Process Credit Fees Raised. Again.

[Rya Nitely]

Here's one of my posts that I still stand by

 

[Luna Bliss]

2 hours ago, Rya Nitely said:

Here's one

Thanks for all the links, Rya.

Thank goddess I don't see any new RL austerity measures being shoved at the merchants as a solution this eve!

[Wulfie Reanimator]

I'm back with my homework.

• Facts
  • Supply Linden injects L$ to fill buy-orders. (supply for the demand)
  • L$ was stable for 5 years at around 248-250:1.
  • L$ had a sudden spike in 2016, getting close to 300:1.
    • Large orders of L$ were regularly placed way above current rate.
    • Many people would cancel their orders and relist them again at even higher rates.
    • The number of sales increased.
    • The volume of L$ sold did not change or slightly decreased. (based on Gridsurvey)
  • L$ has stabilized at around 257-259:1.
  • This is called deflation. The cost of goods and services has dropped at current price.
    • Consumers benefit from deflation due to getting more L$ to spend per dollar.
    • Merchants are hurt by deflation because the L$ they receive is worth less.
  • The deflation stopped as Linden Lab announced changes to trading limits.
• Conclusions
  • Somebody was manipulating the market.
  • Merchants lost money during the spike.
  • Merchants must've adjusted their prices to avoid losses in the (now past) future.
• Questions I couldn't answer
  • Did Linden Lab actually benefit from this, especially if L$ volume was unchanged?
    • All of LL's flat-fee money sinks became cheaper; lost revenue unless more people started using them.
    • Marketplace wouldn't have done better unless prices were raised or market activity went up.

Does this cover it, or did I get anything wrong and am I missing something?

Edited January 7, 2020 by Wulfie Reanimator

[ChinRey]

16 minutes ago, Wulfie Reanimator said:

Does this cover it, or did I get anything wrong and am I missing something?

I think you got most of it covered, nice!

There is only one question you forgot to ask: Is the market manipulation deliberate?

If it isn't Linden Lab the answer obviously is no. Nobody else can have any reason to sell their L$ cheap.

If it is Linden Lab, I'm fairly sure the answer is still no. Apparently Ebbe Linden has said straight out that LL is not trying to manipulate the exhchange rate and I believe he believes it. (There are also other reasons why I'm sure it isn't deliberate but there shouldn't be any need to go nto details.) It simply hasn't occured to them how Supply Linden's LindeX sales affect the exchange rate.

---

As for who is controlling the rate, let's look at who is selling there and how much of the overall volume they represent. Please note that the numbers here are not accurate, there are several unknown factors. They should be in the right ballpark though:

Land rentals	35%
Merchants	10%
Premium members selling their stipends	<1%
Others	55%

Who are these others? That's a good question.

[OptimoMaximo]

8 hours ago, ChinRey said:

Who are these others? That's a good question

Who can have access to such volume of L$? The only reasonable answer is LL itself, under a disguise account or set of accounts. 50% of the volume means half of the L$ ever shed to the market. So it is either LL, or the accounts of the bank that backs the virtual currency emission (very unlikely). 

[Rya Nitely]

10 hours ago, Wulfie Reanimator said:

I'm back with my homework.

that's great! It's a helluva lot of reading, and kudos to you  for doing it 🙂

As for the subject, I did read through some of those threads again myself, and it was interesting reading, for me anyway.

I will always believe LL devalued the L$. Perhaps they saw the need for quantitative easing. And if they did, they would never tell us. Firstly, because they wouldn't think it was any of our business how they run things, and secondly, because it would generate such an outcry.

ETA: I think Ebbe would be regretting that he ever opened his mouth about the $60 million process credit, and the 'some folks are getting away with.....', and there would be a lot of 'I told you so's' from his staff. I think he'd heed their advice and shut up from no on, because SL residents never forget, they will bring it up again and again forever.

Edited January 8, 2020 by Rya Nitely
edit to add

[OptimoMaximo]

48 minutes ago, Rya Nitely said:

ETA: I think Ebbe would be regretting that he ever opened his mouth about the $60 million process credit, and the 'some folks are getting away with.....', and there would be a lot of 'I told you so's' from his staff. I think he'd heed their advice and shut up from no on, because SL residents never forget, they will bring it up again and again forever.

