Alphaville Herald

MMO Project Entropia to Get Banking License

Real life banking license for spacebux?

by Idoru Wellman, staff writer

Project Entropia has long been known as a hype machine rivaled only by Second Life, and it has also been known as a de facto online virtual casino. Now, according to Ars Technica, it is applying for a banking license - as in a legitimate banking license:

MindArk PE AB, the company behind sci-fi MMO Entropia Universe will apparently be able to let players conduct real-world banking from within its online game. Of course, Entropia Universe actually features a cash-based economy already, where players can exchange real money for game currency at an exchange rate of 10:1 (ten in-game dollars to one U.S. dollar) and then buy in-game items with the money; the game itself has proven to be incredibly successful, having generated over $420 million last year.

Now, though, MindArk's going to be just like a bank in the real world: it will be backed by Sweden's $60,000 deposit insurance, offer interest-bearing accounts for its clients, feature direct deposit options, let players pay bills online, and apparently will offer loans to customers.

The interest, we suppose, is that other virtual world makers (or users) might do the same if this works out.

 h/t to Raph's blog

LL Playing Gotcha With Land Baron?

IntLibber Brautigan's frozen accounts can’t sell L$ to pay bills

by Pixeleen Mistral, National Affairs desk

  A surprising note appeared on the Ancapistan Capital Exchange website tuesday evening - accord to the press release, IntLibber Brautigan’s virtual land business is having some difficulty covering land tier payments to Linden Lab due to the Lab’s L$ spacebux currency conversion limits.

Linden Lab has an officially sanctioned real money exchange - the Lindex - which players use to both purchase game currency and sell L$ for hard currency. While Linden Lab’s primary business is renting virtual land, a number of entrepreneurs act as middlemen between the Lab and ordinary game players, and accept payment for land rental fees (land tier) in L$. Although the Lab has promoted the in-world economy as a way to make real world money, it only accepts hard currency for land tier payments - and controls the amount of virtual currency that an individual can sell for hard currency.

Apparently, this has left IntLibber Brautigan in a bind, as he claims to have $8000 USD worth of virtual money trapped in accounts that are locked due to delinquent land tier payments.

Lab Tries to Hide SL Downturn in 3rd Quarter Economic Report

Pay no attention to the player hours logged in September

by Jessica Holyoke

Fresh out of the Herald's Money office, (unfortunately located right next to Jimbo's) is the 2008 Quarter 3 Herald financial report.  The compilation of this particular report was a bit harder to compile as a key piece of data was missing.  Zee Linden reported how the hours logged in for October of 2008 grew 11.4% over the hours of September to a record 37 million hours.  However, the number of hours logged in for September are not located on the Economic Statistics page.  And the graph used to show the amount of user hours logged in shows an aggregate for the quarter, not the individual month.

But algebra helps out this time.  If October's logged in hours equals September's plus 11.4% and 37 million, then September's hours would be 33.2 million hours logged in -- the fewest number of hours logged in per month for Q3 and lower than the amount logged in in June. 

Looking at the Total Hours Logged Growth Chart, the total logged in from the first month of the quarter to the last month of the quarter declined by 4.37%.   This follows two quarters of steady growth over the quarter.  Why this is being reported is that overall for a platform that needs to grow, more people should be using the service over time and from August to September, they didn't.  In comparison, at the end of June and Quarter 2, THL grew by 16%.

World Stock Exchange Open for Business-mostly

by Jessica Holyoke

The World Stock Exchange, WSE, is back up and running.  A few new things have been added since the Exchange went down for updates in January.  WSE 4.0 is active on www.wselive.com.  After the updates, all balances are now in WIC's or World Internet Currency.  People who opened an account prior to August 1st, 2008 will be able to withdraw their WIC's starting September 22nd, 2008.  The WIC at the time of conversion equaled one Linden Dollar.

State of the Economy

Lowest profit per capita growth ever in Q1 2008

by Jessica Holyoke

Zee Linden recently posted graphs reflecting the strength of the SL Economy here - and Zee is very happy to report that the SL Economy grew by 15%. However, the story is not that simple. By several other measures, the economy growing slowly if at all. For instance, the Quarterly Profit per Capita (QPC) shows an anemic growth rate of 0.18 for the first quarter of 2008, the lowest on record. This suggests that virtual economists may want to take a very careful look at Zee’s numbers.

Quarterly Profit Per Capita posts lowest growth rate on record

Zee’s first graph tracks User-to-User Transactions in SL It is an interesting graph because we’ve never seen user-to-user transactions before. The economic statistics page uses Resident transactions and counts. The raw data spreadsheet has L$ Supply and user-to-user transactions as a page, but only details the Money Supply on that page. The raw data used to create the first graph is not readily available. More importantly, the graph uses two specific terms, user and resident. In Second Life, a user is the typist, the person behind the screen. One user can control many residents’ user-to-user transactions - which would eliminate the transfer of money between alt accounts from the reckoning.

WSE Swaps Fictional Currencies, Might Be Trading In March

Roleplaying CEO's pretend stock market still down after 51 days

by Jessica Holyoke

Who wants Kool-Aid?

LukeConnell Vandeverre of Hope Capital Ltd, made an announcement via video link outside of Second Life on Sunday about the status of the World Stock Exchange. (WSE). The WSE went dark fifty one days ago with an announcement that they would be down for a month.

In his opening remarks, Vandeverre reminded market watchers that the WSE is the first Internet based stock market/bank and role playing game. Vandeverre also reminded people about the history of the WSE, and how back in December of 2006, he saw a need for a virtual economy to have a virtual stock exchange. After the virtual financial history lesson, the topic turned to what is happening with the WSE in relation to Second Life moving forward.

While both the Linden dollar and the World Internet Currency are both fictional currency and game tokens, only the World Internet Currency was going to be used on the WSE from the time the stock exchange becomes operational again in mid to late March. The reason given was that with the banking ban, which is formally known as a ban on paying interest, the WSE foresaw the Lab making many decisions not in the WSE's interest, including possibly doing away with the Linden dollar entirely.

BCX Withstands Fraud Attack

BCX CEO claims Spinchief Akina, iblack Afarensis, chyk2u Arado, and Petrucci Jonson are thieves - thanks Linden Lab for assistance

by Jessica Holyoke

Travis Ristow

Travis Ristow, CEO of BCX Holdings (traded on the International Stock Exchange) send the letter below to BCX account holders and shareholders today. In the letter, Mr. Ristow alleges that Spinchief Akina attempted to defraud BCX holdings, but was thwarted. Mr. Ristow goes on to thanks Echo Linden for helping return L$s temporarily removed from BCX holdings, and warns the metaverse that the alleged thieves may return on other alt accounts.

Despite the claims, Spinchief Akina is still in search as we went to press.  Unfortunately, both Travis Ristow and Spinchief Akina were unable to comment.  Mr. Akina's Banqex group did not have other members listed available to comment.

---

To Our Valued Shareholders & Account Holders,

Firstly let us state that we have chosen to make you all aware of the details below for several reasons. Two in particular: one as you have consistently seen with us in the past, we always endeavour to be as transparent as possible and ensure that you, our customers and investors, are fully aware of anything pertaining to the operations of BCX. The other main reason we decided to post this, was due to the fact that, as I think you will agree, we have all seen FAR too many individuals operating in unethical and underhanded practices in SL. We hope that the information we provide may assist you in issuing caution when dealing with the individuals or companies mentioned below.

Second Life Economy is in a Recession

Residents with a positive monthly L$ cash flow declines for second consecutive quarter

by Jessica Holyoke

After the banking ban, there are commentators who state that the Second Life Economy is in a recession and then there are the opposing commentators that say that the Second Life Economy is not in a recession. 

According to Wikipedia, a recession "is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year."  Linden Lab does not have figures on GDP or economic growth.  But the Economic Statistics page does provide two numbers that can assist in seeing if there is a recession, Positive Monthly Linden Flow (PMLF) and total User Hours Logged. 

PMLF is the number of unique users that showed profit over a particular month.  On the statistics page, they are grouped by number of users that have experienced a degree of profit in U.S. dollars.  This number is better than the other monthly spending numbers because it eliminates any Alt effect.  For the resident transaction numbers, if I gave an Alt any amount of money, it would be counted in the totals, even though I was not spending money, just shifting it around.

Second Life users with positive monthly L$ cashflow getting harder to find

Financial News Update

by Jessica Holyoke

A week after the announcement of the upcoming Linden Banking Ban, Lindens and residents are reacting in different ways.  The Linden reaction is that "payment of interest", the main prohibition on offering a bank goes both ways.  Paying interest on deposits is prohibited, but according to some Lindens that responded in writing, receiving interest on loans or credit cards is also prohibited. 

Various banks are coming up with new business plans.  While BCX Bank and SL Investor's Bank are exploring new possibilities, some banks like Bank of SL are no longer going to be paying interest on balances. 

Other banks, like SL Business Bank, have disappeared from Search.  JT Financial is transforming to an Avatar to RL Merchant exchange service called SL Wallet.  All cash balances will be transferred from JT Financial to SL Wallet, presumably under the Arbitrage Associates LLC name. 

BnT is looking to the Middle Ages for a solution called "Contractus Trinium"  where the depositor agrees to deposit a sum of money in BNT Financial for zero interest on a daily, monthly, quarterly, or annual period, the depositor agrees to purchase, from BnT, insurance against default in an amount of 2.5 L$ per 1000L$ deposited, per day and then the depositor, agrees to sell to BnT, all rights to profit from use of this capital, for the amount of 10L$ per 1000L$ deposited, per day.  At the same time, BnT is registering as an LLC. (source: www.ancapex.com)

WSE Down - But Coming Back

step 3: Close virtual stock exchange for 30 days. step 4: Directors resign. step 5: Profit?

by Jessica Holyoke

LukeConnell Vandeverre has plans for WSE

Upon entering the World Stock Exchange, visitors are greeted with a notice that the ATM's and assorted systems will be down for up to 30 days.  After two trading days of 3.8 million shares on January 2nd and 2.4 million shares on January 3rd, LukeConnell Vandeverre announced a shut down in order to update the WSE to WSE 4.0.

The new WSE promises better security, increased functionality and more features.  As part of the evolution of the WSE, the directorship has been changed. Three non-executive directors, Simon Sugita, Erik Goff and Jermaine  Sapwood, all resigned from Hope Capital Limited.  Vandeverre stated that one of the new functions of the WSE 4.0 is the ability for shareholders of the WSE to vote on the board of directors based on individuals he nominates.

Linden Crime Alert

Lab to punish unknowing recipients of fraudulent L$s

by Jessica Holyoke

crime - and punishment?

Wednesday on the Second Life Blog, JP Linden advises caution when dealing with third party resellers of Lindens dollars.  JP Linden's concern is that some third parties buy their Linden dollars from stolen credit cards, phished accounts or hijacked PayPal accounts.  JP then goes on about how to best spot fraudulent resellers, fly by night operations with no background, and warns against patronizing those who resort to spam advertisements to sell Lindens, as you would in World of Warcraft . There are further warnings against being forced to wait for receipt of L$s or receiving the Lindens from multiple accounts.  However, its what happens to the unknowing purchaser that is the scary part.

JP Linden reminds us that if a resident purchases fraudulent Linden dollars, then the buyer is liable for up to 150% of the original purchase.  So that if you buy L$1000, Linden Lab can seize from you L$1500.  The stated reason for this policy is that Linden Lab cannot encourage this activity.  So instead of having stricter paypal or credit card controls, they will seize Lindens that are, in their view, fraudulent.

Here's an example of why this is problematic:

Financial Update - Ginko Not Dead Yet

Ginko Financials still taking deposits

The "JT" behind JT Financials revealed

by Jessica Holyoke

I approached a Resident when I noticed that she had a December 2007 rez date and two Ginko Financial groups in her profile.  She told me how she used a Ginko Financial ATM based on the advice of a friend.  She deposited Lindens in, as that is how you opened an account with that Bank, and was informed by the ATM that Ginko was closed.  Unfortunately, the payment to GF Ambassador still went through.  I confirmed that the ATM was still taking payments by making a L$1 deposit.  The GF Ambassador account must still be active and the ATM is still taking payments on GinkoTech land.

