The Outworld Corporate Invasion and the Inworld Economic Slump

Newbies get entry-level jobs as campers; oldbies get cheap advertising to game traffic and get the ad visible in SEARCH -- eveybody wins, but it's getting more and more costly and the system is undercut by corporate islands offering freebies and entertainment for avatars who never really move into the world.

I realize not too many people are drawing the dots between the corporate invasion, which began late in 2006, and began to thrive in 2007, and the inworld business economic slump in 2007.

People have been telling themselves since, oh, April -- and here it is October! -- that this is "the annual summer slump".

It's not. It's a slump caused by lots of things, and summer is only one of them -- and not really, given that even in the summer doldrums, Second Life continued to grow. You can listen to my podcast on some of this here, and to further elaborate, here's the real reasons for the slump many people are still in:

o Americans especially feel the slump on themselves, because they now face new competitors from non-English-speaking and even English-speaking countries who are making better -- and often cheaper -- goods and providing better -- and often cheaper -- services. Before the VAT Attack, the Europeans had as much as a 10-20 percent advantage in their currency purchasing to start up business and buy mainland, but they also had the advantage of ready-made language cohorts eager to come to them just to simply understand what was going on. Midbies could adapt to this by having foreign-language materials, foreign help cards, staff, key words. But it just isn't enough. Still, even non-English sellers are feeling the slump.

o An even newer wave of people from Latin America and Asia are willing to sell goods for way less as their wages are far less in their own countries than their Western counterparts in many cases and they can take less Lindens for the same work -- just like real life. Anshe Chung is now selling furniture for $L10, but even those prepared to wind up the hate machine for her doing what is natural in any globalized economy would have to concede that Brazilians, Portugese, Poles, and Russians are all doing the exact same thing in SL -- selling stuff for $10 and $20 that used to go for $200 when oldbies sold it.

o Meanwhile, prices on more quality goods like prefabs -- good prefabs -- have shot up 10-fold or more, from $200 to $2000 or even $10,000, as prefab makes (let's call this "new home construction" like in a real-life economy) figured out that the same market spending $100 US or $1695 plus $295 per month on a private island wouldn't blanch at having a prefab that cost them $60 US, too.

o As more and more people have crowded into the world -- 50,000 logged on at any given time -- the advertising keyhole got smaller and smaller. In a world with no mass media TV or magazines -- they are all out on the Internet and the avatar may not follow through on the ads on third-party sites -- there are only three places where the entire world can come and see something in English or other languages and TP and buy: Classifieds, Search Places, and the official Forums (except for ages, the SLURL linkage has been broken there -- bad!). The "real estate" in the browser for Classifieds, selling at $100 US or more per week in many categories, is frightfully small. Most people stick in a $50 ad and hope for the best. Search Places still bears the brunt of most searching and is responsible for most sales in world. That's why I'm not eager to kill it or break it or dismiss its important traffic metric which -- if you get over your geeky fastidiousness over the first 2-3 slots being gamed *just like they are on Google duh* -- rewards people in the economy who do well and get people to come and buy their stuff.

o Casino cashout. Everyone who hates casinos and thinks of them as lag bombs or immoral is forgetting something hugely important about them: they were the entry-level jobs of Second Life, the third thing most responsible for people's incomes when just signing on especially, and when unskilled and poor in real life, especially. The other two jobs are prostitution and camping. Camping is merely a modern cyber form of the old sandwich board walker -- it's a poor man's form of advertising, and like bodegos selling 40s near welfare neighbourhoods, casinos and malls drain the free dollars they give people right out of them by also driving them to buy stuff they really can't afford like $2000 skins. The Lindens pat themselves on the back for handling the casino cashout crisis with aplomb, making Supply Linden fall on his sword. They're forgetting that 40 percent loss of cash transactions, however you want to filter out the real money after the back and forth is done, is INCOME for people that is now GONE -- and not replaced.

o Camping has decreased not only with casino cashouts, but slowing of membership growth, and increasing competition of clubs -- especially as much of the new corporate-generated growth on the Grid with their own viewers have clubs to compete now. Clubs fight fiercely for their low-wage labour -- girls dancing on poles for a pittance. They make fierce rules for their oppressed workers -- they can't go to other clubs, for example. If you signed up with a club owner who ruled your online hours, you couldn't jump off the pole and take part in the club's dress contest, for example, to win $500, and thereby lose your spot and cut your earnings. Club owners also cap how much dancers can earn off a pole per day and don't let them keep jumping to other poles -- they want lots of girls making a little, not a few becoming more wealthy -- it's traffic. Unable to police these rules, and without casinos to drain out the camped funds -- and not making much from vendors, either -- some club owners just decided to dump these devices -- which means entry-level jobs go down the rat hole. Entry level jobs are important, and you have to remain colour-blind about the nature of what they are, whether camping, sex, or surveys, because they all flush new money out of newbies into the economy helping midbies and oldbies to sell their wares and services. This has been severely impacted now not only with policies against ageplay and casinos, but just the general dreariness of trying to get started in business in SL with performance issues, etc.

