Steps to Selling L$

So when are we going to start selling L$? It occurs to me that I skipped this discussion when I jumped right away to selling strategies. A number of people raised concerns that we shouldn’t sell L$, further (in theory) devaluing the L$ at a time when residents have been pummelled by recent changes in Second Life. When we first started seriously talking about selling L$ earlier this year, we said there are at least three steps to get there:

1) Reduce stipends. This is necessary so that the money supply isn’t bloated with L$ we sell, which would devalue the Linden Dollar. We’ve already knocked off nearly all basic user stipends, it’s time to start reducing stipends for Premiums.

2) Allow basics to buy land. Basics who own land have a recurring revenue relationship with us, and no stipend. This is the end state relationship that should be the default for all users. Some people will continue to desire a “premium” relationship, and we should continue to fashion an attractive product offering for that relationship. For the time being, the easiest way to make premium membership attractive is to give them discounted Linden Dollars. But we ought to be working on a lot more ways to make premium attractive.

3) Implement a recurring LindeX buy program. There are lots of premium subscribers who don’t own land (approx 30% of premiums). These people are effectively paying $10 for L$2000 per month – that’s a bad deal. Having them sign up for a recurring buy program would be less revenue for us, because they’d be buying L$ from other users rather than from a subscription with us. But it would put demand pressure on LindeX, which should further strengthen the L$, which should let us sell L$ on the exchange.

I’m not 100% sure what order these three should be done in, but I suppose that ideally it should be in the order set forth above. However, (1) and (3) have some negatives associated with them, and (2) has almost entirely positive benefits. So I’d like to see us proceed with (2), since it is on the path to selling L$.

3 thoughts on “Steps to Selling L$

  1. The logic outlined in this post make sense to me and I would add one more key step. Before we reduce (or eliminate) Premium Stipends, we should implement inventory limits for Basics. This step is critical because without it reducing stipends makes Premiums less valuable as compared to Basics. If the value of a Premium account is reduced (vs. Basic), we would expect fewer upgrades and more downgrades which would be bad for our revenues.

  2. Coffee says:

    Ginsu,

    I notice that none of your three initiatives address the issue that, “A number of people raised concerns that we shouldn’t sell L$, further (in theory) devaluing the L$ at a time when residents have been pummelled by recent changes in Second Life. ”

    Second Life survives on content, and that content comes from residents who are willing to commit their time and resources in exchange for L$. Be deliberately undercutting them, LL is targeting the same US$ that compensates them for their efforts.

    I understand that the legal viewpoint is about what you *can* do within the law, but the plan to sell L$ below market value is a slap in the face of those who worked hard to contribute content to Second Life. If you believe that SL has enough content and needs nothing new developed, then driving away the content creators to encourage the casual users seems like a wise choice. Otherwise, I think you should seriously re-evaluate the direction you’re contemplating.

    As someone who has devoted over two and a half years to creating content for SL, I would find it hard to continue if Linden Lab were to undercut my ability to sell L$.

  3. Coffee: Actually all three steps are intended to keep the L$ stable. I’m not sure people broadly understand that we are already selling L$ – we sell them in the Premium account package, and as Ian has pointed out, we are selling them there at a discount price. The sale of L$ in the Premium stipend is what is “undercutting the market.”

    There are, as I mentioned, many possible selling strategies. But the one that I proposed in an earlier post does not “undercut” the market in any way. I proposed a sale at the average sale price over the prior 5 days. The market could certainly decide that the price wasn’t sufficient, and perhaps the block wouldn’t even get sold at all.

    I think the problem that you are focused on is that we are injecting too many L$ into the economy at too low a price. I repeat, this problem is happening because of stipends to Premiums, and to a lesser extent Basics. And this problem is exactly what is addressed by all three of the steps outlined in this post.

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