The Credit-Carding of the SL Economy and Gwyn's Rewrite of History

One of the annoyances on this conversation about the LL shopping sites acquisition is Gwyn going around like the worst sychophant and explaining to everybody that the Lindens are behaving in an altruistic manner when they fuck residents over in this manner and harm the world.

Huh?

Picking up on the word "GOM" on everyone's lips now, Gwyn claims the public doesn't know (and only she and the Lindens ostensibly know) is that GOM was going to fail anyway, and the Lindens rescued this function for the community, and did something altruistic they couldn't talk about. She cites undocumented "internal problems" at GOM as a reason for the GOM people to go hat in hand (allegedly) to LL, but then not get a deal. This reminds me of the infamous incident involving Reuben then-Linden Steiger now of MOU, when he made a comment at Clickable Culture that implied that GOM was weak and poorly managed and the Lindens had to step in -- a comment he later clarified and essentially apologized for. This unleashed a torrent of back chat. It's instructive to read my long but helpful post about Reuben and his role in SL -- it's a rich and intreresting story. He quit LL not long after that incident. I've always admired Reuben and think his sojourn at the Lab was a good thing, which is why I took very seriously -- as others did -- his claim about GOM -- but he put it in context.

You know, if ever I was to become convinced that the Lindens maintain paid and unpaid informants and agents of influences, it would be with this sort of awful shill Gwyn is engaged in now so frenetically. Huh? GOM was not in some crisis -- except a Linden-induced one. The only issue was how to check newbies, given the propensity for alts -- but that issue remains. The GOM got 3 percent of all currency sales. The Lindens were not getting any of that and couldn't bear it. So they grabbed it.

It helps to read the handily-provided historical record on this issue if you don't think my blog is the whole story.

If the currency was trading at a lower value, let's remember what the Lindens did at that time, shall we, and not blame this independent currency service? They...removed the telehubs. The telehubs were the engines of commerce. They had a hard time admitting it because they hated tacky commerce that involved avatar trapping, and the FIC hated it because the traffic stampeded away from their niche boutiques in the boonies.

The news that the Lindens were going to remove telehubs began to seep out even in June, as the smart people realized that their creation of a detailed pinpoint-style teleportation map we have now was a prelude to putting in p2p and shit-canning the hubs. By the fall, they were announcing it, and in December, they removed them and compensated those with land near them who had continued to buy after May.

THAT is why the currency tanked, duh -- the massive dislocation as suddenly the city's infrastructre for commerce was deleted in one day, and people then had to use search, picks, friends word of mouth to shop. Once people weren't forcibly delivered to hubs anymore (um, the same way they are "forcibly" delivered to Grand Central Station and 42nd St because we don't have p2p in real life lol), they didn't go, most of them, and it was hard to organize them again. The world never really recovered after that, and the giants like Anshe could no longer make money (her millions came from telehub, not island rentals).

Camping appeared not long after as a solution to fix the world that the Lindens broke.

Now, fast forward to our current events, and here is Gwyn again (and she's not alone in this), saying that the Lindens *had* to grab OnRez and Slex because they were failing, and the Lindens couldn't afford to have that function disappear from the world.

There's every indication that Onrez was failing, or not so much failing, as being wound down by a company indifferent to SL, and already well moved on to other things. I don't see any evident that XSt was failing but I think that probably the huge upheaval involved in having to rename themselves and begin talks with LL about cooperation over the brand led them into a place where cooptation seemed inevitable. They may have suffered a business loss as we all did due to openspaces, but as the world continues to grow, sign-ups come in, and inworld spending increases, they shouldn't have been hurting that much. I just don't know. I, too, was told by sources that they were failing and needed rescuing. We have no inside statement from Apotheus or even disgruntled ex-employees saying this, however.