o While there would be hope with *other* kinds of labour -- artists, designers, personal shoppers, night managers, etc. -- higher-level inworld job -- this sector isn't growing as much as the outworld corporate sector -- librarians getting real-life salaries from real-life grants; designers getting real-life salaries from real-life company IT and advertising budgets.

o More and more patches, rolling restarts, changes to the client -- that break new products, lose inventory, return builds -- this so harms some people in start-ups that they give up. They leave the economy production wise -- which means their sweat-equity that they might be willing to supply to script and sell an object and their incentive from micropayments just disappears.

o Slower growth in premiums. Civilization is made from the middle class who own land. It is not just script kiddies and snotty designers who constantly write on forums that you don't need land to have fun. They make a class in society -- but a class paid for by the Outworlders. Premiums are needed to grow the inworld. They slumped because the depressed wages mean

o Depressed wages on the cashout are a serious concern nobody thinks about because all the Lindens and big corporations think about is "stability". They are like right-wing third-world dictators who keep the peasants from owning land and enriching themselves from their labour, invoke ideologies of helping the poor by printing money that are in the long-term misleading and damaging, all the while helping their cronies to corporate welfare packages. The Linden stays at 270 per $1.000 or as I like to think of it in GOM terms, it has gone down from $4.25 per $1000 Lindens you might make in a club or on a rentals job, to $3.69 per $1000. That matters. The long-term effect of having the rapacious Supply Linden print and sell Lindens so that HE makes $1 million US per month and not US is, well, depressing. And let's face it: we live in a remittance economy, like Pakistan -- we all need to remit to real life and are limited obviously in our ability to keep investing in virtual life.

Khamon Fate, an oldbie selling trees, dare not quit his day job -- not only does he face difficulties trying to get his wares visible in a growing world, he faces competition in the flora business from newbies.

Corporate-sponsored sims like the real-life maker of the movie The Nines built by Metaversatility draw in new customers, but keep them trapped looking for clues, admiring builds, going to events socializing -- and not necessarily ever flying out to the rest of the world -- and the economy.

o Corporate islands are handed 40 percent of the newbie signups just for being pretty. They don't have really do a thing to attract them -- no labour, no presence, no micropayments. Ben & Jerry's can literally put out cow shit. Others put out freebies, further disincentivizing people to make things and enter the economy -- the newbie-to-newbie economy which used to thrive in an amateur content and yardsale culture is really being destroyed by corporate giveaways of free stuff, clubs where the owners don't have to worry about tier paying, and a general indifference to micropayments. A corporation doesn't need to get its ROI in micropayments to pay tier -- we inworlders do. That sets up a huge gulf between rich and poor, in SL terms, widens class disparity, erodes the middle class, and makes it impossible to compete except for the very hardy or every much in demand (sex bed makers likely don't have to worry that buttoned-down corporations will cut into their market, although Red Light Center, a new 3-D world that is looking very promising, might do that.

Extortionist ad farmers and sign-griefers on 16 m2 who force you to pay a fortune to "buy back the view" are now fueled by real-life companies like Coldwell Banker. The dollars they drain out of SL aren't put back into the economy but go to line the pockets of extortionists, who in this case get their RL salaries from RL companies. It's like a bribe they take from their hostage mainland neighbours which the RL companies are willing to pay to get visibility in the cramped, tiny advertising space of SL.

o The corporate invasion has totally messed up the labour market. And that matters in any economy, as I've explained in my post below about the Sheep. When the top builders who used to churn out custom jobs and prefabs and help the inworld economy and its very look and feel and attractiveness are sucked off to corporate islands, some of them closed to outsiders, the economy takes a hit. At one level, they free up spots for some new people to get into the prefab business. But as they all leave their prefab vendors out to kaching and don't have to tier land to serve them by having slexchange.com or shop.onrez.com sell them, they continue to leave up tombstones to their long-decased inworld careers that suck Lindens away to them in the outworld, where they now command big metaversal salaries, and tie them up. When people are inworld, creating, serving, innovating, they tend to spend too -- they might buy lockable doors or textures or land or scripts for their prefabs. When they stop making them, their secondary markets take a hit.

o Corporate welfare islands are culdesacs. The money stays on them. I challenged Meta Linden to pour red dye on the avatar keys of all the new sign-ups coming in from CSI or Korea. Well? Well? I have no doubt that the red dye will not trail around past the few hundred sims where the people land. For one, L-word and the Sheep set up a nasty little precedent by letting only their very fine feted friends have stores on these prestigious builds -- they aren't open to an open market place where anyone can simply agree to pay high rent and enter (that was the fundamentally democratic concept of the telehub mall, which I believe was a triumph of Second Life economic policy, and whose destruction has continued to both depress the economy and also make it harder to enter business.

