Top Second Life Creators Concerned About Increasing Linden $ Sell Rate, Massive Block of L$ Put Up for Sale

Top Second Life content creators have been expressing concern over instability in the Linden Dollar market to me and on various online forums over the last few weeks, culminating in an urgent message I just received from Juliette Westerburg of Tres Blah (also co-creator of SL’s famed Mon Tissu brand).

“The [Linden Dollar] sell rate keeps creeping up. There’s 21 million sitting at a sell rate of 254 right now.” She shows me the LindeX screen capture above, taken by another well-known content creator. 21M in Linden Dollars is roughly USD$86,000, at least at current rates. “We used to cash out at L$249 back in April. Also, this grid helps to show how the market has been increasing.”

These increases may not seem like much, but for content creators who literally make a real life living from their SL content, they can make a fairly significant dent, while adding to long-term anxiety:

“If you were to cash out L$1 million at the current rate of L$256 (it was L$254 yesterday mind you) instead of L$ 249 which had been the norm for a very long time,” Juliette says by example, “there's a difference of about USD$105.” Which could translate into a couple RL bills going unpaid, but really, the key concern is the unpredictability: “Everyday the rate keeps changing so it's just a concern as to when it's going to finally stabilize.”

As evidence of this rising concern, Juliet points me to this long Plurk thread where SL content creators (some of them associated with extremely popular brands) speculate and worry about these fluctuations.

“A lot of creators are concerned and have been trying to get answers. but haven't heard a single thing from Linden Lab,” Juliette tells me. “In the past, we would have gotten some sort of response… If this is the Lindens adjusting the market, most creators can deal with that, but we would just like to know that's what is going on.”

I asked Linden Lab about this late yesterday, and will update this post when/if I receive any.

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Comments

[CronoCloud Creeggan]

Yeah, it was VERY noticeable yesterday when the Buy L$ button, which is populated by L$2000 by default said the price was 8.27 US$ rather than the 8.40 US$ it has been for a LOOOOOOONNNGGG time. And it is not just content creators, think about the Ebil Land Barons who cash out to pay their LL tier in RL$ Cue a comment from the Great and Glorious Leader Shang in 5...4...3....2....1

Admittedly the current rate favors shoppers, which I am...which might be a good thing as certain virtual goods are seem to be a bit overpriced recently, IMHO, even in relation to OTHER virtual goods. Jewelry, shoes and template goods in particular...perhaps mesh heads as well but I'm not quite as certain of that as I am the jewelry, shoes and template goods.

I'm not "too" worried about the current rate, this may just be a correction since the rate was around this level back when I joined SL, IIRC. (I think it was L$259 to the dollar then, but I'm not quite sure) But if it goes over L$260 to the dollar (which I doubt it will), then something is a bit out of Whack. though I wouldn't panic at L$260. L$270...well THEN perhaps it would be time to be concerned and perhaps have a polite demonstration of concern and suggest that LL communicate forthrightly about the issue.

[Iggy]

Now THERE is a good topic, Hamlet. How does LL set the Linden exchange rate? What underpins the value of the Linden, other than the "full faith and credit" of Linden Lab?

I know more about how the US Fed sets rates and changes the money supply than I do about the Linden dollar.

To most of us who do not try to make money from SL, the virtual current is just Spacebux.

[CronoCloud Creeggan]

Iggy, you'll notice that the Plurk is all creators, not consumers. As I said, IIRC the rate was even HIGHER when I joined SL back in 2006 (259 to the dollar). The SL economy has favored the SL equivalent of the 1% (those who actually cash out) for so long they don't even realize it.

I don't know how those plurkers would react to it going to L$300 to the dollar as it once did. And perhaps it would help if SOME of those 1%ers would pump some money back into the economy by actually paying SL consumers to do some of the grudge work they complain about. One of SL's problems is that it is very similar to a third world economy. There's those on top...and then everyone else. Gwyneth llewelyn wrote about this:

https://gwynethllewelyn.net/2008/10/13/the-hard-facts-about-the-second-life®-economy

The navigation on that essay is broken so you'll have to add "/2", "/3" etc etc to the end of that link to get more pages. IIRC it's at least 6 pages long.

Personally I'd prefer stabilization at 259 to the dollar, but most the Land Barons and Art School girls of doom with good texture skills using templates to make bank would disagree with me.

[Vaientine]

I have noticed this happening also. There is also a huge amount of lindens being cashed out.. More than usual, ever science LL raised the transaction fees. Someone is out there cashing out lindens at lower values, and it's causing those that need to cash out quickly to sell at a lower rate, or be stuck waiting longer. LL does not control the part of the market you are showing on the image above. It is based on what people are willing to sell their Lindens for on the trade market. It just seems that there are some people that are needing to get knew out fast. And that is worrisome to me.

