Recent changes announced by Linden Lab have shattered the whole of the community. Unexpectedly, in a maneuver claimed to reduce inflation (i.e., the amount of money in circulation), LL has decreed that it will not support contest events anymore. Ratings will go up to L$ 25 apiece, instead of the “token” L$ 1. And the extra weekly stipends will be cut in half.
One thing is the economic side of it. Any good economics technocrat would say: “Good! Finally, LL had the guts to stop the ever-increasing inflation! It was about time!”. And the short-term results were favourable: take a look at GOM, and you see the L$ stabilising at around US$4 for each L$1000 block. There haven’t been big fluctuations since then.
A measure which has also been almost overlooked was the end of any LL-funded projects. The announced Incubator Program — a new model where LL would support financially with US$ high-quality content — was abandoned. All projects that had LL support (there weren’t many, so there were not many people affected) stopped suddenly. The “New Order” states: all projects should be financed by the community. Not by Linden Lab.
The immediate reaction was a serious drop in “sexy avatar contests” and trivia events, which were perhaps 90% of all events. Residents voiced their complaints with bitterness – in the forums, in the blogs, even in-world. People dropped out of SL, threatening never to return. New projects, which relied on a steady flow of free L$ for events, both to attract visitors and to enable the project leaders to cover their initial costs, were abandoned overnight. At the same time, the residents relying upon the ratings system to survive, gave up on SL — who is going to rate other residents, now that the cost (L$25) far outnumbers the benefits? (much less L$ received from ratings) The rating system grinded to a halt as well — no more “rate parties”!
Suddenly, there wasn’t a “free lunch” anymore. A group of residents panicked, or “abandoned ship”. What would they do now that LL wasn’t willing to support them?
This was perhaps the first “wave” of shock, but a second wave soon followed. With no events – or just a very few, and not contest-related — many residents, who relied upon those events to have fun, also went away. They were the unhappy consumers — a large group of party-going residents, whose only contribution to SL was essentially dwell (now named traffic) and, in a limited way, some “entertainment” by appearing at parties and contests. For them, with an eventless SL, this was not entertaining any more. They “abandoned ship” as well.
The third wave was more impressive. These were the many low-quality creators – builders, clothiers, scripters – who relied upon a “rich” society to sell them useless items and low-grade products. Having no free L$ from events to support their standards of living, and no extra L$ from the extra stipends, a large group of residents suddenly understood that living on L$50/week (basic account) is impossible, and even L$500/week is not enough. So, people started to be more careful when spending. Low-quality items suddenly did not find customers in-world, as the now poor residents started to concentrate their money on high-quality products (and entertainment) instead.
The fourth wave was astonishing. Clubs and malls suddenly found themselves without their major source of revenue – events to attract people. Let’s face it, when all clubs use the same radio streamers, what’s the point to “be there”, if no free L$ are to be earned by standing there and going “woot” every minute or so? After all, anybody is able to set up the URL to the very self-same streaming radio at their homes and invite their friends over. What’s the point in going to somebody else’s club?
Also, low-end malls relied on the low-quality merchants to end low-cost shops. Since those were thrown overboard by the “third wave”, this also meant that suddenly malls found out that nobody wanted to rent their space anymore! First, nobody started to build new malls to accommodate for the increase in population; then, the small malls started to disappear; finally, the larger malls began to struggle to keep their customers.
In the space of a few weeks, all that we thought was “normal business practice” in SL started to be questioned. For many, this was the “end of the world as we know it”.
However, SL not only has survived, but the population keeps growing. How?
The point is, the side-effects were startling, and let’s focus on the most positive ones.
Firstly, the events. Since educational events were still supported by LL, many prophesized that now everybody would start to do classes. Alas, that was not to be. The truth is, not everybody is talented or qualified to run classes. So, the number of classes in-world (about 3-4 per day maximum) has stabilized instead of growing.
What about the other events? Well, since contests were Linden-sponsored, these disappeared. Instead, we started to see a few tentative experiments in resident-sponsored events. Many failed miserably. In some cases, sponsors (or advertisers) wanted to pay event hosts to attract people to buy their wares, but explicitly announcing that is forbidden by the rules, so there wasn’t a big increase in sponsored events.
Trivia almost disappeared from the event list, as well as “sexy avatar contests”. What we got instead was — Tringo, an amazing new in-world game, where people can participate by paying a little bit, and the winner “takes it all”. This was an easy way to get around the problem of how to run events without Linden sponsorship. The success was so great that Tringo’s license was sold as a RL game.
What can we learn from this? One thing is clear: too much subsidizing, and people get lazy. Remove the subsidies, and people get creative — sometimes, so creative, that they are able to sell their ideas to attract venture capital! Tough lesson for the ones criticizing capitalism…
What is the New World Order, a few months after the “big changes”? Well, the event list is fat as ever. The current trend is Tringo, of course, and probably will be so for some more months. But at least we’re getting as many events as before the stipend cut. As said, educational events are about at the same level. There are perhaps a few more discussion events, targetted to in-world discussions of RL and SL. But the truth is, those living on socialization, can’t complain any more.
