RIP: Gaming Open Market?

It has been reported: 

...that Gaming Open Market will be stopping all
trading of L$ effective 10pm eastern time Sunday October 2nd. After
that, the site will remain open long enough to allow everyone to
withdraw their cash and L$ balances...

The forum discussion starts out with a trace of disbelief and rises to its conclusion.  It was a brave  experiment that inspired much thoughtful discussion and hand wringing.  For some measure of its impact in its time, consider the Google metric.

Comments

[Lordfly Digeridoo]

1.

A lot of folks in the SL community saw this coming over a month ago; the Lindens announced an as-yet-unknown type of currency exchange that sounds a fair bit similar to GOM. After a spat of drama with the GOM folks accusing LLab of monopolizing tactics, it was pretty much assumed that they'd be taking their ball and going home.

For the record, the Linden Dollar has been slipping HARD the last few months. Currently it's trading at its lowest value since the GOM opened, and this was before tha announcement.

And LLab still doesn't have their "solution" ready, as usual.

As for other currency exchanges in SL, we've got a multi-national, heartles,s inefficient company (IGE), and a home-grown SL success story who is probably the second most important force on the grid (Anshe Chung), not including the lindens of course.

IGE has been doing some major profiteering lately, dumping tons of money into GOM to crash it, and so on.

It'll be interesting to see what happens to in-world commerce after this.

LF

[Arsenal]

2.

I'm curious as to the effect IGE had on GOM. You mention that they dumped tons of "money" into it. I'm assuming this means L$ and not USD since the L$ price is in decline. However, I fail to see how this is in IGE's best interest to "crash" GOM since a lower L$ price just means their own sell services will not get used as much as people move to GOM for the cheapest price. I would assume that IGE was just doing what it could to take a profit in the market and had somehow secured a cheap source of L$ that it was then selling at a profit on GOM.

Does this really suprise anyone? In the end, IGE is simply a currency trader. Most people don't really appreciate currency traders - be they in virtual markets or real ones, but they are a reality that must be faced by any tradable currency. Call them heartless - sure, but ineffecient? I'd say that is up for debate... they seem a lot more effecient than the other people in the market at this time. They are going to take their profits any way they can and if IGE was consistently a big seller on GOM then it seems like there was some inbalance in the market there that IGe was taking advantage of like any effecient currency trader would. The adjustment of the L$ price on GOM is just reflecting the reality of the market in the game. That may be hard to swallow for a SL player, but then a lot of countries feel like their currencies are undervalued so thats not really suprising either.

[Lordfly Digeridoo]

3.

IGE has always been a huge economic spectre in SL. At certain points they were holding something like 10% of the total amount of money in circulation. They were a de facto force to be reckoned with, and at any moment, could crash the entire economy in one fell swoop (a possibiity, as SL has always been one of their smaller markets; pulling out when the going gets rough would be smart for them, but horrible for SL's economy).

There's also a lot of debate in the SL community about the supposed "innovation-crushing" tactics by LLab; by integrating a service that previously a resident did into the client, they are sending a message of hostility to anyone making stuff in SL, that at any moment they can declare your service "good for the community" and integrate it into the "government" of SL.

Or something. I just see it as LLab integrating something extremely vital in the virtual economy into something they can control better (instead of watching helplessly on the sidelines as the $L plummets in value).

I'm rambling, sorry, early morning on campus. :)

Lf

[csven]

4.

while i'm a little surprised that GOM has gone this route given the potential upside (a good reputation has its own worth, especially in emerging systems), it's not a shock. and if LL's implementation is as feature-sparse as they're claiming it will be, there will be others who fill the gap.

[Darniaq]

5.

I agree. On a lesser scale, one could reference Apple or a few MMOGs that support interface add-ons. Good ideas are good ideas. If a company opens their door to modding, that doesn't mean they won't take a good thing and broaden its distribution. Not everyone downloads mods, but everyone can benefit from good ideas if integrated into the game.

Sometimes the company doesn't build the idea as well as the original, leaving it open for players to modify (like WoW's additional action bars and Quest Tracker being somewhat inferior, in my opinion, to CTMod and MonkeyQuest).

