Tuesday, December 17, 2013

Creator's Illegal Activities & Customers Exploited - Mental Health Awareness Retreat

Imagine going to a store and purchasing some wood, tools, and other materials to build a house. As you settle your things on the check out table, the cash register tells you "before I ring your purchase, just know that when you build the house you can't sell it for less then $100,000 dollars." How would you feel? How about if you now knew that it is illegal? Not so great, huh?

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.

In Conclusion-

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


  1. And for anyone who is still questioning and debating this, I am currently in talks via a ticket with LL about the matter at hand to settle it once and for all as creators will not see the wrong in this until LL put some kind of stamp on it. This debate has gone on for the past coupe years and still going on today with no clear resolution. So the matter is currently being forwarded to their legal team now for review.......stay tuned.

  2. Price fixing is about conspiracy between two or more individuals to corner the market. This is not the case with what your saying.... It is in the purchase agreement for all of the world to see therefore pushing out this conspiracy theory your going on about. There is nothing wrong with setting a base price so that items are not devalued on the market. The fact remains that people have a choice to purchase the items with the TOS intact stating what is expected of a minimum price to sell the creations at. It would be safe in saying that if it is illegal to put this limitation on pricing that the people who purchase these items knowing what is expected prior to buying the templates are agreeing to illegal activities themselves. A resolution to this issue could be to discuss with the full perm creators the harm that including their items in a sale that is run whether it be an hour long sale or a week prior to having it to find out if this would be acceptable. The purpose of this baseline pricing is to keep a value going in the market keeping things competitive which whether you like it or not is what makes business. Those bucking this are going to find themselves in the spotlight more than they wish when all is said and done as it seems that if Linden Labs find this disagreeable not only the full perm creators will be penalized but those who agreed to those terms of purchase will be as well.

    1. There is a difference on suggesting a retail price (legal) for designers and prohibiting to sell (illegal) for a lesser price. Here is a recent post you might find helpful. I hope you will see how this is illegal and not only does it exploit consumers but it also affects our real life market negatively. http://skittlesinthepit.blogspot.com/2013/12/antitrust-laws-virtual-worlds.html

  3. I commend you for speaking out about this topic. It's been far too long that the consumer on SL has had ANY voice when purchasing products. Right now, the only place to leave customer feedback is in the Marketplace reviews, but this is an incredibly weak feature. What about in-store purchases made? There is nowhere to go, and reporting a bad merchant is a time consuming and weak process as well. LL drags their feet to follow legal guidelines when it comes to catering to the consumer, because merchant power is what fuels the greedy SL economic engine. Sickening that this can take place, and I'll do everything within my power to voice my consumer rights. I hope other consumers will read this and care enough before they make their next overpriced purchase!!

    1. Thank you for sharing =] Here is an updated post on Antitrust laws and how creators/designers can legally make it right. http://skittlesinthepit.blogspot.com/2013/12/antitrust-laws-virtual-worlds.html. We also started an in-world group called consumers united. Here is the link to join:secondlife:///app/group/3e6d0c9a-317b-f6a4-70c3-22e1158d309b/about. It is free.

  4. "The real winner so far in the ebook price fixing case has been Amazon. The online retailer is free to undercut competitors by selling books below cost, and for everyone else the book market becomes a money losing venture. The Federal Courts have effectively endorsed an Amazon-controlled monopoly on the U.S. book market."

    Just an excerpt from the Apple Lawsuit that was mentioned. Last I checked, monopolies were illegal too. Fact is this, the TOS in Creators Templates is kind of stupid anyway. But, it also helps the designers (the people that buy the templates) in keeping them from being idiots about their pricing. I mean, look at it this way.. if you buy a template for 5k or more.. Why would you want to sell it for less than 70L$? You're killing your own business.

    The end result of removing these TOS minimum pricing statements will be the same as the result of the Apple/Amazon issue... Amazon sells all it's products below market cost, it retains over 65% of the market in books, because of this.. "People are going to go where the price is cheapest".... and therefore, other companies, new companies.. they can't get into the book market. Relating this to SL... what happens when certain designers start getting less and less creative.. start not caring because the market is cornered.. Then the PEOPLE as you are allegedly defending, still get screwed by a crappy product and no alternative. Meanwhile, template pricing just shot through the roof because the market is saturated with the designers crappy designs on their templates being sold at an insanely low cost. So.. have your choice.. a TOS that sets a minimum price for that particular persons product, or most everyone going out of business because they can't afford the new price of templates.

    1. Take a look at this post http://skittlesinthepit.blogspot.com/2013/12/antitrust-laws-virtual-worlds.html. I think it will help answer more questions in regards to setting up a tos. Here is a quote from the post

      "You can't control the market or impose a price whether minimum or maximum but! you can suggest a retail price. For example "Jeans Template - suggested retail price $200L". And the same creators sellers can legally decide not to sale to those designers that do not price the item at the suggested price."

