Thursday, September 27, 2012

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SL Barons Like Me Don't Matter Much Anymore, but the Rip Van Winkles Who Silently Pay Tier Still Do (Guest Post)

Desmond Shang Caledonia Blue Mars

In this guest post, Desmond Shang, owner of Second Life's steampunk-themed State of Caledon sims, offers his perspective as one of the "land barons" who own most of SL's private land, and provide Linden Lab with most of its revenue.

Recently, Hamlet asked me, "Can Linden Lab lower tier without hurting land barons -- and do land barons matter, anyway?" I had to smile a bit to myself... my first thought was that as a class, many people would happily run all the land barons like me right off the grid if they could, with prejudice! But to answer his query, I'd say something like this:

Land barons themselves don't matter as much as they once did, but if most closed down it would be disastrous for the entire Second Life userbase, because a lot of estate residents simply wouldn’t bother to resettle elsewhere.

Let me explain what I mean:

First off, the reality of the situation is a bit more nuanced than “exploitative land baron versus poor users”. When face to face with Alliez of d’Alliez estates, you’d be hard pressed to find any evil whatsoever there. She cares passionately about residents and their concerns. Same with the owners of Skybeam, Solace Beach, Winterfell... I’m embarrassed that I can’t mention them all. Well, what about the big barons? Eh, it’s about the same; I know a few. Step way back, and see them for what they really are: small, often ‘mom and pop’, often scared businesses. One haphazard policy change from on high could crush years of work.

So, do land barons (still) matter?

I’d say we matter far less than we used to, certainly; some of us that were in business before the big ‘boom’ pioneered what most people take for granted today. About fifty thousand new residents a year go through my University of Caledon Oxbridge orientation area in their first week. That never would have existed in the first place, if it wasn’t for the success of the land business model. If you enjoyed Second Life’s ninth birthday, or participated in Relay for Life, the evil old land barons have had their hand in that. Some estates have raised tens of thousands of dollars for charity. It’s Carnegie and libraries, all over again.

But that’s hardly justification for us any more. It’s very easy to envision a grid that didn’t have a single one of us, flat pricing, and just a giant checkerboard of private light use islands. You know, the typical SL dream: castle, trees around it, boat, skybox above. But there's a big problem with that:

The Rip Van Winkle problem

As mentioned above, societally, land barons don’t matter that much. You could get rid of the lot of us, and life would carry on. Financially, it’s a different story. Why? Special secret programs, or backroom deals with Linden Lab? Nonsense! It’s because of the Rip Van Winkles, of course! This is where insight fails most people, unless you are in the business and quietly see it firsthand.

What’s a Rip Van Winkle? I’ll get to that...

There are a lot of misconceptions about the advantages that the hoary old capitalist land barons have. There are only two that really matter, to my mind: old tier regions we’ve had for many years, and the Rip Van Winkles: residents who steadily pay rent, but only pop onto the grid a few times a year. The Linden mainland has lots of them as well: people who still have mainland on their credit card, but haven’t logged in for years, in some cases.

Why are these people significant? Because they are completely inaccessible to today’s land market, and if our regions go, they go too. There are huge numbers of these.

I’ve had to close a few regions over the years, and I can think of only two cases where a “Rip Van Winkle” made time to pull up stakes and move to another location. The rest simply quit. Usually well off working people, they just don’t have time to engage the grid on anyone’s schedule but their own.

I was talking to one the other day; an old friend. “Are you still getting enjoyment from this? It’s a lot of money.” Oh yes, in fact, they rather enjoyed just knowing their tranquil spot on the grid was still there. Their “happy place.” That was enough. Considering the stressful jobs that some people do… I actually understood.

When it comes to replacing high tier, there’s no easy fix

It’s a bit pointless to go over apocalyptic scenarios in depth. Suffice it to say that making tier the same for everyone, no matter what the price point, as many smaller landowners have suggested, would cause a lot of land barons to lose margin and close regions. Many would simply move on entirely; most of us have irons in other fires anyway. And if we moved on, tens of thousands of Rip Van Winkle residents would be forced to a decision point: find another home on the grid, or just quit for now. From a business perspective, forcing decision points on residents is… bad. Lowering tier to match demand might bring back growth, but it would take a lot of lowering before growth came back. And it may not return. But while I agree with Hamlet that lowering tier would be quite risky, I'm still largely in the "risky but someday ultimately necessary" camp.

Is there a magical fix that holds up tier, brings people back in droves, and cures all ills? Well sure, there are several, but few are legal. Gambling had to go; bank scams, Ponzi schemes and their ilk, other worse things I won’t speak of. Ultimately it’s a question of "bolting on" more value to the existing product that is the grid. Selfishly speaking, I’m not sure we should encourage this. The dreamers among us may rue the day that more “financially viable” features take over. My hope is for a cheaper, but still dreamy grid.

This may not have been quite the response Hamlet expected, or that anyone would have imagined, but I hope it’s been at least something fresh to think about.

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Hitomi Tiponi

Excellent post Desmond. For many SL is like an old school art project. It still makes you smile to look at it, even if it is covered by a dust-sheet in the attic.

Nitz

What is important to point out also regarding these "Land Barons" is that they enable the non premium members such as myself to rent land, I wouldn't dare the risk of actually buying the land myself neither do I want to sign up for a monthly fee to become premium.

James OReilly

Steam's one-time €10 price model via Gamer apps puts monthly tier pricing for Cartoon class platforms on the spot anyway. So much for Rip Van Winkle avatars...

Alberik Rotaru

(1) Reduce tier across the board by 5%. Land barons keep their existing privileges in relation to the masses.

(2) Allow Premium members to own Homesteads directly.

(3) Make this a temporary plan for 2 or 3 months that will end if revenue declines to a point the company cannot accept.

The company also needs to look at better ways to monetize those who do not own land. At the moment all landholders subsidise all non-landholders.

We have a revenue model that is killing Second Life and has apparently become set in stone. I am really not certain that the Rip Van Winkle population is high enough that any change would crash the grid, but there are plans that would cushion both the oligarchs and the sleepers.

And ultimately you cannot base the future of the grid on an oldbie population whose only contribution to the economy is tier, at least without some hard statistics on what the size of the sleeper population is.

James OReilly

Rip comes from Ripoff http://en.wikipedia.org/wiki/Ripoff

A ripoff (or rip-off) is a bad financial transaction. Usually it refers to an incident in which a person is overcharged for something, or receives goods or services not of the standard expected for the price.

