Nerfing Second Life Microbusiness

(According to This Blog Post, the problems with the Process Credit system of Second Life have now been resolved. If you are still seeing a delay greater than those specified in the post then you should file a support case and hope they get it resolved el Pronto.)


Fairly early in the maturation process of Linden Lab’s Second Life software platform, the management at Linden Lab decided it would be really neat if people using SL could actually turn their contributions to the platform into actual cash money. Users were already able to exchange the in-game tokens called “Linden Dollars” for copies of their virtual products, but LL spotted and then implemented a method to convert those tokens into outside-the-walls (meaning Real Life) cash money.

Building the Pipeline Out

Linden Lab tried a few different mechanisms to facilitate conversion of Linden Dollars into Real-World currency, and there were some spectacular failures that still live on in the collective memory of Second Life users. But even with the flaming meteors plunking on the heads of unsuspecting customers, there eventually arose a clunky but pretty reliable process.

Basically it consisted of users placing their Linden Dollars onto a publicly visible exchange then waiting around while other users placed purchase orders that could be filled from the Linden Dollars placed for sale. Because it was a strictly “User to User” exchange, none of the companies that hosted and implemented the exchanges were actually liable for anything fraudulent that might happen. This giant shield notwithstanding, the companies involved did, for the most part, expend appreciable amounts of effort and attention to ensure they were crime free.

Linden Lab’s LindeX of course was probably the most visible User-to-User Exchange, but since it was hosted by Linden Lab themselves, it’s only right that it got the brightest share of the spotlight focused onto it. Several of the other third-party exchanges also garnered a fair chunk of the spotlight, but happily that attention came about because of their high degree of maturity, cleanliness and overall freedom from the ugly stain of fraud or bogus scams.

If It Ain’t Broke ..

When it comes to mostly functional software systems, Linden Lab has a well-known track record of unbolting and jiggering around with those specific instances with the lowest rate of malfunction or complaint. At times it seems that the Lab’s goal is to identify those parts of their software that are the most stable and trouble-free then “Update” or “Fix” them. And so it came to pass that the Lab chose to attack and refactor the L$ Exchanges.

To be completely honest here, there may be unseen motivations that existed completely “below the waterline” thus forcing Linden Lab’s hand. But since they won’t ever say, one way or the other, what caused them to tilt the table so drastically .. essentially without warning, the loud money still sits on the “Because they like f**king with stuff that already works” spot on the table. I have to be truthful here myself, I’ve got a fair bit of cash on that bet too.

Third-Party Exchanges

The first and most obvious change that slammed Third-Party Exchanges right across the kisser was the prohibition against anyone other than Linden Lab acting as a Purchasing Agent for Linden Dollars. This blocked the Third-Party companies from making bulk purchases of Linden Dollars from Business Owners in Second Life. Linden Lab went further then to outlaw sale of Linden Dollar tokens by anyone except themselves and duly licensed Third-Party Sellers. In other words, regular users could not act as bulk sellers of Linden Dollars. So in short order, the tools necessary to operate a Linden Dollar Exchange, either User-to-User or Third-Party Owned, were yanked from the hands of the companies already engaged in that business. In very quick succession, Linden Lab knocked a giant hole in their business plans AND depth-charged their income. Double-Pepper-Bomb-Eye-Burning-Screw-You Regulations .. and not even a “Thank you” pat on the butt on your way out the door.

The Only Road to Nirvana

For quite some time before the pronouncement, the process of cashing out via the LindeX (and thus wholly dependent on Linden Lab’s methods) was not only outrageously slow, but at times ridiculously outrageously beyond-all-reason sloooooooooow. Even those people cashing out via the LindeX that had a completely issue-free history, had never once come even partially close to a problem, and had a presence and business in Second Life that extended more than a handful of years .. even those people were subjected to the full 5-day delay that brand new people encountered

Why would Linden Lab subject well-respected and clearly above board business people to the full 5-day anti-fraud delay? Sure you can fashion an argument that it’s possible for someone to commit fraud and slip it past the anti-fraud barriers. Yes it’s possible that they could drop a pack of illegally obtained Linden Dollars on a Merchant that had previously never been subject to anything untoward or of questionable heritage. Okay, so it’s possible! But is the Lab’s anti-fraud process so poor that they can’t catch these things faster? Do they really need the full 5 days to ensure they don’t get screwed?

Because their process is always the longest, and because their payout is always the slowest, and because they are always guaranteed to be the most trouble-ridden system, people needing to get their money out in a hurry would always gravitate to a service with faster turn-around. In fact, the mere capability of these systems to perform a cash-out in minutes put the lie to Linden Lab’s proclamations that their system is the most efficient and trouble-free. It’s really tough to insist that people can’t fly when everyone else flies in to attend your proclamation meeting.

All The Branches Are Removed

Now that Linden Lab has enacted the new rules and regulations, even intimating that if people violate the new rules, they may be subject to legal action by the Lab as well as immediate termination of their account AND deletion of their virtual property. In other words, “Break these rules and we just might erase you from existence and make all your stuff disappear.” Yeee-OWCH!

Needless to say, the third-party exchanges immediately queued up and toed the line. Yup, the branches are all pruned off. Yessiree there is nothing left except the spindly trunk and one leaf at the top. Yes indeed the entire process of changing your Linden Dollars into real cash money is now limited to one and only one legal and valid processor. And then …

Unscheduled Process Credit system maintenance

Back on October 7th the Second Life Grid Status site began reporting that there was some unspecified problem with the Process Credit system in Second Life. That system is the final link that allows users to transfer the credit in their account’s Cash Balance to their outside bank accounts via PayPal. It’s actually a very straightforward process. In fact PayPal provides all the code necessary to accomplish it automatically. But since they announced that there was some unspecified problem in the Process Credit system, payments have been slow, delayed past the normal 5-day time. In fact it appears that payments are getting made on a purely manual hand-fed basis. Hmmmm …

Final Thoughts

My final thoughts here are very simple and .. quite honestly .. very Final. I’m thinking Linden Lab has encountered a problem that requires them to make all payments only as cash is available to make them. I’m thinking that they are doing these piecemeal payments only because they pretty much have to … “Or Else”. I’m thinking that since we come after employee paychecks that they’ve at least made those deposits but really do not have the cash on hand to pay out the entire “Process Credit” balances due.

Hang on to your hats folks. My Spider-Sense is tingling up a storm right now .. and not in a good way .. not at all.


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Comments

2 Comments on Nerfing Second Life Microbusiness

  1. beladona Memorial on Thu, 17th Oct 2013 6:09 PM
  2. The chances are that LL is scrambling to “prove” that $L are not a viable virtual currency to avoid the kind of regulatory scrutiny that Bitcoins is now enjoying. As soon as the Feds started making noises about criminals possibly using virtual currencies to launder funds, the $L became a potential problem. Fiscal compliance with the Bank Secrecy Act will cost them more money than most people realize

  3. Darrius Gothly on Fri, 18th Oct 2013 7:14 PM
  4. According to the SL Grid Status post on this issue (http://status.secondlifegrid.net/2013/10/18/post2076/) and the LL Blog Post here (http://community.secondlife.com/t5/Commerce/Process-Credit-System-Delays-Have-Been-Resolved/ba-p/2266819) all issues have been resolved and cash outs should be back to their stupidly long 5-day delay. *YAWN*