The problem, imo, sits in the fact that he thinks SL user base is a herd of dumbs that can't do a simple 1+1=2 type of equation. Not realizing that most content creators, instead, are not only more intelligent than him, they're only those who dragged development of a platform that would have died off a long time ago if it were for LL's developers and skills

[Alwin Alcott]

16 minutes ago, OptimoMaximo said:

Not realizing that most content creators, instead, are not only more intelligent than him, they're only those who dragged development of a platform that would have died off a long time ago if it were for LL's developers and skills

 .. creators did not build SL, the buyers of the creations did. Like LL offers the platform, creators offer the blocks to create the world as it is. Like LL you'r "only" a step in the process.
There are some very valid points in this thread, but also a lót of proffesional whining. Some creators didn't produce a single outstanding product in years, just floating on ancient successes ... get up, stand out and see your selling rise, or not, but they will get a lot more satisfaction from their job. ánd respect form their customers.
Selling pre 2010 or even lots older primmy stuff is pride in your work? no it's not, thats lazyness and the same arrogance you try to put in LL shoes. Not creating new exciting stuf for you buyers?..thats pride? .. no, the only thing of this all is that its reversed advertising. People will see these posts, and stop buying. There is more competition in all the product lines as ever before, thousends of shops to find clothes of the same quality, landscaping and whatever there is around. Everybody gets a lot smaller part of the cake. Old successes are gone. Past and away.

Edited January 8, 2020 by Alwin Alcott

[OptimoMaximo]

45 minutes ago, Alwin Alcott said:

creators did not build SL, the buyers of the creations did. Like LL offers the platform, creators offer the blocks to create the world as it is.

I'd like to remind you that many features were brought in because of creators requests though. As much as I can stand by your point of view, I also found other means of selling digital assets that are more sustainable than creating in SL, exactly as the professional whiners in here have stated to have, too. So is professional whiners find less and less time to dedicate to SL as the economic conditions for the time spent are less valuable. And by the way, if you're judging from what you can see in the accounts stores, I'd like to remind you that some of us keep selling stuff under other accounts too, leaving some of the products that don't relate to the main business on their personal accounts. For instance, I do sell under a brand name while my plug ins and past freetime stuff are under this account name. I'm doing less and less under the brand name because I'm currently more focused on platforms that stream a better revenue. So, in my case, I'm not whining, I'm stating my observations. For me, SL and LL could shut down tomorrow, I wouldn't care much. 

[Rya Nitely]

46 minutes ago, Alwin Alcott said:

Some creators didn't produce a single outstanding product in years, just floating on ancient successes

I can't guess who this is, but I agree with you that if you are no longer actively creating and just floating on ancient success then you shouldn't be complaining, because you should expect that your sales and profit will decrease over time.

It was interesting reading the old threads because this came up, people like Sassy Romano and Phil Deakins just not creating anymore and sales fading away. Both seem to have left now, but they were once very successful, and then things changed, and they didn't keep up with it, through choice or whatever. Phil said he just allowed his sales to dwindle to a trickle. I suppose they are both still getting something after years of not creating anything new - but both of them didn't give a toss about the decrease L$ value, and they didn't even like the subject (because they weren't actively creating to make a profit anymore). But Phil did eventually take an interest when he agreed the activity on the LindeX was weird.

Anyway, at that point in time I was so enthusiastic, and now I am where Phil was all those years ago, choosing to let things just slowly die a natural death. But this has been a very recent decision, and who knows...............however, if I did stick to it and allow thing to die I wouldn't complain about anything in SL, because it would have nothing to do with me anymore.

[ChinRey]

5 hours ago, OptimoMaximo said:

Who can have access to such volume of L$? The only reasonable answer is LL itself, under a disguise account or set of accounts.

They wouldn't need to disguise it. Actors on LindeX are all anonymous anyway.

But is it really SL? I used to think so too but 55% of the L$ exchange market adds up to well over 50 million U.S. dollars a year. Crunchbase estimates LL's total revenue to be 42.7 million USD and of course most of it is tiers paid in U.S. dollars directly.

Unless some of the numbers are totally wrong, there is simply no way LL can be behind more than a fraction of those 55 percents. Let's say five percent. Then let's be generous and give other entrepeneurs 10% of the "others" pot. That leaves us with 40% of the volume unexplained. Keeping in mind that the other precentages are all ballpark figures with considerable margin of error, we should probably say 25-50%.