Archangel Mortenwold

The discounts on those grandfathered regions really don't come to much, especially over the short term, and then land barons have to compensate for periods of low rental like summer and the winter holiday season when fewer people spend money on SL.

But the problem with current tier pricing is that more and more renters simply can't afford to tier land barons have to charge to make up for what they're paying LL. In a depressed economy wherein people no longer have as much surplus disposable income, maintaining artificially high prices is business suicide and it's affecting the land barons too, which is why they're starting to get out now while they can still avoid huge losses. It looks like only the ones who've already made a million dollars might be able to afford to ride out the decline and turn some kind of profit, albeit not much.

One solution to the problem of lowering tier is to cut it by one third to one half while at the same time allowing the land barons to keep their discounts, so they can save money too and remain in business. Price cuts should be across the board, not just evened out so non-landlords pay the same rate as everyone else.

Think of land barons as being in the same category as SL shop owners. It's simply that their business is buying and renting out virtual land — land many other business owners rely on to stay in business in-world. With an across-the-board tier cut that also takes into account land baron overhead, I fail to see how lowering tier could do any real harm to Linden Lab. If the Lab doesn't lower tier to reasonable levels for everyone soon, including for the land barons, then the company is looking at filing bankruptcy within a year or two.

Jeremiah Whitfield

This is a joke to be honest, if we would all pay the lower tier the landbarons pay the "Rip van Winkel"'s would still go on happily renting without using their land much. A non argument.

CarloAntonio Negulesco

We recently had to give up our region due to our own economic situations. It was owned by us, we paid tier to LL as I didn't want to pay a land baron tax.

We are now renting a homestead from a land baron. We traded them our region for some time of free rent. Better that than just giving it back. If we could own a homestead without having to also own a full region, we'd have done that instead and still be paying LL instead of the land baron. Though admittedly we still would not be able probably to have our RP area on the homestead.

Don't get me wrong, the land barons serve a purpose, but to try and tell me without them SL would collapse is ludicrous. If tiers were lowered, sure less people would rent from land barons, but that's because more people would own their land and pay tier to LL directly.

I do fully believe that LL will not lower land tier simply because they are doing quite well as they are now. No reason to go to the McDonald's school of thought where a small profit on lots and lots of burgers is better than a big profit on a few burgers.

Ajax Manatiso

To say that land barons have most of the "Rip van Winkles" is obviously incorrect. I have only actually communicated with 2 of my renters face to face, have never communicated with most, and have never seen most of them ever online. They pay a couple months, disappear, then show up again later -- so implying that land barons have cornered the market on these types of renters seems erroneous. You talk about how the average SLer doesn't understand the land barons -- it's obvious to me from this article the land barons don't understand the average SLer.

Arcadia Codesmith

The best land owners add substantial value. They have creative vision, they know how to parcel land in an aesthetic and organic manner, they enforce compacts and they provide much better customer service than LL has ever mustered.

I'd like to see a system where they are recognized and rewarded more for their contributions to the community and their artistry than for their access to capital and financial acumen.

I agree that the change has to be gradual and carefully managed, but the system has to change.

foneco zuzu

Land barons can serve several purposes if they are passionate, their states can be really the most enjoyable to live in and their covenant rules are for the most, a great thing (See United sailing sims covenant rules, then sail or fly over blake sea and you will understand their need!
But you can see as much on mainland, on Zindra, where most understand why making a region private or placing security orbs in mainland is just stupid!
My personal experience, renting a homestead for more then 2 years already to same landlord, is that to have a private region there is nothing like renting from Land barons and ill never allow any to buy homestads or full sims directly to the Lab unless in a big quantity!
That would be only allowed to landlords!
What i would do as well, was to give Landlords, acess to saving and uploading of oars directly, thus solving lots of problems (you would rent, you forgot to pay, region shut down, you pay a fee and can have it back after paying tiers with all assets on it, even if moved to another server!)
Premium members will not be able to by full sims nor private homesteads, but instead would be able to get more land per tier level, making the auctions usefull and exploring of mainland to find abandoned land and making them understand that there is much more on Sl then most know or even think about!
Be premium or not, all could buy private sims or homesteads but to land barons only!
That would make sure rules will be followed, not by LL Tos but by Land baron convenant rules!
So LL would not need to lower tiers, Mainland would be open to all, making sure more adult continents would be created (Denying the sex as part as Sl is denying one of its sill legal advantages!)thus allowing to a much more enjoyable and social experience (One cant even imagine the joy of exploring a continent, crossing sims smoother as it can be, for hours, meeting and speaking with the others that we found along the way!
Imagine grabing a boat and going to a party, 200 sims way,sailing or just driving, and then after, back home!
Sl is unique on this!
Its is main advantage, that and Cybersex!



shockwave yareach

Well, I am one of those Rip Van Winkles. My schedule and RL duties cause me to be inworld only as time permits currently. Sometimes I have to spend days before relogging. But yes, I enjoy my parcel, and when I have a chance I return to it, veg in my hammock and enjoy the ambient music and calm of my parcel.

But I do not agree that making the tier the same for all the island owners would cause an exodus. The current approach where the big landowners get discount pricing so they can undercut the little guys prices, that's what is driving an exodus out of Second Life. All we want is parity -- give everyone the same ATLAS pricing no matter how big or small their holdings.

So long as ATLAS exists only for the big guys, LL will be making the little guys pay extra to help support the big guys; the very same big guys who are driving the little guys out by offering lower rent than the little guys can afford because the land costs them less.

All we want is a fair pricing structure and lower tier. If you can afford discounts on land for the 75% of the islands currently discounted, you can afford it for 100% of the islands as well. Anything else is nothing but making the roleplayer sim holders subsidize the very people who are driving us out of business.

Emperor Norton

"The customer is to lazy to check their monthly credit card statement" isn't a viable business model.

Masami Kuramoto

Desmond Shang wrote:

"Land barons themselves don't matter as much as they once did, but if most closed down it would be disastrous for the entire Second Life userbase, because a lot of estate residents simply wouldn’t bother to resettle elsewhere."

I proposed a solution to this problem in early 2011, when Rod Humble became CEO of Linden Lab:

As a RPG platform [Second Life] beats everything else hands down. This is what LL marketing should focus on in my opinion.