Perhaps liquidators such as Shaun Altman should be made aware that the Ginko ATM's are not disabled?

Dialing for L$s

Buy L$s without a credit card or PayPal - use your phone

by Jessica Holyoke

While investigating the current Euro to Linden trade rates in light of the decline of the US dollar, I found an operation called Telelinden. A resident makes a phone call to a German number, costing 1 Euro if you are under Deutsche Telekom and you get paid 200 linden dollars in your avatar account. Ibizia bank is selling $315L per Euro, and the pure exchange rate is $378L per Euro.

The stated advantage of buying Lindens through Telelinden is that you do not need a credit card or PayPal. A resident makes a phone call and pays for the Lindens through his phone company.

Commissions are also available if a terminal is placed at your location, with commissions paid out based on how many times an avatar uses Telelinden if they first use the terminal on your land. So if Johnny Avatar first uses Telelinden on your land, you receive a commission for each time Johnny Avatar uses Telelinden, no matter which ATM he uses.

Telelinden is the product of in-world professionals, the most successful Web 3.D designers in Europe according to their web page found at www.inworldprofessionals.com. Lislo Mensing owns both inworldprofessionals and Telelinden.

Anshe Pays US$60,000 to Open Virtual Pawn Shop in Entropia

Land baron Anshe Chung expanded her empire today by winning one of five banking licenses in the wild and wooly virtual world of Entropia Universe, according to a late-breaking report from RCE Universe. Anshe paid PED600,000 (US$60,000, or more than L$16 million) for the right to make collateralized loans in Entropia, meaning any banks that open there will be little more than virtual pawn shops -- for the moment. In announcing the auction, Entropia notes that “Should an interested party hold a real banking license in the real world, many more services and features can be added.” Will Deutsche Bank soon be getting inquiries from Anshe? And what about the cross-world arbitrage opportunities? A whole new world of virtual capitalism awaits! [More details on 3pointD.]
--Walker Spaight

QQ - The Skyrocketing Virtual Currency

by Onder Skall

QQ finally made headlines in the Wall Street Journal. Largely ignored here in the west, the hottest virtual currency in China is the QQ. Created by Tencent Holdings Ltd, "QQ Coins" were originally invented as a means for trading virtual items in online worlds and through their popular instant messaging program. For awhile it was just like any other coupon-trading system, but then third parties started accepting QQ as payment for real world services. The value of QQ began to climb as demand rose, and currency traders began making some quick Yuan buying and selling the virtual currency. Small shops started springing up everywhere offering discount QQ Coins.

"State-run media reported that some online shoppers began using QQ coins to buy real-world items such as CDs and makeup. So-called QQ Girls started accepting the coins as payment for intimate private chats online. Gamblers caught wind, too, and started using the currency to get around China's anti-gambling laws, converting wins in online mahjong and card games back into cash. Dozens of third-party trading posts sprouted up to ease transactions, turning the QQ coin into a kind of parallel currency."

Obviously the Chinese government is concerned, not only because this unregulated currency is gaining in value, but also in popularity. Regulation of any kind could have drastic effects upon the value of the Yuan, and so whatever move is made next, there is an understanding that it must be cautious. Through some correspondence with Geoff Fowler of the Wall Street Journal I was able to shed a little light on exactly what is being done. While official government statements have requested that web sites not allow "real world" trade for "virtual currencies", no specific punishments have been itemized for doing so.

Samwer Brothers of Germany take 10% Stake in Anshe Chung Studios

The Samwer hotties brothers

The German newspaper Frankfurther Allgemeine is reporting that the Samwer brothers of Germany have acquired a 10% stake in the virtual real estate and metaverse development company Anshe Chung Studios. The Samwer brothers -- Oliver, Alexander and Marc -- gained their claim to fame when they started an online auction site alano.de in 1999, which they subsequently sold to eBay for the equivalent of $50 million US. In 2000 the brothers founded Jamba!, which they sold to Verisign for the equivalent of $270 million US in 2004. They subsequently started a venture capital fund called European Founders Fund.

Reached for comment by the Herald, Anshe Chung would not indicate the dollar value of the initial investment, but it has been reported that venture capital firms have previously valued Anshe Chung Studios at over $2 million dollars US. This would suggest a possible investment of $200,000 to $300,000 by the Samwer brothers. More important than the monetary infusion, which quite frankly ACS doesn't really need given its cash flow, will be the possibility that the Samwer brothers can bring formal business and accounting methods to ACS -- a development that will help to bring other investors on board in the future.

Of special interest in the Franfurter Allemeigne article is the claim that the investors plan on ACS expanding to 100 employees by July and opening offices in Frankfurt, Boston, and Tel Aviv. Ms. Chung would not confirm the opening of the new offices, but did confirm the expansion to 100 employees -- mostly skilled programmers -- and added that ACS would be moving to larger offices in Wuhan.

Is Ginko's Alleged Ponzi Game About to Implode? Will Linden Lab be Held Liable?

The Journal of the Business Law Society at the University of Illinois College of Law is running a well documented article on Second Life's Ginko corporation, which claims to have the equivalent of $475,000 US invested in it but which some have called a ponzi scheme, Meanwhile, Philip Linden has comparedGinko to the Grameen Bank of Bangladesh. Finally, someone is calling out Philip on this outrageous attitude. From the JBLS:

More curious than people’s willingness to give their money to Ginko, is that Linden Lab does not seem to find anything worrisome about the venture. Linden Lab’s CEO and founder, Philip Rosedale, believes that banks can exist within the virtual world of Second Life without regulation. Rosedale likens banks like Ginko to Grameen Bank of Bangladesh which makes small unsecured loans to the very poor to help them start businesses and work their way out of poverty.

Meanwhile, a well placed and reliable Herald source tells us that Ginko is in fact a ponzi scheme. We are not in a position to pronounce on the matter, given the real life legal implications, however we think it is about time for Ginko to show some transparency. Where is the money!? Open the books, and show us where the money has been invested. Is it in other Second Life businesses, or in things like sweet new rides, as our source insists? More to the point, if it *is* a ponzi, will Linden Lab be liable? From the article.

Given Ginko’s complete lack of transparency, if it turned out to be a swindle, it would be very hard for depositors to track down the person or persons behind it. Even if they were found, there is no guarantee that depositors would be able to obtain redress. If this were to occur, it is likely that the depositors would sue Linden Lab for not protecting them from fraud. By not taking efforts to ensure that commercial activity in Second Life is conducted in a transparent manner, Linden Lab is in essence putting their stamp of approval on ventures like Ginko. Linden Lab of course absolves itself of any liability for the actions of Second Life users in its Terms of Service Agreement, but there is no guarantee that the Terms of Service Agreement will hold up in court. If a court determines that Linden Lab is liable for fraudulent activities that take place within Second Life, they may be overwhelmed with suits. To avoid liability, and governmental regulation of the commercial activities within Second Life, Linden Lab should develop rules and policies that ensure commercial transactions between users are transparent and legitimate.

See Virtually Blind for further discussion and an observation that, with yields down 60% in 16 months, it does not look good for Ginko investors.

Let the Island Wars Begin

by Dow Jonas

No sooner did Linden Lab put an island + frills up for sale on eBay (apparently to show Project Entropia they ain't all that), but now Anshe Chung has raised the stakes, challenging with an island of her own for sale on eBay, and she has sweetened the pot with additional perks.

The Business Girl's offering has some of the exact same features as the LL ad, i.e. 120 hours of top designer building valued at $6000 US and $2340 in paid maintenance fees for a year. But to compete against the hand that feeds her, Anshe ups the ante with "20 ANSHECHUNG.COM content packages for you and your friends valued at $2000.

The extras include "exclusive content such as fashion, furniture, art and animations for your avatar and home. From famous creators including Vicious Volos, Anshe Chung, Koji Anansi and other big names" (Vicious Volos is one of the accounts with popular content creation which Anshe purchased to take over the business).

The Private Island Queen also offers *real life* swag including anshechung.com t-shirts and "3 large framed prints featuring your avatar together with online celebrity Anshe Chung on your very own island."

What will really clinch the deal for Anshe though is this: "An exclusive virtual date with our celebrity CEO Anshe Chung valued beyond imagination." (Although a date with Uri would clearly have earned bigger bucks.)

Priceless. (details under the fold)

-120 Hours of design, landscaping and building development to turn your island into the place of your dreams valued at $6,000
-One year of paid maintenance fees valued at $2340
-20 ANSHECHUNG.COM content packages for you and your friends valued at $2000
Includes exclusive content such as fashion, furniture, art and animations for your avatar and home. From famous creators including Vicious Volos, Anshe Chung, Koji Anansi and other big names.
-ANSHECHUNG.COM real-life merchandise valued at $1000
-Includes 20 limited edition ANSHECHUNG.COM Dreamland posters
-Includes 20 ANSHECHUNG.COM polo shirts
-Includes 3 large framed prints featuring your avatar together with online celebrity Anshe Chung on your very own island.
-An exclusive virtual date with our celebrity CEO Anshe Chung valued beyond imagination

This is clearly a shot across the bow of Linden Lab, which has angered Anshe in recent weeks with their new teleportation policies that may well undermine land value near telehub areas. Anshe has already countered with a massive advertising campaign agains the Linden policy (see ad below this post).

Major Chinese Gold Farming Operations Exposed in Tomorrow's NY Times

There is a fantastic article by David Barboza in tomorrow's (Friday) New York Times, but it is already up on the site of the International Herald Tribune if you want a peek. It is only the second case that I know of, where the reporter actually went and visited gold farming operations. I talked to Barboza on the phone when he was working on the story in China and he told me things that blew my mind. Like, for instance, he and his aides have been to a dozen of these places, some of which have 100 workers living in dormatories working 12 hour shifts. They get paid about a dollar a day or less in some cases, although sometimes they get two meals and a place to live in the dorm. Hey, sounds like college! Anyway, he's supposed to have great pics. I'll be interested to see if they are printed in tomorrow's Times.

Anshe Declares War on Ginko: "It"s a Ponzi Scheme!" (Lindens block discussion. Transparency is first casualty.)

SL Power Player and Business Girl, Anshe Chung

By Dow Jonas

A fierce debate about trust in financial institutions is rocking the business community of SL, pitting SL’s largest land baron, Anshe Chung, said to own SL properties valued at U.S. $200,000,against Nicholas Portocarrero, SL’s largest savings and investment bank owner, reportedly holding more than US $60,000 in resident savings accounts.

In a series of forum posts, Chung has accused Portocarrero of running a Ponzi-style operation promising high yields for depositors but using up new investments to pay existing depositors, a scheme likely to lead to collapse. Such scams are named for Carlo Ponzi, an Italian immigrant to the U.S. in the early 20th century who bilked thousands of people of what was then U.S. $15 million in a double-your-money stamp investment plan. Ultimately, authorities and irate customers caught up with him, he was unable to refund deposits and served time in jail for fraud -- only to emerge later to perpetrate a swamp-land scam.

Portocarrero has blandly denied the charges, and despite recent accusations, has added a feature of LL $100 free for new accounts, while reducing the interest to 0.15 percent interest per day. He says that in the country he lives in (which Anshe has claimed to be in South America, in violation of SL rules against first-life disclosure), he is unable to get a bank account due to excessive regulation and cronyism.

Chung is currently accusing Portocarrero of taking $LL 16 million, currently valued at at about US $63,000 on the LindEx, out of Second Life platform to points unknown, leaving $2 million to cover any withdrawals.

Anshe Chung is a German citizen of Chinese heritage whose real-life name and Paypal account address are known to her customers. In addition to her land sales and island rentals business, she operates a currency exchange business that has absorbed some of the customers from the failure of GOM in the summer. She also owns a percentage of SLExchange.com, a popular third-party catalogue site for purchasing avatar accessories.

