Tuesday, October 28, 2008

"Avoid the Voids" - Lessons in Lindenomics



I shook my head when I read news of Linden Labs Openspace Pricing and Policy Changes (and a few reactions I've read)....

Most people know I do NOT like to discuss politics or economics openly. In RL I have a particular worldview that was once shaped by family (Democrat), then college (Republican), then work experience (Libertarian), as well as a circle of friends, books, periodicals, podcasts (the list goes on and on).

I love history, political science, and economics. I consider myself a liberal in a classical sense. To put it another way, I'm a libertarian with a small "l" ... not affiliated with the Libertarian Party, yet sharing in political and economic philosophy. So in the interest of full-disclosure, I look at this announcement with a certain "free-minds and free markets" worldview.

A few points as I see it...

First, on a real world level, LL is a private company and can raise prices as they see fit. LL must spend USD on wages/salaries, electricity, and infrastructure, so that we may all enjoy using Second Life. LL like any RL company, faces increased costs, economic uncertainty, and must act accordingly.

Second, as a RL worker and consumer, I also face economic uncertainty and must make economic choices based on my own needs and wants. My work salary has a certain amount of disposable income that - although not a fixed amount, is only elastic at the margins. My discretionary income can only go so far until I hit the wall of fixed RL expenses. Other than a few generous tips I receive from 2 tip jars and 20 % receipts from aviation-related vendors placed at my aerodrome, I don't make much money from SL, and although I'm very interested in business within the metaverse, I consider myself a hobbyist and social networker. Unless hired by a company doing business here, I'll remain so throughout my time on the grid.

Obviously, all spending within SL must be far behind RL shelter, food, transportation, utilities, medicines, savings for retirement, etc. Personally, I've cut back on certain things (some RL entertainment spending and a 2nd VoIP line) in order to pay for other RL and SL expenses. It's very likely more family budget cuts are in store in the near future.

Avoid The Voids!

My hope was to obtain land-rights to an Openspace sim during the very month that this increase is to take effect. Obviously, that's shot to hell. How many others will "avoid the voids?"

Costs (Taxes) and Discretionary Income

If you consider us all citizens of this virtual world, what is happening is a virtual property tax increase. Uncle M will raise your property values (and taxes)!

Higher costs for land-rights and higher tier fees. Just like a tax.

But remember that taxes control market incentives. And as you raise costs on already burdened individuals and families, only the wealthier among us can afford such things within our ever tightening discretionary income. I don't think the federal government will enact a bailout plan for Void sims. Heehee!

Like many taxes, the likely effect of this will slow down the inworld economy. For many like me who were strongly considering the acquisition of one or more Openspace sims for SL aviation, the decision has now been made. Avoid the Voids!

I do hope that others have enough discretionary income to continue. As an aviatrix in SL, I would hate to see a decline in Openspace sims, but I definitely understand their hardships.

The Big Question:

Is LL still friendly toward hobbyists within the grid? Will aviation in SL be encouraged?

Or perhaps it's their intention that the only aviation-related activity allowed to flourish will be Boeing and Airbus business meetings?

UPDATE: Vint Falken has an excellent roundup of the SLBlogosphere reaction.
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