There should be themed mainland areas. "If you're into Victorian era roleplay, settle here. If you're into cyberpunk, settle over there." SL has the largest map of all games, but the content is messed up.

Imagine entire continents of adjacent regions featuring the same theme. Sort of like the Linden Home areas, but without the prefab buildings. Imagine Nexus Prime, Suffugium, S.I.C., The Next Day, Insilico and Hangars Liquides side by side and The Wastelands somewhere nearby.

Of course this would require a new set of rules and new ways of enforcement. If you built out-of-theme, you would find your parcel relocated to a more appropriate area. If you don't want to be restrained, settle on the anything-goes continent. I think most people would accept those rules because the benefits would be obvious. Right now the mainland is ugly to pretty much everyone, and the only way to escape its ugliness is to get a private region or rent from a land baron. The former is too expensive, the latter is too risky.

Desmond, being a land baron and a themed community host, of course didn't like the idea. No surprise there, since my proposal was designed to get folks like him out of the picture. Quoting myself again:

There are quite a few roleplay communities that emerged around a single themed sim. The problem with these communities is that they vanish as soon as the sim owner runs out of time or money. Themed mainland would achieve two things: It would allow these communities to merge and grow much larger (and shrink gracefully if people leave), and it would remove the sim owner as a single point of failure. The burden of land ownership would rest on many shoulders.

If I were the CEO of Linden Lab, Second Life would now be a society of Rip Van Winkles that pay their rent straight to the Lab's pockets rather than through a land baron. And folks like Desmond would be out of business rather than in control of my company.

What we got instead is a company that is too scared to stop the decline of its first and most successful product, because it depends on the good-will of its shrinking number of VIP customers.

Land barons will be the nails in Second Life's coffin. Mark my words.

Zaphod Kotobide

One point in the OP that I think deserves some perspective, even if it isn't central to the post.

As someone who has owned mainland and rented estate over the years, at times simultaneously, I certainly don't look at land barons as some sort of evil force that must be defeated. I rented from Alliez for a few years, at Desmond's suggestion, and she is the best of the best.

When I think of "Evil Land Baron", I think of Mainland flippers and their armies of bots who, at their peak, pushed the cost of mainland into the lower stratosphere, and out of reach of perhaps tens of thousands of residents who understandably couldn't justify in any way spending $100k on a 512 square meter parcel.

I have the utmost respect for estate operators like Desmond, Alliez and the others who have invested their time, skill and money into developing and providing a value-added, fun, virtually trouble free experience to their customers. I don't know anyone, anywhere, who has any problem with the principles of this business model. It's almost rock solid in terms of the added value you get for the slightly higher price.

My disdain has always been toward the greedy, gouging, opportunistic Mainland "Barons" who for a number of years priced me out of that market as a customer.

Gaga

I have always agreed with the idea of themed roleplay areas just as Masami Kuramoto mentions but it would mean a lot of extra work for Linden Labs which I am sure they don't want and, in any case, there are a lot of different themes with some interests very small or poorly supported. It is fine for Gor perhaps that already support 100's of sims. You might build something around Gor or sailing of Steampunk etc but it gets complicated when some are PG/Mature while others are Adult. It just gets tricky to best manage it and I am sure LL are not interested. The land baron business model suits them fine since the Barons take heat off LL and pay in big sums. Less customers to deal with.

I do agree LL could cut the tier across the board some at least but they need the high revenue while they can still get it as they change the business model to a more video-gaming culture so why would they bother. They have new products in the pipeline. Role players are difficult people to manage and they tend to be far too vocal of their views and needs.

Within a few years role players in SL will be a dwindling minority where I think they were once the builders of Second Life more than any other group.

Role players have been dealt a raw deal and I for one wont leave all my eggs in one basket any more. I have RP sims in SL and OSgrid and a private Hypergrid realm. I would urge all role players to explore opportunities in the Open Metaverse. SL will be a far different place in a few years.

I have articles about role play in the open Metaverse on my blog here...
http://metaverse-traveller.blogspot.co.uk/

Carl Metropolitan

Does anyone seriously think that Linden Lab has the time, money, or interest to engage in the type of retail level customer support that the Land Barons of Second Life do for them? Linden Lab's Land Baron-based business model is (probably accidental) genius. The Lab gets people to pay them for to do their customer support.

If Linden Lab were to adjust pricing or policy in such a way as to take the Land Barons out of the picture, they would have to deal individually with all the residents that the Land Barons do for them. And that would require either hiring a lot more Lindens or (more likely) just ignoring customer support. Either would seriously cut into Linden Lab's bottom line.

More Lindens cost money (as the former M Linden demonstrated). On the other hand, if Linden Lab simply ignored customer support on they hypothetical former customers of the Land Barons, they would most likely leave the SL land market for the same reasons they left the Mainland in the first place.

Note this is not an argument against Linden Lab lowering tier prices. Lower Tier would be good for all residents. Tier prices--both mainland and estate--are way too high for the value offered. In good economic times, the Lab could get away with that sort of business model. However, in the middle of the longest recession in most people's memory, it will only lead to a constant bleeding of customers.

Cisop Sixpence

So what is the profit margin on tier? For instance, if I wanted to buy/rent a Homestead SIM, could I get away with a $40 a month payment and the Linden's still make money? The reason I ask, is I'd be willing to in on a SIM if it just cost $40 a month. If I'm not the only one who would be interested in such a deal, or it would keep some others from consolidating SIMs or leaving altogether, it might be worth it to do so. Even if land barons marked up the cost for a homestead SIM to $50 (from the Linden $40 example above) I'd still be interested.

So I ask, where is the comfortable "willing buyer, willing seller" zone? What would make all parties involved happy campers?

Lord

Once Upon A Time...I proposed on several blogs that LL should 'auction' off the mainland to the land barons.

No single land baron being allowed to own more than, say, 10% of the mainland.

Competitiveness between the land barons would likely result in better looking land and pricing.

LL would then be selling only land to the land barons and having to deal with the land barons complaints about land. It would probably result in less need for 'customer support' for land issues as the land barons would then be handling the majority of those and working with LL for the requested and/or needed infrastructure (server-side) changes.

With LL out of the 'selling individual land' business and leaving pricing up to the land barons, we could also come to realize the ability of paying only for the amount of land we are using (or at least, a bit closer to that ideal) .

desmond shang

Great discussion!
I’ll add to it what I can :)

>"This is a joke to be honest, if we would all pay the lower tier the landbarons pay the "Rip van Winkel"'s would still go on happily renting without using their land much. A non argument."