o Bots sucking the camping dollars, and the battle of the country-specific camp sims. Did we mention camping? Let's mention it again from the managers' experience. A brand-new country-specific sim like Moscow Island is paying out an enormous bundle to campers now, many of whom are bots managed by libsl lovers and single bot-management companies. All that expenditure -- I can't even do the math it's so big at 70 x $10 a minute at any given hour of the day -- can't even lead this struggling continent to get up to 65,000 traffic -- 65,000 traffic!!! -- because older, more intensively spending and event-organizing sims or more nimbler new country sims have 90,000! that's life in the big city! So poor Moscow can't get on the Popular Places List; but Rio can lol. Why? lower wages? hungrier and harder-working people? More present managers to who boot bots? Never fails, those 3 things, in any world, even a virtual one.

o Griefing -- countless losses each month, and the griefers are in an arms race with the Lindens.

Comments

[larryr]

mainly all acurate, which is why as some stated years ago, SL could never and would never be the "metaverse" or anything like the www. Finally took the zealots 3 years to see the repeat playbook that Apple and then AOL used on the "creative culture and business'" over a decade ago.

now that SL is apparent as it is,,just one "paid channel" to be among thousands of 3dweb localles (the future IF many let go of the meta evangelnonsense of avatar rights and new worlds of openeses--lol)

let "competition" exist, between the big and small....but find and nuture a level playing field,
SL couldnt ever be that..

as to the cbs millions of them..which i really dont think will materialize---and ive done 3d games for bigger blockbluster movies a decade ago.....:) let them come to a "paid service" in civil war...a much better SHow than CSI;) or game than the SL lib can provide.:)

may i suggest "you cant see the real SL" placcards on stores and hubs...."unless you search via the member paid for search engine" etc etc...

this if all these reports of a closed browser as described are true...CBS paid for it, Sheep got the money. LL got the money....now for those others paying monthly for 3 years to be part of the action.,.

TAKE your action back...:)
otherwise whose the sheep...?:)

ive suggested SL has become a Media Induced Psychosis.. why not enjoy the drug induced side effects and claim insanity.

only after the drugs wear off will many see the real world they are living in...:)

its ok... soon there wont be a CBS in SL..since LL will be part of Fox.;)

c3

[Prokofy Neva]

No, not Fox, don't be silly. NPR, PBS, anything but Fox. Turner Broadcasting maybe, not Fox.

[Cocoanut Koala]

"o Meanwhile, prices on more quality goods like prefabs -- good prefabs -- have shot up 10-fold or more, from $200 to $2000 or even $10,000, as prefab makes (let's call this "new home construction" like in a real-life economy) figured out that the same market spending $100 US or $1695 plus $295 per month on a private island wouldn't blanch at having a prefab that cost them $60 US, too."

Well, in my case, it was finally figuring out that I was charging the same amount another person was for a shirt. (And in many cases, still am.)

Something large that takes weeks to make ought to cost more than something much smaller and less time-consuming, I think.

coco

[Cocoanut Koala]

Somebody pays $10 per minute for camping? I need to start camping, then!

I think it's more like $1 per 10 minutes.

Other than those quibbles, good analysis.

coco

[larryr]

silly?

Turner has got an eye for Kaneva-local boys and all...

Fox is the one.... :)

[Blaccard Burks]

Right on post. I noticed that sales of my prim counter literally stopped, where I would sell one a week to maybe 1 a month. However RL economics such as the dollar dropping can be a benefit for injecting more euro asian sales into the SL economy. Sales of the prim counter may have stopped because of prim counting features being upgraded in the rental boxes... don't know, or maybe people are building less and less rental communities, I see very little new ones on the mainland.
Building out a sim takes time. So it may take a month or 2 to get it built out and you need to float that monthly tier plus sim costs for start up.

Business Misake #1

A new mainland sim runs $1400 to $2200 with a tier of $195. What I have seen is that most people purchase these sims with the good intention of doing something with them. After a month goes by and reality hits, its like a fire sale. The sims get sliced up into 512 lots and start getting sold off. But in that month they only sell off 3 lots, so the next month it starts spiraling down...etc. Now the land is cheapened and fragmented and the new mainland becomes worse than the old mainland.

Business mistake # 2.

Just because Anshe is selling 10$L couches doesn't mean I need to lower my couches to 8$L. The people purchasing these cheap items usually are not the ones that I would want as a customer anyway. As a business person dealing in high end builds or scripts, those people are working the game from a different level. Great for them, and it doesn't bother me. I just don't really want that in RL biz or SL biz.

The prefab home thing is interesting because as someone said here "they take more time". This is a buyer beware thing, because I've seen way overvalued prefabs with poor controllers and prefabs for a 3rd of the price the are built and textured very well.