No RL name or location is known for Nicholas Portocarrero but by an in-world presence of a year, and consistent payouts on deposits has earned him numerous customers. While his claim to have received $LL 16 million in deposits is unverifiable, several weeks ago, Cyberland Equities, the only company listed on SL’s Metaverse Stock Exchange, reportedly withdrew $LL 3 million in deposits after forums disputes about reputation and financial practices flung on both sides. Cyberland’s directors acknowledge that the high return on their Ginko deposit helped cushion the impact of GOM’s failure on their land business.

“Who’s Winning Losing?” is the title of a typically clever but biased and poorly-spelled forums poll accessed by less than five percent of the SL population -- but an avid and influential percent. Bommerang aptly sums up the community’s concerns with poll options for losers like “Anshe Chung, due to self induced image damage for good of the community,”; “ blaze Spinnaker, due to beleiving in a sinking ship; and “Second Life as a whole, for a 'trust and succeed' ideal seemingly disappearing down a drain.”

In a record-setting day with five threads locked by forums moderator Jeska Linden, SL residents refuse to stop debating the pros and cons of Chung versus Ginko, as many felt driven to support one of the other in SL’s nervous economy.

Meanwhile traffic to Ginko terminals for both deposits and withdrawals appeared normal, and Ansheland continues to sell like hot-cakes especially in the newest sims in the north and on her private islands.

In closing the offending posts, Jeska Linden has invoked an oft-cited TOS rule about not starting threads devoted to one person and engaging in personal attacks.

But residents object that when businesses involving millions of dollars are being traded, the public has a right to demand more transparency.

Currently, Anshe has thrown down a challenge that many forum-watchers have seen as a threat by offering to bail out all existing Ginko depositors while urging Portocarrero to close Ginko, apologize, and explain where the money is -- in the interests of the good of Second Life as a whole. Detractors have rushed to accuse her of a blatant bid to undermine another business and take it over.

Insiders say Anshe has said she has no plans to start a bank, although she is willing to temporarily provide some interest on former Ginko accounts. Analysts have pointed out, however, that Apotheus Silverman, owner of SLEXchange.com where Anshe has part interest, has contemplated in the past adding a banking feature to his new currency exchange. His site already has numerous deposits from shoppers which currently sit in accounts without interest, as many people find it inconvenient to go back inworld from work during their lunchtime shopping sprees to withdraw the few hundred or thousand they have remaining after their catalogue purchases. The notion seems quite plausible that these small depositors, coupled with the larger amounts from content-sellers often calculated in thousands of U.S. dollars, could be lured to add more to SLExchange.com with interest-bearing accounts. Seen in that light, Anshe’s offer of a bail-out seem to some not only to be an altruistic image move, but a shrewd business move.

The acrimonious forum fights have prompted numerous parodies of Anshe’s original post alleging foul play, leading to the sort of racist and sexist baiting the land baroness has weathered before when references to are made to her early SL days of “private entertainment for lonely men”.

Chung questions whether it is right for Ginko to remove so much LL cash from the game and cites her own investments ploughed back into world infrastructure; critics point out that any cashout through LindEx or anshechung.com, both of which have caps on withdrawals, or IGE, are merely providing Lindens for players who want to buy content therefore helping the economy in another way to be more liquid. One practice reduces inflation; the other increases, say some commentators.

Any sudden cashout, such as began to happen with GOM last summer, however, destabilizes the fragile toy-like economy of SL, with it’s US $40,000-60,000 US per day handled by no more than 4,000 people logged on at any one time.

Many finance-watchers have been disturbed to find the Lindens taking a neutral position on the financial scandals. In a November 17 announcement, Linden Lab’s attorney Ginsu Linden said, “We applaud the continued innovation and entrepreneurship of our community....please keep in mind that Linden Lab does not own, operate or insure these [financial] services.”

Travis Lambert, one of SL’s most trusted figures for his work at the newbie Shelter, announced he had withdrawn his account of 75 percent of the Shelter’s donated funds from Ginko, while keeping in 10 percent.

Lindentown Provokes Land Baron Outcry: Stop GOMing us!!!

by Dow Jonas

Sim crashes and texture upload failures, “I see grey people” and frozen avatars – all the joys of the new Second Life software update 1.7 and its patchlets have played havoc on SL’s volatile land market in recent weeks as both would-be first-land stakers and land dealers give up when they can’t even *see* the world. Serious uncertainties not only about the market but their own role in SL put the barons in a huddle again last night as rumors of a new LL zoned sim project for newbies – possibly serious competition for inworld rentals by residents -- were confirmed.

Last night, word spread that a Levittown-like suburban sim, created by the Lindens using selected resident builders’ housing, would soon offer new basic subscribers a free house and land to encourage them to upgrade to premium. The protected status of the plots and houses – they cannot be sold for 3 months – mean essentially the Lindens have created another much-coveted zoned sim like Boardman or Brown.

”We’ve been GOMed,” blogged controversial rentals czar Prokofy Neva, who said he was tiering down two regions in response. “The Lindens now have non-profit rate sims they give to RL educators; they themselves have created and rent out combat sims; they have announced building contests for the creation of amphitheaters for instructors’ classes, and now they have newbie zoned suburban sims – why do they need us to make a world?”

“The urban planner in me screams and screams and screams,” says Lordfly Digeridoo in a forums comment, while acknowledging the new zoned areas could be a boon for newbies and help people make friends.

“Risk Analysis: Linden Lab Opens Realty Division,” warned Jauani Wu, a land baron who had recently unveiled ambitious plans for management of residential zoned projects on private islands at the Cyberland Equities stockholders meeting last week.

“Second Life competing with content creators? I don’t usually express myself in a vulgar way, but: WTF,” said a forums contributors, Anna Bobbysocks. “Why not give us zoning capabilities and let us do this?”

“LL is basically competing with content developers, but worse, they're keeping key technology out of the hands of developers so they can not effectively compete with this,” said a leading forums controversialist, blaze Spinnaker.

The new suburban houses – which immediately summoned up visions on the forums of the old song about “little houses on the hillside made of ticky-tacky” -- were solicited in an open bid for user content to be sold to newbies in a promotional campaign by LL’s marketing department. An email signed by Lauren Linden says new account holders will have six styles of houses to choose from.

Some of SL’s top architects hurried to Blumberg, as the suburb was dubbed, and quickly littered the area with performance art ranging from a monkey with a pet dog on a chain and a snickering kitty. Like RL government-sponsored projects in inner city ghettos, Lindentown might all too soon fill up with fire-prim attacks and blighty bling, even if the Lindens do provide standard-issue housing to avoid the “ZOMGZ my neighbor made a huge ugly black spinning box” horror of the first-land experience.

The houses appear so uniformly drab and conformist in this setting that even desperately homeless newbies could give them a pass and head straight to prettier themed private islands maintained by land barons or well-managed mainland rentals communities with more freedom of choice.

As if to illustrate the high premium people will pay to escape ugliness and griefing in their dream world, this last week also saw what may have been the highest-per-meter land auction bid in SL history, for a spot in the coveted Linden-zoned residential sim of Boardman, as a mere 512 m2 parcel – barely enough for a newbie house and dog – went for LL$100,910, or US $397.59.

Numerous curiosity-seekers and well-wishers came to see the much-coveted plot in the artists and architects enclave, surrounded by 1950s-style suburban houses with convincing props like bicycles and lawn sprinklers. Even CEO Philip Linden showed up later to congratulate the successful bidder, Boardman architect Maxx Monde, who earlier this year set the previous record for a US $262 bid in Boardman.

A volatile land market, with bodacious bidding for Boardman and greedy graffiti-griefing of the grid by anti-Bush activist Lazarus Divine causing fire-sale dumping of land nearby -- and the stage is well set for the Linden’s latest takeover of resident concepts and businesses, Second Life Surrealty

The Lindens’ further intrusion into the land market comes at a time when major dealers are already very nervous about their futures. One dealer who asked not to be named told the Herald of a belief that another major dealer whom they declined to identity – but likely Anshe Chung – was busy unloading her mainland holdings, seeing the handwriting on the wall. “I think for large land holders, only one person dumped all they had quickly so the rest of us are stuck at taking big losses.”

To be sure, many mainland plots on older sims are being liquidated now at half their original purchase price inworld. With many wannabee baby barons entering the land rush now along with thousands of newbies, the price of retail land has skyrocketed.

With this stiff bidding competition, far from unloading her sims, Anshe now charges $50,000 for a 1024 parcel next to new northern continent telehubs, and is selling prime mature waterfront for more than $10/meter in many new areas.

Virtual Market Matters: Cyberland Steady; Is Ginko in Trouble?

By Dow Jonas

Since the demise of the well-liked independent Linden currency exchange Gaming Open Market, Second Life’s land and content markets as well as its fledgling financial institutions have taken a beating. With the month-long ramp-up time of the LindEx, Linden Lab’s own currency exchange, which still has a hefty fee and slow manual pay-out via PayPal, a number of SL businesses offering savings, investments, and shares have had to tighten their belts for a very rocky ride.

Many land dealers were faced with the predicament this past August and September of having too many Linden dollars from booming land sales, but were reluctant to cash at the lousy rapidly-tanking GOM rates as GOM managers headed for the exits after Philip Rosedale, CEO of Linden Lab, announced that talks of a takeover and stock option had failed, and LL would be creating its own currency exchange. SL investors then began to hunt for places to park their Lindens – some commissioned builds, some put their pixelated pennies into more cheap land to flip later, and some entrusted their ephemeral finance to a new stock market and a well-established bank.

After a tangle with Linden Lab, which told the entrepreneurs to remove what they felt was the misleading name SL Stock Market), Cyberland Securities, the sole company listed on what is now called the Metaverse Stock Exchange, appears to be holding its own, paying out dividends on schedule on October 11 to an unknown number of investors holding a total of 469,750 shares. Today, shares are trading at $11.25 per share for 5000 on the buy side and $10 per share for 100 on the sell side, down from the summer high in the 20s . Shareholders are scheduled to meet Sunday at 6:00 PM SL-time to hear plans for spending what is currently a L$3,746,830 cash reserve, evidently garnered from selling the company’s mainland holdings, which now total just 107,760 m2, indicating the successful sale of a number of sims won on auction bids by Cyberland CEO Shaun Altman.

Trading of shares on the Metaverse have not been terribly brisk, as many are no doubt waiting to see how the LindEx does and land market in general turns. LL continues to sell on its auction a dozen or more sims a week at bids opening at $1000 and closing for normally not more than $1200, and more often $1050; with the population explosion, these have been parceled up to small amounts all over the north and are rapidly filling with newbies and oldbies who now find is cheaper and flatter to build in SL.

Ginko Financial is an interesting experiment that has apparently been around for a year or so, which offers a whopping 0.19 percent daily compounded interest to depositors. At terminals scattered around SL, any resident can right-click and pay GF Ambassador, an avatar in the land group and wait for his SL nest-egg to grow. In May, Ginko reported it had reached the $L2 million deposit mark. This week, Ginko announced that the software update 1.7 required them to redo some scripts, but this is par for the course in SL, where each new patch paralyzes hundreds of businesses as they scramble to rewrite code on everything from vendors to rentomatics to ATMs.

Before the update, however, SL’s small investor community was rocked with rumors that Ginko was about to crash, like GOM. While Ginko had kept paying out regularly throughout the GOM crisis, suddenly it seemed as if its model was breaking. Investor insiders began to speculate that GOM itself may really be like the sort of pyramid scheme SL forum critics endlessly wail about in the anonymous-avatar filled virtual world because the financial company itself may rely on an Internet pyramid schemes like the cash-for-web-surfing site at http://www.12dailypro.com/ This site’s mention of e-gold with 12 percent daily commission and 12 percent referral commission, say some knowledgeable about the scheme, would dovetail with statements made by Ginko CEO Nicholas Portocarro that his investments are in gold, and that he has plenty of return to be able to plough back into SL.

Ginko makes no promises to depositors that they may withdraw instantly – disclaimers come with an automatic notecard at every terminal. Its track record has been pretty stable, but in recent weeks, at least one very large deposit said to amount to L$1.8 million was rumored to have been withdrawn from Ginko, and others are speculated to have followed – with the issue not clear of whether they are able to obtain complete and timely withdrawals.