I’ve probably not explained this well; I’d hoped people would understand that we rely on a ‘mix’ of residents; rarely are there enough Rip Van Winkles to cover a region all by themselves unless they rent it out in its entirety. There’s no ‘magical lower tier’ that land barons pay (that I’m aware of, anyway) except for our old regions dating back from 2006 and before. If tier were universally that low for everyone once more, it *would* wipe a lot of us out, Rip Van Winkles notwithstanding. Regardless of where you stand on the issue, relative rates do factor in on our survivability. That’s all I’m trying to say.


>"To say that land barons have most of the "Rip van Winkles" is obviously incorrect."

Agreed. I don’t have hard figures, but I’m 99% sure that the mainland has most of them, not us. But they are still pretty significant to us too. I have a lot of residents that date back to Feb 2006.


>"The customer is to lazy to check their monthly credit card statement" isn't a viable business model."

Agreed! Note that we generally don’t take recurring credit card payments as the mainland does. With most estates, we generally require an actual login to the world to pay tier. Not everyone, but most. On my estate, that’s at least four times per year (every 12 weeks). The spirit of what you are saying rings true, however… which gets into resident retention, advertising, new content and all that. Caledon Oxbridge has cost thousands of hours and tens of thousands of dollars; yes a few residents rented because of that, but… about enough to pay for maybe 5% of it, all things considered. I think we’ve done what we can for retention…


>"Desmond, being a land baron and a themed community host, of course didn't like the idea. No surprise there, since my proposal was designed to get folks like him out of the picture."

Agreed Masami, I absolutely don’t like the idea of creating Caledon only to see it effectively co~opted by force by the service provider! To their credit they didn’t try, and honestly it would have been such a transparent ploy, that I doubt users would have gone for it at all… sort of like if Chevy started cranking out Bentleys, no matter how good they were. Why stop with me? Most online ‘worlds’ create every item, every bit of clothing… totally controlled worlds abound! I’ll grant you this, it *does* work for a lot of places, though.


>"So I ask, where is the comfortable "willing buyer, willing seller" zone? What would make all parties involved happy campers?"

I think it existed back in 2007 or so, when the land market wasn’t glutted, $L oversold, commercial land on the grid was still viable and people actually *logged in* to participate, rather than browse SL Marketplace and send facebooky messages to each other. But even more importantly, it was clear then that there was a *future* … not just shinier shiny things, but a real destiny. That’s what the grid lacks today. I have an answer for that too, but that’s a topic for another day ~ I’ve been honoured to be a guest today on Hamlet’s blog, and won’t wear it out :)

Carl Metropolitan

Masami Kuramoto wrote: "Desmond, being a land baron and a themed community host, of course didn't like the idea. No surprise there, since my proposal was designed to get folks like him out of the picture."

Desmond Shang--unlike Linden Lab--has the trust of most of his residents.

Even if the Lab were to open up their own cookie cutter Steampunk continent, I'd stay where I am in Caledon. You can't build community by rolling out sims. And that is what the best Land Barons facilitate.

Additionally, based on experience with Linden Lab, I can't trust that they would not change their policies six months later and essentially abandon their hypothetical new role-play region, or alter rules sufficiently to break whatever community or businesses might arise there.

Masami Kuramoto

Carl Metropolitan wrote:

"Even if the Lab were to open up their own cookie cutter Steampunk continent, I'd stay where I am in Caledon."

Talk is cheap. This kind of loyalty usually ends when it starts burning holes into people's wallets.

Alberik Rotaru

This is getting to be a very strange argument.

'If we lower tier the land barons will all run away!'

morphed into:

'If we lower tier the Rip Van Winnkles will run away!'

and then that morphed into:

'Actually most of them live on the Mainland'

Only in the wonderful world of Lindenomics would you see the argument that the Rip van Winkles will protest lower prices by leaving.

NB The excellence or otherwise of some, any or all land barons is not a relevant argument to debating tier.

Carl Metropolitan

Masami Kuramoto quoted me on sticking with Caledon if LL opened up a competing themed continent, then wrote, "Talk is cheap. This kind of loyalty usually ends when it starts burning holes into people's wallets", and ignored the remainder of my post where I explained why that is not necessarily so.

Desmond Shang

>"'If we lower tier the land barons will all run away!'"

>"'If we lower tier the Rip Van Winnkles will run away!'"

>"Only in the wonderful world of Lindenomics would you see the argument that the Rip van Winkles will protest lower prices by leaving."


Those pseudo~quotes misrepresent my views entirely.

Repeating it all is likely to just generate *more* pseudo~quotes if that was your perception of my text above... but for everyone else who would like a short summary:

1) Lowering tier won't scare land barons away; taking away all competitive advantage will. This is Business~101 type stuff. Regardless of price point, if there's no reason to rent from another resident, the land baron business model collapses for all residents.

2) Rip Van Winkles generally don't alter their plans much unless their landlord goes out of business (see 1 above). There are more Rip Van Winkles on the mainland, I'm fairly certain, but they are still a major advantage for existing estates. As a competitive advantage, they make it a lot harder for people (new land baronlings!) to start up today and compete with us.

3) "Rip Van Winkles protesting lower prices by leaving..." ~ I'm not even sure how to respond to this... it's a total misrepresentation of what I was saying.


* * * * *

"Talk is cheap. This kind of loyalty usually ends when it starts burning holes into people's wallets."

Masami, this is a valuable point, and it is in fact somewhat measurable.

In late 2006, region tier went up on all new regions by 150% and my estate *still* grew from 14 regions (then) to a few dozen now. 2009, *all* homestead rates went up astronomically... while at the same time, opensim became quite viable. I'm still here in 2012, after repeated blows that would have been fatal to almost any other real world business model.

If that's not loyalty... I'm not quite sure what would be.

I'll concede the point that many Caledon residents can afford a fair amount of land tier easily; I'm a bit fortunate in that regard. Different estates do tend to draw different demographics. Even so, nobody stays comfortable by being a fool with money; and if there wasn't a group of people worth being loyal *to* (land baron notwithstanding) ... they would have all left long ago.

Alberik Rotaru

Desmond

All satire is misrepresentation.

I object to your misrepresentation that I have misrepresented you. I was actually misrepresenting Hamlet who is on record as saying that lowering tier would cause the land barons to leave.