      There is a difference between controlling the market by imposing minimum or maximum prices then suggesting prices that buyers can respectfully follow. I agree that monopolies are illegal too. I went ahead a supplied legal links in the new post to help dissect how these laws applies into a virtual world and how controlling the market (by setting a price on a item to be sold) is monopolizing in a way.

    2. Skittles....Well that's nice you know how Walmart does it.... However, this topic is pretty much all over Semi-Exclusive Items.... You don't think that if you were to ask say... Gucci to create a custom handbag for a boutique that they would say hey btw you must not sell that handbag for less than 300$? You would be wrong... For exclusive and semi exclusive its a different ball game.... There are plenty of content creators that sell their items with no min price set because they are selling unlimited quantities... The Semi Exclusive content creators are within there rights and until you produce a law degree specializing in business law you really need to take a breather because at the end of the day with your googling and amazon vs apple your looking pretty ridiculous. Show us another blog written by yourself answers no more questions than the first one did...

    3. I see you didn't read any of the additional links I have provided. Although I wrote these articles myself, they did indeed have many legal documents you could have at least browsed through. I am sorry to see you didn't take a look at any of those. Since you didn't take the time to read the documents that could have explained so much for you, I will help break things down as much as possible. Keep it mind this is a brief summary and there is so much involved in an economical market. There are standard laws in real life for everyone not just Walmart and yes including Gucci. The antitrust laws are not separated and excluded for just Walmart, they are made for every single company so that no one monopolizes the market (controls it). I did some research on the Gucci custom handbags you mentioned and distributing them to a boutique. They follow just the same laws that I explained in the antitrust laws & virtual worlds post. What they do is they have distributors. People who they sell to. They don't say! "you can't sell for less then this price" because that is illegal. But they do suggest a retail price. This is why when you shop in many places you will see a tag that reads "retail price $49..99, our price $39.99" (as an example). You can suggest! but not control. Since you don't read much of anything I write, just randomly chose to say your opinions on no basis with no links to show me otherwise or research, then I will leave you to your own devices to find it yourself but I can assure you! that if you google it, is there :). The beauty of having our own library in our homes, eh?

      IF a custom template designer in second life gathered a few people to sell to consistently and suggest them prices of sales that would be legal and fair. Heck, they can even do that now in the marketplace "suggest retail price xxx" This allows freedom to the designer to either follow that price, make it lower or greater if they want. There is no strict control and therefore not controlling the market. And if people really value and respect a designer, I am sure they will follow or be as close to the retail price :)

      On you saying "There are plenty of content creators that sell their items with no min price set because they are selling unlimited quantities" It simple isn't true. If you go to the marketplace you'd be surprised how many have semi exclusives without these controlling policies. *coughs* Zombie Suicide *coughs* (just to mention one of many)

      By you saying "until you produce a law degree specializing in business law you really need to take a breather because at the end of the day with your googling and amazon vs apple your looking pretty ridiculous." It is like saying to me "with you googling the drivers license book and studying it, providing a short cut for others to study easily is ridiculous" or "googling the laws on drinking and driving and then posting a short version of them are ridiculous." At the end of the day I supplied you with enough legal documents that you REFUSED to read. I didn't just ramble words at you.
      Yet you, I don't see any links provided to back up your opinions, nor resources, nor legal document to prove me otherwise. If I may make a suggestion? Research, Research, Research. I tell this to people all the time. Don't just base your opinions on what you THINK! but on actual facts :)

  5. I had to make this a two part post, cuz well.. I suck at being short and concise. lol

    I think that you have very intelligent points being made in both the posts you've made on the subject. One of my biggest problems with SL, however, is the fact that people tend to throw societal rules out the door, at the login screen, and make up their own once inworld.

    Since you seem pretty intelligent on the issue, then you'll understand this little ramble. If I have a business in RL, and I want to sell a product, I must purchase that product. Not only that, unlike SL, I must purchase that product repeatedly until I've gained the inventory amount that I wish to sell. So, if I'm selling TV's and I want a stock of 50 tv's, and the product price is say 500.00... Then I'm paying 25k for my entire inventory. Now.. to sell these items, I must price it above 500.00.. because I need to make back the money I paid on each item, plus some profit.. this is how business works. A sale, will never go below the purchased price. That's just bad for business.

    Now, here we are in SL, with the current situation of Creators vs Designers. Creators price their mesh items at ridiculous prices, to be honest. My ex-partner, whom I'm still very supporting her designer endeavors, just recently purchased mesh shorts for 16k... the highest I've ever seen to this point.. usually her purchase are in the range of 1200 - 5k.. for one item.

