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Jan 23, 2004

Comments

1.


"I feel like I am above the players of these games. They are toiling and investing hours and hours into creating wealth and building empires and here I am, no virtual avatar running around and no virtual real estate, just skimming money off the top."

We'd probably all agree (?) that such a service is not parasitic to the community - but is useful in that it provides a sort of "liquidity" to the players...

On a related point, I have wondered if such a service would ultimately be necessary to the MMOG community to avoid the root cause (IMO) the demise of the pen/paper RPG market... namely the development of vast numbers of competing RPG systems... players then invest so much resource (time) in learning one system, they get orphaned.

While "virtual currency" investment is only one barrier to player mobility - it is probably a very large impediment.

-nathan

2.

While 2L and There may be as different as Burning Man and Disneyland, we seem to agree to the value of the GOM.

As such, even if others in the industry ban GOM from their realms, I think they have a long and profitable future even with just 2+ virtual worlds.

-Bruce

3.

Bruce> While 2L and There may be as different as Burning Man and Disneyland, we seem to agree to the value of the GOM.

I doubt that we agree completely, Bruce, since GOM is directly competing with There.com. There.com has said many times that their business model is based on selling currency to their users, so every time some outside service facilitates this exchange, There.com loses money.

Second Life's model is not built upon selling L$ -- in fact, we do not sell L$ to out users -- so an outside service doesn't compete with us.

4.

Cory,

I'm not so sure GOM competes with There. There.com are the only ones who can create Therebucks, and that's where their profit lies. Their model seems based on continued sales of ever-new content, anything that helps a user get a hold of Therebucks will help There. They already sold the Therebuck they created at their fixed price, and when Player X buys Therebucks somewhere else at under the fixed price someone is biting the loss, but it's not There.com.

5.

Nathan Combs>the root cause (IMO) the demise of the pen/paper RPG market... namely the development of vast numbers of competing RPG systems...

I was speaking to a UK games shop owner at EuroGenCon last year and he said it was all D&D. Other systems come and go, but 95% of the role-playing materials they sold was D&D. The competing RPG systems weren't actually all that much competition, at least in his neck of the woods.

Personally, I blame the proliferation of premade modules for the demise of pencil and paper games, but with the caveat that I have no evidence for this whatsoever except my own deep-seated prejudices against them.

Richard

6.

Richard Bartle> 95% of the role-playing materials they sold was D&D.

Hard to guess what this means (chicken or egg). Wizards of the Coast offers a D20 OGL system (which apparently underlies their D&D product line). Their rationale I cite below.

Anecdotally, in the '80's I gave up trying to follow my friends around between these different gaming systems and switched to CG's. Sort of embittered by the former. ;-)

-nathan

http://www.wizards.com/D20/article.asp?x=dt20010417a

"The company believes that one of the major factors which caused the collapse of the commercial tabletop RPG market from 1993 to 1996 was the proliferation of different, incompatible, core game systems.

The company believes that when many different game systems proliferate in the market, they cause significant problems with the shared rules knowledge and preferences between communities of players necessary to sustain a long-term, commercial market for RPG products."

7.

Great story. BTW, the AVH did an interview with Jamie Hale at GOM about a month ago. Here's the link:

http://www.alphavilleherald.com/archives/000063.html

8.

Cory> so every time some outside service facilitates this exchange, There.com loses money.

I have to agree with DS here. I see no 'loss' when someone sells their currency to another member.

Besides my own bank, I have worked hard both inside and outside the company to ensure that the currency always has a place to be bought and sold in the market. Internally, to promote third party trading sites, we even decided to do an emergency rewrite of the TOS at launch just to make sure there was absolutely no confusion on the importance of 3rd party currency trading.

Trading sites now include Tbux.com, Therebux.com, ThereCash.com. FirstBankofThere.com, BankofThere.com, GamingOpenMarket.com, and several others that I have yet to find. There are literally millions being traded daily, and we love it! And the feedback we are getting says that our members love it to.