Rumours were further fueled by the disappearance off the SL map of Paris and South Paris, two casino, shopping, and museum private island sims owned by Ginko that never seemed to taken off, despite breathtakingly realistic French builds by architect Kavai Onizuka. Onizuka himself has been targeted by claims from Anshe Chung and other SL developers for failure to perform on building contracts though his builds on Paris seemed above reproach. This week, the word on the street is that Kavai, who is often said to bluster about access to deep pockets but whose connection from his alleged RL location in Macau has often been spotty, might be a candidate for the Teen Grid. His for-sale ads on the forums have grown more frequent. Onizuka was rumored to have been paid by Ginko for the failed sims not in direct cash, but in a favorably-rated deposit in Ginko itself, creating speculation about grounds for some claims and counterclaims, although to date Kavai remains an officer of GinkoTec Financial group.

Calling into question the LL mantra about “value-add”, despite their beautiful architecture and planning, the Paris islands never seemed to get the traffic they needed to succeed, though for a time they were managed by successful entrepreneur Timmy Night, whose Night Mountain has regularly been in the top high-traffic and Developer Awards lists. Rumour has it that Ginko was forced to sell off the Paris sims to make ends meet on the withdrawals at the terminals. Meanwhile, Ginko is in fact showing a new island “coming soon” on the map and doesn’t show any actual signs of closing its ATMs. Tracking the Ginko doings in SL are made difficult by the confusion between GinkoTec and Ginko Technologies, which executives say are completely separate – yet have some of the same people in or around them.

The secretive Ginko has never wanted to explain where its investments are made outside of SL, and that has created a credibility problem for its users. Still, most depositors seem so happy to get the .19 per day help grow their SL dream that they haven’t looked too closely at the arrangement. As with all pixel profits that have no certainty of turning into RL cash, caveat emptor.

Elves Enter Money Trading Biz

In the wake of the closing of Gaming Open Market, the notorious SL group Elf Clan has started its own currency sales operation. A couple of interesting points are worth noting. One is that the entry of the Lindens into direct money trading has oddly led to the loss of GOM but simultaneously with at least one new money trading operation. Two, I wonder what would happen if Elf Clan established its own currency for elven affairs -- currency which could be bought and sold with either dollars or lindens. The group is approaching the size where that might be feasible, and it would have a big impact on group identity. This leads to the question: what is the best way to implement something like that.

EXCLUSIVE: Philip Linden Reacts to GOM Announcement

In an exclusive interview with the Herald, Second Life honchissimo Philip Linden gave his reaction to this morning's announcement that GamingOpenMarket.com would halt trading in L$ as of October 2. Far from stifling competition, Philip sees Linden Lab's move into the currency-trading arena as one that will enable the entrance of even more resident-created services.

The Herald asked Philip whether the company's move meant that there was a limit to the innovation LL would accept in their world. Several residents have expressed concern that anything truly useful would simply be co-opted by the company. Did Philip share their fears? Their pain? Their pecan pie?

"We were caught as surprised as everyone else by the GOM announcement, and are now moving even faster to get our own version of an exchange online," Philip told the Herald in an exclusive interview. (Did I mention this is an exclusive?)

Philip also expressed concern for the SL economy in the short run. "Making this announcement without simultaneously suspending trades seems like the worst possible way to do it in terms of impact on prices and the people using the system," he said. "I don't know why they made that choice. If it was to signal their frustration to LL, I think it was a poor choice because it also has a negative impact on the thousands of people using the system. I am happy to see that in the hours following the announcement, although the price of the L$ briefly dropped, it has remained quite stable."

As to the question of competition, Philip said, "I think it is important that there be many markets with different strategies and features. Outside of GOM, there are multiple currency traders today, such as AnsheChung.com or IGE. We will be adding features like web APIs for currency transactions to make the systems that they have work better and make new systems easier to build."

Philip noted that forum discussions have included the question of whether GOM would sell their service to another resident or residents. "We would be very supportive of such a purchase, and would gladly help out with that transaction in any way that we could," Philip said. "I would love to see GOM continue to operate in the hands of other SL residents, and we would certainly help out."

Philip was unconcerned that GOM's move -- or future move on LL's part -- would discourage other residents from undertaking major projects. "I doubt that residents will shy away from big projects like GOM, given how many incredible opportunities are showing up almost daily now, and how rapidly SL is growing," he said. "We will sometimes need to add features to the SL platform that will compete with resident projects, and I think that is OK and part of growing SL. I think that most entrepreneurial residents are smart and resourceful enough to jump in regardless."

The Herald would like to thank LL for permitting its chief executive the time to respond to our questions. Now back to our regularly scheduled muckraking.

Going, Going, GOM: L$ Site to Close Doors

In news that is sure to shake up virtual commerce in Second Life for some time,GamingOpenMarket.com, probably the single most popular site for trading L$ and the benchmark by which most smaller traders do their business, this morning announced it would shut down its L$ trading service, effective 7pm game-time on Sunday, October 2. The move comes just a month after Linden Lab began taking steps to get into the L$ trading business -- something many predicted would indeed have the effect of shutting GOM down.

As we reported back in August, Linden Lab had contacted GOM about more fully integrating its service into Second Life sometime last winter. But after Jamie Hale and Tom Merrall, GOM's principals, visited LL to talk about a deal, negotiations broke down and LL decided it would be better off implementing the service itself.

According to posts by Hale in the GOM forums, he and Merrall felt LL's offer was unfairly low. He also felt the company had underhandedly mined the two developers' brains for information on how their service worked.

In the end, LL decided to implement its own service, one that would be "a direct duplication of GOM's functionality with the addition of credit card billing," according to Hale. "This is taken from communications with LL -- it is not speculation on our part."

GOM president Jamie Hale resigned his post a few days after news of GOM's meeting with LL became widely public, making his announcment in an open letter to SL residents in which Hale pointed out that soon after GOM had launched in 2003, Philip Linden had actually contacted the company asking it to list the L$.

LL's entering the L$ business makes it less likely that services like GOM would be able to survive. LL's position is that it will be able to provide better service to more SL residents than a third-party site would be capable of, and that they will implement an interface that will allow other residents to get into the same business.

But this may or may not be true. It remains to be seen what the cost of entry to the L$ trading business will be under LL's model. And more than one of LL's major projects are already showing the strain of over-reaching and poor implementation. And the real question here has more to do with whose world and whose imagination Second Life will represent.

The SL economy will survive. But as one SL forum poster put it: "Moral of the story? Long, complex projects are impossible to do in Second Life." Several other SL residents have come forth with similar sentiments, and some have said they will abandon plans to start ambitious undertakings. Their concerns appear to be well founded. GOM was an example of a popular resident-created service that worked well. As the administrators of Second Life, LL enters the L$ trading arena at a huge advantage; their move could only have spelled doom for GOM, and they must have known this.

The question is, what's the limit of innovation that LL will accept in their world? Will any truly useful project be co-opted by the company, on their terms and their terms only?As the undisputed rulers of their world, LL operates in an atmosphere in which they need not take into account the market value of resident-created goods and services. Their move into L$ trading at the expense of GOM raises concerns for future projects on a similar scale.

The Herald has contacted both Philip and Robin Linden for comment on the issue, but as it's only 7:00am game-time at the moment, we're having to run this story before we've heard back from them. We'll be sure to keep you posted as developments develop. [UPDATE: Read our exclusive interview with Philip Linden.]

Betrayed! Lindens Phuck Gaming Open Market!

Why do I rob banks? Cuz that's where the money is.
--Willie Sutton

There aren’t a lot of online institutions that you can trust, but Gaming Open Market has always been one of them. Readers will recall being introduced to GOM by the Herald two years ago, and how GOM came to the rescue of Urizenus when the rest of his virtual assets were seized by EA in December 2003. Since then we have followed GOM through a number of crises have seen the company eat losses in an effort to protect their customers. All along, Linden Lab was encouraging GOM to develop their market, establish credibility and trust for their trading system, and integrate it into Second Life. But now, apparently seeing a nice juicy market there for the plucking, Philip Linden and Co. have decided that they want in on that business, and reportedly plan on mimicking the architecture of the GOM site for their *own* currency exchange (note to Linden Lawyers, we didn’t say ‘steal’) and writing one click access for Linden dollars into the user interface. Why? For the good of the newbies of course, according to LL. Yeah sure, that and one dollar will buy you membership into Gullible Idiots Anonymous.

This is a rapidly developing story and we hope to talk at length with our friend Jamie Hale about this. In the meantime, readers are encouraged to visit the GOM forums discussion of the matter. The discussion includes a long explanation of the situation by Jamie, part of which is reprinted below.

From Jamie Hale's post on the GOM forums:

LL called us up last winter and wanted us to come to SF to talk about integrating GOM into the system somehow. We were extremely excited about the prospect. It was something that Cory and I had been batting back and forth for a while. The trip turned into job interviews. There was all sorts of talk about having us work for them, helping to manage the in-world economy. We told them about all the cool things we were planning to do with the site, and about all the even cooler things we could do if we had direct access to SL databases. The data alone was enough to make us giddy.

When we returned, we didn't hear from them for two and a half weeks. When they did respond, they made it clear that they didn't want any more remote developers. This was okay - it's their choice. It sucked, but that was okay.

Instead we talked about other ways to get them what they wanted: better access to the market for everyone.

We talked contracts and APIs, but it was clear that a decision had been made after our trip that LL was going to have an internal market one way or another. The way Philip was talking made us feel backed into a corner. It was then and there that we realized that this company, with millions of dollars in the bank, could easily hire developers to build what we had, and with their access to SL users' billing info, could easily blow our market out of the water. When we were in SF, they told us of an internal policy of theirs not to compete with their customers, but in this particular case it seemed they were willing to break the rules.

We complained bitterly that if they were going to take what we had built, that we should be compensated in some way. We had laid the ground work. We had done the R&D. We had taken the risks. All the while, LL stood by and encouraged us. And now that we had proven that the market could work and that people would use it, they wanted it. Philip argued that compared to their regular billing, the market would barely contribute to their revenues so that GOM wasn't worth much of anything to them. We explained that without their intervention, at our current growth rates, we were on track to be making enough money for Tom or I to actually take GOM on full time. He didn't seem to care.

"The Offer"

Bad Bots! Computer characters mugged in virtual crime spree

There is a really interesting article in New Scientist about a guy in Japan using bots to mug other players on Lineage II and then of course selling the loot for RL currency. The culprit running the bots -- a Chinese exchange student -- was arrested. By RL Police. Cool.

Equities Exchange Opens for Business in Second Life

First IPO is successful.

Today the Cyberland Equities Exchange opened for business, with an initial public offering of Cyberland -- an in game land investment company. It is unclear at this point whether additional SL corporations will be allowed to join the exchange (the FAQ says no, but the discussion with Shaun Altman on the SL Forums seems more open to the idea).

The instructions on trading are very clear, and the interface is quite intuitive (very similar to the GOM interface), with buy and sell orders posted. It took me about 5 minutes to open my account and make my first purchase -- 500 shares, woot! Screenshots of the interface and press release follow.

Opening an account requires linking it to your avatar at an atm

Who is that guy?

This guy Mark Wallace is all over the NY Times, these days, most recently giving a story about big time earners and real estate moguls in Second Life. The article is The Game Is Virtual. The Profit Is Real, and our friend Anshe and other big earners in SL figure in a major way. Again, I say, this Mark Wallace d00d writes almost as well as the Herald Editorial Director Walker Spaight. I wonder if they've met.

Unconscionable!

CmdrSlack has a post on Grimwell Online, entitled "There's Gold in Them Thar Pixels!: an examination of virtual chattels and property rights." Of particular interest to denizens of SL, is the discussion of Linden Lab's schizophrenic policy of simultaneously (i) saying they are not responsible for loss of property and (ii) advertising on their web site that you can make money in the game and exchanging it for US Dollars. CmdrSlack offers that a court may well find this "unconscionable."