An there's more. LindeX' sales volume in USD ought to be a bit lower than SL's total economy but it actually seems to be considerably higher. And there's also something we mentioned earlier. To sum it up:

• Between a quarter and half of the L$ offered for sale on LindeX has no obvious source.
• The volume appears to be far too high compared to SL's total economy. If this is correct, much of the transactions can't be directly related to SL at all.
• The volume is amazingly stable and doesn't seem to be affected by changes in the SL economy at all.

I'm not going to draw any conclusions. I think eveybody can see where this is leading and we can't go there without much firmer data and much more thorough calculations. Is there an accountant in the house?

 

Edited January 8, 2020 by ChinRey

[ChinRey]

3 hours ago, Alwin Alcott said:

Some creators didn't produce a single outstanding product in years

 

Building an SNO ("Something New and Original")	5 hours
Listing (including picture creation and copywriting)	1 hour
Marketing and customer support	2 hours
Total time spent	8 hours
Realistic price	100 L$
Realistic sales volume	10
Gross income	1000 L$
Net income	3.20 USD
Income per hour	0.40 USD

Sorry, I got distacted. What was the question again?

Edited January 8, 2020 by ChinRey

[Rya Nitely]

28 minutes ago, ChinRey said:

Makin Something New and Original 5 hours

😮

no wonder I'm burnt out.

Recently I spent 4 weeks (about 3 hours a day on weekdays, and about 5 hours a day on weekends) just trying to create a waterfall texture that I'm happy with.

My family were so sick of me saying 'how does it look now, does it look real?' for 4 weeks. OK I know why I'm burnt out.

[OptimoMaximo]

43 minutes ago, ChinRey said:

They wouldn't need to disguise it. Actors on LindeX are all anonymous anyway.

But is it really SL? I used to think so too but 55% of the L$ exchange market adds up to well over 50 million U.S. dollars a year. Crunchbase estimates LL's total revenue to be 42.7 million USD and of course most of it is tiers paid in U.S. dollars directly.

Unless some of the numbers are totally wrong, there is simply no way LL can be behind more than a fraction of those 55 percents. Let's say five percent. Then let's be generous and give other entrepeneurs 10% of the "others" pot. That leaves us with 40% of the volume unexplained. Keeping in mind that the other precentages are all ballpark figures with considerable margin of error, we should probably say 25-50%.

An there's more. LindeX' sales volume in USD ought to be a bit lower than SL's total economy but it actually seems to be considerably higher. And there's also something we mentioned earlier. To sum it up:

• Between a quarter and half of the L$ offered for sale on LindeX has no obvious source.
• The volume appears to be far too high compared to SL's total economy. If this is correct, much of the transactions can't be directly related to SL at all.
• The volume is amazingly stable and doesn't seem to be affected by changes in the SL economy at all.

I'm not going to draw any conclusions. I think eveybody can see where this is leading and we can't go there without much firmer data and much more thorough calculations. Is there an accountant in the house?

 

That's how inflation works: you print more money so the unit value decreases. If LL demands more tokens to be released by the bank which backs them, with the same or lesser amount of monetary value behind it, as a result the token decreases in value. 

[ChinRey]

4 minutes ago, OptimoMaximo said:

That's how inflation works: you print more money so the unit value decreases. If LL demands more tokens to be released by the bank which backs them, with the same or lesser amount of monetary value behind it, as a result the token decreases in value. 

Yes but there seems to be more to it than that. Unless the numbers I used are totally off, somebody are buying and reselling L$ on a large scale.

Speculants don't care about the exchange rate at all. What matters to them is the difference between maximum and minimum rate. Buy at the highest rate and then sell right away at the lowest and you make a small profit. The margin on LindeX is less than 0.4% (how much less depends on the amount since there's a fixed purchase fee) but with a large enough volume, a fast turnover and very little work required it can still be worth it. We'r not talking big net revenue here, you need to buy and resell almost 40 million L$ to make a net profit of 500 USD, but it adds a lot to the transaction volume, 40 millions is almost half he total volume on a typical day.

Speculants don't set the rate, they just follow and to some degree stabilize the trend. But the sheer volume (if it really is a s high as it seems right now) is enough to mask the real trendsetters. Linden Lab may honestly believe their little five-or-whatever percent controbution is to small to influence the rate and forget that so many others are jsut passively following their lead.

[ChinRey]

42 minutes ago, Rya Nitely said:

😮

no wonder I'm burnt out.

Recently I spent 4 weeks (about 3 hours a day on weekdays, and about 5 hours a day on weekends) just trying to create a waterfall texture that I'm happy with.