On the economics side of primary vs. secondary markets; when I was in the Auto Industry, we used to be asked a similar question from those outside the industry: do used cars compete with new cars? For the most part, if anything, a secondary market only works to increase the value of goods on the primary market by increasing their resale value. This principle holds true for not only in commodity markets but also in monetary markets as well, which include newly minted currency, stocks, bonds, or any other negotiable monetary instrument in a market.

So, the net result of any secondary market on the primary is very rarely negative.

-Bruce

9.

Bruce -

But doesn't GOM help create a more efficient market for the redistribution of Therebucks? In this case I believe there are many scenarios where the market efficiency does hurt There’s direct currency sales. For example, consider the redistribution of assets which might have otherwise been abandoned – namely, players who leave the system selling their There bucks instead of just writing them off.

Feels to me like the secondary market for gift certificates – they have some stored value which can only be redeemed by the retailer. Previously retailers could count on a percentage of this stored value never being redeemed, but an efficient market (eBay, craigslist, etc) leads to redistribution which results in a higher percentage being cashed in.

Now indeed there might be enough ancillary benefits to There that it does grow the overall pie but I think the above example has some relevancy.

Interesting to note that theoretically regardless of whether SL sells L$ or not, the efficient market has a cost to them as well. Cory – if dollars are perfectly allocated, they are more likely to be exchanged for land/objects within SL, a resource which while small, does have a monetary cost associated (bandwidth, server space).

10.

Hey Hunter,

I think there are a number of businesses in the market that count on customers 'not' using their product. Just to name a few, cell phone companies often sell you more minutes than you need, or cable companies sell you more channels than you could possibly watch, Internet companies sell you more access than you can use, all you can eat restaurants sell you the whole buffet when you can only eat a plateful or two. I am even sure, that the US government is plenty happy to have a dollar bill or two get lost in the wash.

But, There has a very different business model. Over the next few years, we will become increasing partnered with our members in providing content for other members.

In many ways, I see this as a franchise model. First we create something, tune it, sell it, and turn it into a business model. The next step is to then turn that retail business into a wholesale business. We do this by releasing painter and builder models of the same object and making it cheaper to mass produce then buy from us. For this to work, members must have a way to both sell the items in-world and cash out the proceeds to cover costs, both in-world and in the real world.

Today, between 60-80% of all goods in the world are member made. In the future, 2-4 year, I expect that number to climb to 90-95%.

Please be assured, that whatever small change we might collect from abandoned accounts, is dwarfed by the tremendous benefit we gain by having a currency that is completely liquid in its flow from real world currencies and back again.

I liken this to direct foreign investment. You can imagine the difference in foreign investment between a country that has an openly traded currency and one that depends on people expiring with a few bucks in the bank.

Again, sites like Tbux.com and GOM are vital to the health of the There Economy and we welcome them with open arms.

-Bruce

11.

Hunter made my efficiency argument somewhat more effectively than I would have -- although increased efficiency in P2P transactions may be a larger loss than currency retirement due to player loss unless churn is quite high -- and I agree that additional sites have advantages in terms of traffic and word-of-mouth advertising.

But to expand on my point a bit, yes, Bruce and DivineShadow are correct that There.com is the mint and can still make money selling the buck the first time. However, it is only during periods of net conomic expansion that new Therebucks need to get printed. At other times, they circulate through the economy but because the arbitrage is handled by external entities the money paid for them doesn't go the There.com. Of course, the world can try to deflate via taxes (which Second Life tried for a while but we eventually removed due to complexity and because taxes were disliked) or by charging for everything (which is the same nickle and dime approach that Project Entropia uses, such as rotting your purchases to ensure that you have to buy new ones).

You're also right about efficient distribution in Second Life but so long as sites like GOM offer more US$ for L$ than Linden Lab it is in the user's best interest to use an external site to convert to US$ first.

12.

Bruce> Over the next few years, we will become increasing partnered with our members in providing content for other members.