Here is the skinny, more below: "Although Linden Lab seeks to disclaim any liability should player content be destroyed, it also promotes its service by telling prospective users that they too can earn real-world cash by starting a successful business in Second Life. Whether a court would uphold the "All Data Is Temporary" clause of the TOS/EULA is doubtful. It could be considered unconscionable due to the unequal bargaining positions of Linden Lab and its users. It is also possible that a court would consider the contradiction between Linden Lab's actions and the language of its EULA misrepresentation because it seems clear that virtual chattels in Second Life have extensive real world value. "

Here's a longer excerpt from the story. I highly recommend that readers go to the Grimwell site to read the whole thing.

"A short visit to the Second Life website will turn up various web pages that describe its vibrant economy, highlighting the chance to earn real-world cash.50 The "money" page provides links to Gaming Open Market and Internet Gaming Entertainment, two secondary market services that allow players to buy and sell Linden Dollars ($L), the in-world currency.51 The Gaming Open Market website charts the exchange rate of $L to $US much like a modern stock or currency exchange.52 The CEO of Linden Lab, Philip Rosedale, uses the data produced by Gaming Open Market to determine economic policies within Second Life.53 However, the Second Life TOS/EULA specifically states, "All of your content and accumulated status has no intrinsic cash value and that Linden does not endorse, and expressly disclaims . . . any value, cash or otherwise, attributed to content or accumulated status [all caps formatting removed]."54 Linden Lab also attempts to disclaim liability for its management of the virtual economy.55 While the Second Life TOS/EULA claims that user content has no intrinsic value, the website touts the chance to make real-world cash and endorses two secondary market merchants, one of which is the source of data for Linden Lab economic policy development.

"This seems problematic from a contract construction perspective. Although Linden Lab seeks to disclaim any liability should player content be destroyed, it also promotes its service by telling prospective users that they too can earn real-world cash by starting a successful business in Second Life.56 Whether a court would uphold the "All Data Is Temporary" clause of the TOS/EULA is doubtful. It could be considered unconscionable due to the unequal bargaining positions of Linden Lab and its users. It is also possible that a court would consider the contradiction between Linden Lab's actions and the language of its EULA misrepresentation because it seems clear that virtual chattels in Second Life have extensive real world value. Although the Davidson opinion seems to indicate that players have a choice of what game to play, Second Life is the only virtual world that allows players to retain their intellectual property rights to their creations, and to that extent, it is unique.

Second Life is also unique because its residents can buy and sell land for in-game currency or for U.S. dollars. The sales for real currency are done via auction on the Second Life website.57 In the event that Linden Lab terminates a resident's account, the TOS/EULA sets forth the equivalent of a foreclosure sale for a resident's virtual land. Residents will even be charged up to $100 as a "Resale Fee." Given these factors, it seems that virtual chattels and land do have an intrinsic value within Second Life. This could be problematic for Linden Lab. As Jack Balkin notes, if a game developer was to go bankrupt, recognizing the intrinsic value of virtual chattels and currency could cause players to "petition the bankruptcy court to keep the game running, restructure the business, and/or sell it to another party so that player's virtual property interests are not destroyed.""

IGE in licensing agreements with MMOs?

It is being reported on UO Powergamers.com (and of course discussed on Terra Nova) that uber-virtual-currency-trader IGE has negotiated licensing agreements with at least five different MMOs. These agreements would presumably allow them to conduct their currency trading etc for a payment to the game companies. Which shows you that for once history is on our side and that the game companies are ever so slowly coming to grips with (a) reality and (b) that you can't make the laws of economics go away by sticking your head in the sand. Gosh, it seem like just yesterday that you could get yourself banned from a game for mentioning IGE in an off-site blog! It is anticipated that there will be an official announcement at E3.

Off the Grid with Walker Spaight: Making the Virtual Market

Fed chairman Alan Greenspan ponders the Linden-dollar exchange rate

With Linden Lab still considering hiring a virtual Alan Greenspan to manage Second Life's economy (as Philip mentioned in a Town hall meeting some time ago), we got to thinking: If game companies hate the trade in virtual items and currency so much, instead of trying to co-opt the market or simply stamp it out (as most TOS's do), why not simply take a more active role in the market and trade for their own accounts, acting to a certain extent as a stabilizing influence, in much the same way as the Federal Reserve?

(The following is reprinted from Walkerings.)

First, some background. The buying and selling of virtual goods that exist only within the "reality" of an online game has become a contentious phenomenon. Many players and game companies hold that the practice gives an unfair advantage to gamers with deeper pockets. Game companies are no doubt also concerned that there's a potential revenue source they're missing out on, though they rarely if ever admit to this worry.

There's no doubt that the market is booming. "The sale of virtual goods in massively multiplayer online role-playing games has exploded," writes GameSpot's Tom Leupold in a recent article.

Leupold cites Anthony Sukow, CEO of eBay tracking company Advanced Economic Research Systems, who estimates that the top eBay seller of World of Warcraft gold took in $44,000 a month in revenue in the first two months of this year.

Leupold also cites Sony Online Entertainment spokesman Chris Kramer, who pegs the market for the sale of virtual items at $200 million.

I recently spoke with IGE's Steve Salyer, who repeated to me his estimate that the market is closer to $900 million than $200 million. As president of the leading broker for such sales, Salyer has an interest in making the market sound as big and attractive as possible. But he's also in touch with game companies and virtual merchants around the world, and probably has a better sense of what's out there than most.

SOE, it will be remembered, recently moved to take a piece of this market with its new Station Exchange service, which will let players on a small number of EverQuest II servers conduct their virtual business through Sony's interface–and give Sony a small transaction fee in the process, of course.

This service seems designed to fail. It's only being offered on what sounds like a limited number of new servers, and players who wish to switch to an exchange-enabled server will be able to do so at no cost. While this might help create a ghetto for virtual merchants, the majority of their customers are probably not interested in giving up whatever community they've built on their current servers, just for the right to give Sony a piece of their payments on the exchange-enabled ones.

(If were paranoid, I'd speculate on whether Sony's trying to lure all the virtual merchants to the new servers just so they can get a better sense of who and how many there are.)

So what about this idea? What if, instead of trying to co-opt the market or simply stamp it out (as most TOS's do), game companies simply took a more active role in the market, trading for their own accounts and acting to a certain extent as a stabilizing influence, in much the same way as the Federal Reserve?

I see a couple of advantages to this approach:

First off, game companies get to make an honest buck in the markets, just as traders do on Wall Street. With a limited universe of games and goods, getting a profitable handle on things shouldn't be very hard for companies who are sitting on far more capital than the average MMOG merchant.

Secondly, companies could engage in market-related interventions in much the same fashion as the U.S. Treasury or Federal Reserve. Imagine a scenario in which a flood of World of Warcraft gold hit the market, depressing prices. In order to keep gold prices at a level at which in-world items aren't ridiculously cheap, Electronic Arts might want to step into the market to support the virtual currency. As gold prices recover, players again have to turn to in-game activities to earn their swords and spells. The added advantage here is that every game account, high-level weapon or piece of gold that EA buys is one less that's contributing to the out-of-balance playing field.

For game companies, the problem with market interventions would be that they'd have to dish out cold hard cash to fund such purchases. But by tracking demand and perhaps creating a limited number of items for sale in the market, a company could either profit or mitigate their costs, and could also have an impact on what items are available for sale, thus limiting the adverse effect on the would-be level playing field.

Becoming a Fed-like market manager also has implications about transparency, but that's a subject for another post.

So where does that all leave us? It doesn't seem like game companies are going to be able to stamp out virtual commerce. Sony's Kramer estimates that up to one-quarter of players engage in some type of virtual commerce (buying or selling). To enforce a TOS that forbids it would be to turn away paying customers. What companies will have to do instead is embrace the market and either offer a robust and level playing field in terms of trading in virtual items, or else enter the existing markets by trading for their own accounts. I imagine what they'll end up doing is both.

It seems to me that if MMOGs continue to grow as they have been in recent years, or even if they top out at around the current level, something like this will eventually have to be put into place. Who knows, perhaps there's already a roomful of EA day traders somewhere Off the Grid.

Prok's Candid Conversations with the Core: Cristiano Midnight, Part Two

Is Prokofy "inner core"? After the enthusiastic reception that greeted Part One of Prokofy Neva's Candid Conversation with Cristiano Midnight (well, contentious reception, anyway), the Herald's crack fact-checking team has double- and triple-checked Part Two for contextual errors and asset-server screw-ups. We're sure our readers will point out any that slipped through, but to do that, they'll first have to read the thing and find out for themselves just how feted our inimitable interviewer really is.

PN: There is a fierce class of content barons and hangers-on who jealously guard their position and don't want competition and don't want their status jeopardized. Some strands of this grouping are howling that their pos-rate stipends were cut, and they will no doubt howl about the leader boards.
PN: It's like a small-town village where the village elders are always trying to set you straight and tell you where you are going astray, and constantly "setting the tone" as arbiters of taste and morals.
CM: And you would be akin to the person who comes along after 2 minutes and tells people who have been there far longer than you how things are.
CM: far longer

PN: So? it's a good corrective
CM: it is only a good corrective if it is an informed corrective. That has been your biggest misstep. You are woefully uninformed about much of what you speak.

PN: Those that come at the 11th hour get their reward in heaven too Cristiano.
CM: ah back to religion

PN: These belief systems that people cling to in SL are quite religious in their nature.
CM: you have a zealot quality yourself my friend

PN: Well you believe that you have access to some "facts" that I am not privy to or wise to, but I challenge that. I haven't heard any persuasive "facts" as to the non-existence of this privileged, self-referential, and rather arrogant and condescending group.
PN: They exist.
PN: You have only to read the forums LOL.
CM: The funny part is nothing seems more arrogant than your posts

PN: And who the hell are they? Setting people straight, sneering at newbies, chastising, correcting, scolding, all the day long.
CM: Give me an example of someone..
CM: This is not the forums, name some names

PN: Oh, names? But you can read them in the forums. Start on day one, and go through all the posts, and you see, all these people, who chastised, sneered, set straight, scolded, warned, berated, etc.
CM: Are there some insufferable people in the forums? Yes - there are some I can't bear myself, and you are definitely not one of them. I tend to save my ire in the forums for established players - though you have attracted it. I agree with you that pushing back against bad behavior is important. We share that need to push - I just disagree with some of your assertions.

PN: Well let me see, there is Kris Ritter, Ulrika Zigzag, Chip Midnight, Weedy Herbst, Hank Ramos, Nolan Nash -- who used to be courteous to me but now he has taken to using nasty intel-type tactics to troll for info and make nasty unsupported allegations.
PN: I mean, who haven't I had a fight with among the regs. Except for the lovely Olympia Rebus, who is far above all that sort of thing
CM: She is lovely.
CM: I have had fights with Kris, Ulrika and Chip myself. I don't find any of them to be shining examples of the feted inner core though.
CM: Chip Midight is interesting - I know you are not a fan. On many topics, we disagree completely - we have had several arguments in the forums, yet I have always found him to be a great guy - and very helpful to people learning to design clothing/skins.
CM: Blaze Spinnakker has jumped on your FIC bandwagon - I really think you should do something about that.

PN: oh, well, I have no patent on the term FIC, I could never have imagined that it would take off as it did, I had no idea it would be come a household word and a mot and even Phil Linden says it.
CM: BTW, the most feted group is on the IRC, you have missed that boat completely.

PN: Who is this "real FIC" that I am completely unaware of? Explain.
PN: I am QUITE prepared to believe that there is an inner core so feted as to be actually invisible.
PN: For example, I met this fellow who told me that he was in business meetings with the Lindens, and then when I asked him if he needed to rent land closer to the telehub, he said, "What is a telehub?" I mean, there are layers of SL that we cannot even begin to imagine.
CM: lol

PN: I am fully aware of the feted IRC regs and their blessed Lindens who frequent IRC
CM: ah but that is not who I am referring to.

PN: Ok, well tell me the most inner feted boat I missed? Is this the boat to the new continent? Being in the flakey outer crust as I am, and not in the FIC, I don't know the inner, inner FIC, sorry.
CM: Please, you are a celebrity.