My family were so sick of me saying 'how does it look now, does it look real?' for 4 weeks. OK I know why I'm burnt out.

Aww, poor you!

My theoretical SNO was a small build of course. A more eleaborate build is likely to take much more time. Hopefully that also means higher price and more sales but don't bet on it and don't expect the income per hour to be much higher.

It's much easier to make more of the Same Old Stuff than to make Something New and Original and it also sells better. On top of that, if you really manage to come up with something new that becomes a hit, it won't take long before the market is swamped by copetitors who want a share of the cake.

[Pamela Galli]

Seems like the last time the Lindex did this was after the region buydown was announced. People evidently cashed out a lot in order to have cash to buy down — although that theory was never crystal clear, like now,

[Theresa Tennyson]

3 hours ago, ChinRey said:

But is it really SL? I used to think so too but 55% of the L$ exchange market adds up to well over 50 million U.S. dollars a year. Crunchbase estimates LL's total revenue to be 42.7 million USD and of course most of it is tiers paid in U.S. dollars directly.

 

Don't be so sure. A very large number of the Second Life private regions and a fair number of Mainland regions (i.e. the "heart" regions) are owned by rental businesses. They will take in Lindens in rent and then convert them to a "US dollar balance", which Linden Lab withdraws from to pay the tier. No actual US dollars go in for the tier for those regions - they come in indirectly when renters buy Lindens to pay their rent, or even more indirectly when customers buy Lindens to pay merchants for products who then send those Lindens to their landlord.

[ChinRey]

19 minutes ago, Theresa Tennyson said:

Don't be so sure. A very large number of the Second Life private regions and a fair number of Mainland regions (i.e. the "heart" regions) are owned by rental businesses. They will take in Lindens in rent and then convert them to a "US dollar balance", which Linden Lab withdraws from to pay the tier.

Yes but that amount is included in the landowners' 35% in my table since we are the ones who actually sell those Linden dollars. This is about L$-toUSD transaction volume, not how much USD are withdrawn from the SL economy.

I have to emphasize though that 35% is a very rough estimate. We don't know how much LL's total tier income is (Gridsurvey's estimate is USD 44.088M a year, larger than Crunchbase's estimate of LL's total revenue), we don't know what the rental sector's gross revenue is, we don't know how much of the rentals are paid directly in USD and we don't know how much tier is paid with money from other sources than L$ sales.

 

[Luna Bliss]

4 hours ago, Rya Nitely said:

Recently I spent 4 weeks (about 3 hours a day on weekdays, and about 5 hours a day on weekends) just trying to create a waterfall texture that I'm happy with.

My family were so sick of me saying 'how does it look now, does it look real?' for 4 weeks. OK I know why I'm burnt out.

I saw that waterfall texture...and you are damm lucky I'm not a texture thief!    

[Luna Bliss]

Well this is my support group for those dealing with falling wages in SL, so I want to offer a job to my fellow merchants in pain first...

I need a castle, a big one, like nearly the size of half a sim, on another grid, and could pay 500 usd for the job.  Please contact me if interested.

[Luna Bliss]

8 hours ago, Alwin Alcott said:

There are some very valid points in this thread, but also a lót of proffesional whining. Some creators didn't produce a single outstanding product in years, just floating on ancient successes ... get up, stand out and see your selling rise, or not, but they will get a lot more satisfaction from their job. ánd respect form their customers.
Selling pre 2010 or even lots older primmy stuff is pride in your work? no it's not, thats lazyness and the same arrogance you try to put in LL shoes. Not creating new exciting stuf for you buyers?..thats pride? .. no, the only thing of this all is that its reversed advertising. People will see these posts, and stop buying. There is more competition in all the product lines as ever before, thousends of shops to find clothes of the same quality, landscaping and whatever there is around. Everybody gets a lot smaller part of the cake. Old successes are gone. Past and away.

Your evaluation is too simplistic, and doesn't take into consideration some important aspects of reality.

First, I haven't seen anybody on this thread who doesn't create new stuff, and in mesh.

But, if somebody wants my damm prim gazebo (a goddess gazebo) then I'm going to sell it to them.  I don't want to take the time and trouble to redo it in mesh, and there's not a lot of goddess or wiccan gazebos, so if someone chances across it and it fits their needs then more power to them!

In Inworldz, there was actually a group of people who had trouble viewing mesh -- I don't know if they had potato computers or if this was a problem with mesh in Inworldz. I could see mesh just fine. Anyway, they formed a group with a cute name -- Prim Preservation Society or something -- and requested sculpted plants and other prim items from me that I was happy to provide.

