Thursday, September 13, 2012

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Linden Lab Losing Lots of Private Sim Revenue, But Don't Expect Linden Lab to Lower Tier Anytime Soon -- Here's Why

Second Life land loss

On Second Life's Subreddit group, users keep upvoting a blog called Gridology which points out that SL is losing a lot of private sims -- i.e. "1000 SIMS IN 11 WEEKS". (Taking these numbers from Metaverse Business' very useful chart depicted above.) From Gridology's perspective, this means Linden Lab should lower the company's monthly tier costs. However, as I've said before (but since it keeps coming up, bears repeating):

Linden Lab will very likely not lower tier any time soon. It's an utter non-starter.

Here's why:

Second Life Revenue Estimate Revised

  • Most SL land is owned by a small number of "barons" (see chart above, from this post last year), about 500 of whom pay over 60% of Linden's land revenue.
  • If land baron tier prices are cut, therefore, Linden will suffer a huge blow to revenue.
  • Linden Lab can make more money keeping tier prices where they are, which again, is mainly coming from land barons, most of whom are still able to make tier.
  • By keeping tier prices where they are, Linden Lab can plow a reliable stream of profit into a war chest to sustain themselves years after SL private land revenue finally, inevitably, withers away.
  • As an added bonus, keeping tier prices high makes it difficult for new sim owners to compete with existing, established land barons -- which likely keeps these land barons happy, and happy to keep paying tier.

It's more likely that Linden Lab will offer more non-sim land offerings as a Premium monthly subscription benefit. And if SL were to enjoy substantial user growth and growth in alternate revenue streams, yes, then it might make sense to lower tier. But it would be a near-suicidal gamble to lower private sim tier now, in the desperate, blind hope that somehow, somewhere, there's a substantial market of people interested in paying hundreds of dollars a month in virtual land. CEO Rod Humble won't even address the question of tier costs. And if you understand the chart you see above, you'll understand why.

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cube republic

Yes but your hypothesis relies on people actually continuing renting land from land barons at silly inflated prices. It would be interesting to see where the dropped sims are coming from.

Jo Yardley

They should cut tier, but not everywhere at the same time.
They could for instance cut tier to NEW sims, this will make more people try setting up a sim and if it works, they will keep the regular tier after a few months or after the first year.
Or maybe a discount to sims who have been around for a few years, rewarding them for hanging out and thus supporting sims that survive.
In short, don't bring down all tier, just create a few discount schemes, support packages, contests,etc.
The kind of system where you help people get started, give them discounts for a little bit here and there.

cube republic

If they reduced tier the land barons profit margins would be the same

Maria Korolov

It's a very risky strategy, too.

Land barons know how to sell land to customers, and they have customers. They're in a prime position to launch their own, competing grids and market them to their existing customer base, allowing them to offer much lower land costs -- while increasing profit margins. This is especially true for land barons that serve tightly-knit niche communities.

Land barons can also make the transition smooth and easy for their users. The Littlefield Grid is one example of a community that migrated in bulk -- with their content and content creators -- to their own grid.

Every day, the hosting solutions out there get more and more attractive -- turn-key, easy setup, full grid and user management tools, currencies, etc... etc... Land barons can focus on their users and their content, and leave the tech stuff to the vendors, and if they get tired of their vendor, they can move the entire grid over (similar to moving a website from one host to another).

At some point, it will be too late to stop the migration.

roblem hogarth

I wouldn't call a 2 "users keep upvoting" over on reddit. InaraPey, strawberrysingh, and the occasional video do. But we are talking 785 readers in the subreddit, not exactly the pulse of SL. Gridology's numbers are bias anyway, kinda like all SL deathwatch sites.

Ravik

One thing you haven't mentioned is the damage Linden Lab is doing to it's "Good Will". Ie the feelings customers have toward the company. By milking Second Life as a cash cow, Linden Lab damages their credibility with their consumer base. This will make it harder for them to be successful with any future endeavor.

Hamlet Au

"But we are talking 785 readers in the subreddit, not exactly the pulse of SL."

That's true. But it's also a recurring issue on NWN and in many SL blogs and forums, too, so might as well address it.

Shug Maitland

I see no need to cut tier, a simpler solution would be to increase the land allowance for premium residents. There would be no need to put more servers on line as there is plenty of vacant Mainland. Yes, the first thing that would happen would be existing mainland owners increasing their holdings, but just think of the number of people who would see the real value of a $10/month upgrade. Doubling the allowance to 1024sqM would not be unreasonable.

Melissa Yeuxdoux

So LL won't be reducing tier, but elsewhere in NWN you refer to "their unsupportable land-based revenue model". So do you expect LL to continue on the clear safe course that leads ever down into stagnation?

Nathan Adored

So, what happens if one day, some major thing happens that causes a goodly number of those land barons to just up and pull out of SL? That is to say, what if the number of people owning large amounts of land suddenly, in a short time, go byebye, and all that revenue goes byebye too?

You don't put all your eggs in one basket, because someone might just take the basket. Or drop the basket, splattering a whole lotta eggs all over the stage.

Will Szymborska

Technically if land barons did not exist, most people would be forced to own regions. Basically all land barons are doing are making a profit off of people who cannot afford to own a region or don't want to commit to the 1k+ USD fee to buy a region.

Additionally for people who don't want to own a region and want a opensim or homestead would have to own a full region to do so.

I am perfectly happy paying rent on a homestead and not worrying about owning a region to do so. Even if tier was lower, this would still be a problem.

Also, most people who play SL these days come and go and would not invest the time to look into long term benefits of owning a region. Instead, they splurge on renting a sim and then walking away from any responsibility of a long term investment when they are tired playing SL.

Ezra

The only scenario Linden Lab won't come up with lower tier prices is this increasingly grim and malicious notion of yours that Linden Lab is just stockpiling some war chest and actually has no intentions of reversing Second Life's decline.

If however Second Life is meant to be around another 5 years, land can't continue to be priced higher than demand. Economics 101 will kick in and Linden Lab will have to lower prices.

Robin Lobo

I find it interesting that the tier & setup "discounts" enjoyed by the Barons are rarely factored into these discussions. Estates comprised of huge blocks of discounted + grandfathered Sims effectively already have reduced tiers.
Full Sim: $300/mth vs $195/mth minus a discount% is huge.
I think the first indication of real trouble will be when the Barons start offering land well below the un-discounted regular tiers.

Hamlet Au

"this increasingly grim and malicious notion of yours that Linden Lab is just stockpiling some war chest and actually has no intentions of reversing Second Life's decline."

I never said the latter - LL does want to keep SL viable, that's why they're putting so much emphasis on boosting Premium subscriptions. But yes, they're also plowing as much profits as possible into other directions. That's not my "notion", that's actually what is happening now. It's not grim or malicious, however, it's just good business. If one sector of your company isn't growing, you invest in other projects that might do better.