Does this mean that There.com is going to let its users compete on a level playing field with Levis and Nike? I think that will be very exciting to watch, because if users actually get to protect their IP in the same way your big marketers do, I'd bet that they would be far more effective.

Bruce> Today, between 60-80% of all goods in the world are member made.

Just so I understand, does this mean that 60 - 80% of goods that are purchased by players are sold by players? That 60 - 80% of the items actually in-world are player made? And, given your explanation of the franchise model, that means that player made content is just reskinned (both texture and geometry) variations of There.com created content, right? So to really grow that percentage, you're going to have seed a lot more franchisable content into the world.

13.

Cory> "There.com is the mint and can still make money selling the buck the first time. However, it is only during periods of net economic expansion that new Therebucks need to get printed"

So, again this is a common misconception about how economies work in general, and in how There treats our currency. In economies, the city of New York does not count it as ‘profit’ if US$ are purchased with Japanese Yen by visiting tourists. It is not until these US$ are spent on local goods that any consumption, in an economic sense, occurs. In this same way, from a purely accounting sense, when Therebucks are purchased, I believe There records this as a liability, and it is not until the Therebucks are used to purchase something in the world that I record this as consumption in my economic reports.

As far as control over the money supply, There has no control over our money supply. In fact, the population itself determines exactly how much money they would like printed on any given day. This is a very unique model for even modern economies, and one which is engineered specifically to encourage There to create demand for the consumption of member created content.

Cory> Does this mean that There.com is going to let its users compete on a level playing field with Levis and Nike? I think that will be very exciting to watch, because if users actually get to protect their IP in the same way your big marketers do, I'd bet that they would be far more effective.

First, I think you would be surprised how effective our members are in creating all sorts of content, both in the world and outside, both goods and services. Just to give one example, at last count, There had some 200 fan-sites, many of which provide a myriad of services to others in the community.

Second, I think we covered this exact question just a few weeks ago in “VWs, Data Mining, Advertising and Privacy”
Question: (1/6/04) Cory: >In There.com Levis and Nike are in a privileged position relative to the users since Levis and Nike retain their IP rights and presumably have access to demographic data while users are forces to grant licenses to There.com.
Answer (1/6/04) Bruce> So, I guess this legal mumbo jumbo is a bit confusing. But, just to be clear, Levi’s and Nike actually don’t have any legal advantages over our member developers. Yes, they retain their IP, so do our member developers. Yes, member developers grant us license to use their IP, but so does Nike and Levi’s. It’s been this way since Beta 2 back in April. The advantage that is available to Nike and others is that they can purchase abilities that we set aside for them. For example, in the case of Nike the shoes actually let you run faster than member developer shoes. In the case of Levi’s the texture on the jeans is of higher quality than we normally allow.

Cory> Just so I understand, does this mean that 60 - 80% of goods that are purchased by players are sold by players? That 60 - 80% of the items actually in-world are player made?

Yes. And, Yes.

Cory> And, given your explanation of the franchise model, that means that player made content is just reskinned (both texture and geometry) variations of There.com created content, right? So to really grow that percentage, you're going to have seed a lot more franchisable content into the world.

Nope, and nope.

I think that you are forgetting that a fair amount of any advanced economy is not only manufacturing, but also services.

But, back to business modeling, I call this the Benjamin Franklin approach to economics. While it is important that someone play politician, it is equally important in the early stages of an economy that new business models are created. That new ways of getting things done are invented, and that new ways to meet each other’s needs in the economy are developed.

In a similar way, I view There’s role in the economy as strategically proactive in the early stages of the economies growth. Not only do we have the ability and responsibility to play local politician/policeman, but also to figure out new business plans, to model these business plans for the community, to open these up as new opportunities, and then to take a backseat and let the economy drive itself.

I hardly see us inventing everything, in fact I don’t see us inventing but a handful of very strategic business models each year. Nor, do I think these will all be ‘production / manufacturing related’. There are a number of services that the community needs and they may also need new ways/tools to meet those needs to be invented.