Now, here comes an Alphabet Linden in the comments at Hamlet's to set us straight:

Says T:

@Geuis - If Linden Lab can make Xstreet more successful for merchants and shoppers than it already is, most merchants will be happy. Our goal is a successful, growing, vibrant marketplace where sellers and buyers can connect and that is aligned with the goals of merchants.
@Chenin – our incentive to improve the marketplace is to keep the creators and merchants and shoppers who actually comprise the marketplace engaged and profitable. The first order of business is to send more shoppers towards the web marketplace. As Gwyneth notes below, the vast majority of users don’t know web shopping exists.
@Gwyneth – “Lagfree Shopping” is a nice coinage. But I don’t believe that inworld shopping will go away. Amazon didn’t kill the retailers. And every brick and mortar store has a web presence. The social experience (people love to ask “where did you get that?”) and immediacy of shopping inworld (trying on clothes before you buy them) is very compelling and unique to inworld shopping.
@everyone – a few facts.
1. We approached Apotheus. He was not panicked. We were surprised and happy to learn that he was looking for capital to expand his business, which was growing rapidly.
2. It’s not perfectly accurate to say that 99% of residents are unaware that webshops exist. Many people do not know about Xstreet or OnRez, but it’s more accurate to segment Residents. For residents who own land, buy classifieds, etc, the number is closer to 80%. For Residents who a less economically active, in world it’s closer to 97-99%. The implication is that we can help merchants get more exposure via the web shops
3. Today, Adult content is an category on Xstreet and will continue to be so. Google, Ebay, Amazon and others have set best practices around how to present this kind of information, and we’ll align with those.

Check out our faq https://support.secondlife.com/ics/support/default.asp?deptID=4417&task=knowledge&questionID=5809

Posted by: T Linden | Wednesday, January 21, 2009 at 07:18 AM

I'm finding it rather hard to believe, that any large percent of the 70,000 people logged on concurrently don't know about the shopping sites, but it's truly a function of advertising -- and they aren't advertised much. FlipperPAY used to put up big encroaching ugly billboards advertising SL Boutique, and that was what you had to do to get noticed. If you read SL blogs, you would see references or ads, but not everyone reads blogs.

However, if you simply SHOP, and go to malls, which pretty much everyone does in SL some time or another, you'd see the references to XSt on the vendors and on the boxes inworld.

If the Lindens can get more eyeballs to this site and more shopping and more commerce, great. But as always with the Lindens engaged in their helpful socialistic altruistic activities to help capitalist commerce *cough* you have to ask, at what price, comrade? Their shill about GOMing GOM was that they had to put more cash into the hands of newbies who couldn't get cleared within 30 days on GOM, to enable them to shop. That shill helped quiet down all the merchants upset about GOM. They were bought off that way "Shut up, we will send more newbies with cash your way".

But...newbies remained very impervious to buying Linden dollars using the Interface, little ATMS that existed for awhile before they junked them, or even on the website. It's confusing and strange to have to go bid on a complex currency market just to enter a country. Imagine if I couldn't just hand over my dollars in France and immediately get a packet of euros, but had to sit at a terminal trying to figure out a currency exchange and what to bid on it. It's entirely stupid. The Lindens refused to provide cash in ready-made easily-obtainable packets like every other game. They kept typing premiums to land, when they could have cut the price in half especially to help those facing VAT and sold one-time $2000 packs of Lindens with some free clothes in an account that cost $4.95, that then continued to put $300 into the account afterwards. Since they print money with Supply Linden anyway, they could just have him print and sell less ,and sell packets of slightly better-costing Lindens to newbies. Oh, they will be gamed and people will buy 100 at once? Well, no, because Lindens can tie it to a credit card and limit one or three per customer, something they used to do, back in the days of GOM and $1/m first land.

To this day, despite three long years of discussion on this, and the devastation of GOM, which had to close their business, newbies still face stupid hurdles buying currency (someone can buy a $72 a year annual subscription, then be stiffed by Linden checks and limited from buying even $3.71 worth of $1000 Lindens on the LindEx), and confusiong and wonkiness in the premium offer. None of this has to be. It only takes common sense and decency to prevail. Why can it never prevail?!

So now that the Lindens are claiming that they will send more shoppers by putting this client in their orbit, and even likely inworld, what's the loss? Of course, the health of an economy that would have separation of power centers in commerce, with not everyone dependent on the Borg is one obvious thing, but the Lindens don't believe in pluralistic and diverse capitalism, which is too messy and out of control for them, but believe, like Gwyn, in technocommunism -- the ability of technology to perfect society by taking it over like communism does, but running it better with technical proficiency.

