Well that is exactly! what is happening in Second Life and people seem alright with it for the most part. I want to believe that is due to ignorance and that is why I want to shed light to this illegality taking place.
I personally didn't know this was illegal until a recent argument between two designers erupted. One designer was the original creator of a mesh template and the other was the designer using the template. The mesh creator accused the designer of breaking her TOS because she had a sale, the creator's tos read in part:
"You are NOT allowed to:
- give away the RAR, pds, tga, dae, obj, or clothing for free & full perm......
- sell your creation under 120L. The outfits are professional done and we don't want to destroy the sl economy.
- give away as freebies or group gifts.
(If you see anyone acting against my tos please report to me asap that i can take action)"
Now most people like me (when I was blind to LAWS) would say "but this is the creator's work, there is nothing wrong with this person making their own TOS for their own creation that they sweated an arm and leg for" WRONG!
Around the world this is called price fixing and it is ILLEGAL. Price Fixing is where sellers come together or alone to buy or sell a product, service, or commodity only at a fixed price or try to maintain the market at a certain price by controlling supply and demand. This may lead to high prices and bigger profits for all sellers. Sellers agree not to discount the sales price lower then agree to as a minimum price.
What Does This Mean?
Profit for the seller and designer, exploitation for YOU! the customer, due to the higher prices in place. Normally, in a place where competition is allowed and there is no price fixing, sellers can have sales, sell at a lower cost, be fair to customers while generating a profit.
How Does Price Fixing Happen In SL?
There are two ways this can happen. One is by expression (I randomly chose these examples by entering "template" in the search box in the marketplace) which looks like this:
"Overall price can not be less then my item(s) total current selling price. For example; if you used 3 of my items which are $250L each, total outfit can not be any less then $750L."
"You can price it as you like as long as it's not below 70 lindens"
"You are not permitted to advertise clothing made from our mesh products in any form (modified or as is) as a freebie, dollarbie, or less then 99L on SL marketplace. This ensures everyone has a fair opportunity with our templates."
The second way is implied, where a designer/creator speaks out in public or to another designer and says something along the lines "why is that person having a sale or lowering their cost? This is what ruins our market!. People shouldn't sell their items for a much lesser price"
Does This Even Benefit Creators/Designers In The Long Run?
No! Creators/Designers gain more by providing more values to its customers then their competitions do by either lowering prices or providing better quality items/services.
And people who are price fixing will always! be out done by those who put their customers first! After all customers are more likely to shop when prices are reasonable, there are sales, and there is a lesser price for a better quality item elsewhere.
Price Fixers are also outdone by other businesses who are more liberal.
If Price Fixing Is Illegal, Are We Allowed To Report The Creators/Designers doing this?
Of course you can! Just like any other laws such as the intellectual property laws that second life follows, anything that is Real Life law, SL must! abide by it.
You can look up your local Antritrust Office if you are in the USA and report it via their website or phone. For example my site is NY. In that site you will find their phone number, how to file a report, how the complaint is handled and more.
In the UK you can report it by finding your local Office Of Fair Trading (OFT)
In Other countries you will have to look for your local consumer/commerce commission and/or look up your antitrust laws offices.
What Can Happen To Them?
They can be prosecuted as a criminal for federal offense and/or fined.
Feel free to google and find out what happened to some companies that got caught =]
But How Can Someone Be Punished In Real Life When They Are Selling In SL?
Remember that Creators/Designers make real life money (in the case of a mesh creator we are talking about A LOT of money, enough for the feds to care) and that SL follows Real Life laws. For example with intellectual laws anyone in second life can real life sue a person stealing their copyright/trademark and other kinds of work. Here is what the TOS say for second life in regards to real life laws....
LL's TOS: "Intellectual Property Rights" means copyrights, trademarks, service marks, trade dress, publicity rights, database rights, patent rights and other intellectual property rights or proprietary rights recognized by law....Because the law may or may not recognize certain Intellectual Property Rights in any particular Content, you should consult a lawyer if you want legal advice regarding your legal rights in a specific situation. You acknowledge and agree that you are responsible for knowing, protecting, and enforcing any Intellectual Property Rights you hold, and that Linden Lab cannot do so on your behalf."
"10.2 The applicable law and venue is in San Francisco, California."
"You agree that this Agreement and the relationship between you and Linden Lab shall be governed by the laws of the State of California without regard to conflict of law principles or the United Nations Convention on the International Sale of Goods. Further, you and Linden Lab agree to submit to the exclusive personal jurisdiction and venue of the courts located in the City and County of San Francisco, California, except as provided in Section 10 regarding arbitration."
"11.1 The Service is a United States-based service."
"Linden Lab controls and operates the Service from its offices in the United States. Linden Lab makes no representation that any aspect of the Service is appropriate or available for use outside of the United States. Those who access the Service from other locations are doing so on their own initiative and are responsible for compliance with applicable local laws regarding your online conduct and acceptable content, if and to the extent local laws apply. Subject to the terms of this Agreement, we reserve the right to limit the availability of, restrict access to, or discontinue the Service and/or any content, program, product, service or other feature described or available on the Service to any person, entity, geographic area, or jurisdiction, at any time and in our sole discretion, and to limit the quantities of any content, program, product, service, or other feature that we provide."
As you can clearly see, LL abides by real life laws and those laws are the ones of the USA, California where price fixing is completely illegal.
What Can We Do As Customers?
Besides reporting it, you can purchase 100% mesh from Creators/Designers who do not sell their templates or you can purchase from Creators/Designers who do not follow price fixing.
We as customers must stand together and united as much as Creators/Designers stand united over TOS being respected. I don't get how these same people talk soooooo much about TOS, intellectual properties, copybots and scammers of their items, getting highly upset if such laws in place are not respected but then they lack respect for customers? Many who are real life disabled, low income, and struggling. I definitely am not going to support creators that are doing this nor designers who are purchasing from creator's doing this and I suggest you don't either. By doing so, what you are supporting is exploitation and illegal activities.
Thank you to the designer that opened up my eyes to this <3
UPDATE: I want to clear things up since people are still confused on what price fixing is, by saying things such as "various designers set at a different prices therefore is not fixed". Price fixing doesn't just refer to the actual price an item is being sold at. It also refers to setting a maximum or minimum price in an industry. Here is an example of a lawsuit where a similar debate occurred: Apple E-Book Price Fixing Trial