Today, we have currency exchanges, newspapers, private clubs, advertising companies, 2d/3d for-hire designers, photographers, tour guides, consultants, therapists, market analysts, website designers, employment agencies, real estate agencies, promoters, dancers, marco builders, radio stations, client add-ons, etc, etc; all of which are member created business models. Of all the business models in the world I think we created 2 or 3 last year, but they were some that were extremely important to our economy and to our members. My guess is that this is about the pace and ratio of There to member created business plans that I would expect going forward.

And, again, the currency, economy, There's role and the many opportunities in our economy are all specifically designed to encourage the consumption of member created content.

-Bruce

14.

Bruce, just out of curiosity, is there any loan-giving banks or virtual VCs in There? If so, can us a little about this area of service business.

Also, what is the breakdown of GDP for goods and services?

I'm just curious about the extent of the development of the economy from an industrial production model to a more knowledge production model.

Frank

15.

Bruce> Second, I think we covered this exact question just a few weeks ago in “VWs, Data Mining, Advertising and Privacy”

My apologies for missing this previous reply. However, now you've really piqued my curiosity. So Nike and Levis agreed to:

"You hereby grant to Company a perpetual, irrevocable, royalty free, worldwide license to use, publicly display, distribute, modify and otherwise fully exploit any Content that you submit to Company for any purpose necessary or relating to the Company's services."?

That is amazing to me, and if that is what you are saying, is very impressive!

Bruce>So, again this is a common misconception about how economies work in general, and in how There treats our currency.

I think that I wasn't clear. My point was that if the virtual world company handles P2P currency exchange, they have the opportunity to make money on the exchange (whether they call it a comission, a tax, or whatever) whereas if GOM is doing that, the company loses the option.

As for the money supply, it seems that it would be more correct to say that There.com's users determine how much currency they want at any given time. Without outside services, all of that currency would be minted by There.com. Thanks for the info on how those sales are accounted for, I was confused because there were a bunch of news stories where Therebucks sales were highlighted with US$ figures which to me implied that those sales were part of the business model. My bad! Anyway, now that outside services can (in theory) meet the demand of users who want more currency, and since that currency can then flow with high liquidity from the buyers to the sellers and then back to the buyers via GOM, BoT, &c, this means that additional currency is only added to the system (that is to say, purchased by the users) when it is cheaper to purchase from There.com then from BoT or GOM (properly corrected for risk, of course).

Bruce>First, I think you would be surprised how effective our members are in creating all sorts of content

Heh. I am no longer surprised by anything that users manage to accomplish within online worlds. Impressed as all get out, but not surprised. Plus, my assertion was that in a fair race your users will crush the big players.

16.

Hi Frank,

Frank> just out of curiosity, is there any loan-giving banks or virtual VCs in There?

When I first started my bank back in March of last year, I actually started with savings and loans. The problem I found though was that as the currency becomes more liquid with RL currency I was actually competing with RL credit cards. Since VISA has a much lower risk rate and a much more efficient system, I decided that it was more important to make sure that the currency stayed liquid than to try to compete with the likes of VISA.

That said, there are a number of VCs in the world that will buy designs before they are submitted or buy the rights to take a percentage of a submitted product. I think this is just in its very early embryo stage as must investments are less than $100 for almost thing someone might want to invest in. Give it 3-5 years and I think there will be areas that cost upwards of $5-10k in initial investment, which then would increase the need for true VCs.

Frank> Also, what is the breakdown of GDP for goods and services?

To be honest, I don't have a good breakdown. We do see a good number of pure currency trades, but it is very difficult to classify them. In the case of 'goods', because the initial sale is done 90-95% of the time through the auction system, so I have good ratios on the breakdown of There to member created item breakdowns.

But, if I had to give a rough estimate, my guess is that 20-40% of the economy was services based.

Frank > I'm just curious about the extent of the development of the economy from an industrial production model to a more knowledge production model.

