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SL's Economy - Tier vs Time


Leia36
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The only RL price here is land, every other item or commodity is deflated in value. In other words the servers are worth more than the people's time spent creating and its the people that make SL, not the servers, just look at open sim.

Its the dynamic of the SL economy that stagnates it. The value for money spent vs time spent creating. Would selling RL goods and services help SL grow?

The exchange rate is a function of the confidence the market has in the entity that is SL, would bringing it closer to dollar parity hurt or help SL and how is that accomplished?

Do all these factors mesh into the equation and what other factors do you see as contributing to SL's "State of the Nation"

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Leia36 wrote:

In other words the servers are worth more than the people's time spent creating and its the people that make SL, not the servers, just look at open sim.

Yet, not all servers are equal in what they deliver in value. 

A SL server delivers an entire grid/world to us, with additional features like this SL forum, SL feeds, and the SL marketplace.   I've been to many OS grids and sims, and even though they've tried their best to copy all that LL/SL offers, it can't be done with the Open Source mindset, as the freebie part negates the market dynamics of SL.  Other grids also tried to copy SL, and many even added the "marketplace" and monetary factor, but still fail to deliver the sheer numbers, and interactive possibilities that SL delivers.

So, a server may physically be equal, but unless it can deliver equal value (as in a SL experience), it does not matter.

I have seen amazing creations in various OS grids, many that rival and even exceed creations in SL.  But, again, the number of people who saw those amazing creations is very small, compared to the exposure they would have gotten in SL.   One may argue that those creations would not have happened in SL,because tier prices would be prohibitive.  True perhaps, but SL is only an equal-opportunity-creation-zone when individuals choose to spend the money on tier.   Otherwise, they can build in sandboxes, and have a very limited audience indeed.

Bottom-line is that SL is a business.  Nothing else.   When the current business model fails to deliver, then real changes may be made.  Currently, the business model includes making money from tier (renting server space for people to interact within a virtual world), and it's actually a pretty good system.  Wish I'd thought of it. 

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I'll give you an example, I answered a classifieds ad about three months ago, the poster wanted a custom logo for his shop. I am a graphic artist (amongst other things) in RL and I answered his ad. Usually a logo such as he wanted would take around 8 hours from concept to completion in various formats. I calculated my normal rates and the price I would charge in RL would be close on 65000L and that's bargain basement rates, he wanted to pay me 1200L ..lol

Point is a logo is a logo here or in RL. The above is only an example I am sure others have had there own experience. I am curious about how others feel, the OP is not a challenge to anyone's rice bowl.

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SL is not RL. It's a "game" for most and so they are not willing to spend RL prices. But if you offer a service that uses RL time that simply does not match.

I don't script/animate/build/whatever for others because I will surely not spend my RL time for SL money. All I do is for fun only. That's ok for me.

SL doesn't offer any business model (for me). So I treat it like a game. It's for fun and can cost a bit money, that's all.

 

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Heh,

Yea, I am a Construction Contractor in RL . Depending on the job, I make 50 to 150 USD an hour.. I know damn well I wont get that in SL. LOL

Second Life is more of a hobiest venture type thing. There are some people that will pay good money for a logo .

This is where you have to trim down your expertise and do a decent job with minimal time to make your time worth. There is a lot of designers that can create a logo for somone in an hour.. Do they spend mounds of time on it to make it perfect? Probably not lol

The thing about Sl is.. It takes several hours to create a product. Like Mesh for instance... But once it is created. It doesnt cost me anything to reproduce the item and sell hundreds and hundreds of copies. Mannufacturing overhead is low to none.

It is a matter of what you are willing to do for the money. .

 

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Yes I get that RL isn't SL hence the OP. I guess I am struggling to conceptualize the dynamics of the SL economy and trying to find an explanation for the high tier costs.  In some respects a few creators have made decent money, bloodlines comes to mind. However I would like a glimpse of where SL is going, I do think a "real" 3D interface is a few years away at least, and perhaps then things may change, or another platform come into being.