    Now, if this were RL, she could not make a 5k purchase, then turn around and sell the "designed item" for over 5k.. it just won't work. No one will buy. 5k is approx 20.00US... Creators tend to sell semi's around 10-12 purchases and then drops the item. That means, they make 200 - 240 US Dollars... They're making their money, they are banking big. But, the designer cannot sell their designed item at that kind of price, no one would buy, period. So, of course the price is going to be lower, and a designer has to sell MORE to make up for their purchase. The one thing in SL that does not occur in RL is the fact that you pay for something once, you sell multiple copies of it. And this is a big factor in the lack of economy in SL.

    Another big factor is that certain groups are trying to "make bank" with every item they sell.. such as creators. I have made mesh and went through the entire process.. it's clearly not one of my talents, and I won't take anything away from those that have the talent. However, it is very clear that most mesh creators are trying to "make bank" on every item they put out. Where as Designers are stuck trying to compete in a messed up market, just to make their money back on purchasing those templates.

    I don't begrudge anyone the idea of wanting to pay RL bills with money made in a virtual world... and it's entirely possible, I've seen it. But, creators are making their bank on every item they put out, and then telling designers how to price those items. Creators need to stick to making mesh, and stop trying to control what happens beyond the purchase of their mesh, because whatever the designers do, doesn't hurt nor help the creators. Period. And any thoughts otherwise is pure stupidity.

    That being said, Designers need to buck up too. They are the ones actually creating the market in SL. Selling the goods. And to buy something at 5k and sell it for 100L$... That's just bad for business. Anyone that says otherwise, clearly doesn't know business. The creator sells 10 items at 5k. They just made 50k, and that item can no longer be purchased by anyone. The designer sells that "designed item" for 100L$ and they must sell 5000 of those items to even match the kind of money the creator made on that product.

    1. I hear you and perhaps like a person said in another comment, maybe having "standard prices and creating some economical guidelines" would be better then having forced prices. But that's just an opinion I agree with. I am sure there are many other possible solutions.

  6. People are arguing about price fixing, and who's right and who's wrong. The simple fact is.. BOTH sides are wrong. Creators, Designers, Scriptors, Builders... You've all pretty much ruined the economy in SL. The very idea that SL is built on the premise that everything is or should be free, ruins the economy. Because of this premise, people will keep lowering the price of their item to the point of being free.. and for why? Cuz it certainly make no business sense.

    Creators should have no say in a Designers sale price. Period. However, a designer that has no respect for their product and either gives it for free or lowers the price in some misguided attempt to corner the market, have only themselves to blame for the lack of income and the high cost of doing business.

    I'm almost at the thought that the only way to fix the economy in SL IS to have a council of designers, scriptors, builders, and creators come together to set standard prices, create some economical guidelines, and then try to rebuild the economy. But the hardest part in all that, is going to be getting these "everything should be free" minded people, to understand that there are people in SL who's fun involves creating a thriving business. And there is nothing wrong with that.

    Right now, there are designers and creators telling each other.. What are you going to do if we just stop buying from you (or "what are you going to do if we just stop selling our wares")... and the simple fact is.. you'are all idiots. Creators need the designers and designers need the creators... that's how business works. McDonald's don't make it's own meat, folks.

    Stop being idiots and posturing to each other, actually sit down and work something out for the benefit of SL as a whole, rather than just benefiting yourselves.. in the end, it will only make things even better for both parties.

    /end rant. lol

  7. What you do not know of this whole issue is the creator contacted the designer..... then this designer who was purposely selling creator templates AS IS with not even an upload of a texture in discount events etc of NEW templates that were only a day old. Bloggers, designers and customers were complaining so this creator obviously decided to do something about this. So a conversation happened and the designer told the creator she would not do it again... not even a month later obviously she did it again instead of talking to the creator before hand to see if it be ok i guess. Anyways i see why creators do the no selling under a certain price, i see why designers would not like it in terms for sales etc. BUT for this instance this designer who has "bullied" other stores just for drama sakes and trying to get designers to close up shop. Is pricing everything low and 99% of the times its creator templates as is she is selling without changing a thing then i don't blame creators for going after stores like that. I surely don't shop at stores that are just ignorant like that.

