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History of Marketplace Economics - Share Your Interesting Stories...


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Hello, fellow residents!

I find myself absolutely fascinated by the long, storied history of Second Life's Marketplace and in-world economy, but I can't find any good roll-ups of all the anecdotal stories from the people who've lived it or been affected by its undulations. So, being the social person that I am, I thought I'd post to these forums and see what I turn up!

I am vaguely aware of a few stories, just to get us started:

1) The "bed industry" was briefly affected by someone dropping the price of their high-quality beds to L$0, creating a race-to-the-bottom issue all in one fell swoop. How did that resolve itself?

2) Mesh avatars helped create standards, leading to a wondrous proliferation of goods that inter-worked.

3) Anshe Chung had once released good quality furniture for L$4, which had reprocussions across a broad range of industries... but I don't know how that ultimately got resolved.

4) Fluctuations in the cost and quality of the web marketplace and moved stores back and forth between the web and in-world storefronts over the years. Is this an on-going balancing act?

Would love to hear more stories and thoughts (and rants!) from long-timers-- builders, service industry workers, real estate agents, even customers!

Long live the free market! Long live builders and makers directly interfacing with consumers! Woot, woot!

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"3) Anshe Chung had once released good quality furniture for L$4, which had reprocussions across a broad range of industries... but I don't know how that ultimately got resolved."

I believe XStreet was still SLX, owned by Apotheus. Anshe was a 40% partner at the time. Apotheus decided to let her advertise her "10 Linden" program, in which Anshe was going to produce a vast amount of content all priced below L$10, mostly done by workers in her office in China. 

Many sweatshop comments and cries of unfair competition to be had, we rebelled and Apotheus pulled the plug on advertising her program on SLX. Game over on that one.

 

 

 

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As Kwak said, LL bought the marketplace. In fact they bought two of them. They were both operated by users.It wasn't something they came up with themselves. What they did come with was the realisation that an awful of money was changing hands in SL, and they decided to have a cut of it, and that's why they got into the market by buying other's people's systems.

They went about it in a very unscrupulous way, by doing their best to point users at it, and away from inworld stores. They intentionally and specifically worked against their own paying customers who were inworld traders, by using everything they could to undermine inworld buying. For examplee, when you signed into the website, you were greeted with "Welcome Marketplace user" in very big letters. They stopped doing it quite a while later, but it was unscrupulous.

(1) I know the "bed industry" thing you mentioned but I don't think I'd describe it as "high end". It was the most well-known at the time, and the person who owned it, and set all the animations for sale for 0L the lot, stole most of them from the person who created them. There's a silver lining though..The guy claimed to have made a million US$ from that business, and then he sued LL over something, and failed. After that, he said that he'd spent all of what he made on the law suit, so he ended up with nothing. As far as I'm aware, it didn't affect the bed industry at all. It certainly didn't affect my end of it.

(3) Furniture has been my stock in trade for a good many years. Quite some years ago, I heard that Anshe had started selling furriture at !0L. I can tell you that it didn't affect my business in the slightest. I.e. there was no noticeable effect.

(4) I'm not aware of any balancing act, or of stores moving to and from the Marketplace. But then, I have never sold anything on the marketplace - on principle - so I'm not the best person to give an opinion about that. :)

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It also wouldn't be a complete list without mentioning the "Listing Fee Wars".

Pink Linden proposed nixing free items on the newly acquired XStreet and implementing a L$10 listing fee for each product listed.

That discussion spanned many threads, thousands of posts and remained a heated debate that lasted for many weeks. In the end obviously, no restrictions on free items or listing fees.

Ironically, Sansar will most likely be taking 30% or more commission.

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This is the way it really is....

In an eggshell:

Constant price pumping by LL, particularly in regards to land costs has kept tons of 'marbles' (read customers) out of the game.

LL did everything they could to promote inworld shopping over SLM but of course failed in that regard because they weren't willing to jack up their 'service fee' 5% commission to something more reasonable.

Many Merchants still not willing to sell their wares for more reasonable (much lower) prices also contributing to many marbles being absent. 

Anyone who implies that LL is interested in a Socialist SL is just duckspeaking and p.r. promoting and probably everything they say should be taken with a large grain of salt.

A vastly improved economy would be based on inventory placeables and not land revenue.

So yes, the SL economy, and by default due to LL's virtual monopoly that exists, the VR economy as a whole is still in depression.

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Spica Inventor wrote:

Constant price pumping by LL, particularly in regards to land costs has kept tons of 'marbles' (read customers) out of the game.