I think this also brings up a great question, which is what view point do we use when classifying our production model. From the RL perspective, I doubt that anyone at There (employees) or any of our professional members would be classified, in the 'manufacturing' section of US GDP. But, from the immersive point of view, clearly members are 'manufactures' as they are producing vehicles, furniture, houses, etc.

As far as where I would like the model to go, I would really hope that we have a good mix of both, but most likely heavy on the production side in the early stages and shifting to the services side as time goes on. On the "oh my gosh wouldn't that be cool!" side of the long-term vision, I could see Therebucks being used to pay for a number of RL goods and services worldwide. I don't see any reason we couldn't set-up an iTunes like service, or a netflix, or have Therebucks accepted at any number of RL websites.

Even with my little bank I have done a few studies to see what it would take to issue VISA Debit cards that withdrew from a Tbucks savings account to pay for goods and services in anywhere in the real world. But, today my guess is that GOM could now do this better than I.

And, again, its sites like Tbux.com and GOM that would make these sorts of business models even thinkable.

-Bruce

17.

Cory> now you've really piqued my curiosity. So Nike and Levis agreed to:"You hereby grant to Company a perpetual, irrevocable, royalty free, worldwide license to use, publicly display, distribute, modify and otherwise fully exploit any Content that you submit to Company for any purpose necessary or relating to the Company's services."?That is amazing to me, and if that is what you are saying, is very impressive!

Thank you, we think so too!

While I am not privy to the exact language that was used in the Nike contract, from my understanding they are (of course) free to withdraw from the partnership at anytime, but can't take their shoes with them. Again, from my understanding, any and all Nike shoes that have been sold are now a permanent part of the world of There. They can be resold to any other member in the world regardless of nationality or residence. (Being formally in international manufacturing, it is somewhat amazing to see worldwide distribution rights being given to one company for any product, but in VWs I think this is what it takes) If we change or technical specs or the dimensions of our avatar's feet, we would need the right to modify existing trademarked products, so my guess is that that is included. Our members are also free to take pictures of them for personal use, and the media is free to take pictures of them for promotional use, and, There is free to pictures for commercial promotion of our business.

This does not mean that There can start making Nike T-Shirts in the real world, nor can we do that with our member's IP.

So, yes, you can say this is impressive, and no, I see no legal advantage that Nike or Levi's have over our member developers. And, again, it's been like this since April, '03.

Cory> My point was that if the virtual world company handles P2P currency exchange, they have the opportunity to make money on the exchange (whether they call it a commission, a tax, or whatever) whereas if GOM is doing that, the company loses the option.

Cory, Cory, Cory, if we were this neurotic about every time a member made a few Therebucks we wouldn't have a flourishing economy.

Whats the difference between a currency exchange that makes a few Therebucks by exchanging cash, and a developer that makes a few Therebucks by re-skinning a model, from your view, aren't we losing money? What about when a real estate agent resells a house, or a tour guide gives a tour or a website developer designs a website, or a newspaper or radio station sells an ad, etc, etc, etc. Yes, we could 'hire' people to do all of this, but, that's counter our whole reason for existence. There's whole purpose of existence is to create a world where in members can meet the needs of other members, thereby creating a place that people really, really enjoy. What would we care, if a member makes a few Therebucks doing any number of services including currency exchange, on the flip side, I would care very much if we dis-allowed it simply for the sake of retaining that business model for ourselves.

And, no I am not saying that There does this for charitable reasons, on the contrary, we believe that employing real world economic principles is very good business, and to the extent we are successful in doing so, we will gain a serious competitive advantage in the years ahead.

Cory> I was confused because there were a bunch of news stories where Therebucks sales were highlighted with US$ figures.

NP, I guess we could shift this to reporting monthly GDP, and breaking it down by sector, as thats how I measure it internally. But, I think Therebucks sales work as a good barometer for news articles.

Cory> All of that currency would be minted by There.com.