Question, if more people could make real money here easier, would SL then be a bigger & richer experience?

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Although I agree that current tier costs are unsustainable given the SL economy, I think otherwise you've generally got the cart before the horse. In my opinion, it's not that the inability to make real money in SL prevents it from growing, but rather SL's stagnation and gradual slump into obscurity prevents it from being a viable platform for making real money.

Another point that I think is tangential to the thrust here, but is either wrong or vastly oversimplified:


The exchange rate is a function of the confidence the market has in the entity that is SL, would bringing it closer to dollar parity hurt or help SL and how is that accomplished?

In a very specialized sense, the L$'s value is a function of market confidence, but only to the extent that SL users' demand for L$s reflects that "confidence." Although there are probably still a few L$ "currency traders", I don't think anybody is buying L$s as a hedge against devaluation of other currencies (nor vice-versa). That's because the L$ exchange rate is very tightly managed by the Lab through its various currency sources and sinks.  The source of last resort is sale of new L$s on the LindeX to prevent the L$ from getting too valuable (too low an exchange rate) in US$ terms.

As far as I know, the Lab never buys L$s on the LindeX, so in theory, a crisis of confidence could cause people to accept less in return for their L$s (sell at a higher exchange rate vs the US$), devaluing the L$. I say "in theory" because the L$ has remained remarkably stable for years. The only explanation I can imagine for such stability is a system tuned with enough sinks that there is some sale of new L$s pegged at that constant target rate.

It's been years since LL has reported L$ sources and sink. Back then, they only seemed to sell L$s infrequently and in large quantities, but since then there have been fewer Premium stipends paid and the L$ is even more stable, so I suspect there's now a fairly constant stream of new L$s sold on the LindeX.

If that's correct, it would be possible for the Lab to gradually increase the value of the L$ toward US$ parity just by selling fewer new L$s. That would make everyone with a significant L$ balance fabulously wealthy, so if that policy were made public, the change could be very fast: people would try to buy up L$s as fast as they could, at any exchange rate higher than 1:1. This wouldn't mean that the SL economy was any healthier, only that there was a huge temporary arbitrage opportunity that the market couldn't ignore.

In fact, however, I think US$ parity would be very bad for the SL economy. It's all artificial of course but there's a willingness to spend lots of spacebux that are individually nearly worthless, whereas people would hesitate to spend even part of a token that's actually worth a dollar.

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Leia36 wrote:

I'll give you an example, I answered a classifieds ad about three months ago, the poster wanted a custom logo for his shop. I am a graphic artist (amongst other things) in RL and I answered his ad. Usually a logo such as he wanted would take around 8 hours from concept to completion in various formats. I calculated my normal rates and the price I would charge in RL would be close on 65000L and that's bargain basement rates, he wanted to pay me 1200L ..lol

Point is a logo is a logo here or in RL. The above is only an example I am sure others have had there own experience. I am curious about how others feel, the OP is not a challenge to anyone's rice bowl.

In SL it's very likely that someone can get a "free" or nearly free logo made, as SL is a hobby for many RL graphic artists.  Plus, in the SL population, you have many people who are self-taught:  graphic artists, scripters/coders, builders, animators, musicians, 3D modelers, etc.  These self-taught people do beautiful work, but since they did not come from the RL world of doing their hobby for money, many are happy to get paid, even if it's below what is a RL-payment scale.  Just think what the cost of SL goods and services would be, if everyone got RL pay-scale for their work.

At one time, many years before you arrived in SL, some people did get, nearly or actual, RL pay-rates for SL-inworld work.  But the demand for that type of work disappeared as RL companies and universities left.  Add to that, the constant increase in the SL population, gaining skills. SL is now entering into it's 10th year, many people have very good skills to offer, and that make rates lower, as competition drives pay-rates down.

One other thing I'll add:  You're example is a one-off job where you'd be creating a one-time item.   Better to create things to sell to many people, as the time spent, can be recouped over many sales.  Create one dress, couch, or house, and it sells many times, so your average time spent per item is small.  That's how people make money in SL. 