For the record you're clearly one of the best estate owners out there, but that does not mean that the Rip Van Winkle argument is a whole lot better than Hamlet's let them eat cake argument.

Business 101 says, among other things, quite a lot about the relationship between price and demand. The thing gets taught in the first 2 weeks and then everyone moves onto to stuff that is worth serious inquiry.

Except, apparently, in this and previous threads where some special exception has been discovered by which it is claimed (in effect although not in terms) that demand will fall if prices are reduced.

There are not a whole lot of empirical examples of such a relationship. There are not even a whole lot of examples of people advocating the complete reversal of everything we know about price and demand.

Except in the strange empire of Lindenomics.

Lucius

Am I missing something ? If Rip is only coming online ot pay tier, or worse, what's his contribution to the SL economy? If these people truly exist, they are not upgrading their avatars, they are not buying clothes, they are not tipping in clubs, etc. They would seem to be an asset only to the land owners, not to the SL community. Those 'land barons' will most likely convert the Linden to old fashioned $.

Like someone above already stated, SL is a luxury item, something to burn pocket money on when RL is going well. RL life is not going well for the typical Joe and Jane who muck about in SL. They lost their job in RL, foreclosed homes, the economy is gone to hell and yet LL seems to think it is still 2002.

The lads at the Labs need to think about a new business model, scale down on the hardware and overhead, while allowing the end user to run a sim on his own hardware. Personally I think that, in the face of dimishing users on the grid, the survival of LL is more important then that of land barons.

Masami Kuramoto

This Rip Van Winkle story is nothing but FUD. It is a land baron's attempt to paint himself indispensable.

While some of Desmond's tenants may be loyal to him, his own loyalty to Linden Lab (who made his business possible in the first place) is zero. Make no mistake: once the Lab removes Desmond's "competitive advantage" (in the form of rate discounts), Caledon will shut down in no time.

How many Rip Van Winkles he will take with him in the process remains to be seen. I would guess the number is rather insignificant.

The truth is, many people have been quite satisfied with the way LL governed the mainland. And even the themed Linden Homes were a successful product, despite their building restrictions. In fact they were so successful that many land barons complained about them. You can imagine what would happen if LL introduced themed mainland the way I suggested earlier.

Unfortunately the CEO doesn't have the balls to do it. He's busy reaching for the low-hanging fruit, by cloning Minecraft and Crayon Physics Deluxe.

Robert Graf

The Land Baron's argument is we got here first, we are "entitled" to reduced tier and setup fees, and we will prevent small timers from ever being able to compete on a level playing field. What a crock of #$%&. So, the current strategy from them and LL is to stay with the status quo and hope that thousands/millions of new residents suddenly and magically appear to rent all these regions and land parcels.

SL has become over the last 6 years an "insiders" game. With more and more of the profits earned by inworld commerce concentrated in fewer and fewer hands. And how's that working out for SL? Based on the available data and looking around inworld it's a disaster of titanic proportions. It's a recipe for continual decline and the eventual death of LL/SL. Keep up the good work! I'm enjoying seeing the whole thing collapse... LMAO! ;)_~~~

Ezra

Honestly the debate doesn't really matter, and Linden Lab isn't even participating in it.

Sim counts are dropping and the attrition shows no signs of losing steam, one of three things will have to happen next:

1. Everyone suddenly decides land costs are fine, affordable, and starts paying them again enough for region counts to grow and the status quo remains intact.

2. Linden Lab releases a product that has all of Minecraft's many years of success in the span of a single year. And then do that every year to match yearly revenues from Second Life.

3. Linden Lab buckles when sim counts drop below whatever number they feel critical and redo their pricing.


I wouldn't bank on 1 or 2, but it seems Rod is for now. Either way, since sims are bleeding off, time will cure this issue, not debate. The beauty of economics is that it doesn't matter what anyone thinks here. Money talks and Linden Lab is forced to listen and Rod will be forced to speak on what he wouldn't at SLCC a couple years ago. Or whoever has his job next when sim counts drop low enough.

Desmond Shang

>"All satire is misrepresentation."

Ah, it did seem a *bit* of an odd interpretation! Satirically, I can see where you are coming from. Pesky text, it doesn't have a lot of those wonderful hallmarks of communication.

"Rip Van Winkles" aren't so much an argument, as a clear business reality.

If say 30% of your landed residents are "Rip Van Winkle's" who never miss a payment in years, that right there is a *quantifiable* (in tier, dollars or whatnot) financial advantage over any estate without them.

It's not enough to 'make' an estate; you'd need at least something like 75% occupancy of them to ensure survival, and what a deathly quiet estate that would be! Not good, and I don't know of any estates like that; not even the mainland is that dead.

Price, supply and demand with SL is... nonetheless tricky. Nothing is quite as it seems; the construct of 'land for a price' is really very much a red herring. I've stated for years that I'm in the business of selling *creative control*... which is a radically different thing. More specifically: creative control in a social arena.

This is why an opensim grid competing at one tenth the cost of the main grid still won't draw 90% of the business. Sure, opensims have special issues but when it comes to value per dollar on a *technical* scale, they are obscenely worthwhile. It's the difference between Joe's Bar and Carnegie Hall... no matter how good the acoustics are at Joes, it's just not the same to perform there. That can change, of course.

Long term, land barons or no, I do believe lower prices make sense. That's presuming this platform will still be viable in twenty years. The big question would be: what happens when chinks appear in the price armour? We all got insight into this last year, with the region sale over one weekend. That's a story unto itself, but the net result: it didn't reverse the decline of the grid.

What would happen the day tier were lowered, even a little bit? That's an extremely good question. Purely lowering tier in and of itself, is not the same as taking away the land baron's competitive advantage. The day tier is lowered, we would see the main grid for what kind of product it really is. If it's a girl scout cookie, sales will go up (business 101). If it's a 1980's era punk rock jacket, blatantly marking it down would kill sales prospects. Instead of 'rare and cool item' it would be acknowledging it as 'long dead fashion.'

I think lower tier is important for long term survival prospects, but if you are Bentley, even just one weekend fire sale is only going to damage your brand forever. What's the best way forward? They pay Linden execs the big dollars; I'm quite happy to let them sort this one out on their own :)


* * * * *

>"The Land Baron's argument is we got here first, we are "entitled" to reduced tier and setup fees, and we will prevent small timers from ever being able to compete on a level playing field."