So, in the long-term I am not even sure if this will be true. With my bank, I issued a set of coins denominated in Therebucks. 1k, 5k, 20k, 50k, 100k, 250k, 1M. To create a coin it cost me all of 200 Therebucks each, and yet the coins were negotiable for face value, and used by a few members as a sort of street currency. Going forward, I could see all sorts of negotiable monetary instruments being created and controlled by our members.

To be honest, I not only want to take virtual world economics to the next level but with the help of currency exchanges like Tbux.com and GOM linking Therebucks with RL currencies, I would like to to RL economics to the next level.

-Bruce

18.

Its so nice to hear a company support the buying and selling of in game currency/ items. I myself am just about to get into the game and look forward to the experience, currently I am involved in The Sims Online and Everquest, I also dabble a bit in FFXI. I enjoy my time playing these games and interacting with the people within, but I also enjoy the business end of the game. I am a seller at www.playersbay.com, it is a newer auction site for the MMOG market, and they are in the process of making a there section on the site as well as 2L. I have really found the whole concept of auctioning virtual items very intriguing and profitable, to the point it is now a full time job and pays better than when I worked in upper management of a restuarant. So from what I am seeing here a company finally supports the entire idea, now how does the general There community react to this? I know in EQ pretty much everyone that does buy or sell items keeps it low key because the EQ community seems to frown apon the idea, however I would say 70% of them take part in it. I know that games such as SWG, EQ, FFXI all have rules in their EULA stating that they own the rights to anything in game blah blah blah, then why does There have such a different view point? Anyway, I am very excited to check out this new virtual world and thank you for supporting what I think is a great opportunity for all of us players.

19.

Bruce> Cory, Cory, Cory, if we were this neurotic about every time a member made a few Therebucks we wouldn't have a flourishing economy.

Bruce, first off, you're preaching to the choir on the advantages of allowing your users to make money and interact with the economy :-).

Again, my apologies for misinterpreting the various news articles that prominently features Therebucks sales as a big part of the business model. Also, correct me I'm wrong, but with a high velocity of money, the expected power law distribution among your top merchants, and moderate growth, P2P currency sales become the dominant method to use US$ to get in-world currency. So this isn't a few users making a extra Therebucks (I guess I was unclear about this) but the majority of Therebucks purchases shifting from player->There.com to player->3rd party. Obviously, this conflicts with a business model that emphasizes Therebucks sales. However, you've pointed out that those sales are not intended to be a significant part of There.com revenues, so it isn't actually an issue.

20.

I have a question for you Cory, if a member of the There community or any community for that matter, had lets say 2 million credits in world. What is the point of keeping it? That is an amount that would be very very hard to spend, so why not sell it, offer the other members a better deal, and I personally don't think it is bad for the company itself, like Bruce said, There.com does not rely solely on Therebuck purchases, and even if they did with said members selling T$ if you look at some of the sites such as http://tbux.com and http://therebux.com they are out of money, so with that said they have no choice but to buy from There.com to (in tbux case) submit items to sell. So regardless There is still making its profit on T$ sells. Also theres people that don't trust 3rd party vendors and would rather buy directly from There.com I think its really all a matter of opinion myself, but I am 100% confident that if a company does not allow P2P currency sales then that company will just regret it down the road. It really is a great thing to have.

21.

quoting Ken Merrill:

"I feel like I am above the players of these games. They are toiling and investing hours and hours into creating wealth and building empires and here I am, no virtual avatar running around and no virtual real estate, just skimming money off the top."

Yes, congratulations, Ken, you're now a bloodsucker in the virtual world, just like all those stockbrokers and currency speculators who contribute nothing to the real economy, but juggle the lives of millions of people every day, leverage buyouts, slow down economic growth, force companies to cut jobs and pare back benefits and ruin lives. You're a real piece of work.

The only reason I'm in Tbux.com is so I can get some value out of these millions of Therebucks I otherwise have no use for. If you ever see me making a career out of trading money, it'll be because I've got no other way of staying afloat, rather than a desire to get over on other people.