But other times, someone with a good idea isn't done with that one idea. Since they can't make money from it anyway (as far as I know, since they're modding code the developer/publisher owns), I'd consider it a validation of their creativity for the company to roll in a feature, even if its only a part of it.

[Darniaq]

6.

Doh! Pressed Submit instead of Preview. Anyway, the other part of the article I was intrigued by was the whole RMT/Commodoties subtext. Got me thinking about RMTing.

[Mike Zidane]

7.

It is kind of sad to see GOM go. But it is hard to argue that we won't all be better off with the trading happening through SL. Linden Lab at least gives the appearance of security that GOM could not. Though it will be intresting to see how they handle fraud.

On the one hand, I think that the people who 'get stuff done' in SL are thinking too big. Something like GOM really is better off if handled by the Lindens. On the other hand, if GOM hadn't become such a success, the Lindens may not have bothered.

But the good news for me is that I think it's unlikely that LL will move in on the drug paraphernalia market, so I'm safe! :)

[Fizik Baskerville]

8.

This is a great example of when a Brand shifts from a 'symbiotic brand' to being a 'parasite brand'. All companies, will always look for ways to increase revenue streams, a monetary exchange was always the logical next step for LL.

Also, by bringing the exchange in-house LL is demonstrating a positive and responsible attitude in building brand equity: THE trusted partner.

As for virtual world business models, it does raise the issue of the importance of diversification. All businesses should not rely on one source of revenue.

The interesting situation here is not GOM closing, it’s the time it takes LL to establish a new solution. Short-term, it could see a shake up of the user run business; cash flow is always major issue in any business.

Also, when the exchange does open, will we see a lot of people cashing out? What’s the incentive now for people to hold L$?

[ren reynolds]

9.

So, last year Cory and I had this exchange

http://terranova.blogs.com/terra_nova/2004/06/gom_offline.html

Cory wrote:
>1) As stated above, if a world wants commodification via 3rd parties, it makes sense for that world to work to improve the business opportunities for those sites.

Certainly makes business sense. But why bother with third parties? Is there a public statement anywhere about why Linden does not run an out-of-game trading system? From a consumer point of view it would certainly make sense as there would be a single entity for recourse.
In fact why does Linden not just buy GOM?
,,,
Posted by: ren | Jun 28, 2004 4:40:42 AM

Ren> Certainly makes business sense. But why bother with third parties? Is there a public statement anywhere about why Linden does not run an out-of-game trading system? From a consumer point of view it would certainly make sense as there would be a single entity for recourse.

A fascinating question, actually. In general, I think that options are good if you are a consumer -- assuming a certain level of consumer protection -- so multiple 3rd party sites allow exploration of market in ways that the game operator might not think of or decide to explore. Plus, the aggregate of multiple 3rd party sites provides a great metric for the value of the currency. The trick, of course, if figuring out how to provide consumer protection.
Posted by: Cory Ondrejka | Jun 29, 2004 12:14:34 AM

Cory > In general, I think that options are good if you are a consumer -- assuming a certain level of consumer protection -- so multiple 3rd party sites allow exploration of market in ways that the game operator might not think of or decide to explore.

In general I agree. But I’m not talking generally. I’m talking about the state of the market right now. Given the margin on trades, issues with payment methods like PayPal, transaction tracking in-game etc., then there seems to be a good argument from both the standpoint of stimulating the market and consumer protection for games companies that so support the notion of commoditisation to support the actual business of commoditisation.

Not that I’m telling you how to run your business, oh, hold on…
Posted by: ren | Jun 29, 2004 4:00:11 AM

We now have this:

https://secondlife.com/currency/index.php
About Second Life's Currency Exchange
The LindeX is a currency exchange offering residents of Second Life the ability to either buy or sell currency. Charges for purchasing currency are placed on the same form of payment you used to open you Second Life account. Prices at this site are set by the market price - the best price offered by the different sellers of currency.
For a list of some other third party sites where you can buy currency, see here

I’m not saying I told you so. Oh, hold on,,,