Dave Bell

I can see how, under the current price structure, the small land-holders will pay higher tier than the large. and that influences the rental paid to the Barons.

But Linden Homes didn't kill land rentals. If nothing else, some people may be nervous about having a direct financial relationship with Linden Labs.

In the end, nobody can make SL pay unless they can supply what people want. The Land Barons wouldn't exist unless ordinary residents want land, and the obvious question is why should anyone want land.

Dwelling on land and tier is irrelevant if nobody wants to use Second Life.

I'd suggest that Linden Labs is a service company, selling something we could call fun to individuals. The whole Land Business is an abstraction of that, and perhaps a red herring.

If nobody is trying to sell SL, if nobody is delivering, the whole thing falls apart.

From my point of view, there have been too many delivery failures in the last few months.

Ezra

Better business is pricing towards demand, which I believe Linden Lab will in the end do. Or Second Life goes away.

The only thing of value in Second Life is square meters land and prim allowances. Dune buggy gifts on 512 sq. m. plots of mushroom land are pointless.

Rin Tae

I think it is correct that in the current SL-economical system it would be a problem to lower prices for LL. However that system is extremly unbalanced and outright dangerous to the lab and in their place I would do a lot to try to change it.
With just a few land barons contributing so much (however it is not them but their renters who are contributing the money) LL has to deal with the possibility that when jsut one leaves their profits dropping considerably. And as custoemrs they can decide to do so any moment and even take a big number of renters with them what would hit LL even more as it would have an impact on what all those people bought and created. So they have to keep those few land barons happy at all costs since with the prices as they are, no one would be able to compensate and buy up all those sims should such a big land baron leave.

The big point that you keep missing in your articles is, Hamlet, that the land barons are nothing more then middlemen and that LL can easily cut them out and rent to people directly. This would spread the moeny flow over much more people. With this, if some leave the sims will be rented by others and they don't have to deal with suddenly having 200 sims on their hands and no one wanting or being able to rent them. It would actualyl even strenghten the position of LL too and they could finalyl cut all thsoe special deals and treat anyone the same since they would not be depandand on keeping just a few people happy (not that I would beleive that they are succeeding in that ;P but I have no insight into the big land baron circles). They would have to keep all renters happy and the more people rent, the lower the prices can be and the lower the prices, the more people can rent. It would bring more competition into the land market too with more land barons and non-land-renting people beign able to get more sims. Of course I can see some land barons complaining about that but market economy has many good points to it while high price monopolistic market-entry barriers usually don't.

Of course being a new strategy LL would have to start some very visible and well made advertising campaign both the new and exisitng users and sadly LL has not shown any ability in that regard either.

As I said before, I consider the current land-economy system to be outright long-term dangerous and unstable to the lab. The high prices seem like the best visible symptom of this situation.

Iggy

Unless LL can release some new product or come up with a new revenue stream, they are trapped between the Atlas program and the loss of sims.

I think we can all do the doomsday-math here, if the rate of loss continues at anything close to 1,000 sims every 3 months.

Maria's assessment of hosting is correct, but the content issue is thorny. Atlas can't shrug too easily. Unless there's something about which I am utterly stupid (no small stretch, that) you cannot just pull an OAR out of the Linden Grid and put it into an OpenSim grid.

So if a Baron migrates, his or her renters would lose their perfect fake hair and fashions, lose their fake Ferraris, fake Taj Mahals, and fake Viking Long Ships.

When LL screwed over education and non-profits but left the Atlas program around for its cash-cows, I set up my Plan B project in Jokaydia Grid. Only a few things I made made myself exported thanks to Imprudence.

Then I paid an SL content creator to recreate some of the fashions and household items she'd made and sold already in SL. Finally I built the rest or got items from the small but active group of creators who release their content for hypergrid-enabled OS grids.

It was not easy in terms of hours spent. It was fairly cheap, but that was for one project, not an entire community with dozens or hundreds of participants.

While I suspect we'll see migration, it will be in fits and starts. Some will go to other walled gardens such as InWorldz or Avination.

The Land Barons are as trapped as any fashionista who laments the helmet-hair and prim skirts of the OpenSim grids where cross-grid migration can occur. That sort of hosting is where the real 3D Internet could be. Right now we have a few 3D AOLs and some nut-cases, self included, in the equivalent of 3D Usenet.

Archangel Mortenwold

The problem with your argument is that until or unless Linden Lab drastically lowers its tier prices, there will be no influx of new users. Since there doesn't appear to be a new revenue source on the horizon, the only way to increase land ownership again is to lower prices. In a depressed economy in which the number one reason for region losses is the excessive tier, it is not only suicidal but just plain stupid to keep it as high as it is. By digging in its heels Linden Lab is guaranteeing that its existing revenue source will dry up to the point the company either goes out of business or they are forced to sell to a larger corporation.

Spreading the revenue base over many land owners, as opposed to a relative handful of moneyed virtual real estate business owners, would have another benefit as well: if some leave SL, there isn't such a big drop in revenue. By keeping prices high, with the result of limiting the existing revenue base to a few hundred individuals, the inevitable loss of regions because of unreasonably high tier costs causes the company to take a huge financial hit.

AND — and this should finally convince you to join the rest of the grid in demanding lower tier, Hamlet — if you want SL to become that gamers' paradise you want it to be, take a look at the pattern of region losses: role-playing sims. As people keep telling you but you refuse to accept, no game developer is going to flush money down the drain trying to import his or her game to Second Life when there are other grids that offer more for far less money, and when the tools for successfully and completely importing their games are actually present.

But yes, Linden Lab has made the stupid decision that the company should go out of business in a couple of years rather than listen to the demands of its user base. That doesn't mean users will, or even should, stop demanding lower tier. SO just give it up already and stop asking people to stop asking for lower prices. It's as likely as LL lowering tier.

Archangel Mortenwold

By the way, anyone who's been to mainland knows that it is nowhere close to being a viable place to even visit. I can't go there because every time I do, my viewer lags out and I'm logged off. And if you think that's an isolated thing, then you haven't been in SL very long. Mainland isn't a very good alternative to private regions because "owners" do not have estate powers such as region restart, so if your region is hit by a griefer you have to wait for LL to roll the region back and then get them to ban the individual from the estate since LL (last time I checked, which was admittedly a few years ago) limits what estate powers mainland "owners" have.

kesseret

A lot of the land from Atlas Project was discounted so those barons are paying lower tier prices anyway. So if they discounted tier for the rest of us then they'd not be losing any money.

shockwave yareach

There is one hole in your logic -- the ATLAS program.

All LL has to do is give the same Atlas prices to every private sim holder and the losses will stop. And you cannot say they can't afford it, since most of the private sims are already priced at that in the first place!