What is likely to be the immediately impact of this takeover? While I think in the long run, inworld shopping at locations won't be significantly harmed, it sure will be in the short term! With advertising on the website, splash screen, and whatever other ad real estate the Lindens muster, there will be a stampede of people to the sites. They will spend with their *real life credit cards immediately* which will be a hell of a lot easier than going inworld, putting Lindens into an ATM, trusting them to lag and whatever, and then buying off them. People like impulse buys. One of the ways XSt gets you to buy, buy, buy is to show you both Linden costs and dollar costs. When you see that some items costing thousands of Lindens is only $3.47 or $12.52 US dollars, you jump and buy it, because it's nothing, the price of a latte or a hamburger.

So Lindens will become scarce in the economy, Supply Linden will say he has to sell more of them (another quick half million next month is a tempting prospect) and suddenly we will get why Zee let the Linden float up to a greater value of a point or two the last few months -- it's getting ready now to go DOWN again in value becaues of lack of cash as people buy direct with credit cards.

There might be a very serious hit to the Linden cash flow and a cash crunch inworld -- and the first thing that will suffer is rentals and land sales -- they can't be bought with credit cards like content, further bifurcating the already nasty split in the economy between land dealers and content creators. I often see tenants who paid me a month in advance to get the 10 percent discount I offer getting their eye on a car or a dress and then refunding, even taking the cancellation fee hit, in order to get cash in their hands again to go shopping and bring the car back to their house, and go back to living week by week. Or they pay only a day or a week because they want the cash to shop. Can't blame them. And I see this: when they are really really interested in buying, they just stop renting houses. They shop, buy that coveted dress or widget or skin, they crash at friend's houses and save on rent for a few weeks, then they come back to rent again, dressed to the nines, often with a new boyfriend in tow. That's why each year, Christmas can be a bad time for rentals except for snow honeymoon getaways because people want to shop, not live in their houses, and in a world where you can fly around and sit in clubs camping and not *have* to go to a roof over your head, the rental falls into second place. This will only make Linden overlords happy, as they are all about shaking loose the land barons.

Those who haven't figured out how to get up on XSt, possibly because they don't speak English and are 60 percent of Second Life, speaking other languages, could suffer real losses in their stores. If there is to be a backlash against this GOMing, I suspect it will come from Brazilians or French really pissed off at how this has been done -- and the localization of XSt can't happen fast enough with thousands of dynamically changing resident-made entries and ads on it - -it's just not on. It's like saying "Let's translate e-bay into French tomorrow".

Lindens may already be busy trying to GOM some local provider or talk them into becoming the partner site to XSt.

So the stress on the non-American merchants, especially of the newer and cheaper sort as the economy wooshes past them out to the websites and away from Linden cash and stores will be to get even more desperate, commit even more copyright theft, and offer even cheaper prices. You will not see these people giving up. Un like all of us, they are more literally hungry more of the time. So you will see even more of an underground of theft spring up that the Lindens will not be in a position to control across their sprawling empire. Zha Ewry and Adam Zaius will cite these realities as a reason to cease the copyright and intellectual property model for business and insist that the "generatives" of customization or consulting will provide replacements -- or laud a gift economy that tries to collect money elsewhere (rentals or hook-up fees or event fees) instead of from content sales.

I'm really hoping that Cenji Neutra of Apez rises to his historical challenge now to save our freedom. With some good luck, support, and humility, he might be able to keep a more diverse and thriving economy going. In fact, Lindens, seeing how they are devastating inworld shopping and the LindEx by creating the credit-card funded lunch-hour shopping phenomenon may come in and secretly silent-partner to Cenji. That would be ideal, I suppose, as we have no other hope.

Gwyn and others on sluniverse.com will say that traffic fraud will now handily end -- except for clubs. Furniture stores will work at paying for ads or finding ways to get noticed on XSt --what a frenzy (the tackiness of all the junk constantly streaming on that page turns off some of the more fine-tempered FIC who are given the vapours by such commerce on the part of the masses).

Clubs are very important, however, as clubs are where you find sexual partnes, if you aren't savvy enough to hook-up your three-way right at the infohub when you land, as I see some of the more enterprising newbie Lotharios managing to do, probably because they are alts. Club will be more vicious in their lag and fighting.