Tier, while admittedly high, is one of the few things of value to me, as it represents the LL servers & code.  I can make just about anything in SL, but I cannot make "Second Life" itself.  Second Life, is an entire world, full of wonder, creativity and amazing people.  For, that, I'm willing to pay tier.

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Leia36 wrote:

I'll give you an example, I answered a classifieds ad about three months ago, the poster wanted a custom logo for his shop. I am a graphic artist (amongst other things) in RL and I answered his ad. Usually a logo such as he wanted would take around 8 hours from concept to completion in various formats. I calculated my normal rates and the price I would charge in RL would be close on 65000L and that's bargain basement rates, he wanted to pay me 1200L ..lol

Point is a logo is a logo here or in RL. The above is only an example I am sure others have had there own experience. I am curious about how others feel, the OP is not a challenge to anyone's rice bowl.

Your RL fee isn't entirely  based on your artistic ability or logo-making skills; in fact, that's really only a small part of it. it's entirely possible that a LOGO as good as yours (including the eight hours of work) could be produced by an art school student for portolio fodder, an artsy housewife for fun, or (in the case of Chevrolet) a megalomaniac entrepreneur who sees an interesting symbol in some wallpaper. Your fee, (which you deserve, mind you) is based on your artistic ability PLUS an expectation that you'll work when you'd really rather go out dancing, that you'll take responsibility for your work and avoid doing things that will get your client sued, and that you won't flounce immediately when you find that you're working for a raging tool.

In RL the financial stakes are high enough that these additional factors are worth paying for, but in SL they aren't. Yes, a SL region private region is expensive, but it's cheaper than 16 acres of RL land with full services, which is what it's the equivalent of. With this in mind, it makes more sense to go with the equvalent of the art school student or the housewife (or to be the megalomaniac entrepreneur your ownself) than to pay extra for professional services. (In SL the cost of a provider giving up the Right of FIrst Flounce in itself would be staggering, given the raging-tool population.)

 

 

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Dilbert Dilweg wrote:

The thing about Sl is.. It takes several hours to create a product. Like Mesh for instance... But once it is created. It doesnt cost me anything to reproduce the item and sell hundreds and hundreds of copies. Mannufacturing overhead is low to none.

 

this ^^

like you say is fundamental different to RL. the cost of manufacturing is free. and also with the SL marketplace model then other fixed costs like warehousing and transport and retail space are also zero to the merchant

is sales based payment method at the moment. dont sell and pay nothing

without a fee structure that actual cover the cost of all these things and make a profit for the host then is not sustainable in the longrun from business pov

linden have to figure out how to push retail prices up (therefore sale commissions) if they going to continue with this model or they going to go broke. easiest way to do this is start charging a base minimum fixed fee to be a SL merchant

without a base fee then is a race to the bottom for prices. when costs are 0 then prices go to 0 when is multiple merchants in the market. is how equilibrium works

when there is a base fixed cost then when receipts go under this amount then those merchants drop out of the supply chain. this dont happen when the cost is 0  

+

is some merit in a SL merchant account. like say $300 a year or about.

you get a land for a inworld workshop/store. x resource uploads and a marketplace storefront. x free adverts in inworld and marketplace search. want more adverts and resource uploads then buy them

if got a merchant account then can sell for any price even $0

if not a merchant then can only give/transfer stuff to people directly. like you cant set a vendor prim or script to sell for any amount. even $0. can still create and make your own stuff. and give to your friends just by drop on them manually. cant make a script to this either if you not a merchant

 

 

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Celestiall Nightfire wrote:

 

One other thing I'll add:  You're example is a one-off job where you'd be creating a one-time item.   Better to create things to sell to many people, as the time spent, can be recouped over many sales.  Create one dress, couch, or house, and it sells many times, so your average time spent per item is small.  That's how people make money in SL. 

 

This is an excellent point.  Within a thread on photography in SL someone mentioned a person who takes amazing photos, many of which are used on the SL website banner.  I browsed her blog and she does indeed do amazing photographic work.  I noted that she had a MP link.  Following that I found she offers two photography packages; one for a couple and the other single - I'm assuming something along the order of a profile pic.