Give us small fry the same price as the land barons and we'll be able to afford to stay. You can either take in less income, or take in no income. Which is better? People are voting with their wallets, which is exceptionally dangerous to LL because every lost sim is a customer who will never ever bring their money back to buy a sim again.

If you don't give all private islands the same price as the big landbarons, you will lose those customers for good. Period. Gone. And as you are finding out, there are no more deep wallets willing to pay the money you want for something they don't even get to own anymore.

This is your fault LL and only lowering the tier so that we get the same discount as the land barons is going to fix it.

foneco zuzu

Unfortunately for SL the Land Barons are not trapped and prepare for some big news soon!
Where LL need to bet to survive now is on Premium membership and making Auctions and m2 allowed higer to them!
That is their own hope and if they will not act, they will become irrelevant even if unless they decide to shut down the plug, still active!

Robert Graf

By introducing reduced tier/setup fees for land barons many years ago LL killed the golden goose. No current/potential business owner is going to invest/continue to invest in a business where land prices/tier determine what they offer their goods and services for if they are competing at a major disadvantage. On tier alone land barons are getting a 33%+ advantage, so they can offer land rentals at prices that non land barons can't.

At best non land barons limp along for awhile until they see the futility in continuing to invest money in SL.

LL has chosen to cater to and assist the .01% of residents enjoying these advantages at the expense of the 99.99% that are not. They seem to not be able to grasp the basic rules of business/capitalism/human nature. There's a sucker born every minute but at some point most suckers wise up. lol

Keep doing what they are doing and the slow decline/death continues. Lower tier and setup costs and equalize them between land barons and regular folks and things may turn around.

But that takes admitting reality and the series of major mistakes done over the past 6 years. Something LL seems unable to do. ;)_~~~

Arcadia Codesmith

Everquest 2 offers me multiple homes for free. If I want to, I can get sprawling mansions or my own private island for under $20, rent-free. And they recently announced a new program whereby residents can design and create new objects for the cash shop, receiving a 40% cut of sales in cash. That may sound like a raw deal for creators, but SOE takes care of all the piddly non-artistic details of boring commerce.

This is the market price for virtual land -- zero. If you want fancier digs, the market price is under $10, one-time up front fee, no recurring rental.

Second Life's strength is that it's the Everything Machine. But it can't be the Everything Machine if it can't pull and hold the creatives. Without the creatives, it's the Nothing Machine.

And artists in every medium are price-sensitive. 98% plus of the pros and semi-pros are scratching for gigs, hustling galleries, and/or waiting tables just to make rent each month.

Here's the other thing about creatives -- they need an audience, but they don't need you. Give them a stick and a couple of rocks and they'll make art/music/theatre out of it. They can take their work elsewhere, and it's less and less compelling for a virtual artist to maintain a presence in Second Life.

Emperor Norton

Gods Hamlet I don't you if your just a hit trolling or an idiot. It's very simple; if there are no private sims, the gamer future of SL doesn't happen. Are you really such a fool to think your dream of a SL Day Z could happen on the mainland?

Metacam Oh

Don't worry Hamlet, I don't expend Linden Lab to lower tier any time soon, and I also don't expect anything relevant from Second Life ever again either. The future is in decline and the lack of awareness of their product + lack of awareness for what it is worth, really have given up on any sort of future where SL ever reverses this shrinking. I've stopped expecting anything from Linden Lab except disappointment.

Hamlet Au

It's kind of funny reading a lot of these comments, which assume that I'm just pulling this analysis out of thin air. As opposed to reflecting insights from a lot of insiders who are in a way better position to know what's going on.

shockwave yareach

Hamlet - If LL can afford to give 1000 sims to a few people at a discount, they can also afford to extend that discount to the remaining 300 sims owned by 100 people. Or they can watch the 100 people take their money and quit, reducing their income from those folks to 0.

No matter what your explanation, idea, theory or buddy buddy rationale, this is pure economics driving people to drop their sims. It is time to either go or get off the can -- LL either wants individual private sim owners or it does not. All the signs we see point that LL wants individuals and groups to be in Mainland and only the landbarons be permitted to own private sims. Let me just say that my group and I spent considerable capital to move off of mainland for a reason, and my periodic probes back there confirm that the failings in mainland are worse, not better.

The only driving LL is doing isn't to the mainland, but out. And I think even cheerleaders can see that.

Metacam Oh

Hamlet, what is hilarious is your analysis that Linden Lab is losing customers but don't expect a price cut. What kind of business economics is this? Product is vastly overpriced, but don't expect a cut in the price? Sorry but that doesn't fly. The only reason they would not cut prices is because they plan on milking the dying cow. If you want to reverse this shrinking trend of SL users and land ownership, something will have to be done, you can't just magically change a bad situation by doing nothing.

"By keeping tier prices where they are, Linden Lab can plow a reliable stream of profit into a war chest to sustain themselves years after SL private land revenue finally, inevitably, withers away."

What is this, Linden Lab is now a bunch of Saints, and they are charging high prices now so when all their business goes away they can still run SL when no one is in it?

Here is the real analysis. Linden Lab has no vision to evolve their product, their current model is causing their product and user base to shrink, they have no options, so they will choose to milk the dying cow instead of perform surgery to save the cows life.

Not a great prognosis. Definitely a shame that SL is going to go be an evolutionary dead end because they couldn't figure out how to offer their product for a reasonable price.

And don't mention the cost saving measures they have directly implemented like region idling etc, savings which absolutely cannot be passed down to the customer right?

If Linden Lab can't find a balance instead of raping people for 295 a month and a $1000 setup fee, they deserve to go out of business.

Archangel Mortenwold

The flaw in your argument, Hamlet, is that you think Linden Lab can attract new users and keep them while maintaining unaffordable tier prices. Linden Lab is not the health insurance industry. It does not have armies of lobbyists buying off politicians to pass legislation forcing us to buy regions, be they mainland or private. Without that, lowering tier prices across the board to something competitive with other grids is the only way to bring people back and attract new ones. Relying on a diminishing number of land barons to hoard dwindling revenue just to keep the grid running for a few more years is not a sane or sensible business model. Metacam's analysis is right on the mark.

This is what needs to happen to salvage Second Life and generate more revenue for Linden Lab's other projects:

1.) Immediately lower land tier prices to on private regions to $100.00 USD per month, and eliminate the $1,000.00 USD buying price or lower it to $100.00. Competing grids such as InWorldz and Avination offer full-prim private regions for a $75.00 buying price and $75.00 a month server maintenance fee. By lowering tier prices so, Linden Lab will be able to bring back people who've left and attract new land owners. What's more, the increased number of new and returning land users will more than make up for any short-term losses. But it has to be done, and in tandem with an aggressive marketing campaign letting people know that the prices have finally been lowered.