22.

Thanks Bruce for your insights.

It is interesting to hear that given current efficiency rates, credit cards are the de facto credit institutions. There’s definitely a research paper to be written on this.

It is also interesting to read that Nike and Levi have the foresight to treat their virtual branded products the same as physical ones: instanced extensions of their brand. The license terms appear to indicate that once an instance of a product is sold, the instance belongs to the purchaser in the second market, virtual or otherwise.

Question: if Nike and Levi pulls out, can There continue to create more products or does the production cease?

Question: I’m wondering whether the financial analysts in Nike and Levi use the prices of their products in There to benchmark their intangible brand values?

This precedence of RL products in VW leads to the perspective that virtual property is just an instanced representation of certain negotiable value. Example of usage: When Tbucks are sold Tbucks are free to circulate and to be used by the immediate owner, but the Tbucks IP still belongs to There and Tbucks IP license governs how Tbucks are to be used.

Frequent flyer mileage and other loyalty programs come immediately to mind. So, it is great to see that in the future There could be the ultimate loyalty program; it will be more of course.

Also, I think the currency outflow into the RL will move beyond iTune-like sales and towards the delivery of physical goods, like an Alessi kettle. The price of the physical goods will be embedded into the price of the virtual goods, thus increasing the velocity of ‘foreign investment’ in There.

Of course, I think most will hate to see There end up as a virtual shopping mall, but a virtual Chelsea flea market sound like lots of fun. I think lots of people like me will enjoy the journey and discovery of a virtual antique show.

Frank

23.

Hey Cory,

Cory> Bruce, first off, you're preaching to the choir on the advantages of allowing your users to make money and interact with the economy

Well, if you'll sing it, I'll preach it, as it’s 'bout time someone got this industry a roll’n.

-Bruce :-)

24.

Hey Frank,

I agree there is so much that could be written and who knows what studies will be done as There grows in scale.

Frank> Question: if Nike and Levi pulls out, can There continue to create more products or does the production cease?

Production of new items would cease completely. This goes for Nike, Levi and any member developer items as any IP owner can pull the plug on additional production at any time.

Frank> Question: I’m wondering whether the financial analysts in Nike and Levi use the prices of their products in There to benchmark their intangible brand values?

No idea, but my guess that there is huge brand recognition crossover, but little brand value crossover.

I would think that a brand owner like Nike would have to do a product line by product line review of pricing and that there is only a faint crossover in brand value from say Nike shoes to Nike watches even in the same real world market, let alone RW>VW crossover in brand values.

Frank> When Tbucks are sold Tbucks are free to circulate and to be used by the immediate owner, but the Tbucks IP still belongs to There and Tbucks IP license governs how Tbucks are to be used.

What a great insight! Surely in the real world, the paper and design of any currency belongs to the government of issuance, while the represented value belongs to the bearer of the document. In the real world, there are also very strict rules as to how, say US$ bills, can and can not be used. As you described, I think this principle holds true for Therebucks as well, as the IP is really that of There's, but the value belongs to the possessor of the currency.

Frank> Also, I think the currency outflow into the RL will move beyond iTune-like sales and towards the delivery of physical goods.

Possibly, but since we would still have to compete with the many other payment solutions on the market, the competition is very high in this area. On the other hand, in the case, of micro-payments with 1TB being equal to about an 1/18th of a penny, we are might be closer to a better solution than most micro payment systems available today.

Frank> Of course, I think most will hate to see There end up as a virtual shopping mall.

As would most our members, which is why I think while we may have certain capabilities in these areas, they are very low on the development list of priorities. In fact, I think that most of what you will see There doing over the next few years will be very in-world immersive in nature.

-Bruce

25.