PN: Actually you'd be surprised, Cristiano. I have loads of customers in the game. They don't read the forums and they have never heard of me, they just want me to put their URLs on their lots, and that's it. It's an entirely different world outside the forums, the forums are completely irrelevant to these people, as are all those forum denizens who think so much of themselves
CM: I wouldn't be surprised, I have loads of customers in game who've never heard of me either. I know the forums represent only a small portion of SL

PN: they say 5 percent
CM: it does represent some of the most involved members though

PN: I think it has some impact because whenever there is someone stupid like Hank attacking some aspect of my business or pandastrong or whatever, in fact, I get more sales LOL
CM: the same thing happened to me when I was attacked in the classifieds forum. The attention did wonders for my Inari store

PN: still, I do believe that the FIC types and their associates or wannabees are quite capable of basically crippling people's businesses, I do see them do that, and I find it atrocious
PN: For example the attacks on Shaun Altman's "Cheap Ratings" or the attacks on Random Unsung's tier donation program, it's just atrocious, by jealous know-nothings who couldn't come up with a new idea themselves.
PN: This notion that you can't make personal attacks is a huge brake on being able to demand consumer rights and transparency of business practices on SL.
CM: I have never been shy about making them when necessary. I don't just randomly target someone - but I have certainly pushed back very strongly against certain people doing some of the very things you have said.

PN: There is appalling fucktardery that goes on in this game and I for one won't stand for it. It is a combination of woeful ignorance and horrid negligence combined with occasional flashes of brutal malice.
CM: fucktardery is a great word, I need to use it more often. I agree, there is a lot of it -- but it is across the whole player spectrum.

PN: It seems that really, you don't believe there is a FIC, but that's because you are IN it.
CM: I acknowledge its existence, I won't attribute all the negativity you do to it though, as I find the people I tend to loathe the most in SL are outside of that scope anyway, and some of the most appalling behavior I've seen has come from more recent players.
CM: I guess that is why I get upset seeing groups of older players in SL maligned so often -- because I have watched so many people put so much effort into building SL, and it irked me when you painted everyone with the same broad brush

PN: Cristiano
CM: Prokofy

PN: I can't get down and genuflect that they "built" SL
PN: this is hogwash
CM: no one is asking you to, but it is not hogwash

PN: this is like saying I have to genuflect to Abraham Lincoln for "building America." I don't buy it, I'm not impressed
CM: you can respect the people who came there before you.

PN: I know it goes completely against the grain, but I don't get all this adulation about things like Neverland or Chinatown
CM: that's fine, it is your opinion -- I have respect for those who came before me

PN: People come back and say Chinatown lags, they couldn't shoot straight, and "all I got was this umbrella" and yet we're all supposed to genuflect?
CM: see that is the thing -- Chinatown is probably one of the most impressive things I've seen in SL, period. It raises the bar on what can actually be done. And I am hard to impress.

PN: read the forums. ppl are saying yes, it is totally awesome, but then they list 100 things wrong, which are wrong with the GAME ITSELF not that project
PN: did you know that the Linden moon reflects in puddles of water in the game normally?
CM: yes, but that is not the fault of the Chinatown developers.
CM: I can't imagine anything impressing you, especially if created by someone else. You seem to have honest contempt for the adulation of the work of others

PN: I react to all the adulation and puffery. When I first came to SL, I flew around and admired all kinds of things. For example, Maxx Monde's towers. I fly around Stillman, and I IM my friends and I ooh and ah over Juro Kothari, Lumiere Noir, and all the rest.
CM: Stillman was my first home in SL. Juro and Lumiere are incredibly talented builders.

PN: I continue to admire many things in the game. For example, the parceling Anshe does on a sim. Or Buck Spinnaker's choice of land to promote.
CM: I find the land resale market to be quite dubious, personally, though I admit I do like your approach.

PN: OK, let's hear about how dubious you find it.
CM: Much of my contempt for the practice was born out of Anshe's actions last summer. There were limited amounts of new sims available, and then she would purchase sims at auction by outbidding people, then turn around and mark it up 50% and resell it to the same people wanting the land.
CM: you may find this crafty, I found it parasitic.

PN: It was normal. Because it was in short supply. Before that, she had to deal with excess supply, and couldn't place proper valuation on the land.
CM: actually before that she didn't exist in the land market. she rose to prominence in the $30/m market. actually at that time a lot of the land was still in smaller parcels.

PN: Someone had to do it, I guess it would be logical to be a young Chinese neocapitalist LOL.
CM: I suppose so. What bothered so many people about it, myself included, is here you had something that was vital to a large aspect of SL, and you had someone dominating it and controlling the market in many ways.

PN: Well that's because socialism breeds oligarchs like that. This is what I always write about. The Lindens subsidize a socialist economy, a state-capitalism or socialism form if you will. It is naturally the case then when you have artificially-induced scarcity alternating with oversupply that oligarchs emerge to create a buffer or conveyor belt.
CM: it is ultimately why I found the market so dubious -- suddenly you had players having to spend hundreds of USD just to get a piece of land. It would be interesting to see a strong competitor emerge against her.
CM: ultimately I don't understand people who turn SL into a full time job

PN: well why not?
CM: I am not passing judgement, just saying I don't understand it
CM: I used to wonder that with Big John. The amount of work it took to keep it on top of the popular places was staggering. and for what? a few hundred bucks a month.

PN: What's sad is that it can't provide more for them, and for others. They put in all that incredible work, and the yield is so low.
PN: I sometimes realize that myself, when I spend two hours of RL helping a customer who is paying me $4 US in rent. I view it as a kind of game of Monopoly, the kind you used to play with your little brother for hours and hours and days with little side rules like "damages" if you roll the dice on somebody's hotel.
CM: I have been very lucky with my business in SL -- it is very low maintenance. Whereas my girlfriend has been plagued by hers -- constant IMs and requests from customers.

PN: Yes, I have such a heavy customer service interface now that I have to run several alts to keep several sides of the business straight so that when I log on, I know I will be doing X or Y straight for some hours.
CM: I think BJ did it for the perceived stature. Anyone who would call themselves Big anything has some issues.

PN: I think it's fun that he called himself Big John. IRL maybe he is 5' 4" and maybe has a tiny dick, who knows?
CM: Actually, you may know him. He came from TSO, and was well known for making the nude patch for TSO.

PN: Hmm, I vaguely remember that guy, yeah. The nude patch was kinda overrated LOL, "not hot" lol.
PN: I found it too lifelike, pictorial. I prefer the artwork in games to be a little cartoonish to keep that quality of another world. I don't want some pasted magazine picture of a dick stuck on a prim.
CM: I feel the same way. I don't get into the sexual side of SL. I specifically chose to avoid it with my business.
CM: I could have made probably double what I do catering to the blow-jobs-and-butt-plugs set, but I decided to avoid it.
PN: Well, discretion is the better part of valour, Cristiano.

Op-Ed: Greenspanning the Grid

by Walker Spaight

Hamlet Linden had the first of a two-part interview (or, more than one part, anyway) with Philip Linden yesterday on the recent economic changes in Second Life that's certainly worth reading -- though we find there's not much new there that hasn't already appeared on the forums and in meetings with Robin and other Lindens. Part II will presuambly bring more.

In fact, Robin was slightly more forthcoming, perhaps because she had to field questions from a half-outraged mob. I, for one, think Second Life would not be at all hurt by an increased level of economic information coming out about the system. Robin promised the Herald an interview on SL's economy, but that has yet to be arranged (probably only because we haven't followed up, not due to negligence on her part).

The Herald's editorial board has already weighed in as to its skepticism about certain aspects of the changes, and previous Herald op-eds have come out in support of other aspects.

Here's hoping the flow of information continues and only increases. The grid and its residents are capable of supporting this, and the Lindens might benefit as well, by being able to indicate, in those mobbed moments, a clear, fact-based rationale for the changes that were doubtless not an easy thing to decide on. Residents might still not agree, but at least the Lindens would be better able to rest their case.

Op/Ed: Business Girl vs. Griefer Kin

by A Concerned Reader

Like her or dislike her, Anshe Chung is one of the richest and most famous (or infamous) people in Second Life. So when she posted in the SL forums complaining about the actions of her W-Hat neighbors in Baku where she had just bought land, there were some predictable jeers, but also a surprising amount of sympathy displayed by the forum patrons. Obvious things like leaving litter on her property and objects that overlap the boundary lines are blatant offences but the main dispute is definitely centered around the recently erected build known as Club Mo-Ran.

W-Hat officers insist that the offending signs were always there. Funny then, that they show the same amount of money as in Anshe's screen shot.

Calling Mo-ran a "club" may be bending the standards of even Second Life architecture as I have a hard time imagining even the most obsessive club-goer wanting to patronize it. W-Hat builds tend towards headache-inducing animated textures and lag-inducing spinning objects along with random examples of what one W-Hat member referred to as "classy art" and others have referred to as "ugly". (For reference, one piece of "classy art" that I observed while hovering over their Baku headquarters was a giant pair of plywood deer engaged in sexual intercourse).

Deer Humping on W-Hat Land. Hey, where's the Buck?

Some former Baku residents have come forward corroborating Anshe's claim that the W-Hat members in question are probably trying to extort her into selling out to them while W-Hatter Ned Ludd and his friends have denied the charges. Some people have said that it's not a problem as long as it's not on Anshe's land and others have accused Anshe of calling the kettle black for opposing tactics they say she has allegedly employed herself. (While she has been known to land-ban people who bother her, most of these accusations remain unproven.)

However, recent signs that have appeared over Mo-Ran (see above) seem to indicate that the W-Hats involved want to make the debate personal.

W-Hat's reputation seems to center around the trick of dancing the narrow line between griefing and actual TOS violations. While it has been claimed that the W-Hat builds as they currently stand are TOS-legal, I found several things on W-Hat property that could be taken as violations of SL's community standards, most notable being:

- The aforementioned signs targeting Anshe

- The rutting deer (even in mature areas, sexually-explicit material is required to be kept in closed spaces and not in the open).

- The multiple raucous and unceasing sound-loops from the Mo-Ran property: this isn't streaming land music but sound clips played by scripts that can be heard from some distance away. This is "disturbing the peace" and explicitly disallowed by the community standards.

For that mater, "disturbing the peace" also includes "objects that intentionally slow server performance or inhibit another Resident's ability to enjoy Second Life". While the W-Hat builds in Baku are certainly lag-inducing and displeasing, intent is difficult to prove without access to the W-Hat inner circle. Buying the land in Baku may have been a dubious or careless business choice on Anshe's part considering that W-Hat was in Baku first. She might have eventually lowered the price and sold to W-Hat on her own if they had left her alone and no one else purchased the plots. But Anshe takes a hard stance against people whom she believes to be griefing her and this is likely to be a long standoff unless there is Linden intervention.

And it is griefing that these W-Hat members are engaging in. There's no doubt in my mind that Mo-ran needs to be taken down or at least remodeled if the landowner intends to keep it as a legitimate club. Even the dreaded black box (a common club design by people with little building skill) would be an improvement over what they've built.

And if they are deliberately targeting Anshe, they're guilty of inhibiting a small part of her Second Life, regardless of how much money she has or how much land she owns. The land business is Anshe's way of enjoying Second Life and as long as she remains honest in it, it's her right to be able to continue doing so.