2.) Get rid of the insane mesh prim cost factoring, and simply triple the current prim allowance on all region types. For a full-prim region this means the limit goes from 15,000 to 45,000 — a prim allowance already being offered by the other grids. If Linden Lab wants to keep higher-priced regions, have 512² meter region with 90,000 prims that Linden Lab can charge $150-$175 a month for. Give people something that justifies what they're paying.

3.) Bring back the teen grid. One of the bigger mistakes was throwing underage users onto a grid that was primarily geared toward an adult audience. Segregating "adult" content (including game play involving graphic violence) from the rest of the grid has only imposed rules that have stifled creativity and placed the onus for weeding out kids in adult avatars onto landowners.

4.) Bring back the Viewer 1 user interface while keeping mesh and other goodies. If the developers of Phoenix, Singularity, and Cool VL Viewer could backport mesh and other V2-V3 features into the V1 GUI, then certainly Linden Lab can restore the far easier V1 GUI. If they have to, they could even bring the developers mentioned in as paid staff to redesign the new viewer. And if Linden Lab absolutely HAS to have the clunky mess of a GUI that is V@ and V3, why not have the Exodus viewer developers bring theirs on as the official one for gamers on SL?

The consistent amount and pattern of disagreement with you on this issue should tell you something, Hamlet: you and Linden Lab are undeniably wrong in your analysis of the problem and unquestionably wrong about solutions. As we keep telling you and you keep denying: Linden Lab cannot increase the Second Life user base without drastically decreasing region tier prices. You can't expect the company to do the one without doing the other. Stop asking people to stop demanding lower tier prices. It's just not going to happen.

Hamlet Au

"Immediately lower land tier prices to on private regions to $100.00 USD per month, and eliminate the $1,000.00 USD buying price or lower it to $100.00."

Do you have any evidence that there's a substantial market of people willing to pay $1200 a year for virtual land? To maintain its current revenue base at the rates you're suggesting, Linden Lab would need to find about 50,000 new customers willing to pay that much. Where are they going to come from?

Robert Graf

"Do you have any evidence that there's a substantial market of people willing to pay $1200 a year for virtual land? To maintain its current revenue base at the rates you're suggesting, Linden Lab would need to find about 50,000 new customers willing to pay that much. Where are they going to come from?" - LL ran them all off over the last few years. They all wised up to reality. Who wants to keep ramming your head into the virtual brick wall(unequal/high setup fees/tier) LL and the Land Barons use to keep small timers from being able to compete. We all have major headaches from the last 6 years of it... Anyone have an aspirin... My head is aching... lol ;)_~~~

shockwave yareach

Hamlet -- I'll help with that.

I lost my previous island due to LL's graft and price raising. I detest them and their bait/switch tactics, plain and simple. One doesn't have to read much to see how LL turned me -- a former LL cheerleader -- into quite the tickedoff gadfly.

Even so, if it cost 100$ to buy and 100$ a month to own a full island, I'd buy one immediately and add it to my group's chain. I won't even worry about "ownership" at that price.

1200$ to build my mazes and my playscapes, that I can afford. But 3600$ a month with 1000$ nonrefundable setup fee for something I won't even own? Forget it. I pay 60$ a month for my land rental now, just to play in; I'd leap for a chance at an island at 100$ a month and wouldn't care about the other problems at that price.

shockwave yareach

3600 a year, not a month.

Ezra

How to price land cheaper is Linden Lab's problem to solve. Lift the abstraction and it's just CPU load, disk space, bandwidth and connected services like customer support. Linden Lab is a glorified web host and their pricing problems aren't close to unique or unsolvable.

There's some senseless things Linden Lab has in place now that'd require nothing except a policy and configuration change that could help Second Life, like removing the need to own a full region before purchasing being able to pay for a Homestead.

For the uninitiated it's probably difficult to come up with ideas and analysis of what Linden Lab should and could do to make their pricing pages look better, but for those of us actually using Second Life and are customers of Linden Lab and land barons, it's as clear as day what should be done. I trust me and the next customer over unnameable "insiders".

Hamlet Au

Well, here's your chance to tell those insiders in specific detail how they can significantly discount tier while finding tens of thousands of new customers to offset the revenue hit and likely loss of existing customers. What's your plan, Ezra?

Ezra

I don't believe a tier price reduction would lead to a loss of revenues or a loss of existing customers like you do.

What I believe is that since land owners are responsible for 99.9% of pixels on screen, the best investment Linden Lab can make is making sure land owners can put a lot more pixels on screen. That means Linden Lab ending your blog's ongoing Sim Deathwatch. Which would mean ending the number one reason given for a sim closing: too expensive tier.

Linden Lab either believes in their product or they don't. It's one thing to believe reducing prices for land would result in a loss of revenue, but actually believing it'd not result in new customers? Really? What company believes chopping prices won't increase sales? That's crazy.

If Linden Lab is of your opinion then Second Life is doomed anyway. But if they're more optimistic about Second Life then their number one priority would be figuring out how to price land cheaper and more flexibly.

Tier cost reduction doesn't necessarily mean "ok let's slash our profit margin and do nothing else". While I'm optimistic enough about Second Life to believe Linden Lab could do that to an extent and end up with even more profit through volume of new tier payers, there's still a lot of other things they could do without touching their existing profit margin.

Like it's been repeated above, Linden Lab is just a glorified web host. They sell CPU time, disk space and bandwidth much the same way Amazon sells it to them for the couple of things Linden Lab uses Amazon for. Yes, Linden Lab has customer support, builds their own software, has to maintain developers, software licensing, and so on, but Amazon has to do all those things as well and more. Yet, Amazon charges Linden Lab by the minute of resource used, by the terabyte of data stored or streamed.

There isn't a law of physics that says Linden Lab has to be different than Amazon in that regard. There's no law of physics that says a Homestead can't possibly be sold without the Full Region prerequisite. 15,000 isn't a magical number found in science about prim allowances. Nothing except policy stops Linden Lab from selling a dozen different full region or less configurations with less prim allowances and less concurrent users for less a resource cost to them and less tier cost to us.

There isn't a law of physics that states just because we call the simulator software 'land', it requires much more than the Apache server that runs this blog. Especially for empty sims that receive 0 visitors a month yet their owners are still expected to pay the full $295.

Second Life's pricing problem isn't just that the $295 a month entry price point is too expensive, it's also the fact it's the ONLY entry price point for land besides a $9 a month virtual housing project hovel.

What other services do you subscribe to with price points so rigid and inflexible?

If you want only data on your phone, you can get it without having to pay for voice and SMS. If I uncheck Vivox voice and Havok's physics from parcel settings does that reduce my tier costs?

If I use only a lamp in my apartment and the neighbors are operating a jet turbine, I don't pay as much as them. If my region idles an entire month because 0 people used it, do I pay less than Bukkake Bliss Island?

