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Transaction Fees

Lets clear up one piece of terminology real quick. A transaction charge, credits in a virtual economy, refers to assigning a fee for any and every activity. Some of these charges may be upfront and visible (submission fee), while others are invisible (time spent building a product). In our analysis of the economy we uncovered that we built a system that didnt scale with our business, particularly when it comes to transaction fees. For instance, some of our fees are inconsistent. In some areas we charge inconsistent fees, in others we charge none when we should. This isnt good. Its inconsistent, inefficient, and contributes to challenges such as the buildup of excess credits. The two biggest activities that we have at IMVU involving credits are: Shopping, and User-to-User exchange of credits.

We already charge some transaction fees for Shopping, and will be making some tweaks there to improve our consistency (ex. Making sure no products can be sold for less than their charge), or simply improving the experience to encourage people to spend. User-to-User exchange is an area where we should have had something in place from the very start, but never did. This doesnt mean, nor was it ever the plan, to simply start charging a fee for every exchange immediately, we wanted to evaluate some options and determine the right course of action.

We analyzed our User-to-User credits exchange and saw it quickly breaks down into the following: 80% of the volume is related to Resellers using our Gateway API (Our behind the scenes code that allows Resellers to run their businesses); 20% is tied up in Resellers using the IMVU web method or users gifting. When we looked at this problem fully we realized that while Resellers contribute an important function to the community they operate without any transaction charges. Users pay charges for certain activities (ex. The price for a product), and Creators pay charges (ex. Submission fee), but Resellers (pure resellers) pay no charges for their main activity, exchanging credits.

So, we felt that that Resellers not paying a charge needed to be corrected since this was clearly an activity that accounts for a lot of activity, but carries no charge, and that isnt fair to the economy or the community. Now we do know that 20% of the volume is also going through the web method, but a portion of that is related to user gifting, so thats a hard problem to solve. The plan that we developed was to first address the issues of the Reseller transactions utilizing the Gateway API. This charge would accomplish two goals: 1) Remove credits from the economy and ensure overall health; 2) Have Resellers pay their way for their activity credits (just like everyone else).

The next step in our plan is to evaluate the results of the previously mentioned actions, plus the results of the Reseller Gateway API charge to see the impact on the economy, and any feedback. Depending upon that result (and assuming the web transfer method isnt abused) we can then make a judgment call if we need to take further action. We would like to avoid applying a charge to gifting. But we need to make sure the web method is not abused or continue to contribute to the excess credit challenge.

Our original plan was to start discussing this topic with the first group impacted (Resellers) and then move the discussion to Creators and regular users in two credits to three weeks from now, after we had a chance to review the results. We have taken your feedback for better communication very seriously and wanted to make sure we had as many answers as possible before coming to you.