Her price for the single package is $1500L and $2000L for the couple.  The photo shoot time is listed as approximately 30 minutes.  My "guess" based on a professional portrait I had done years ago in SL with another photographer, is that this person has a variety of templates to utilize after the initial shoot, cutting down on design time.  There is no other way I can imagine someone who is very well-known in the SL community and who does amazing work could afford to charge a very modest amount for her work.

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Pussycat Catnap wrote:


Leia36 wrote:

Yes I get that RL isn't SL hence the OP. I guess I am struggling to conceptualize the dynamics of the SL economy and trying to find an explanation for the high tier costs.

Justifiably there isn't one.

No other MMO has costs like these.

But you can't really compare SL with an MMO since MMOs are "pre-built" worlds, if you will, in which one enters and interacts.  An MMO has specific goals and levels to attain.  There are no homes or places to live, a recent exception being Everquest who introduced "neighborhoods" for which one pays rent for a particular parcel -  houses, furnishings, and landscaping items must all be purchased pre-built from an NPC - the only creativity being in how one arranges the purchased items, no user created content aside from grinding out item (A) after first collecting parts (B,C,D,E,F) and having the skill level needed to combine them, nor a merchant economy.

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Czari Zenovka wrote:


Pussycat Catnap wrote:


Leia36 wrote:

Yes I get that RL isn't SL hence the OP. I guess I am struggling to conceptualize the dynamics of the SL economy and trying to find an explanation for the high tier costs.

Justifiably there isn't one.

No other MMO has costs like these.

But you can't really compare SL with an MMO since MMOs are "pre-built" worlds, if you will, in which one enters and interacts.  An MMO has specific goals and levels to attain.  There are no homes or places to live, a recent exception being Everquest who introduced "neighborhoods" for which one pays rent for a particular parcel -  houses, furnishings, and landscaping items must all be purchased pre-built from an NPC - the only creativity being in how one arranges the purchased items, no user created content aside from grinding out item (A) after first collecting parts (B,C,D,E,F) and having the skill level needed to combine them, nor a merchant economy.

SL is an MMO. Anyone that says otherwise either doesn't know how they work, or is just dumb.

http://en.wikipedia.org/wiki/Massively_multiplayer_online_role-playing_game

MMO's are loosely defined as "a genre of role-playing video games in which a very large number of players interact with one another within a virtual game world." Well, SL is a virtual 3D world where the users interact on a client/server system. MMO's have economies complete with in-game item creators, bots, roleplayers, fraud, separate "instance" servers, unofficial sites- everything SL has. The ONLY difference between SL and an MMO like WoW is that the content is user created instead of developer created.

Pussycat is spot on in what she said. If anything, SL's costs should be even lower than any other MMO out there, because LL doesn't even create the content. They don't have game developers, story writers, voice actors, or customer support. They simply turn on the servers and then say "not our problem" every time there's a problem.

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The question as to the strategic economic direction of SL certainly remains open. Something has already been said about scale/design-once-and-mass-produce, the amusement/hobby motive, the discrepancy between in-world currency and RL forex, and meta-world technological/infrastructural commerce. The crux of the matter obviously lies in creating value in-world which would translate to RL monetary value.

 

Apparently the current dynamics of SL in no way justify valuation of in-world artifacts remotely resembling that in virtual (gaming) worlds such as World of Warcraft. There the established homogeneous culture of the gamer target group seems to transfer value naturally to the RL (black) market. To achieve something similar the diffuse package which is SL would likely have to be strategically differentiated and reintegrated. This would mean highlighting select selling points to meet diversified market demands.