Of course, the increase of ratings seems to have stopped people from profiting with “rate parties”. That meant for many, leaving the game. The “rating barons” were usually event hosts — and they’re back with Tringo, so they get their ratings that way. Sure, it means that they get much less ratings in the New World Order — but even a few per week are usually enough to make it into the “top residents having been rated”. As a side-effect, abuse of negative rating has diminished drastically, now that it’s not so easy (or so cheap) as before. Better still, after 6 months, your “rating status” gets “cleared”. This means that, unlike before, you cannot go to a few “rating parties”, get into the Leader Boards, and live off the once-earned ratings. No, you need now a regular supply of ratings, and if you’re not into socializing — you simply won’t get them. As I write this, the Lindens have promised us a revamped rating system. The current one has an advantage — it costs more to give a rating than to get a financial return on a rating received. Thus, “rating parties” will always be held at a loss for everybody involved.
Quality has increased overall. A simple rule tells us that over 90% of all stuff sold (RL or SL) is simply rubbish. Only 10% have quality. The New World Order makes “rubbish” not economically viable. This means that only the top 10% items will “survive”. Nowadays, instead of buying any kind of clothes or cars or items, because money was easily available, you’re more careful in what you pick. Yes, this means that the good content creators are going to get richer, while the mediocre content creators will lose interest and give up creating – or, alternatively, concentrate all their offers into a niche market. I can certainly talk about my own experience — between clothes, furniture, animations, and scripted objects (around 50 items offered for sale) only a single one is deemed to be “good enough” for me to make a profit. I simply gave up the other items — they’re too “low quality” as perceived by the community. So, naturally, they become freebies sooner or later, and this also means that some will benefit from them 🙂 I expect this to be a universal trend…
The real estate business is flourishing, but the land barons have to become much more creative in their offerings as well. People are much more choosy — you won’t spend your easily-earned thousands of L$ on worthless plots anymore. L$ are not so easily earned, so you want a return for your money. This mostly means choosing carefully and buy from land barons with a good reputation and adding value. Anshe Chung has been a leader at implementing those two concepts, and it’s no wonder she still fares well — both on selling or renting land. Others, like Prokofy Neva/Random Unsung, concentrate on offering land for sale integrated in a peaceful community, where top architects will provide you a home with quality building and a nice blending into the surrounding landscape. People pay more, but they also get much higher standards of living. These are not the only two ideas — several new approaches of dealing with “value-added land baroning” have been introduced. The initial reports talk about success at all fronts. Somehow, this doesn’t surprise me.
Perhaps the overall lesson that we can extract from these changes is that “faulty” systems of dealing with the economy create a distorted economical system, and it’s very hard to “do things right”. Like a true Government, LL pokes here and there at the economy, to stimulate what they’re keen to see: good entertainment, and high-quality content. If this was all part of the Master Plan, I’m certain that LL is on the right track. If it was just “some more social experimentation” (i.e., in other terms, mere luck), well, then we must give praise to the creativity of our fellow residents, who make the best with what they’ve got. I believe that the truth is somewhere in between — LL had a rough idea of what would happen, and the residents, as usual, rose up to the occasion, and made the best of it. Surely these changes did not appeal to everybody. Friction occurred between the “barons of the Old World Order”, the survivors, and the “new barons” (the ones who grabbed an opportunity before the rest was able to adapt) — many left, or threatened to leave, but also many more joined, free from any preconceptions. These are currently the ones to watch closely — they’re not “encumbered” by nostalgia, they have come into a world whose rules they have quickly grasped, and don’t need to deal with the “old baggage”. “Oh, so you got free L$ just for holding events? How weird. Well, I don’t need that, I make enough from my own events anyway…”
The more particular lesson we should learn is about the meaning of change. SL is due to change a lot, and quite quickly. The ones who adapt to change will be survivors – no matter how radical those changes are. The few still clinging to the past will just become “old maids” mumbling all the time “oh, we did all of that in Beta… those were the days…”. Failing to recognize the nature of change is fatal.
Talking about change, how many of you creative content providers have logged in to the 1.6 Preview to make sure that all your fabulous, high-quality content, is working properly…? Better make sure that you log in and do some testing. Again, there are big changes ahead, and it’s safer to make the tests first, instead of complaining later. Already some residents are designing objects and scripts that will only work in 1.6 — weeks before 1.6 is launched! They’ll have an enormous advantage over the rest of the content creators — who will painstakingly come to the forums and yell, sob, and tear hairs, complaining that LL broke the scripting again, or something, and feeling “left out” when some are already selling 1.6-compatible items. Well, learn to adapt to change. As the old saying says — it’s so much better to be safe than sorry!