Is this smart pricing to you? It's too expensive and too inflexible. Like I said, Linden Lab as a web host and service provider doesn't have unique nor unsolvable problems. They should price services for their customers with the same thoughtfulness the companies they pay price for them. If they can't do this then they should consult with the thousands of other companies in Silicon Valley that've figured out multiple price points and configurable, pay-what-you-use services.

Ananda Sandgrain

A few years ago, the land market was growing like gangbusters. Then Linden Lab looked at this and realized they were busy creating a larger and larger infrastructure of servers in a virtual world design that they knew *was already obsolete*. Linden Lab isn't going to lower tier prices to grow bigger because bigger is no longer their goal for Second Life, their goal is simply to milk the existing world for all it is worth until they manage, if ever, to come up with something better.

Robert Graf

"Well, here's your chance to tell those insiders in specific detail how they can significantly discount tier while finding tens of thousands of new customers to offset the revenue hit and likely loss of existing customers. What's your plan, Ezra?" - Hamlet Au - How about you and LL pick up a book on Henry Ford and Ford Auto. And listen for once instead of dictating to all of us how it was, how it is, and how it shall be from now on... Listen and Learn... The auto industry was stagnant, cars priced so high that only the wealthy could afford them. An industry that was at best limping along. Once Ford came along and offered a car that virtually anyone could afford the industry took off. They made their money by selling in volume. Instead of a few dozen/hundred car sales a year of extremely high priced cars, they began to sell millions of cars affordable to average folks. And volume sales equal bigger profits. The more people able to afford your service or product the more you sell to... The more profit you make. What's so difficult to understand about that concept? It's basic business/capitalism 101. ;)_~~~

Ananda Sandgrain

Well to continue your analogy though, Ford didn't succeed by just lowering prices, they succeeded by coming up with a method of making those cars cheaply and in much greater volume. The problem I was alluding to before is that when land area was growing rapidly, LL was having to install new servers every week, and facing the idea of having to bankroll whole new buildings at server farms, all to supply these machines at some ridiculously low ratio of around one new machine for every 12 people actively accessing the world. That's just unsustainable growth when the prospect is that someone will come along in a few years and releases a server model that allows them to support hundreds or thousands of people building things to their hearts' content on a single installed machine.

The technology to support vastly larger populations and/or land areas with the same number of servers as LL has does exist, but Second Life's current structure is maladapted to use it. Knowing this, it'd be really stupid of them to lay out the capital to keep growing their old system.

Cecil Hirvi

By my calculations, the end is near.

Robert Graf

So, no lowering of setup/tier fees... No equalizing pricing between land barons and the rest of us... And no changing of course... Full Steam Ahead... That's the plan? lol Look out for that icebergggg..... lol! methinks I hear "The Fat Lady" warming up... lalala laaaaaaaaa... This Opera is about to enter the last act... ;)_~~~

Metacam Oh

Hamlet, of course Linden Lab will take a hit if they lower tier prices. Sometimes you have to take the hit short term for the long term good. The reason SL is in an everlasting stasis is because Linden Lab is hooked on land tier. Its always next months profit in mind. How can a company running a futuristic product, something that requires long term planning and vision, only react based on next quarters profits? It's short sighted.

Look at it this way, the people that own land that are either paying Linden Lab directly or paying landlords that pay Linden Lab, these are the people that populate Second Life with content and places and things to do. So not only do they rely on customers to provide the content used to represent what their product is, they are raking them over the coals with their insane prices.

If they don't do something to stop the decline and help out people that are losing faith and losing money then those people and things disappear, and Second Life will be no better than Open Sim.

Explain how making someone who already pays 295 a month for a sim, pay a yearly membership fee on top of that?

Basically Linden Lab's business model for Second Life right now is we can't lose any profit in a horrible economy (where everyone else is losing) so we will sit by while our product slowly dwindles into obscurity, instead of taking a short term hit to retool with a better business model. Stop charging people for artificial shit land size prim size, charge them for what they use, inventory space, bandwidth, cpu usage, there are numerous things they can play around with to compensate for lowering the main price of an island. What did you say about past Linden Labbers suggestion, "Do something bold?"

Archangel Mortenwold

Hamlet, do you have any evidence to support the assertion that people will continue shelling out $3,540 on tier alone (the added costs of running a region probably double this amount)? What evidence you're providing tells us fewer and fewer people are willing to do that.

elizabeth (16)

@Will Szymborska - what you said

Pan

It is idiotic to allow a few land barons to hold to ransom the success (or failure) of a company. I wonder at what poor management allowed this to happen.

It is beyond stupid to continue to pander to the barons without considering the customers of the barons, ie the renters. Renters would quite happily pay LL direct if they could, but LL doesn't offer them the packages of land they want eg: a homestead without owning a sim, or a 1/4 parcel of an island, or a full sim at a price they can afford. They are renting from barons because they don't want mainland, they want to be on an island. If the customer could buy these packages (or completely new packages) direct from LL then it would cut out the middle man. It would create a more stable SL.

LL would take a big drop in profits if they, say, halved tier. So what. For example,

Current tier = 2013 profit 75m, 2014 profit 40m, 2015 profit 20m, 2016 SL is closed down.

Half tier - 2013 profit 35m, 2014 profit 35m, 2015 profit 35m, 2016 profit 35m, 2017 profit 35m, etc

SL could become sustainable over the long term with more affordable land, and end up making more money for LL than this current boom and bust model.

Also, with half tier there would be a modest upsurge in customers having more land, it wouldn't be enough to match the 75m profit now, but the people are there and eager to buy it, if it were affordable.

Hamlet, why are you not setting up a gamer sim in SL, since you keep mentioning gaming? I suspect you would say "omg are you kidding, I can't afford 300 dollars a month for this" but change that to a sim costing 50-100 dollars a month with no purchase cost and you might take a punt on it.

One of the reasons that stagnation is happening in SL is because creative people cannot afford to do what they really want to.

elizabeth (16)

the zillion dollar answer is whats the churn of renters on the barons islands

Hamlet Au

"Current tier = 2013 profit 75m"

That's not correct, LL's *gross revenue* is $75 million. Its profit margin is probably $5-15 million of that. So if they cut their revenue in half, they would lose their existing profit, which means they'd need to make a lot of layoffs, cut services, and by that point, the board would probably cut their losses and sell the company. Whether SL survives in all that is highly unlikely.

"What evidence you're providing tells us fewer and fewer people are willing to do that."

Yes, that's generally true -- except for the land barons and others who are managing to cover tier or even turn a profit with rentals and other revenue. At some point very soon, those will be the *only* people with private sims. But that's fine for LL, because that's most of the landowners.

"I don't believe a tier price reduction would lead to a loss of revenues or a loss of existing customers like you do."