As far as I can find, the land fees haven't changed for the past decade at $295 a month for islands and $195 for mainland sims. The setup fees have come down quite a bit even. The setup fee for an island in 2007 was $1675, now it is $600. How is that price pumping? Price pumping to me means increasing the price constantly. Do you just mean land is expensive?

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DartAgain wrote:

It also wouldn't be a complete list without mentioning the "Listing Fee Wars".

Pink Linden proposed nixing free items on the newly acquired XStreet and implementing a L$10 listing fee for each product listed.

That discussion spanned many threads, thousands of posts and remained a heated debate that lasted for many weeks. In the end obviously, no restrictions on free items or listing fees.

Ironically, Sansar will most likely be taking 30% or more commission.

What actually happened in the end is much more typical of LLs amnesiac modus operandi: LL ignored the bloodbath in the forum, stood their ground -- then just never implemented the fees. I think they might have eventually said something like "Oh that? No, we are not doing that."

The history of the MP put to music would sound something like "We Didn't Start the Fire".

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I think there is something to be said about the removal the in world store boxes. When a box was needed, you had to get a parcel in SL which led to the thinking , "I have a parcel, might as well make a store." Now it's easy to make a store on the marketplace and there is no incentive to make a store in world.

The SL marketplace is convenient but it does seem to sidestep the entire vision behind SL which is to have a virtual world where you can do everything.

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I've probably blogged on the SL economy in the past more than anyone, look up my blog at 3dblogger.typepad.com/second_thoughts and/or google the terms. 

You have a lot of preconceptions that don't add up, and you never mention the land market which is just as important or more than the content market, and there have been a great many sagas and scandals in that regard over the years like the grandfathered $195 private islands and initial effort by LL to inform only their special friends of the price hike which was then exposed, causing them to have to sell lots more grandfathered sim than they wished. There was also the "open spaces" scandal when the Lindens got tired of people making money flipping low-prim part-sims called "open spaces" which were supposed to be void water and not for living -- they retired that product and created something else called "homesteads" and that caused a furor. There was the Bush Guy and ad extortionists for years until finally the Lindens developed a policy against these to stop the devaluation of land because they realized it was affecting their auction sales.

Anshe's dumping of cheap furniture which she mainly pushed on her tenants really didn't affect the market because it was cheap and tacky furniture no one outside her tenant sphere sought to buy.

When Stroker Serpentine released his infamous sex bed to all perms for $0 on the market, it wasn't that big a deal. For one, only people who could bother loading the animations and figuring how to put them into a prim to work would bother buying it for $0; most people are willing to spend at least $350 to $500 to get a pretty one off the MP. I sell it for $100 inside a coverlet, for example, or $100 "as is" and the latter only makes a few sales because it doesn't work "as is".  But by this time, there was a HUGE amount of competition in this space, not only with beds with many hundreds more animations (his was a lot with like 600), but smoother animations and even an end to poseballs and the initiation of loops that could take avatars through 20 or 30 minutes of interactions without them constantly having to right click on awkward pose balls. So now his bed his obsolete really.

There isn't any "balancing" act on the web store, it's a simple story of the Lindens wanting to move to a taxation/commission system so they can get a piece of the content sales and wean themselves from the land (server) sale/rental model. But it won't produce enough revenue. People persist selling inworld because of hunts and the need for socialization and "see it inworld" to make sales.

The Lindens bought and then trashed Slexchange when they made their own system.  They cabbaged their own land revenue by wiping out the necessity of stores -- which people were happy to leave because they thought they suffered more copy-botting in them.  But as I said, they weren't completely thorough in this gutting of the world as people persist in being free and making markets that suit them, not overloads, and people like face-to-face interactions, serendipty, socializing, nice builds and atmosphere in a store as much as convenience of purchase on the MP.

The shopping events system and the emergence of the gatcha as an economy driver are really the big stories of the last years. Gatchas went from a novelty at $25 to the core of merchants' revenue at $75 and $100 a pull. 

There isn't really a free market here because the Lindens control the currency like Russia or China. The cashout is watered down in value due to Supply Linden printing Lindens to maintain a cheap ruble, er I mean Linden dollar. The LindEx recently dropped a point from 248 to 249 for limited buys within a day, because of millions going out the door due to Project Sansar.

The non-transparent auction; the insider discounts for some island dealers and not others; the early preview of features that insiders get; the censorship of the forums and many other features of Russia/China mean that the economy is hardly free -- and there are always people clamoring on the forums for even more socialism like a cap on land prices.

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