Bruce, why doesn't There Inc. consider buying at selling Tbux at the same rate? I realize this would cost them money in the short run, but in the long run, since there is no black market, players would have to come to them in order to buy more $T. This would be very popular with designers since they could then more easily launder T$. I estimate that 3-5 designers are in the $500-$1,000 or more US range in There already. This would be great marketing as well. "I made $12k a year playing games! Join There!" :)

I know some people will argue that when you have There buying back currency, its a license to steal and loopholes happen, and crooks will exploit the system. My background is from adult affiliate programs and banner exchanges...no matter how much you program, you can't catch all the crooks...and so one of the best ways to catch them is...follow the money. If There Inc. controlled both the buying and selling, they only need to do a quick DB query and show "who are the top 10 Tbux sellers" and then you put an internal tail on each of them for a quick investigation and determine...are they legit or have they found an exploit. Crooks always get too greedy and always get caught in the end if you follow the money trail.

What are the reasons that There does not want to buy and sell at one rate?

-Andy

26.

I estimate that 3-5 designers are in the $500-$1,000 or more US range in There already.

It only took me a month or two to get to the $250 range (and then I quit) so I would expect that there's more than 3-5. :)

27.

Bruce,

Thanks for the insights again.

There are lots of movement in the micropayment space. Peppercoin is using statistical sampling methods to reduce the transaction cost.

Looking forward to future developments.

Frank

28.

Andy> What are the reasons that There does not want to buy and sell at one rate?

This is a great question. When I started at There last May, this was one of the first questions I asked. The second was a close cousin, 'why have Therebucks at all?', in other words, what if There just listed all prices in US$, and skiped the middleman.

I think the short answer is that there are just too many open questions on this right now, not as many as we had 9 months ago, but still quite a few.

But, putting aside the open questions, there are also a few very good design reasons why we wouldn't switch to US$. the main reason being that aids to dilutes the magic, or immersive feel of visiting a foreign place. This is goes double for international members. We would really like to maintain the feeling that you are visiting a foreign place and not a city somewhere in the USA. In fact, to be even more specific, we wanted it to feel like you were visiting a under-developed country, which is why we made Therebucks 1787/1US$ instead of say 110/1 like the Japanese Yen, or 0.9/1 like the Euro.

There is also a very good reason why we can't sell and buy Therebucks at the same price, simply that it would be very easy to game. For instance, I have a cash back VISA that pays 1.5%. If There's sell and buy price were the same, people could simply buy $1000 worth, get $15 cash back, then resell it for $1000. Add to that the credit card fees and costs of making the transaction, etc, etc, and There is actually down $50-$100 on the round-trip, depending on where in the World the orginal purchase was made from.

I guess we could set it up so that There bought back at say T1950-T2200/US$ but, then we would still be left with the many open questions. I think we would also be left with currency exchanges, they would just be limited to the range at which they could buy/sell at.

Personally, I like the fact that members that buy offline are the benefactors of the cheaper currency. Yes, there is a small risk involved, but I see places like Tbux.com and GOM taking that risk level down over time.

That said, we are still at the very beginning of a very long path and who knows what is going to make sense or not 2-5 years from today.

-bruce

29.

As another data point, GOM is currently trading US$100 - US$200 in L$ per day or around 5 times the eBay volume of UO currency per capita. Per this week's top 10 list, our top 10 made US$100 to US$500 per week in L$.

BTW, I completely agree with Bruce regarding the decision to use in-world currencies rather than US$ in virtual spaces and also agree that we're on the very first steps of a long and interesting road.

30.

As a registered member of both worlds, I know that I enjoy a better standard of living in
Second Life. I have a boat, motorbike, hoverpod, hoverboard, airplane, clothes that cost 40-50 Linden dollars a piece, a weekly allowance of
1500 (about, I don't remember exactly), and I pay less for all of it. However, I like the graphics better in There and the behaviour of the
only vehicle I have been able to afford, my hoverpack. 2L's vehicles are jerky and hard to control.

31.

I've managed to save up roughly $88847 in my bank account, but I'm not sure if I should buy a house or not. Do you think the market is stable or do you think that home prices will decrease by a lot?

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