Maybe -- but do you have a specific, detailed plan for how that would work? What rate should it be lowered to? How many paying new customers would it require? How does LL acquire those customers? Where are those customers coming from? They've already considered tier reductions but they couldn't create a plan, so help them out!

Rin Tae

I still don't beleive that they can't come up with some plan that would allow them to lower prices, get more customers and with this, grow to the point of having more profit then before. And as you said it yourself, Hamlet, that it is generally true that fewer and fewer people are willing to pay that much for a sim, LL will have to change something sooner or later. Land price is the one big thing that keeps a lot of people from geting more sims and if I think about how many freinds of mine mentioned wanting to have one and that they all said that it is too expensive .. and reading and hearing the same one reason in other places andconversations too .. I came to the realization taht SL would be several times as big as it is now if people could afford to get their place in it.

And it is not just the land mass but also additional builds, more interesting pelces, bigger appeal to new users wanting to explore it and with this also more revenue form transactions.

However your questions that you posted above:

'Maybe -- but do you have a specific, detailed plan for how that would work? What rate should it be lowered to? How many paying new customers would it require? How does LL acquire those customers? Where are those customers coming from? They've already considered tier reductions but they couldn't create a plan, so help them out!'

cannot be answered by anyone of us since we do not have the insight into LL and their numbers. No one of us can present any detailed plan but we can still point a few things out like ... how to require those customers? The lab might try something out, they have never done before .. it is called marketing and advertising. There are many people outthere who knew how to do it but over all those years I have been invovled with SL it made me think that for LL this is some sort of alien concept. Communication with customers (instead of closing communciation like now done with the JIRA) would also be nice so that all those people who want a sim would knew that they can get one cheeper now (I would nto be surprised if the percentege of people reading the LL blog and their twitter announcements would be like 0.5% of the entire population) and then of course some investment into the platform. It is nice to sit on large bags of money but it is a better buisenss strategy to use this moeny to improve the product so that it can produce more moeny in the future .. even when for a short time this might lower the profit.

But this is again something we do not know and can only speculate about. They might too be driven by modern (un)economic thinking where insane concepts are used like unlimited growth or where the only measurment of succees is shareholder value and said shareholders or investors demand always rising profit or they go and 'rage quit' because the idea of long term profit does not fit with having big bags of moeny to sit on right now.

SL is still a great product with lots of potential in it and a bright future but the general feeling is, that LL does not know how to get there or maybe they have no idea where they actually want to go.

So if they can't come up with a plan they should maybe listen to what their own customers are saying and also hire a few people who knew how to orgenize the advertisement needed for more people to vome and rent all those cheep sims.

Robert Graf

so, LL is out of ideas? Every decision over the past 6 years has been made in favor of the land barons and the SL insiders at the expense of the 99.99%. We're done... We like the fact that SL is in freefall. LOL! And for LL employees, management, land barons, and the FIC we don't want any of our ideas being used. Keep doing what you are doing - One bad decision after another. We don't want anything slowing down this train wreck.

It's been alot of fun watching LL crash and burn. And seeing all the arrogant self-described geniuses have one major fail after another. The bottom line is that the folks making all the decisions at LL are just not that smart. Dumb as a big bag of rocks is an apt description. LOL ;)_~~~

Ezra

"Maybe -- but do you have a specific, detailed plan for how that would work? What rate should it be lowered to? How many paying new customers would it require? How does LL acquire those customers? Where are those customers coming from? They've already considered tier reductions but they couldn't create a plan, so help them out!"

Read what I and everyone else wrote above.

Asking for tier reduction isn't the same as asking for the exact same service as now. So it doesn't have to equate to any revenue losses. Why can't Linden Lab sell homesteads directly to customers? Why can't they offer another package that's 1/3rd the prim allotment of a homestead and 1/3rd the price?

The plan is fill in the gap between a $9 premium parcel and $295 full region, and lift the luxury tax on whether an integer in the database is 64 or 256 when representing meters. Concurrent users doing things and rezzed objects are the only thing that really cost Linden Lab money, not how wide and long terrain is, which is why a Homestead can be as big as a Full Region but cost a fraction less. Keep dividing; offer full region land space all the way down to a few hundred available prims and ten or less maximum visitors.

Users of Second Life want their own space. It's evident in private regions being more popular than mainland. Even within private regions "See Avatars" is often checked off from one parcel to the next, and before that was an option, and even still now, users find distance from one another by building and holding up thousands of meters in the sky.

Why ignore this behavior? Give users what they want and are willing to pay for. We value square meters of "land" and available prim counts. Sell it reasonably.

Ezra

@Rin "I still don't beleive that they can't come up with some plan that would allow them to lower prices, get more customers and with this, grow to the point of having more profit then before."

Exactly.

Second Life is software. Linden Lab doesn't have to dynamite mountains, drill underneath the ocean or launch satellites to provide Second Life. They're a much richer company than some companies that actually do the aforementioned things. No matter how complex Second Life's datacenter and software stack is, it's still just software. It can be changed to fit new business needs.

One of the reasons Linden Lab ever got away with charging so much for land is because its called "land". It's ingrained in Second Life users mind that there's some inherent value in the 4 vertices composing 16 sq.m. of terrain. Certainly an object rezzed with a script powerful enough to run web servers costs Linden Lab money, but "land" and everything spatial in Second Life is just an illusion with a ridiculous price tag on it. A great illusion for immersion with one another, but a detriment to Second Life when apparently not as many people are buying the abstraction and illusion anymore but Linden Lab is stubbornly still trying to sell it.

I don't believe the shotcallers at Linden Lab are dumb. I believe they just still feel they have time to rope everyone back into the illusion again. They have time to see if pathfinding changes things, if the occasional no-setup fee deal on new regions works, etc. Failing these last grasps at straws to either get old customers back into the illusion or find new ones in place like Steam, they're going to have to deal with their real customers who are done with the illusory value of land. At least at that price point.

Hamlet Au

"Why can't Linden Lab sell homesteads directly to customers? Why can't they offer another package that's 1/3rd the prim allotment of a homestead and 1/3rd the price?"

Ezra, that's not really a business plan, that's just a string of hypotheticals. Think about something much concrete, I'll launch a new topic next week where you can spell it out. Also, the plan should explain why it wouldn't cause a revolt among land barons, who'll probably consider it a threat to their revenue base.

Ezra

"Ezra, that's not really a business plan, that's just a string of hypotheticals. Think about something much concrete, I'll launch a new topic next week where you can spell it out."

How is having more than two entry level price points a hypothetical and not a business plan? There's already tens of thousand, if not hundreds of thousand of us paying land barons the full spectrum of $10 to $300+ dollars a month for subdivisions of land. That's demonstrated market and willingness to pay those price points for those amounts of subdivided resources. Why can't Linden Lab offer it themselves, and sweeten the deal in ways that doesn't harm their revenue described above?