I don't think that real estate will seriously move to advertise on XSt -- I've never been able to get hits from advertising there and gave up, but who knows. This could be a serious sub-GOMing of the overall GOM. And yes, I continue to say GOM. I don't see that the old independent business of XSt and its loyal customer preserves or wins from this arrangement. It gets taken over, guttet, and Apotheus, even if he is not "panicked" is brought to heel. Some people find that a good thing, that he and others, like the obstreperous Samii, now can't as arbitrarily ban and mistreat people they don't like, as the Lindens will curb their excesses.

The Lindens get something else that's quite juicy from this. They could get all the intention searches -- what people search for and what they want, even if they don't buy it -- from their own world, but they are probably too lazy and it's too complicated. Apotheus has intention searches very finely honed, and he has stuff like amazon.com "people who bought this, also bought that". The Lindens will be able to see what people want, and like all good totalitarian powers, they will give most of the people at least some of that.

Comments

[Ann Otoole]

Xstreet is already being taken apart. The auctions are gone.

Some people have seriously questionable facts. ACS only had 41%. Apotheus made this very clear during the 10 Lindens ACS debacle. Therefore it is physically impossible for ACS to "own most of XStreeet".

In addition claims of in world shopping going the way of the dinosaur are incredibly short sighted in many ways. For one obvious reason is because it is enjoyable to shop in world especially if shopping for a prefab building. And the texture loading issue will be fixed. So the gray world thing will pass.

As for the benefit it is indeed true that when shopping.secondlife.com is manifested throughout the secondlife.com web space it will result in more traffic on the marketplace. My sales alone have skyrocketed today as new people hunt and find deals to be had. These are people that are new to all this based on some convo I have had with them.

The forums are toast. That is a given. LL has to bring it's FIC ruled goose stepping moderation to xstreet or shut it down. Otherwise someone will lose face. People will just move the "community" (that was praised) somewhere else out of reach. LL can't control community. LL needs to learn it's place is to facilitate community development and to stay out of the control freak business.

Despite all the angst overall more sales will happen via the marketplace. And some merchants will not like it at all because their little clutch on the in world search and feeds will be history. And that is a very good thing.

I do wonder about the future of the marketplace search though. Linden Lab has historically had really odd ideas about how searches should work lol. As in intentionally preventing people from finding what they are looking for. Thus why people shop the marketplace. How will that play out? Time will tell.

[Ciaran Laval]

I have fears for the land market in the short term, although maybe some new creators will band together and rent some land so they can host their slx boxes.

GOM was well before my time, I find reading the history of such issues fascinating, I also think it's important to read such information. However the point I don't get about Gwyn's claims, is why would LL want to buyout a failing venture? It's not like LL haven't got enough on their plate already.

I'm not sure whether the Onrez purchase was aimed at keeping the sheep sweet or simply to prevent them from turning their eye back to the world and strengthening their product, the signals seem to imply they were losing interest.

I too hope Apez seize the opportunity presented to them.

[Carl Metropolitan]

I think Gwyn partially correct; I can't really assign any nefarious motives to Linden Lab here. For OnRez, the writing was on the wall. Merchants were leaving and ESC had pretty clearly lost interest in OnRez and SL as a whole.

XStreetSL is a more complicated story. If Anshe Chung really did own a majority or controling interest, it's pretty obvious why she would want to get that cash out as quick as humanly possibly. A look at the map shows why; Dreamland has been bleeding sims all over the place. While she definately sold some (especially the valuable 195US tier sims); she also gave a huge chunk back to LL.

Parse for a moment the T Linden quote you reposted, "We approached Apotheus. He was not panicked. We were surprised and happy to learn that he was looking for capital to expand his business, which was growing rapidly." Translated from Lindenspeak, I read that as saying "We knew his primary backer was Anshe, and since we've got a lot of her old sims parked in the far lower right hand edge of the map, we figured XStreetSL might be in trouble. So we gave her a call, and she jumped at the chance to dump her interest on us. Then we offered Apotheus and a few of his key people a new last name and a contract. He took a look at the world outside his window and decided that a few years at LL would be just the thing to ride out the recession."

To me, this doesn't appear to be a case where LL drove a resident owned company out of business by competing with them on unfair terms. If anything, it looks more like a Bush-style "bank rescue" where the rescuer ends up owning the rescuee.