Also off topic.. Sort of. Has anyone actually seen the transfers to PayPal speed up at all since they said they changed the system? I have not. LL has all my information.. I have sent in tax documents, photo ID.. Everything they have ever asked for.. And it still takes over a week. Ebbe said that they were increasing the fees because they had a new system that would process claims faster. I call bullshit. Because that isn't happening.

[Hunter]

Actually it may be Linden "fake" selling Linden.

The volume of Linden being sold has hugely grown over the past 8 weeks (double up on volume). But transaction numbers are not spiking.

Meaning these are super large grouping on Linden Dollars. Somebody (or group of people) would have to be injecting over 500,000 USD across the board to make that happen. That can't just be sim owners converting to USD for the sim discount. There are only a few land barons that could move the market that much and it would make no sense for them to increase their cost for USD to buy in to discount prices.

It's Linden Lab doing a forced devaluation. Those massive amounts being offered up are then removed and moved into new buckets. They are not begin sold, they are using it to move the walls on the buy side towards a specific goal.

[joe]

I dood it.

[Stimp]

I agree land barons are scrambling and pretending all is well with the market. The reality is I agree with the comments above it is LL manipulating the walls to devalue. However as they lack economists on their staff I suspect they opened Pandora's box so come speculators are now riding in to the buy side to push it further.

On one hand here is a discount.
One the other let us further devalue your cash assets so we offset the discount.

T linden has long since left the building.

Also all this griping about 1pct creators shame on you. They still work for way below national averages so stop being so bitter.

[Cathartes Aura]

Sounds like devaluing the currency will save LL a shizload of money as they "transition" to SL2(Sansar).

Anyone have any idea how much is out there in residents accounts? And how much those "savings" are being devalued? And what happens if everyone attempts to cash out at the same time? ;)

Sounds like this ship(LL/SL/Sansar) is sinking... Only so much room on the liferafts... Better get out while the gettin's good! LOL!!!! ;)

[Tesla Miles]

Well, whoever is doing it, and for whatever reason, it seems to be the fastest way to SCARE away the big content content creators on the grid - I'm talking about the most popular stores in SL who are making bank... if lindens are so unstable to devalue so quickly, then it makes no sense to continue being a creator, as any money you make will just disappear. For now, many creators can either risk holding on to their lindens and hope demand drives the prices back up, or just dump whatever they have as quickly and as often as possible. Inflation is bad news for business, whether real world or virtual. Linden Labs better be paying attention, because if the creators start leaving, then the lack of new content may result in SL consumers leaving too.

[Galatea]

"Sounds like devaluing the currency will save LL a shizload of money as they "transition" to SL2(Sansar)."

I think you're very confused. LL doesn't reimburse residents for their L$ -- they're not on the hook for its value, so devaluing it doesn't save them anything. Quite the opposite.

[Hottie Something]

The value of the Linden dollar is tied to land. LL has been allowing land owners to buy down their sims for a couple months now.

Two things may be occurring. Land owners, now earning $100 more per month are willing to take less USD for their $L because overall they are still ahead. Why would they though? Well many land owners may be buying down gradually. So each month they are taking a large chunk of their profits to pay for buy down fee. (Which the lab is calling a "Server upgrade" on the statement LMAO, even though the server stays the same). This stretches them thin and when it comes time for tier to be due they don't have the luxury of waiting 6 days for $L to sell (back when people routinely sold at 249, the few who sold at 248 would have to wait about 6 days for their order to go through). And every time one of these sellers bumps it up to cash out fast, the next person does the same thing.

It's not creating a slow creep its creating massive jumps.

The second thing could be that those land owners who have already bought down their sims may be already lowering prices, thus lowering the number of $L people have to buy to pay their tier. Which would lower the volume being sold in general. But looking at the history of the last 90 days it seems the volume has been higher than the past. So this isn't likely happening....yet.

If you look at the historical data on the Lindex you will see that we used to have a higher sell rate along time ago and we have been enjoying a low for many years. I haven't tried to figure out when that dip first happened but I would be willing to bet it coincides with the time when LL increased the tier rate of sims. Back when sims all cost $195 per month we had to calculate at a rate of 265L/$ (which included transaction fees so probably a sell rate of 258 or 259 before the fees) and I would not doubt that if a majority of sims are being bought down to $195 again people will once again have to calculate at 265L/$ to determine profits.

Keep in mind that around the 1st of the month the volume of L$ transactions goes from 80M to 110M and the rate jumps up for few days. So this is going to get worse before it gets better.

If you are a creator and you own your own sim I recommend you bite the bullet and buy down. (Though that will mean more people selling Lindens and more jumps on the Lindex). That and increase your prices based on a rate of 265 after fees. It may get a little worse than that for a bit, but when it settles it will probably settle there.

[Cathartes Aura]

While enjoying the latest bit of perfectly putrefied roadkill I have claimed for my ravenous self I begin to work my old buzzard brain. I wonder just how much LL has budgeted for $L cash outs? How much cash on hand do they have to cover that?