Again, what services do you subscribe to or stores do you visit that has one thing for $9 dollars a month and the next tier of pricing is $295 after a $1000+ setup fee? Then and only then after paying the latter pricing, you can buy a cheaper third product for $100 a month after hundreds of dollars of setup fees?

Why accept such bad business from Linden Lab as the only way things can be? Why must any notion that it can be different be a hypothetical? What prevents it? Do the Second Life servers run off moon rock? Why put the onus on us the customers of proving we can be charged more reasonably and fairly when we aren't the oddities in how we pay for our services, instead Linden Lab is the oddity in how they charge for their services?

"Also, the plan should explain why it wouldn't cause a revolt among land barons, who'll probably consider it a threat to their revenue base."

Some land barons like Desmond add value with their ability to theme their communities and keep their communities greater than the sum of it's parts, but a lot of land barons are just as what's described above by others: unnecessary middlemen.

For the land barons that create value beyond what they can resell, they won't be cut out. It'd still be appealing to join a steampunk community vs. renting empty green grass from Linden Lab at similar price points. For the land barons that don't feel they can't compete with Linden Lab offering green grass, who needs them? Why prioritize a few hundred over the tens of thousands if not hundreds of thousands more that can build, create, share and experience better with price points between $9 and $295 directly from Linden Lab?

There's no point in starting a debate about any of this if land barons are going to be deemed a holy grail, and Linden Lab changing how they charge little more than hypotheticals. These are the only areas solutions can come from. There's not going to be any behavior correction on the part of us the customers and suddenly we start believing the prices are worth paying. We've already begun talking with our wallets by keeping them increasingly to ourselves, so what now can Linden Lab say?

Rin Tae

@Hamlet: 'Also, the plan should explain why it wouldn't cause a revolt among land barons, who'll probably consider it a threat to their revenue base.'

As written above by Ezra, land barons are no holy grail and those who would scream and complain I would rather send away to a course about how a market economy works (of course it is normal for those within the market to wall themselves off and scream whenever the way a market eceonomy works for once does not benefit them and give them some new competition).

Bsides .. lower prices for everyone would also allow the land barons to get more sims for the same moeny they pay now and more prims to give the user a better value for their money. Land barons would still have a giant advantage over the land LL rents because LL will never be able to offer the themed expierience the land barons could (as they can more easily hire builders and content creators what in turn would benefit SL as a whole)

But then people rent the expirience and the idea of 'living' in a themed community and not the land itself. Land barons who can't deliver that would have a problem and would need to adjsut their buisness models. Why should LL give so much weight to a few if they can spread their revenue stream over a much bigger base?

Pan

"That's not correct, LL's *gross revenue* is $75 million. Its profit margin is probably $5-15 million of that."

Ooops, I should learn to read.

So at half tier they take 2.5-7m profit (plus the increase in land ownership because it becomes affordable to more people, whatever that number is) and they make SL sustainable, or they continue as they are and go bust within a couple of years.

Also, I like the idea above of just keeping the prices the same but just doubling the land we have.


Archangel Mortenwold

Hamlet, all you have to do is scroll up through the thread to get an idea of what we propose. Your own figures are showing that even the land barons are leaving SL before they lost their shirts. Renters are the source of the land barons' revenue. They're not renting land anymore because it's too expensive. The land barons are taking losses they cannot compensate for so they're leaving before they lose their shirts.

You can keep your head in the sand and keep denying that lowering tier prices is the only way to increase the number of SL users and keep up the Lab's profit margin, or you can watch as SL and Linden Lab go out of business having refused to accept the reality of Economics 101 at work.

cube republic

OK Linden Lab should do the following:

1. Lower tier price. This is a proven working business model. When homesteads were cheaper loads were rented out. When the prices increased loads were dropped.

2. Offer incentives for landbarons so they don't get cut out the equation. This at least takes some of the responsibility from Linden Lab to market their product.

3. offer new land packages staring with full regions with 1000 prims. Extra prims could be subscribed to via a control panel on the website.

4. Start a planned phase out of mainland. After all most of the mainland is now for sale as your abandoned holdings. Instead create themed island clusters with covenants and building codes. Tropical/jungle/medieval/snow etc. Get rid of land flipping and make access to these clusters part of a new attractive subscription package.

5. Make it easier to rent and name land like the cloud party model. It's a two day ticket ride to have your friend as a neighbor in second life.

6. If people are aloud to set their private island to exactly that, private then provide an on/off switch. This way island owners who don't allow visitors can switch their sims off when they go to bed and save you electricity.

7. Of course all the above suggestions would generate more land rentals which in turn allows for more content sales which means more lindens going through the marketplace.

8. Advertise more, use marketing, place adds on 3D websites, hold competitions on said websites. If you're going to steam then hold a competition to develop the best bells and whistles game known to all grid kind! Prize could be a free region for a year and some cash. Get people involved with your product instead of this almost decade long moan directed at you from all your customers.

9. Allow power users to rent or connect their own hardware.

10. Create more interesting and usable land shapes like the mega region model so devs can make interesting games such as racing car games that may win over the steam crowd and existing customers.

11. Build it they will come

cube republic

Also if I may add, I rent a homestead from a land baron. I'm stuck between a rock and a hardplace. I'd quite willingly rent more land, but my next jump up if using the private island metaphor is 15k prims. So in theory LL are missing out on extra money I'd be willing to spend.

foneco zuzu

My faith in SL is growinf steady as i see some nasty bugs being sorted out!
Crossing sims is getting better every day!
A ride on Corsica, by bike, this weekend for more then 2 hours straigh without crashes!
Nascar races without lag, with the track full of cars!
More then 100 tlp without a problem ojn ZIndra (Looking for a spot to buy, we found an amazing one at only L20, m2, really cheap considering the place!)
So LL got a new premium member (My Love after 3 years moved on, cause She finnaly realized the advantages of buying land on mainland!)
LL needs to keep solving and sorting bugs, improving mainland (It is amazing how they made the Corsica rock texture the most horrid possible and made the road the most lovely one!) and making sure that is worth being premium, making more auctions!
Land Barons can still provide, like the united sea sims made clear, a good alternative, but owning nothing but to the Lab, for sure has its advantages!
And its pretty amazing that on Zindra, most of the residential sims are open to public acess, wish means it is the perfect place to fly with a plane!



foneco zuzu

Hoo and im sorry but, old comps and old viewers just dont mic anymore!
Its time to:
Move to another grid if your comp can't hold Sl anymore!
Move to another grid if you can't deal with the V3 interface (Must have to say, its hard but as one gets used to it, it becomes much better then v1)!

shockwave yareach

I love SL

I can't stand how incompetently LL is ruining their product though.