Oh, I don't think I'm entitled to anything! Clearly, for anyone in business: live by the sword, die by it! I've got three small businesses now, and working on a fourth ~ only Caledon has anything to do with SL. I fully respect and acknowledge that it would be a new "small timer's" self interest to disrupt the existing land barons if possible, although it would obviously take a *lot* of residents out with us. Even if Rip Van Winkles are only 20 or 30% of all estate occupancy, that's a *lot* of people, money and regions. And it 'cuts the long tail' of involvement with SL for many really experienced people.

I'm starting a new business these days (unrelated to SL) ~ would you feel entitled to equal footing in that arena too, if you enter it *seven years* after I do, with the same business model I'm pioneering for you *completely* at my own risk today?

Masami Kuramoto

Desmond, you have no idea how many of your tenants would refuse to settle on themed mainland.

I could claim that the number is flat zero, and you would be unable to prove me wrong.

The only purpose of your Rip Van Winkle story is to scare your own land baron, which is Linden Lab. You are the mobster walking into their store and saying: "Nice virtual world you have there. Would be a shame if something bad happened to it."

Now here's the thing that many people, including the Lindens, don't understand: A lot of SL residents refuse to settle because their only option to get land in a themed environment is by renting it from a mobster like you. This is what LL must change if they want SL to survive.

Let's not forget: zF Red Zone and similar spyware was extremely popular among land barons. And when mesh was rolled out, many land barons banned it from their estates because some ancient viewer rendered it wrong.

Desmond Shang

You overestimate my impact Masami, nobody much cares what I think, though sometimes it's an entertaining discussion. And I'm not too eager to dispense free business advisement either. They get paid the big dollars to figure all that out on their own :)

As for 'mobster'... I don't lol often, but... LOL! They happily sold me every region I have, and would sell me more this instant if I clicked 'buy.'

"This is a stick~up! Youse guys there, behind the countah... we want every boiger in the place, and you'll take Thirty Dollars for each one and Like it!!! Quick, Knuckles, put the gang's loot over by their register... and get us some condiments will ya?"

Ricco Saenz

@Ezra: "The beauty of economics is that it doesn't matter what anyone thinks here. Money talks and Linden Lab is forced to listen"... so-so... See, economy is not a hard science. It's not like math either. When things start going bad, you have to *decide* what to do, not only sit there and wait for advice from your pocket. Your pocket complains, but not necessarily tells you what to do. Lower tier for everyone? For landbarons? Level tier? Reduce tier across the board? Make them all pay for LL directly? Allow only landbarons to buy certain kinds of land? Our opinion may be irrelevant here, but the debate is not. LL may not be interested in what we say, but they probably have to consider the subject. And if nothing else, even if our opinion is useless to LL, it may be interesting for ourselves to try to understand the scenario in which we, as LL customers, are moving.

Masami Kuramoto

Desmond Shang wrote:

You overestimate my impact Masami, nobody much cares what I think

Apparently Hamlet does, otherwise he wouldn't repeat your FUD over and over and provide a stage for your "insightful" guest posts.

They happily sold me every region I have, and would sell me more this instant if I clicked 'buy.'

Don't get me wrong, I'm not blaming you. I'm blaming Linden Lab's CEO because he doesn't get it.

If I were in charge, I would implement a policy and tools that make it easy for mainland residents to relocate their parcels, in order to facilitate the formation of themed neighborhoods and to put an end to land speculation, squatting, and related abusive behavior that currently makes mainland ownership unpleasant and risky.

The number one business opportunity for residents must be content creation, not real estate flipping.

I believe that themed communities are the main reason for people to sign up, log in frequently, and spend money. The bigger these communities grow, the less likely they are to fall apart when people leave.

Consequently, I would provide various incentives and rewards for people coming together and forming themed neighborhoods. For example, any themed neighborhood that grows to a significant size would be featured on the SL website, offered as an initial teleport destination for new sign-ups, and even considered for separation from the rest of the mainland into a new continent. Themed neighborhoods would be granted the privilege to submit default avatar outfits, so that noobs arrive in proper gear for the theme they choose.

It must be corporate policy to inject new users straight into their favorite fantasy, help them find like-minded people instantly -- and settle near them. And it must be impossible for individuals to erase entire communities. More specifically, if a land baron quits, his land must not disappear but continue to exist as themed mainland with the previous tenants becoming the owners of their parcels. This would eliminate the Rip Van Winkles problem entirely. And it would stop land barons from leveraging their own tenants against Linden Lab.

Archangel Mortenwold

Masami's ranting aside, Desmond, what are your thoughts on the across-the-board price cut I suggested up-thread wherein the land barons keep their discounts so that they save money too and pass that savings on to their tenants?

shockwave yareach

I have finally figured it all out.

LL wants to change their model to one where they are the car manufacturer, and dealers like Desmond here, they charge whatever they can get away with and do the actual interaction with the customers, just as the car dealership rather than the company deals with car buyers.

Thus LL has no customer service anymore, nor responds to griefing problems or sim restart requests on mainland or billing issues. But the sad part is, neither can the land barons (the dealer). Which leaves us in this strange quasi state of chaos that SL is currently mired in.

Tracy Redangel

I still think if LL is not ready, able, or willing to reduce tier at present, than at least bump up the prim limit. Give us just a little more for our money. I have no problem with land barons. I don't want to fork over $1,000 plus pay $300 for a full sim I really don't need. My husband and I rent a 1/4 sim (which costs us about $80 a month. We don't have a business or make any money in SL, this is just for our own enjoyment. That's $80 a month taken out of our entertainment budget every month. That's an extra 'dinner N' Movie night'(or two moderate dinner-only dates) we give up because we're both very passionate about virtual worlds and gaming. It's an expensive hobby...I just want a little extra bang for my buck, that's all. I don't expect LL to lower tier prices (which would decrease my rental tier) but it would be nice to get even just a bit of a prim limit increase.

Masami Kuramoto

Archangel Mortenwold wrote:

wherein the land barons keep their discounts so that they save money too and pass that savings on to their tenants?