IMO Most $L IOU's will never have to be paid. Accounts with just a few $L in them. What happens if enough active accounts that have too much to risk all try to cash out in a short amount of time. What's that all add up to and does LL have the cash to pay out?

In other words, if there is a run on the "bank" can they cover it? I hope so! For all those folks that are holding $L.

I think smart money at this point would want to keep just enough in their accounts to cover expenses and the rest cash out on a regular basis. Less risk involved. Especially given everything that's going on atm.

Better safe than sorry is all I'm sayin... ;)

And the Turkey Buzzard goes...

hisss lol! ;)

[Hunter]

Disagree with you Hottie Something. They are not adjusting prices yet due to the six month cycle in. Also it would take a whole large group of land barons to coordinate and push to sell USD 5 points above market when if they just stuck with the original limit sale it would have sold within 2 hours or so. That would be economic suicide so it's highly unlikely it happened for that volume to move that much.

It's a forced devaluation and it does serve LL as Supply Linden has injected into the market as we know - they are basically performing quantitive easing so reduce the USD value down for those cashing out / moving their funds into USD so the discount is reduced. Simply put they are hedging against the discount they provided.

[Chellynne Bailey]

Everyone seems to think SL would be "on the hook" for those Ls.. but they really arn't. Unless they choose to adjust the amount of Ls in the system, either by buying up or selling off more Ls.. there is fixed number of Ls in the system. (not counting the Ls coming in for Premium Accounts and the Ls flowing out of the system in the form of MP Fees.) When you cash out, those Ls are being sold to other residents. If people suddenly start trying to cash out to go to sansar.. then theres really no where for those Ls to go, the rate will just skyrocket.

Luckily... the CEO has stated already Sansar will have the same currency as SL, so the idea that people would dump Ls to buy sansar money is silly.

[Tesla Miles]

Whatever happens, you can be sure that content creators and landlords will start raising their prices to account for the exchange rate and as a counter inflationary measure. Items and services may start to appear more expensive than they are at first - don't know how that will affect business for many people, but I doubt anyone will sit idly by and watch their revenues decline without taking action.

[Tesla Miles]

On a side note, I don't know why Linden Labs don't just peg the Linden to the US Dollar - makes more sense since most merchants cash out in USD anyway, and it'll help prevent market manipulations.

[Brookston Holiday]

@Tesla

If they pegged the Linden then they would have to balance the market on both the sell and the buy side. The supply is no problem, they just create more Lindens out of thin air. On the buy side they would have to inject real US$ into the market to keep it balanced, and I don't think they want to risk having to pump millions into people cashing out.

If they didn't balance it on the buy side, then you could run into situations where there is no way to exchange your Lindens for $, when there are more sellers than buyers.

[Hunter]

Also over the past 5 days as the rate starting to rise to sell Lindens, there has been an obvious injection of 20M (in two 10M blocks) that keeps getting pushed in at the highest rate. It's not depleting for the main (it is then removed and placed again).

If this isn't Supply Linden something really unusual is happening.

[Iggy]

Maybe ISIS is cashing out before they lose Fallujah.

[Tesla Miles]

Ah Brookston, good point, I see what you mean... But couldn't they just match the buy and sell rate, increase their transaction fee, keep a higher reserve ratio and have a slightly longer cash out time to exchange larger amounts? - Or basically, just do away with the Linden altogether.

[metacam oh]

No offense to anyone, but anyone relying on the Linden dollar market these days to hold steady and/or provide dependable income is a moron. The writing has been on the wall for years

[zz bottom]

:)

[A Nony Mouse]

Whoa. Watch out. Don't have an opinion on this thread or you will be targeted by Provokofy whats-his-name. Totally unprovoked IM attacks in SL. Textbook troll. Reveal your identity at your peril.

[Slider]

"... If this is the Lindens adjusting the market, most creators can deal with that, but we would just like to know that's what is going on."

Yeah, I'd like some info on that, too.
And while we're at it, I'd also like some info on what the stockmarkets and banks will be doing so I know when to buy and sell stocks without making a loss.
Oh, wait... THAT would be the sort of stuff that gets me a cozy little room in the Bernie Madoff Motel...

[Helena Wells]

I think Linden Labs is getting flippin greedy and going to run off everybody. I have just been on for 3 months and the price has jumped from 271 to 260. WTH! Then this crazy stuff with raising Premium rates for nothing. Their bs cabin and more group are nothing. If they want to give people something for being premium how about 500 lindens per month so you could actually buy something. They need to step up their game. They can make it more inviting for people who are not premium to switch from Free. I have several avi premium accounts and spend for them I will have to cut back. They are really not thinking this out. Don't break what works enhance what you have. The need to stablize their money system I hate buying anything right now because I never know what the linden is doing so I have stopped buying lindens. THEY NEED TO FIX IT!!!

[Vlam shu]

2 Times I did try to cashout money from second life on alt and 2 times my process credit was closed refunded, just like that without any reason.