A Virtual Currency, merits beyond fashion shopping?
December 5, 2008 11:07 pmI probably won’t need to tell you how focussed a lot of ‘virtual world users’ are on making Real Life cash. Often the first question Mentors hear is “How do I make money?” - recently, but only temporarily replaced with how do I find virtual love - and ‘how to get rich’, ‘make linden dollars’, ‘free money’, ‘get linden dollars’, … can often be found in my blog’s keyword search results (and I’m not even aiming at those). Yet, there’s more functionality to ‘virtual currencies’ than just earning it and then converting it to real life ‘hard cash’.
Juho Hamari writes about those reasons for introducing virtual currencies at the Virtual Economy Research Network Blog. Separating those different uses of virtual currencies in three major strategies - which can be used separately or on it’s own - you get:
Virtual Currencies by Strategy
- Acquisition of users - Reward existing users with payments in a virtual currency for bringing in new members. Better give those new members a ’starter budget’, so they quickly get accustomed to shopping & paying for stuff in-world. Life is more fun if you have some money to spend, goes for the virtual life too!
- Retention of users - Maybe the most important is the addition to the ‘perceived value’: “Oh my god! I have 7000 Linden Dollars in my balance. I’m rich here!” Nobody would leave a world where he’s rich, right? You can also reward users witha virtual currency for good behaviour, achieving a certain mission, helping others or spending a large amount of time in your world. This will level out the difference between users that invest a lot of time and users that invest a lot of real life cash into this virtual world.
- Monetization - Strangely enough, most Linden Lab uses for monetization are not listed in Juho Hamari’s overview: Get a percentage on the trading of the ‘virtual currency’ to a ‘real currency’ and vice versa. Allow users to pay their user fee and virtual land (*cough* server space *cough*) in this virtual currency. Charge the virtual currency for certain inworld services such as owning groups, texture uploads, … . (often referred to as ’sinks’).
Virtual Currencies by characteristics
Mr. Hamari also stresses that a Virtual World can have multiple virtual currencies and rule sets. Any combination of the ones below is possible:
- Time Currency / Purchased Currency / Earned Currency (by missions, good behaviour, …)
- Interchangeable currencies / Currencies that allow you to purchase a specific set of items/services
- Exchangeable to a ‘real’ currency / Just for inworld use
I really suggest you go and read Juho Hamari’s overview, as it makes our Second Life economy look pretty simple! That is, if you think out the whole ‘Own or rent Virtual Land’ part of it.
Mr. Hamari also offers a whole lot of ideas still unexplored by Linden Lab. Maybe the ‘time credit’ isn’t such a great idea - *waves at the campers*, but a little incentive when you rezz your first prim, create your first group, send your first Instant Message, upload your first texture, make your first ‘Second Friend’? Non-transferable though, to prevent abuse and to be spend at ‘Linden Government Owned Shops’ where they offer items from starting virtual world designers? Or that they can use to pay their first months of virtual world rent? Or assigning a ‘noob’ to a mentor and giving the mentor a financial reward when that n00b becomes a ‘True Resident’? Maybe we’re not using the LS that we love so much to the max! ;)
6 Responses to “A Virtual Currency, merits beyond fashion shopping?”
Second Life could certainly benefit but SOME form of currency distribution through Linden Labs. The big problem is of course preventing abuse.
One thing I am supremely grateful for is that my account is old enough that I still get the free 50L a week stipends. I have a few newer alts and coming up with money is always a pain since I don’t care to spend my days camping. Generally the money comes of course from my main account.
It’s not like I’ve never bought Lindens. When I want something larger I pony up and for a while I was renting a few apartments which require Lindens. I think I figured up once that over the years I’ve probably throw 50-75 US dollars towards Linden Labs.
Alternately, maybe instead of a few lindens per week, the ability to day, upload 10 textures a week free. Or ten textures/sounds/animations. Something to help incite new players into building things or making clothing to try to sell. 10L isn’t much but when you’re working for 2L an hour in a camping chair it’s a LOT. On the other hand, I’ve tried selling the things I make through various outlets with zero success.
Anyway, I think that goes along with the spirit of this blog post.
I never understood people that let their avatar camp over night, while the puppeteer slept.
In most countries the electricity, to power the PC, cost a lot more then the few Linden dollars you get out of it.
You might end up paying more for to get those L$, insteadt of just buying them via your plastic card.
Interesting stuff, certainly beyond the scope of SL, thanks for pointing this article out! We had quite a discussion amongs OpenSim developers about how to deal with currencies and money, on a grid comprised of sims or gridlets operated by independend grid/sim owners. One overarching currency for all, or each grid it’s own? The latter seems unworkable to me, but some grid owners really expect to operate their own economy on a small grid. I’d rather use Lindens, but that’s not allowed - yet? More on that discussion here:
http://sered-sl.blogspot.com/2008/11/nature-of-open-grid.html
Thank you, Sered! I followed the discussion a bit back in 2007, but never read something recent. The one problem is, that Second Life (and thus probably also OS) differs from most other MMORPG’s & virtual worlds on 2 points: the ability for a large amount of user created content & the ability of of the users to set price for virtual goods & services. Besides land tier & the sinks (and a possible influence on exchange rates through the sinks & land prices through the amount of new land they offer) there is not less LL can do to ‘control’ it’s economy, opposed to other virtual worlds?
The way I see it, LL has two control mechanisms on the economy.
LL cannot directly control the amount of land available for purchase on the market, as it is partly influenced by endusers selling their parcels besides new LL provided land. LL has to be very careful with adding new land in order to keep the land market in a certain state of equilibrium: there cannot be too much land available for sale, or the prices would plummet (..even further) and that could crash the economy.
The second piece is the amount of available Lindens, also to a certain extent. They print the Linden Dollars, out of thin air, for new accounts and the premium stipends, which they have to provide. But they can’t control the user owned dollars, which is a vastly greater sum; in the end Linden Labs does’t have too much control there, either. They have managed to keep the value of the L$ reasonably stable nonetheless.
So no, LL cannot control it’s economy as far as I can see, other than crashing it by prohibiting or restricting certain lucrative in world operations like banking or gambling ;-)
Stumbled it!
great one, Juho Hamari’s overview, makes it simple alright.
Care to comment?