something we can’t tell. Perhaps they didn’t buy the Lindens on the Lindex, even, but got them from

  8. sheila6225 Allen

    Apr 1st, 2007

    It was reported in Japanese news that Netage would buy Linden dollars with their 50,000,000 yen. This amount is worth USD 426,803 at the exhange rate of 117.15 yen per dollar. So, “just over US$550,000″ is a little different form the amount I got in the Japanese news.

  9. Nacon

    Apr 1st, 2007

    Actually, second thought is… maybe they had special Money order arrangement with Linden Labs to save all the hassle work with buying Lindens on Lindex (due to purchase limit on Lindex). Which maybe Linden Labs “forgot” to add that into their activities transaction record.

    Third thought is… maybe they had people, whom already in SL, joined up and pitched in their Lindens without affecting the Lindex market to begin with.

    Ahh who knows? but does it really matter that much? Question would be, are they doing alright in SL? (with lag and all)

  10. Ombrone aka Albert Falck

    Apr 1st, 2007

    Well hard to give an answer, also ’cause actually I didn’t find the original press release

    1- As first supposition I would no discard a Press Release Hype or even an April fool.. So we can go back quietly to our daily routine

    2- As Second chance they did really. Form a tech point of view there are several way to buy Linden a part the LindeX, so the trading limit are not absolute.. they could have done it.

    The strange stuff would be the absence of any spike in the change… 150 milion L$ are about the 7% of the total monetary mass of SL as per Linden Official data. the dimension fo this movement is comparable to a Soros RL speculation. We should have seen a movement on the market

    This mean two possible scenario:

    A- SL Monetary mass is bigger than we know. LL data are wrong, or maybe the SL Banking system is no more a game and they are putting in the system all this liquidity, without any control.

    B- The market is much less trasparent that we believe it’s really possibile that so huge operation pass in silence without any apparent effect on the basic user.

    Both are not nice news in my opinion..

    Third chance flashed in my mind just now: they had directly agreement with LL, and they got all this milion of newly minted L$ directly from our top brass outside of every market. Half milion dollar of fresh cash for Linden in exchange for the risk of some inflation in game… hard to say no to all this money.

  11. Frederic Prevost

    Apr 1st, 2007

    Why dont you ask Asaeda Shinja of Mentingdots?

    He has been running Japanese ghettos in SL for quite sometimes, and MeltingDots sim is like Japanese Noob welcome island. Ghettos are selling like hotcakes because Japanese does not feel comfortable around “gaijin” even in Second life. (*smirks— Sorry, I’m a japanese, born and raised, so I can make this remarks.)

    With this deal, he now expanded to set up Japanese Second Life sign up websites with Japanese tutorials and links to client downloads with step by step instructions, and the biggest hurdles Japanese ppl had, “Money Exchange” by Japanese Yen.

    With this he now virtually monopolyze (Is there such word?) Japanese Second Life population.

    I would not see any economic impact overall, since Japanese ppl tend to stay inside the *ghetto* and refuses to do business outside, on the other hand, he may able to establish his own kingdom within the Secondlife Empire.

  12. Generic

    Apr 2nd, 2007

    This actually DID happen, and I think it is total folly and stupidity for this company to jump on the hype band wagon like this. Especially since SL will face some stiff competition this year.

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