It's possible that LL went to the owners of both companies and said, "sell or we will make our own version and incorporate it into our system", but I'm skeptical. To date, there has been no evidence that LL had been interested in getting into the content sales business--a business where both ESC and Anshe Chung apparently managed to lose their shirts.

LL just saw a new shiny at a discount price and went for it. They never been able to resist the new shiny.

Now the idea that a Linden-repackaged XStreetSL is going to somehow significantly displace in world businesses... no way. Shopping is the number one recreational activity in SL (yes even more then naughty poseballs) because it's social and it's fun. You don't get that buzz from sitting in front of your computer and clicking links. I wonder if the perception that it might is another example of a disconnect between the "geek" and the "barbie" side of Second Life.

As for Apez stepping up. I'll believe it when I see it.

[Prokofy Neva]

Carl, I've always said you are an absolute master at translating Lindenspeak. That was pure poetry, thank you!

[Ann Otoole]

xstreet is a broker not a content creator. You are reaching to try to brand linden lab as in the content selling business when it is clear the creators of content are the ones selling their content through the xstreet brokerage. They are just getting into the transactions business.

However there is nothing stopping individual lindens from competing by creating content and selling it on the side is there?

I just don't see Linden Lab trying to build content in a serious way. Now if they buy 10 lindens ACS and emply an army of Chinese prim labor well yea now they are in the content business but that hasn't happened yet.

Personally I think they should have just taken a 5% rake at transaction time and been done with it. On all transactions not involving them directly. And eventually it will get to that point. People best get used to the idea. As well as sales tax which will eventually come to SL. The numbers being bandied about in the press are going to have the guhvuhnatuhh all over second life looking for tax revenue.

[Porky]

I'd love to see what everyone is searching for product-wise on Xstreet.

Handy knowledge there...

I'm not so sad about the merchant change over, id rather see the site looking official, DMCAs being easier and integration with the game browser.

However I will miss the exchange, the forums and the freedom.

I wonder how they'll take to weapons, some having been banned as 'greifing toys' with the previous Xstreet Staff.

Sad to see OnRez kick the bucket, despite slower sales there, i much preferred to use that website for everything except converting lindens to usds

[Catherine Cotton]

For the most part Carl I tend to agree with you.

I will say this again; LL needs to watch how this is integrated; if done poorly (like current iw search) LL will strongly feel the negative backlash from its user base.

[Prokofy Neva]

It would be one thing if this shopping site was a mere function -- a kind of neutral service that enabled better communication, commerce, service. Something like the function of a 411 or a Yellow Pages, that would be undertaken either by government or by some big company, like an ATT.

But performing such huge public functions requires credibility, and requires removal of conflict of interest.

It's one thing to have ATT run the Yellow Pages for everyone in a system where everyone gets in the list, and there is an open and public system to buy an ad if you want your store to show up in a bigger box than the others.

But that's not what we get when we get Linden Lab. We get a company with a long track record of playing favourites, making special deals, blocking those they don't like, and sometimes merely being incompetent and stupid.

It would also be another thing if the communications company ATT was also in other kinds of business. Like making zoned or themed continents with a staff of people and competing with rental businesses. What makes ATT or Bell's monopoly over a city's yellow pages tolerable is that it is also not in the construction, restaurant and garment business. It distributes the yellow pages for free, in order to encourage the use of its telephone service, but it doesn't then reach in and take a percentage of each pizza delivery and dress sale.

See, that's what's so messed up about all this -- the conflict of interest and the blurring of the distinction between service and common carrier. Which is it?

[Clubside Granville]

I imagine the integration will be pretty quick as they code is easy: add a "Shop" click right next to the L$ click in the upper right and all eyes will be curious and check it out.

The real problem is XStreet, while being more feature-rich than OnRez, still looks amateurish design-wise and the average person will chalk it up to the usual sub-standard Linden execution of things. The add-ons such as the forums and currency exchange kept XStreet as a welcome place despite its looks and missing functionality (I can sort by prim count but can't actually SEE the prim count?).

The only real good I hope to come from this GOMing is new functionality in the server to remove the need for the XStreet boxes to handle delivery. Remove that and there's one less edge case for small parcel support.