GOM’s Zeppi Schlegel: This bodes well for the future

GOM strike price for Linden Dollars

While residents of Second Life are generally opposed to the Linden’s new restrictive monetary policy, Gaming Open Market’s Zeppi Schlegel (aka Jamie Hale) thinks it is a good idea in principle, and he thinks that their execution of the policy is not that bad either. (Club owners will survive just fine, thank you.) The Linden dollar spiked to $4/1K Linden’s during Robin Linden’s town meeting. Will it stabilize? Will it go higher? Well, Zeppi says…

GOM's Zeppi Schlegel

Urizenus Sklar: Zeppi, I'm sure you are following the new Linden economic policy with great interest. What is your initial visceral reaction to it?
Zeppi Schlegel: To be honest, I think it's absolutely amazing that the Lindens are concerned to this extent about the economy. It bodes well for the future.
Urizenus Sklar: Do you think that the moves they made are called for? And do you think they will be successful in keeping the monetary supply in check?
Zeppi Schlegel: Called for, yes. Socially I mean. If the value of the L$ is dropping against the USD and the apparent reason is that there are too many L$ in circulation, then one nice and clean way to address the problem is to start limiting the supply...
Zeppi Schlegel: ... And while a lot of them are my clients, casino and nightclub operators shouldn't really be the target for event income. They make enough - I'm all for supporting the education events.
Zeppi Schlegel: As far as keeping the supply in check...
Zeppi Schlegel: ... time will tell. :)
Urizenus Sklar: So you think they are cutting back stipends where they should.
Zeppi Schlegel: If I were in charge, and if I *needed* to cut something, I think they're in the right sector yes. Of course by saying this I'm sure I'm annoying some of my larger clients, but they all know much better ways of making money than through stipends.
Urizenus Sklar: Do you think the Linden will stabilize at around $4/1K?
Urizenus Sklar: or do you think it might go higher?
Zeppi Schlegel: I think there's a significant psychological resistance level at $4. I think that if there's enough interest to push through that level, then at least in real-world markets, resistance becomes support and we could see higher prices.
Zeppi Schlegel: That said...
Zeppi Schlegel: ... if after all this hoopla the price doesn't press much beyond $4, then we could see a dive. It's fascinating how much the market resembles real-world markets. I love it! :)

A False Economy? Lindens Fight for Economic Stability

by Matthias Zander

Bonus decreases. Ratings price hikes. Event support disappearances. These three things that could be seen as catastrophies are the Lindens' latest solution to the less-than-beautiful economy of Second Life. Robin Linden took the time to speak to a crowd of around 100 SL residents onthe afternoon of January 11.

"We think it's important to keep a close eye on the economy," Robin told the gathering of avatars, some of whom carried signs protesting the changes.

"The changes are pretty simple, and are meant to do a couple of things," she explained. "First, to manage the flow of money into the SL economy, and second, to start to deal with some of the problems we're seeing in events and in ratings, the economy being the main issue."

Her comments were met with so much chatter from the crowd--some in protest and some in support--that Robin often had trouble making herself heard. But eventually she was able to get across "the facts."

Here is how she laid it out:

Robin Linden: 1. rating bonuses will start to ratchet down starting next week
Robin Linden: rating bonuses account for about a third of the money going into the system each month
Robin Linden: 2. event support will be discontinued except for classes and such
Robin Linden: 3. it will cost L$25 to rate someone
Robin Linden: 4. there is no change to any fees you currently pay for land or membership
Robin Linden: 5. there is no change to weekly stipends payments, which are by far the largest source of Linden currency

Robin's five "facts" can be grouped into two different categories. The first three state what IS going to happen. The final two state what is NOT going to happen.

First, rating bonuses will begin to decline. This is the amount that each user gains per week above their base stipend because of the ratings they have received over time. For premium members, this is anything over their $L500 stipend per week, but for basic account holders, it is anything over the low $L50 per week that they are entitled to. The figure that has been stated by the Lindens for this decline is 50%. The speed of the decline has not been stated, only the fact that it will happen and that it will begin starting with the patch that is to be released the morning of January 12th.

Second, event support will be discontinued besides "classes and such." This essentially means that if your event is not educational, it will not receive any funding at all from the Lindens. Perhaps we shall soon see "Pimping 101 at Club Lotsa HOs" popping up on the events list instead of "Come Dance at Club Lotsa HOs" from now on. Hey, as long as they teach something, this vague term will apply to it. Perhaps the Lindens need to work on developing an exact definition of this.

Third, the price of ratings will increase from $L1 to $L25. Now, while this may seem like a good thing, all it means is that the people who are currently far ahead in the ratings will never be reached. With it costing 25 times more to rate someone, those people in the top ten have secure places unless the Lindens decide to wipe or reduce ratings, something that Robin said would not be done at this time. This also means that you have to think harder about rating someone because you like their clothing. Do you honestly like it enough to spend $L25 telling them that?

The two things that will not be changed in these changes are pretty similar. There will be no increase or decrease in the price to use Second Life. This includes land tier fees as specifically asked by multiple audience members. The actual stipend amount given out per week will also not change. This means that those who currently have a basic account will keep getting only $L50, plus their reduced bonus, each week. The effects of this could be astronomical, making it so that the rich of Second Life get richer while the poor get poorer.

The changes were inspired by concerns among the Lindens that Second Life's economy had been growing out of balance. Money supply has indeed been rising in recent months, and there is also concern about property prices.

The announced changes had a significant impact on the price of the Linden dollar compared to the US dollar today. Yesterday, a bundle of $L1000 was trading on the Gaming Open Market for US$3.78. During the meeting with Robin, the price rose to US$4.00 per bundle of $L1000. In response to a question from the Herald, Robin indicated that the Lindens' target price for the Linden dollar is just that, US$4 per L$1,000.

But the rise of US$.22, while seeming small, is actually quite large compared to historical fluctuation patterns, and there is some concern that fears of changes to come will lead to an even higher US$/L$ exchange rate.

SL residents have been comparing this announcement by the Lindens to the announcement that There.com made on May 21, 2004. This announcement that their product would no longer be supported eventually led to the downfall of the There system in the eyes of most. Only the future will tell whether or not the decisions made by the Lindens will have a positive or negative impact on the system. All that we can do as users of Second Life is to express our opinions to the Lindens in an informative and respectful manner so that they can obtain accurate feedback on what they are doing.

The Herald has secured the promise of an interview with Robin Linden, but it remains to be seen when that will take place. Robin told the crowd of almost 100 residents gathered at Stage 4 today that she would be back in-world over the next few days to field more questions, complaints, and even some support, which was also to be heard at the meeting. Changes to event support did not stop a protest meeting that was planned for 6:00pm on Tuesday, however.

Continue to expect full coverage of these changes from the Herald in the hours, days, and perhaps even weeks to come.

Avatar of the Year, 2nd Place: Sir/Father Callahan

This choice might surprise some, but not after you hear the facts. Over the past year, Sir/FatherC/Ian has been all over tso, and SL, and usually in the middle of some dramma or other. Beginning the year as a small time simolean dealer, he made a name (and drammatically changed gameplay) by acquiring zillions of trial accounts and selling them to mafia's etc. He used Nyk's mazebot, but drew the ire of the simolean dealers by reviewing the new version of the mazebot straight out of the chute. Not long after, he made a name for himself by using his trial accounts to acquire piles of rare cannons, flooding the market. But he really started making news when he joined Mr-President's administration as Press Secretary...

As Press Secretary for the Alphaville Government (AVG), Sir initially led the defense of Mr-President against charges of fixing the election and groping an innocent intern (and even organized a smear campaign against Ashley), but when Sir caught Mr-P in the White House, alone with Angelique Fontaine (Angelina Becquerel in SL), it was more than he could bear, and he resigned his position and turned on Mr-P. Later he formed the Simulated Soviet Union (SSU) with disgruntled members of the AVG, and led a griefing attack in which the AVG Capitol building was trashed. Fed up with the criticism he received for the SSU, he quit tso and moved to Second Life, and had a series of alts banned for griefing (including a bingo fire bombing episode) when he finally stabilized as Father Callahan and worked for the Herald as a reporter.

Father Callahan managed to be in the thick of the dramma surrounding the Second Jessie War, and it was his interview with Tank Levy that led to the big split between One Song and Tank and the end of their joint mega-mall project. Father Callahan was on the ground during the great Jessie Battle as well. His biggest scoop was perhaps the interview with Mimi Coral, after she was accused of being the terraforming terrorist and destroying 6 private sims.

Father Callahan was subsequently banned again from SL, and so returned to tso and set up shop in Dragon's Cove, but with this return the real story turned out to be his reporting and the abuses of power by Stratics moderators, reportage which, given the thin excuses provided, led to his being banned from Stratics for a while.

Through it all Sir has been operating the Alphaville Gazzette, which is the leading source of real news about tso since the Herald moved operations to SL, and it is clearly the second best newspaper in blogspace!

For all this, we consider Sir/Father Callahan to be a bigger newsmaker than Ashley and Mr-President. But not quite number one... stay tuned for that.

100 million? 880 million? More?

Ok, the market in Simoleans, Linden Dollars, Hammers of Kick Ass, and whatnot are big -- we knew that -- but just how big. Just a couple days ago The New Scientist ran an article quoting Ted Castronova as putting the world wide sales of game currency etc. at 100 million (and also quoting some guy named Ludlow about this being a glimpse into the future -- whatever that means). Now, in his talk at State of Play, IGE President Stephen Sayler put the number at 880 million -- and he is certainly in a position to know. We are rapidly approaching a billion dollar market. Good luck fighting this monster, AJ!

Item Farming is Big Big Business. Is it Good for the Game too?

We know about the dealers in rare pets and cannons on tso, and we know that some dealers make a pretty penny at it, but what of games with lots of players like Lineage (with over a million subscribers)? Well, a recent article in Newsweek International, puts the revenue generated by sales of game objects at between 83 and 415 million US dollars annually. That's for one game!

Meanwhile, on Terra Nova, Ted Castronova seems to suggest that this is a good thing because otherwise [I'm paraphrasing now] these games become a dead end for everyone except people who are willing to do brainless skilling like talking to parrots all day long. That is, it makes everyone a loser except the losers who thrive at brain dead levelling. While lifetime losers revel in this turning of the tables on people with lives, it doesn't make for a healthy game. Object traders help put the food chain back in order -- e.g. the help put people like the stratics luffers back on the bottom of the food chain where they belong.

Big Mick Permanently Banned from Stratics!

Well, the tale of Stratics keeps writing itself, and just when u think the plot couldn't get any thicker, well, it gets thicker! Just days after opening his own chat board as an alternative to Stratics, Mick Lite has been banned from Stratics for having a link to his own board in his bio. You can read the story in Mick's own words below, but some interesting questions come up. Was Mick looking to get banned? Does that mean he *should* have been banned? Have the Stratics mods completely lost all sense of proportion?

From Mick's site:

"Thats right, I received another "friendly warning" today, when I posted on a thread from Sir, letting him know to be careful. He posted 2 minutes after his own post. When I posted a minute after my post, it was deleted and I was warned for bumping and spamming the boards when all I did was add another sentence to what I was already talking about. Right after the friendly warning, I received an official warning. The official warning stated that I was previously warned for having a link to this site in my signature. I deleted it from my signature after I was warned. But my official warning came from me having a link to this site listed as my homepage in my bio.... wtf?? And that if I posted again, I would be banned. During this escapade, I was talking to Honeybuns on AIM lol. I asked her to please ban me because I was a stratics plus member, and decided I did not want to waste anymore good money to keep that site in operation. She said she could not ban me because I asked her, but if I posted again without removing the link to this site from my bio, then she would. So I posted in the City Hall saying Hi Honeybuns, how are you this evening.... and was banned lol."

SOE vs Big Mick

Mick Lite and his OnlineGameBucks site just can't stay out of the news lately. No sooner does he reward his 10,000th customer with 500K extra free simoleans in the hardcore city of Dragon's Cove, than Sony Online Entertainment tries to bust a cap in his ass over his sale of time cards and CD Keys for SWG, EQ, and Planetside. While Mick's Lawyer check's out SOE's case they have suspended sales of all SOE products (Platinum Pieces, etc.). Statement from Mick follows.

Hello everyone,

I wanted to let you know that Starwars Galaxies, Everquest and Planetside have been removed from the store on our site for purchasing time cards and cd keys. They were removed because Sony threatened to sue us if we did not stop selling their products. This really sucks as SWG was our number 2 seller.

We don't know if the removal will be temporary or not. I currently have my lawyer looking into if they have a case or not. They are claiming that by our selling we are devaluating their trademark. So until further notice all Sony products are no longer available.

But we all know SOE sucks ass anyways.

Mick Lite
OnlineGameBucks

Cheap Online Game Money!
http://www.onlinegamebucks.com/

Gaming Open Market Hacked Again

GOM strike price. Hmm, Lindens need to do something about the deflation.

As Dan Hunter has reported on Terra Nova, the Linden dollar/US dollar money exchange, Gaming Open Market, has been hacked again. Thankfully, the Lindens are working with Jamie Hale (aka Zeppi Schlegel) to rectify the situation. Obviously we are going to see a few of these episodes before we get the kinks out and the security up. Hopefully everyone will have enought patience to see this through.