In other words, take your constantly merchant blaming and elitist attitudes and.....do whatever with them.

Edited January 8, 2020 by Luna Bliss

[Chic Aeon]

There actually are folks who still like and use prims -- for whatever reason, be it technical or nostalgic.  You can make some pretty compelling items using prims and THEY DO LOAD FASTER!!!!    All I have to do these days (the past week or so there has been a change for me) is watch what loads first when I come into a new area :D.   

 

Also wanted to report that after the first few days of January sales picked up again and I am back in at least November territory it seems. December is always a bad month -- just never THIS BAD.   No regrets on giving up my sim though, it was fun but really not needed or used that much. 

And back to the theme of this thread, most of my sales are still (and even more) on the Marketplace. AND it was very good to see some newness happening there with more filters and such.   I did raise some prices on the Marketplace (mostly new things). They are the original prices in the store. Few folks COME to the store, but those that do and are paying attention get some things at a lower price. I think that is fair. They took the time to look at the demos.  

 

[Wulfie Reanimator]

20 hours ago, ChinRey said:

I think you got most of it covered, nice!

There is only one question you forgot to ask: Is the market manipulation deliberate?

If it isn't Linden Lab the answer obviously is no. Nobody else can have any reason to sell their L$ cheap.

If it is Linden Lab, I'm fairly sure the answer is still no. Apparently Ebbe Linden has said straight out that LL is not trying to manipulate the exhchange rate and I believe he believes it. (There are also other reasons why I'm sure it isn't deliberate but there shouldn't be any need to go nto details.) It simply hasn't occured to them how Supply Linden's LindeX sales affect the exchange rate.

Since L$ was stable for so long, there's no reason to assume Supply Linden suddenly went haywire and caused the spike. Especially not if large orders were placed way above current rate, which doesn't seem to have been how Supply Liden worked in the past. (The large orders may have tricked Supply Linden to stock at that rate, but the damage was already done by that point if residents were canceling and relisting their orders anyway.)

One theory that was mentioned and would actually make sense in more ways than one: money laundering. If you have "dirty money," it's worthless because you can't spend it. If you can dump thousands of dollars into SL every month and be guaranteed to sell it immediately at a small cost (higher rate), that's definitely worth doing. In this case it would also make sense why LL would go on to impose new trading limits, and it seemed to have an immediate effect. Possibly because whoever was making the large orders was also banned for fraud/laundering.

If it wasn't LL or Supply Linden bugs or money laundering, what else could explain such a sudden change in market behavior? (Genuine question.)

But what ever caused the spike, LL wouldn't tell us simply because their public stance is that they're not going to "fix" the market. If it was money laundering, there would be demands for LL to fix the rate (I'm sure) and it would cost them a lot of money because the only way they could fix things was to buy all L$ above the old rate and prevent higher-rate orders for a while, and it would be really terrible PR for their platform. If it was LL's direct decision, obviously they wouldn't want to tell us. If it was just a market anomaly with no special influence, there'd be no reason for LL to comment on it.

Either way, this was three whole years ago. No matter who/what the cause was, it has since stabilized and everybody's had time to adjust to the new rate. At least we're not in the middle of that turmoil now.

Edited January 8, 2020 by Wulfie Reanimator

[Alyona Su]

25 minutes ago, Chic Aeon said:

Few folks COME to the store, but those that do and are paying attention get some things at a lower price. I think that is fair. They took the time to look at the demos.

It absolutely is fair and I count myself as one who wouldn't bother coming to in-world location except only to see rezzed demos. Even if MP version costs more and I *know it* - I still will purchase the MP version as long as I feel it's a fair price. The extra costs I chalk up to convenience surcharge. So what? It give me the convenience of a shopping cart, the convenience of a running record of purchases, the ability to get a redelivery, and if I remember: ability to express my feeling about the product for the next potential buyer.

Furthermore, it's a lot easier, faster, more efficient when looking for something my subject or genre than attempting to sim-hop around, waiting for textures to load and all, the rest. There are people who shop absolutely on price, others who shop on quality. Don't join any race-to-the-bottom. Set your prices for what you feel is fair, your target customer will find you and buy.

As for merchant sales numbers during holidays... well, I think most of us in this thread have been in SL a few days long enough to know it is panic-week of years past, so no reason it wouldn't be this year, also.

 

Edited January 8, 2020 by Alyona Su