    1. What you don't know (and I am the designer in question so I think I may just be able to tell you a bit more about the situation than you can provide)

      Bloggers, designers and customers weren't complaining as it was set up for that event and ONLY the designers in the event could even get there. There were a couple jealous little girls watching and picking apart everything I do. I had one colour of the dress there for 65L the highest I could price it in that specific sales event. Let me tell you about that sales event as well.. it's a VERY small one with maybe 15 or so participating small stores. I had the creator contact me and I changed the price as she requested.. not because I felt I was in the wrong or doing anything illegal.. but, out of respect even though she was quite rude to me

      Later, I decided to have a SALE in my store.. and within minutes of having the sale I had Beyonce Zane in my box.. as well as her friend who was telling me having my sale was illegal and that I would pay for this.. that I would be kicked out of events and my name plastered all over the place as a dishonourable seller so that no one would sell to me and that no one would let me in events... that is.. bullying. (no quotations)
      I then was kicked out of an event.. my name was plastered all over SL and Facebook as promised by these people.. stalked, harassed, defamed, bullied, belittled.. oh and someone tried to hack my account

      I also normally DO change the items.. in that case, I didn't.. why? the dress was beautiful as is.. I had planned to make a version that was different until all this went down.. Now, I would never use her item ever again. If creators don't wish designers to use their textures.. don't include them :)

      There.. now the issue is all cleared up.. if you have any questions, feel free to contact me :)

    2. So to make one thing clear here, i am Beyonce Zane and you are TOTALLY allowed to use my textures, that was the first bullshit, 2nd is that you have PROMISSED me to dont put the price lower anymore and i told you MORE then just 1 time IF you do it then please let me know...Every designer watches those tos , just not one, so is it fair? Anyway... you sent hubert swushbuckler after me on facebook, not did i start anything.. YOU started it by sending your "friends" after me. I get harassed EVERY SINGLE day in sl, in facebook etc. You ve even TOLD ME that you dont care to read tos and that you would never do it again bla bla. And that you call out my name here just proves me that you literally want to ruin me cause you didnt get your will. Then you play victim all the time JAYSEE NETIZEN. You do it ALLLL the time. You are getting ppl after me and play victim after... SERIOUSLY?? I even told you .. do all you want , set it for 0 L , put it in events for 2 L, DO WHATEVER YOU WANT JUST LEAVE ME THE HELL ALONE . Then your friends jump in my group, tell SHIT about me, hubert swushbuckler tells SHIT about me, astrid, momentomorin... and you are still playing a victim who you arent. You closed other designers stores down last year, you even had to leave cause you only got hate from them all. Then you start to come back and begin this whole shit again? please come on ok.....this is the last thing i am going to say forever about it cause i am really really bothered and hurted and harassed the badest already. IF YOU DONT LIKE MINE OR OTHER CREATORS TOS THEN HELL DONT BUY FROM THEM AND BREAK TOS AFTER ON PURPOSE. SIT ON YOUR BUTT AND STUDY 3D design ON YOUR OWN IF YOU SIMPLY CANNOT ACCEPT THE FACT THAT ITS LEGAL. And by now i WISHED i would have talked to other creators about it to save them from your nasty side to just be a pain in butt. smh AND NOW LEAVE ME THE HELL ALONE and dont always take my name in your mouth OR IF YOU DO THEN SHOW YOURS TOO... MY GOD

  8. I hear what you are saying but these posts are not about that. It's about fair pricing instead of control. Here is my opinion...Wouldn't it be better for a creator to offer a suggested retail price (a price they deemed the item to be worth if sold) and let designers decide their prices based on that? In fact, I personally think it will help the market because people can see what kind of prices they can be able to sell their products for that might be great for everyone. If designers really respected creators they will follow through. To me a suggested price means "this is what I think my work is worth for each piece sold. do you think the same or should it be more or less?...up to you" but instead what I am seeing is "oh well! you can't sell it for less then xxx price and if you don't like it don't buy from me!". I understand how giving out items for free can be an issue for the SL market negatively, even in RL is the same away but sales? Why are sales restricted in many of these creations? Again this is just my opinion as I am sure there are many other ways to handle the market without control.

  9. Thanks for this post. As someone who doesn't own a shop and doesn't buy templates, I wouldn't have known about this otherwise (I knew about price fixing, just not in SL). I've read about some unsavory SL business stuff over the years and this just adds to it, it's really disappointing. It's about not wanting to destroy the SL economy my bum.

    This reminds me of the news report I saw a few days ago about how a woman is being sued because she left a negative review about an online company... never mind that she was completely polite and the company deserved it because they didn't even ship her the items she paid for! Ugh, but that's a whole different ball game :P Keep up the fight and the excellent work :)

    1. I believe that as consumers, we must watch where our money goes and have our rights respected. I am glad that in real life we have consumers affairs to handle such matters. It seems to me that in second life it has become very much about the rights of creators and designers, that somewhere along the lines customers rights were somewhat lost and the treatment towards customers became unfair such as not allowing fair pricing and sales. I hope everything works out for that lady you mentioned in RL as it is our rights as consumers to speak up. As Harvey Milk said "Rights are won only by those who make their voices heard". Thank you for sharing Nova and for the wonderful support <3