--START EMAIL EXTRACT--
"Well, it happened again. Someone took advantage of us and we have another mess to clean up. Linden Lab noticed the problem early and stepped in and froze all the funds in Zeppi's account so that the fraudster couldn't make off with any. But of course, that prevented a few of you from getting your withdrawals. Rest assured your money (USD and L$) are safe - we just have to sift through the records to figure out who owes what to whom. If you have "lost" any L$ in the past day, please reply to this email with the details (time and avatar name) and I'll add it to the list to correct.

You'll notice the site is locked out. We decided to close the doors for a bit while we get things under control. I know this is a pain for some of you, and I'm really sorry. I'm also sorry because I've been ignoring the bazillions of IMs I've been getting. I'm not trying to be rude. Just trying to get things ironed out so we can get return to service as quickly as possible.

The in-world ATMs have been collected because we figured while we were down cleaning things up, we'd touch up the ATM scripts which have been crufting up over the past few months.

Once again, I apologize for any inconveniences. We'll be up and running very soon, and your money and L$ are, as usual, completely safe. You're welcome to confirm that with your local Linden."
--END EMAIL EXTRACT--

To the Editor: Top Simolean Dealer Delivers Low Blows

In reference to the story in the Second Life Herald about Mick?s Online Game Bucks site evaluating other simolean dealers.

Mick?s decision to judge his competition is a low thing to do. I could understamd if he was maybe just listing the competition, but rating them (claiming he used them under an anonymous name when I believe he really used them so he could cover a delivery) and making other nasty comments on them is pretty bad. But that?s not all. Originally, the only people he gave his highest rating too were affiliates of his. His idea was that if his potential customers wanted to buy from someone else, they would use someone from his highest rating list and he would get the cash.

That changed when I contacted him. He had originally made rude comments about my site and said he didn?t use me because my prices were high (and other sellers he said he'd used under the anonymous name had higher prices). So I asked him to remove me from his website. But then he started saying how he was entitled to freedom of speech and all this junk and decided to change my rating to the worst score he has as well as add comments that I am rude and unprofessional. He also implied I was a scammer (which I most definitely am not).

So the next day he contacted me and I asked him why all his top sites were affiliates. He updated his site within five minutes, taking all but one of the two star seller and brining them to three stars (the top level) just to piss me off. I then asked him again to remove my site, and he removed all the neutral comments about be and left a big negative paragraph about me (which can currently be seen on his site).

He also copied his design from lead architect. His front page is exactly like his with a slightly different set up and the majority of the links are to his ige affiliate account. On the topic of lead architect, he also rated him as one star, when he has 700+ 100% positive feedback on ebay. He bashed him for being a reseller too, when mick does the same thing himself (http://feedback.ebay.com/ws1/eBayISAPI.dll?ViewFeedback&userid=tk-5483 take a look at what he's bought)!

This just comes to show you how unfair this seller is. Shame!

Mr. Simolean

Gavel Falls on Jessie Land Auctions: Land goes for gazzilions!

The auctioning of land confiscated from the permanently banned WWIIOLFalconBK Hanks is complete, and pretty clearly Falcon lost some serious assets. The plots sold in US dollars went for a total of $324 US. The plots sold in Lindens went for a total of L 27,149 ? equivalent to $152 US at current GOM strike price. Total sales = $476 US, for a total of 4608 virtual square meters. In part the high prices were due to the fact that this is the only ?unsafe? public sim where one can own land. It is also due to the fact that what land there is is closely held and not released to ?outsiders.? WWIIOLers and other longstanding Jessie residents made a concerted effort to keep the auctioned land ?in family?. There was also the threat of One Song possibly buying in, which led to some scare bidding. Raw numbers and names of winners follow.


The guy who lost it all, WWIIOLFalconBK Hanks, works on a turret in happier times.

And now to the winners. Following numbers indicate...

plot number ? location ? virtual square meters -- # of bids ? sale price ?date -- winner

Jessie 001 (50,10) - 384 m2 20 US$55.00 Aug-22-04 Levi Anansi
Jessie 002 (72,178) - 2304 m2 38 US$207.00 Aug-22-04 Urizenus Sklar
Jessie 003 (214,192) - 480 m2 15 L$16810 Aug-22-04 Chaunsey Crash
Jessie 004 (8,174) - 416 m2 37 L$10339 Aug-22-04 Chaunsey Crash
Jessie 005 (128,128) - 1024 m2 38 US$62.00 Aug-22-04 Mag Caldera

winner of two auctions, Chaunsey Crash

Size does matter when it comes to guns. Mag Caldera wins auction 3.

Sorry, didn't have a good pic of Levi in the archives, but here he is at the New Jessie Wall in a stand down with One Song

and you all know what *I* look like.

Sir/Ian leaves TSO

Sir may only be 16 in r/l, but he has cast a long shadow over events in alphaville over the past year. He has been a simolean dealer, a temporary accounts broker, and a dealer of cannons and other rares. He was the PR officer for the Alphaville Government during the elections, a past reporter for the Alphaville Herald, and now the publisher of the Alphaville Gazette. To top it all off, he got many members of the Alphaville Government to desert Mr-President after the election scandals and join him and Fans in the Simulated Soviet Union. The list could probably go on, but I grow weary from trying to remember everything. That was one industrious gamer. He has moved on to Second Life. Good luck staying away from the Lindens for the next two years!

(His resignation letter follows)

Dear Fellow Alphavillians and Sims Online Players,

I am Sir, and reporting for duty. It comes to my great regret to announce this; but as I have this letter, my attendence in The Sims Online, is finished. It was a long and hard decision to face and make. But I think it is all for the best. As I am writing this a tear comes to my eye, because I am leaving a game that could have been so much more than it is, and all the people I have made friends with and come across. This decision was made on my own, and nothing in game, such as the AVG, or SSUaffected it. I feel like in this game I accomplished all that I felt needed. I started off in this game in early January 2003, as my beta discs would never work. I started my journey in at the time, the booming city of Mount Fuji. I met two wonderful, and generous people. That relationship, I wish I kept, however they disappeared from the game. I created relationships with a lot of popular people in town, such as Platinum Kitten. There, I also met, ?Enzo Bong", a person who was my age, and knew how to make and manage top 10 houses. He is truely a great friend, who I wish I had kept, but we just lost track of each other.I also owned several top houses while I was there.After that, I moved to East Jerome, and met some of the most kindest people there, Peter Ruby, and Redd Ruby. Who at the time were John Johnson and Redd Ruby. These people gave me
a home, and a reason to stay in East Jerome. They are currently in Alphaville, and I would like to thank themfor their time they gave to me, to teach me the game. From East Jerome, I found the big city of Alphaville. It was a big and long journey to understand it, but I am glad I took it. In Alphaville, I truely made the most relationships with people of all around the world. I think everyone deserves their name being said, if I forgot you, I am sorry, you truely deserve to be on this list?

Fans, whom I only met recently, but is a sim who is dedicated to what he does, Mr-President, who I put down a lot, but he is truely a great person out of game. Alex-, who has long left the game, but I hope he reads this. I hope RL is going great for you now. Boscorelli, who we have had our differences, but is truely a wonderful sim. Robert the Man, who is great at being a leader, good luck to you. Sean Kendrick and his humor, Edinahornet, Qwen, Loxee, Ashley Richardson; I know we hate each other in game, but you are good at researching your politics, and I hope you continue, and someday be representing me. Lead Architect, Queen Selena, Oprah, a fantastic host, Ms Cocoanut, how could I forget you, you truely inspired me and my sim in game, Urizenus, who is pushed away by EA, but he is on for the right cause, Cornelius Vanderbuilt, my witty friend, who I have oftened chatted with throughout late night, Dyerbrook, Scott C, David Pierce, Hook, Carlissa, David Pierce, and Javy Lopez, my fellow Baltimorean. And to people whom I have had trouble with in game, Honey Buns, if you are reading this, you were truely one of the best adult friends in game I have ever met. To anyone I missed I am sorry, but you are the most important ones, . To the SSU, thank you all for having faith in me and the organization. I truely want to thank you all for putting up for the construction, of your wonderful organization. I wanted to make sure that the SSU was fully set up and running before I left. Please, be happy with the new overlord of tso that I set up, Edinahornet is truely a wonderful choice. But don?t worry, I will still be the webmaster and make any change ASAP. I saved the people of the Alphaville Government for Last. I know we had our troubles and strong dislike in the game, but you all were great supporters and would do nothing but uphold what the AVG stands for. These ladies and gentlemen are the most loyal people I have ever met, besides the SSU. Most of them would NEVER leave the AVG. If I met any of you out of game, I would be nothing but generous to them. I would like to leave the AVG with this quote, one of my favorites, by Gandhi; First they ignore you, then they laugh at you, then they fight you, then you win. To Urizenus; you have nothing but my utmost respect, for having the balls to challenge EA and what they stand for. For Fans, I wish you nothing but luck with the SSU, you were one of my Best friends in game that I ever met.

Finally, I would like to leave on a note of one of my favorite authors; Elie Wiesel: The opposite of love is not hate, it?s indifference. As Michael jackson sang.. ?if you wanna make the world a better place, take a look at yourself, and then make a change? Fellow, players, I only wish the best of luck to you in life, and you all did, inspire me, and taught me ?there is a person behind the sim". To finish off, I will quote, the great communicator himself ?Whatever else history may say about me when I?m gone, I hope it will record that I appealed to your best hopes, not your worst fears; to your confidence rather than your doubts.?

Jeff Brown Spouts off again! You gamers are wasting your time.

EA's Vice President for Corporate Communications, addressing the Edinburgh International Games Festival

Well, Mr. Uber-foot-in-mouth has outdone himself. This time, EA's Vice President for Corporate Communications Jeff Brown popped off at a gamers conference in Scottland, saying that gamers would be better off going out and mowing the lawn than ... did he say play online games or did he say try to make money gaming? The attendees were unclear on what he meant, but it is reported on Terra Nova that these remarks were made as he sat next to Jamie Hale of Gaming Open Market! Lots of fun remarks in the thread on Terra Nova? Favorite quote: "Either EA hasn't been tracking eBay player auctions, or this guys is a complete idiot." Gee, can't it be both???

Here is your thread for more hilarity:
http://terranova.blogs.com/terra_nova/2004/08/eas_eyes_wide_s.html

Coolness: GOM's virtual ATM machines in SL

So there I was in Club Elite, rapping with one of those fine Club Elite Escorts about her services. I was just thinking, you know, maybe we could play a nice game of Spades or rap about theology in the Club Elite VIP rooms like the escorts do in There ::cough cough::. But I was tapped out, and I needed a few K of Linden Dollars to make this happen. But wait! Salvation! Gaming Open Market had installed an ATM machine in Club Elite (they've been in game for about a month). I walked up. Said ?withdraw 5000?, and poof! I was 5K richer (for a couple minutes anyway). Machine also accepts deposits (just pay it). You do need an account with GOM of course, but after this, who wouldn?t have one?


I mean, it just wouldn't be a strip club without an ATM

Ok, ok, so it was only 1K and not 5K, and I'm one of those cheap-ass cyber customers, but like that's all *I'm* paying for a game of Spades...

Oh and by the way, Zeppi Schlegel (the acct that paid me) is none other than our friend Jamie Hale, who bailed out Uri on TSO, and had a nice chat with Atlantis in the Herald some months back.

Jaqueline Richelieu plans investment bank/stock exchange in SL

In this very important interview with Ren Reynolds on Terra Nova, Second Lifer Jacqueline Richelieu discusses her plans for an in world investment bank, with an eye to taking public some of SL's more successful businesses, and also a stock exchange for trading shares of the firms once public. Mechanics of the enforcement mechanisms are being pondered in the dicussion thread.

Warning! First Sims Bank Scam returns to TSO

Thanks to Ian at the Alphaville Gazette for being right on top of this. The notorious scam operation, The First Sims Bank has returned to business on TSO. As reported earlier in The Herald, this is definitely an outfit to stay away from. Be sure to warn your friends about it.