I see Ben Bernanke has a Second Life account too. Yeah, let's cut the rates for the 500 too-big-to-fail land barons even further. What could possibly go wrong?

foneco zuzu

Add on on sate of affairs>
http://iliveisl.com/second-life-losing-8-3-sims-per-day/
Plus terrible weekend for many users on mainland -Lots having crashes and not being able to cross a single region!

desmond shang

Since you asked, Archangel, let me try to respond to that sensibly ~ I presume to this:

>"One solution to the problem of lowering tier is to cut it by one third to one half while at the same time allowing the land barons to keep their discounts, so they can save money too and remain in business. Price cuts should be across the board, not just evened out so non-landlords pay the same rate as everyone else."

I've been sitting here thinking about this for a while; it seems to address the price point issue and (perhaps) wouldn't drive off a lot of people in the land business. It would be a gamble, though; the devil's in the details.

Linden has a fairly large overhead of fixed costs; going back to lemonade stand economics for a moment, if it costs you 5 cents to make a lemonade, there are real limitations to lowering your cost from 10 cents. Where's the pricing sweet spot? I can't know without seeing an income statement, balance sheet and price elasticity data which even *they* don't have yet... except perhaps very tangentially from the results of that single weekend sale last year.

We know it has been on their minds, though. Notice that 'region idling' (regions using less computing power when nobody's in it) has gone in recently; that's a margin reducing move, as well as perhaps a 'green energy' move. We've also seen development on the 'value added' front, much as Tracy mentions above. They are clearly trying things.

My gut sense tells me that *just* a price point change by itself would be like pulling back the curtain a little on the Great Wizard of Oz. It's behavioural economics; once you reveal that you'll drop tier 5%, many will logically hold out for 35% rather than "rationally" respond to incremental changes.

Due to that, they can't *just* do a price change, even if that is the right move. If the price point of a hamburger is too high and there's already an entrenched ecosystem of customers there, it may be time to add a 'dollar menu' that makes sense. In a way, they already tried this with Linden Homes, but did it in such a way that it was *disastrous*. The Linden Homes program drained away customers that *would* have largely been mainland residents faster than anything the land barons could ever have done, replacing it with a Stepford~like carpet of "places just to change"... which evolved a lot of their customer base into "Eh, I just need a place to change." It continues to this very day.

They have a lot of work ahead of them; fixing the price versus value point is just one part of it.

There are some other deep, structural issues. SL Marketplace, for example... convenient, yes? Before SLExchange was 'nationalised' about 40% of my estate was commercial property: stores on the grid. Now it's less than 5%. Why should a merchant rent an inworld shop for 10, 30, or 100 dollars a month when they can have one for *nothing*? And we wonder why land isn't selling like it used to, and actually being logged into SL is less relevant? It's a clear choice: SL Marketplace, or commercial land. It may be too late to roll back that one, but it was probably *the* blunder of them all when it came to keeping people inworld and engaged.

On top of that, the land glut destroyed all land equity ~ and if nobody thinks that equity matters in a virtual world, let me ask you what you think your $L are worth right now, compared to yesterday. It's *exactly* as if they sold $L until the price went to zero, except with land. They were smart enough to do a LindeX, but never did a LandeX; never limited the supply. We are seeing a value correction playing out; tier overwhelms equity to such a degree that it makes little sense to steadily pay for land. Meh, just pick some up for a few months, ditch it the rest of the year! That effect is price point agnostic; it's one of the structural changes they will *have* to make, or people will achieve their lower price point by paying for land only 75% of the year, or 25%, or whatever.

I hope that was a thoughtful enough answer, if not a blatant "yes or no." The bigger question to be answered for Joe Average is: "if I stick around and stick with it, are truly good things coming my way?" In short: a future.

* * * * *

One final note ~ while I might disagree with Masami on the state of things nowadays; I think we can all agree that the grid *could* have evolved that way.

It's the norm, anyway! You start a character, and from day one you are an elf, human, goblin or whatever in your own custom designed themed community! All your goblin~clothes fit perfectly, there are proper shops, and you even have pretty good dance moves. There's little fear that ElvenVale or Orchelm Town or wherever will 'go out of business' either.

The difference with Second Life is that capitalism was *strongly* encouraged ~ it made front covers of magazines, and everyone's grandma was selling her art. Such a cuddly narrative! But in fact, we were raising anarcho~capitalists like cute little baby alligators for *years* now.

That's a key question: do we continue to encourage rampant capitalism on the grid, or not? What happens if that changes, and what opportunities are gained or lost for everyone else in that case?

Ayesha Lytton

Thanks so much for the positive mention in your post, Desmond. I agree with you that the vast majority of land barons care about their residents. We all got into this business because we care about Second Life and its success. We enjoy making customers happy and building community. Frankly if I wanted to make a lot of money, there are much better business investments.

I'm not opposed to lowering tier across the board. I think it would stimulate growth by making land more affordable. However, I strongly oppose making homesteads available without owning a full sim. That would put many land barons out of business including me. It would also put a lot more on the shoulders of Linden Lab for customer service and I don't think they want that. To prevent the land glut from getting worse, though, they would have to limit purchases by large estates. We need to fill what's currently available, and then have slow, steady growth.

The marketplace has really caused commercial land to take a hit. Many stores no longer bother with an in world presence. The most successful ones still do, however most are no longer operating mall or branch locations. Clubs and organizations that depended on rent from branch locations have lost that revenue source, so many have closed, further compounding the problem. There needs to be an incentive to operate in world locations, or a disincentive to list on marketplace if you don't own land.

The problem I am struggling with most right now is that there are a couple of the very largest land barons who rent large amounts of land so cheaply that the rest of us can't compete. I'm not talking about Atlas members, these barons are bigger and get discounts not available to anyone else. No one but them even know what the discounts are. Unless you're willing to own hundreds of sims, there's no way to compete with their pricing. They can offer such low rates not just because of quantity, but also because they don't invest back into the community. I have to charge more because I have event sims that don't cover their own tier, as well as costs to pay live musicians and hosts. If I can't offer those things then I would rather not have a business. Sadly, it's getting close to that point.

The economy puts further pressure on residents to choose the cheapest possible land. I've lost count of how many potential customers I've had come to me with a horror story about someplace they rented from before. Then in the next sentence they ask me why I'm not charging some ridiculously low rate they were paying there. They don't see the connection between price and good service. I have closed 20 sims this year, and nearly all of the tenants I've lost have said they could not longer afford their rent, due to getting laid off work in RL, their in world business failing, etc. I've also lost a few Rip Van Winkles who weren't very active and chose not to move to a new location, despite being offered free tier, when I was forced to consolidate sims for financial reasons. Some people get very attached to their virtual patch of land, and an unstable land market is bad for everyone across the board.

