Will XStreet SL’s Currency Exchange Survive?

This post was originally posted by Konner McDonnell at the now defunct Your2ndplace and is reproduced here with permission from Konner McDonnell:

As first reported by famed blogger and SL icon Prokofy Neva and confirmed here by Nobody Fugazi, Linden Lab has acquired popular commerce websites XStreet SL (formerly SL Exchange) and Onrez. By way of reminder, LL’s announcement stated that the company intends to ‘build upon’ XStreet SL’s platform, but will discontinue Onrez after February 11, 2008.

For many (myself included), the looming question isn’t “what will this mean for my business” or “will this reduce instances of IP theft,” but instead “what will become of XStreet SL’s currency exchange?” A fair  question, really. XStreet’s currency exchange rates are typically better, the fees more reasonable, and those who sell their ‘limited license right’ can immediately have their funds transferred to Paypal.

This looming question remains largely unanswered. In a crude Q&A session taking place on the SL forums following T Linden’s announcement, T and Colossus fielded every question except those concerning the currency exchange. Many people asked, with one poster noting that the Linden Duo had sidestepped the question time and again – which  probably means the XStreet SL currency exchange will go the way of the

This suspicion is based on an observation that LL is not adept at damage control or misdirection. They avoided the ‘ad farm’ issue for quite a long time. They undercut their Land Baron middlemen good and proper. So when they start talking about “new features,” I check for my wallet, so to speak. Further, I know that LL makes their money from land  sales, tier, and the Lindex. Given the Machiavellian zeal displayed through their handling of the land issue, reigning in the currency trading competition was predictable – not to say I predicted it. I’m just as complacent as everyone else.

Beyond my own cynicism, there’s Colossus Linden’s answer to one user’s inquiry about commission:  “[Linden Lab] will be keeping [sales commissions] and most other features of Xstreet.”

So what features are being removed – perhaps one of them is that which you’ve carefully avoided discussing? Keeping in mind that ‘most other features’ implies that 51-99% of current features will be retained,and therefore that as little as 1% would be removed – and could  be as little as removing the ‘forum topics ticker’ on Xstreet’s main page-, I must confess that I perceived that 1% as being that which was being presently avoided AND was the thing I was worried about losing.

I sure do it hate being left to my own devices and flawed judgment, but it’s actually quite brilliant: If you keep people wondering, they’ll  do your advertising for you, they’ll keep coming back for those answers, and you can hook them on ‘new features’ and other such things. On the other side of the coin is confirming people’s suspicions right away and risk turning them off. Besides, there’s no point in making people angry when you can avoid the question entirely – it’s not as if  people will stop buying Lindens.

For all my conjecture, at the time of writing this, there is no confirmation as to whether LL will remove Xstreet’s currency exchange. Should they? My personal opinion is no. At a glance, it seems like they have much more to gain from leaving it alone. There will always be competition. The key in benefiting from competition is to be your own biggest competitor. Whether this is ethical or even remotely possible in  this context is, well, subject to debate.

Have Virtual Investors Learned From The WSE?

This post was originally posted on Your2ndplace by Konner McDonnell and is reproduced here with permission from Konner McDonnell.

Last September, I bid farewell to Y2P as a contributor. Embedded in my farewell article was a silent vow that, should the WSE declare insolvency or otherwise withdraw as a virtual exchange, I would return to cover the event.

In his December 2008 address,  Luke Connell announced that his exchange would be severing all ties to Second Life and Second Life-based companies. Though the announcement provoked some applause and cries of victory from the virtual exchange cognoscente, the majority dismissed the address with an indiscernible shrug – comfortably nestled in the latter camp was yours truly.

In the two month period between my announcement and Connell’s, RL had whisked me away. Until two weeks ago, most of my involvement had taken place via email. When the holiday break afforded me a bit of leisure time, I sat down to make good on my promise, but the words didn’t come. The distance had given me a new perspective. So I stepped back, caught up, and drew some disturbing conclusions.

Where the WSE is concerned, it’s gone from Second Life. Good riddance. The periods of unannounced halts, disinformation, fear mongering and revisionism -which I’ve flippantly dubbed “retConnelling”-  are someone else’s problem.

But this by no means constitutes a victory. When I think of the “old investors” whose money has hitherto been made unavailable to them while “new investors” deposited and withdrew at will, I can only conclude that
the sole winner here is Connell himself.  But that was always the case.  Besides, people like myself weren’t trying to beat Luke Connell at a game he dominated. We were simply creating an archive. As VSTEX PR
Director Samantha Goldflake likes to say, “The internet does not forget.” I concur.

The only real victory is one of collective action. When a few like-minded individuals band together in the name of a common interest or promoting truth, the act says as much about the thing being pursued as it does the pursuers. Here, the victory is Pyrrhic, which is often the case, but it is a victory nonetheless. Those people that cared enough to risk their own money to decry Connell’s actions are themselves  illustrative of why I continue to involve myself in the exchanges.

The problem is that these individuals seem to be in the vast minority. That I didn’t recognize it until now says remarkable things about the company I’ve kept in SL, but it says little of my knowledge of  the community as a whole.

From a distance, I’ve watched Luke’s agents unapologetically abandon ship, and, like rats, scurry to bigger and better pieces of cheese. That’s expected. What is surprising is how quickly they’ve been embraced.

Further, many of the old hands with questionable dealings and reputations have been left to their own devices. Similarly, new enterprises have been quickly accepted on exchanges based solely on the lofty goals outlined in their prospectuses.

My concerns are based on research. The information is available to everyone, that is, if they care to look. Though it may be somewhat sloppy of me to write an article, allude to problems, then suggest people do their own research, frankly, my goal has always been to supplement-not replace- individual research.

Though I hope to be proven wrong down the road, I am worried that those people so eager to move beyond the WSE have ignored the pedagogical value in their haste.

I still hold to belief that there is a future in the exchanges – one that will be appreciate by external regulating bodies should they impose  regulations in the future. But as a writer who sought to champion ‘shareholder’s rights,’ I’m finding little in the way of self-determination and/or due diligence. Call me an idealist, but I look  to a day when market volatility reflects speculation  on performance and not the probability of CEO malfeasance.

Not long ago, I had a discussion with Delicious Demar about the WSE and what it meant for the future. Towards the end of that discussion we agreed that it was time to move on, attend to our respective obligations, and enjoy the thing we’d sought to preserve through our individual actions.

That is what I intend to do.

In the last year I’ve signed on with two virtual companies for an inside look and an opportunity to put my ideals to some use. Expect a writeup of my experiences towards the end of this year.

Meanwhile, a new year is upon us. Seems a good time to broaden my horizons. We’ll see what comes of that.

Happy New Year, Y2P.