 

For instance:

 

- gaming sims could strive for interoperability/interchangeability with trend-setting, dedicated virtual platforms and/or create new experiences

- sims modeling  RL geographical locations or history could be made RL-mappable within a (mobile) mixed-reality (tourism/role-playing) concept

- RL sports/recreation could be mapped onto SL à la Wii to augment training and enjoyment

- sims providing virtual showrooms for development technologies could act as in-world, end user-friendly Rapid Development Environments

Critical would be leveraging the generic and flexible characteristics of the SL platform to unity the offerings within a seamless user experience tantamount to a one-stop-portal-to-the-Metaverse...

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Czari Zenovka wrote:


Pussycat Catnap wrote:


Leia36 wrote:

Yes I get that RL isn't SL hence the OP. I guess I am struggling to conceptualize the dynamics of the SL economy and trying to find an explanation for the high tier costs.

Justifiably there isn't one.

No other MMO has costs like these.

But you can't really compare SL with an MMO since MMOs are "pre-built" worlds, if you will, in which one enters and interacts.  An MMO has specific goals and levels to attain.  There are no homes or places to live, a recent exception being Everquest who introduced "neighborhoods" for which one pays rent for a particular parcel -  houses, furnishings, and landscaping items must all be purchased pre-built from an NPC - the only creativity being in how one arranges the purchased items, no user created content aside from grinding out item (A) after first collecting parts (B,C,D,E,F) and having the skill level needed to combine them, nor a merchant economy.

Well all that's just an argument for the MMO having a higher cost. Since here, we have to do the work. Its almost an argument to say LL should pay -us-. :P

 

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Gadget Portal wrote:


Czari Zenovka wrote:


Pussycat Catnap wrote:


Leia36 wrote:

Yes I get that RL isn't SL hence the OP. I guess I am struggling to conceptualize the dynamics of the SL economy and trying to find an explanation for the high tier costs.

Justifiably there isn't one.

No other MMO has costs like these.

But you can't really compare SL with an MMO since MMOs are "pre-built" worlds, if you will, in which one enters and interacts.  An MMO has specific goals and levels to attain.  There are no homes or places to live, a recent exception being Everquest who introduced "neighborhoods" for which one pays rent for a particular parcel -  houses, furnishings, and landscaping items must all be purchased pre-built from an NPC - the only creativity being in how one arranges the purchased items, no user created content aside from grinding out item (A) after first collecting parts (B,C,D,E,F) and having the skill level needed to combine them, nor a merchant economy.

SL is an MMO. Anyone that says otherwise either doesn't know how they work, or is just dumb.

MMO's are loosely defined as "a genre of role-playing video games in which a very large number of players interact with one another within a virtual game world." Well, SL is a virtual 3D world where the users interact on a client/server system. MMO's have economies complete with in-game item creators, bots, roleplayers, fraud, separate "instance" servers, unofficial sites- everything SL has. The
ONLY
difference between SL and an MMO like WoW is that the content is user created instead of developer created.

Pussycat is spot on in what she said. If anything, SL's costs should be even lower than any other MMO out there, because LL doesn't even create the content. They don't have game developers, story writers, voice actors, or customer support. They simply turn on the servers and then say "not our problem" every time there's a problem.

Gadget, Gadget, Gadget - you are so myopic when it comes to the issue of gaming.  Having done both SL is nothing like an MMO except for SL having role playing areas within it.

And you'd better not be calling me dumb...them's fightin' words and you really don't want a redhead hurricane now. ;)

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Myopic? Am not, you doodie face.

 

Seriously though, if you ignore objectives and ignore where the content comes from, the technology and environment are literally the same thing.

 

Now if you'll excuse me, I need to go pwn some noobs in BF3.

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Gadget Portal wrote:

 

Seriously though, if you ignore objectives and ignore where the content comes from, the technology and environment are literally the same thing.


If you ignore the fact that they're radically different, the basic cellular structures and materials of a cat and a peanut plant are literally the same thing

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Gadget Portal wrote:

Myopic? Am not, you doodie face.

 

Seriously though, if you ignore objectives and ignore where the content comes from, the technology and environment are literally the same thing.

 

Now if you'll excuse me, I need to go pwn some noobs in BF3.

"Doodie face?" 

Gah, now you owe me a Pepsi!!!

*Wipes off the monitor*

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