Second Life has always in the past been friendly to small business. It's a place where anyone can get started creating or selling at low cost and succeed based on talent. As in real life, monopolies can destroy competition and hurt small business owners. Diversity and healthy competition is good for the economy. Linden Lab should not be in the business of creating content or themed communities beyond what they've already done. Instead they should support small businesses, and offer incentives for selling in world, running quality events and creating themed communities. It is our world and our imagination, and no single company should have too much power, whether that be Linden Lab or an in world business grown out of control.

Dawny Daviau

You know what is real sad? Getting tricked by a Halloween add to pay 4 weeks tier and get 1 weeks tier free and then not getting your free week from Surreal Estates which are from Anche Chung.
I payed 4 weeks tier in the understanding that i would get 1 week free. There is a board in the middle of the Surreal Estate sim (where you pay your tier box on and where they have raffle boards each week) which imply that you get 1 week free if you pay 4 weeks at once. Not one word about needing to be a new renter on that board!
After asking for my free week it was denied as it was only applicable for new renters who payed the tier box for the first time and got their parcel from Marketplace.. I started renting there 2 weeks ago. Well i found my parcel on their website http://www.anshex.com/ and not a word about the promo.
When i asked if there is a way to get it after all she said yes. Upgrade your parcel and in a way that half the tier you pay now is added to the new tier price. I don't need a bigger parcel and i think 4.999 a week is more than enough!
This was not explained to me when i payed my first tier, all that was said was that i could pay for weeks and when i replied i can not do that at this moment maybe at a later date she said ok. Nothing about needing it to do now!
I have to stay 4 weeks there, as i assume i will not get a refund, but after that time i will move to a different parcel and will not have to do with Surreal Estates ever!
I did send a pm to Anche Chung and hopefully she reads it and i will get my 1 week free as they advertise with!
Such a shame, their support is really 24-7 and they are very approachable, its just the Lindens they want and not a good tenant who might stay a long time renting from them....

Pussycat Catnap

I'm so late to this discussion I'll bet no one ever sees this, or I'd comment more.

But this:
*******************
If say 30% of your landed residents are "Rip Van Winkle's" who never miss a payment in years, that right there is a *quantifiable* (in tier, dollars or whatnot) financial advantage over any estate without them.

It's not enough to 'make' an estate; you'd need at least something like 75% occupancy of them to ensure survival, and what a deathly quiet estate that would be! Not good, and I don't know of any estates like that; not even the mainland is that dead.
******************

Linden Homes likely would qualify as that kind of scenario. They appear to have almost only Rip Van Winkle residents.

Then again, what are they, but themed mainland - they are a direct competition to anyone who would do a themed estate that is fantasy, Japanese, suburban, or mountain lodge.

But of a nature that only attracts people looking to -avoid- community: Rip Van Winkles who set out to be such from the outset.

I know a RL person who's paid for an online account to a game for 7 years without using it more than perhaps once per year for less an hour each time... so I'm not at all surprised by them - some people like to have something "on standby."

They're handy in business - they pay out and don't consume much in resources. But they're toxic for a community, which in turn can make having too many of them bad for business.

Robert Ferrari

Very interesting thought on the matter.

holi

Football Agent www.indo11.com reported, AC Milan captain Massimo Ambrosini believes Didier Drogba is a better player than Manchester City forward Mario Balotelli.
Milan have been linked with a move for both attackers in the January transfer window and the veteran midfielder feels Shanghai Shenhua forward Drogba is the more complete player.
“I’ve always liked Drogba,” Ambrosini told as reported by Indo Eleven.
“He is very professional and he is welcome at Milan. Mario’s talent is not enough – it’s wrong to justify his behaviour with his age.”
Two attackers linked with a move away from San Siro are Robinho and Alexandre Pato, and although Ambrosini would like to see the Brazilian duo stay put, he accepts that they could leave.
Ambrosini also claimed that Juventus would retain their Serie A crown easily this season and that the best Massimiliano Allegri’s side could hope for was second place.
Milan have been drawn against Barcelona in the last 16 of the Champions League, and Ambrosini concluded by saying that his side are among Europe’s best eight teams.
Source : www.indo11.com

Mistwalker

The differences in tier among some land firms is amazing. But so are the offerings. If you want a beautifully landscaped sim...you can go to a Chung, or one of the other companies who take pains to do that for their customers.

Personally, I like to landscape myself, so I prefer to go with the lowest price that I can find which offers what I want. There is a particular land company that I enjoy renting from, and they offer the lowest tier I've found yet. You get a flat piece of land, but you can make it the way you want it.

The drawback is that they are often difficult if not impossible to contact if you need help with anything. So it's a trade off.

Sadly though, in the past couple of years, I've gone from 3750 prims, to 1875 which suited me fine for the longest. Sadly though, I've had to drop to 937 because I just can't (or won't) pay $20 a week...it's just not worth it. Although I have noticed a growing trend with offering alternate sizes and prim allowances.

Either way...I have been on SL for 6 years now, and will continue to support my habit and the estate business as long as I can. When I can no longer afford 937, I don't know....

Finally, I've tried other worlds. Yes, land is cheap. But the user experience sucks. User-experience is everything.

Also, I tried becoming a premium member. You can forget that.

Mistwalker

The differences in tier among some land firms is amazing. But so are the offerings. If you want a beautifully landscaped sim...you can go to a Chung, or one of the other companies who take pains to do that for their customers.

Personally, I like to landscape myself, so I prefer to go with the lowest price that I can find which offers what I want. There is a particular land company that I enjoy renting from, and they offer the lowest tier I've found yet. You get a flat piece of land, but you can make it the way you want it.

The drawback is that they are often difficult if not impossible to contact if you need help with anything. So it's a trade off.

Sadly though, in the past couple of years, I've gone from 3750 prims, to 1875 which suited me fine for the longest. Sadly though, I've had to drop to 937 because I just can't (or won't) pay $20 a week...it's just not worth it. Although I have noticed a growing trend with offering alternate sizes and prim allowances.

Either way...I have been on SL for 6 years now, and will continue to support my habit and the estate business as long as I can. When I can no longer afford 937, I don't know....

Finally, I've tried other worlds. Yes, land is cheap. But the user experience sucks. User-experience is everything.

Also, I tried becoming a premium member. You can forget that.

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