What got me hooked is that it's a virtual world where you can be anything, do anything, and no harm done. A place where it does not matter who you are or what you are in RL -- in VR, you have a clean slate and can make your VR self to be whatever you want. And if you want to build a fantasy land in it, just pay up and build it.

And LL decided that it had to force people to behave the way LL wanted, to live where LL wanted (mainland) and to stop doing anything creepy, sexy or odd, all to protect their attempts at selling the company. And LL has priced itself and bait/switched itself out of the reach of so many people who love SL and want to be more involved.

Here's an idea for you LL -- instead of requiring premium as a prerequisite for buying land, have the premium membership become a free reward for ponying up a credit card and buying land. Getting a 4K parcel is 30$ a month, which is already getting pricey for a monthly charge for a game. (And like it or not, it comes out of the game budget in most households). But at 40$+, it goes out of the reach of many budgets.

Give away premium with land ownership and simplify the TOS to say "What you do in your land as long as it is legal in your RL state and isn't visible from other parcels/roads is your business", and you'll help things some. Giving EVERY private sim owner the same discount from ATLAS would also expand SL a great deal. And you can't say it's unaffordable -- they are doing it right now with their best bosom buddies.

Metacam Oh

A proposal that won't send land barons in revolt? Perhaps let them know SL is shrinking and eventually they will be on the hook for a lot of tier to Linden Lab when that happens. If land barons are the ones holding second life back, shame on them.

Melissa Yeuxdoux

Thinking purely in terms of a virtual world, tier = virtual property tax. The logic behind the Laffer curve applies. If tier were zero, everybody would buy land, but LL wouldn't get any money (at least for tier). If tier were so large that land barons couldn't make money, they'd leave and LL would also get zero money for tier. There ought to be some optimum in between--the only question is where are we now, and how can we tell?

Sir Cork

I began with SL when it was released. I played and advocated for years. I have owned land and even regions before, but quit, many years ago. Why? Because despite tier, pricing, and all the things this thread is going on about, the system is just laggy, graphics suffer on anything but a supercomputer despite much more complex games with higher visual "costs" running just fine on same systems, and because even when everything works good, you are still standing around bored in a ghost town.

The land problem is a red herring. If there were thousands of users to sell goods and services to in the world, I'd pay the price for the rent. Poeple don't complain because ad space in Times Square costs too much, because the rewards are there. However, trying to charge Times Square rent in Mayberry's town square, empty of people to see it? Stoopid.

Fix the mechanics, update the graphics engine to be at least as performance oriented as a ten dollar discount store last-years game title and get some people in here. Any discussion of land cost without anybody to visit it except it's owners is just sort of out of sequence. Unless you consider that those same land owners are the only ones producing any compelling reasons to even log in, and as they get priced out of being able to do that, the world dies an empty, lonely death.

We need users, then real estate discussion will make sense.

Frankly, I pretty much quit when they banned poker anyway. I really liked poker inside SL :) But that's not LLs fault. That's the gubments fault and an entirely different thread :)

Sir Cork

Just fired up my viewer, probably for the first time in 2012, and on the home screen they are proudly advertising "FEATURED EVENTS" which contain a whopping 9 people. The biggest one has 25. Any further questions about land cost should be discontinued until there are some people there to give a rat's a55...

Remington Aries

An astonishing blog post and some passionate remarks about it.

To the point; the article smacks of “Let them eat cake”. A good pice of journalism needs to connect to the reader, not preach to the crowd. The virtual one percent comes across as the mafia, not in the sense of organized crime, but in terms of treating those outside the inner circle as insects, no quarter or compassion given regardless of the consequences.

It is rare to find a company change hands and genuinely be asset stripped from within. Most boards want to keep the golden goose well fed regardless of the fact they may lack the skills to do so.

Second life and its pricing policies were born in a world of 1mb internet speeds, where anything above this, and in addition the data storage that goes hand in hand with it, meant serious sums of real money would need to be produced to pay for it.

As of now, an extra 10g of space on a large drive is cheaper than a coffee, and home internet speeds have gone from the aforementioned 1mb, through to 8, then 20 and now thanks to fibre, up to 100mb. This is a home connection let us remind ourselves, not a commercial net server. Routers now come with NAT looping as default. All the chess pieces are out beyond the line of pawns and in positions to strike; check mate is imminent for Linden Labs.

If Linden Labs and any supporters who draw a wage from association continue to defy the most basic aspect of free market economy, they will become unemployed. The rule of cash changing hands needs stating to the ivory tower and those who reside there - the customer is always right.

I began my part of Second Life, Empyreal Dreams with my partner under one rule: it must pay it's own way, no matter what. If Second life is a virtual world with an economy, this in theory is entirely achievable. Make items people will buy, sink the money back into expansion and grow. The trouble is, it just doesn't work beyond a fixed economic and virtual land space point. The land fees are fixed at the end of the chain and they have remained high despite the falling costs to hosting mentioned above and the dire real world economy we are all immersed in.

We reached an economic tipping point where time invested in making goods to sell meant less time for creating art builds, until it reached a place where all we were doing was making product. The art stalled. The root cause of this stalling was the unwavering and inflexible land tier fees.

My let them eat cake reference may lead you to think in terms of virtual revolution as happened in France.

However what has happened to Second Life is more a reflection of events across the channel to France; The British tired of oppression did not tear down the walls, they climbed into ships and crossed the ocean to a new (virtual) world.

And I joined them.

Dragon

If private regions would drop to US$100 Setup fee and US$100 monthly tier maintenance fee, myself and 10 others i play SL with will get a full sim in no time, I personally rent a private region from a friend that owns a couple of sims at a rate of US$350, yeah is US$55 more a month of what LL charges but I'm not willing to pay LL US$700 for setup fee + US$300 of first month tier.

Studmeister

Heres the thing. I have been reading up above. I believe that a $1000 USD setup fee is rediculous. The HP computer that I am running right now, could probably handle a full prim sim with it's exisiting hardware configurations, and only costs me a total of $600 from a rental place(I was a computer engineer for 26 years before becoming disabled). I dont think that the monthly fee needs to be lowered, as if someone purchases the sim, they can subdivide and sell off parts of the sim to others as a private landlord. I think the setup fee needs to be cut in half. After all, what exactly is that one time fee paying for? A new computer? I dont think so, because you need a computer to run the virtual world anyway. So, a $500USD fee, would be more appropriate, and would open it up to more and morepeople.

Sharraki

I have read most of the posts above and am in awe of the knowledge and ideas of many of you. It makes me think that perhaps Lindens underestimate the sophistication of many SL residents.

I've never owned a full sim but I've had half a sim and other sized parcels since I first joined SL in March 2007. I engage in a wide range of activities in SL - combat/RP, building, exploring, shopping and now blogging. I have a lot of friends who are creators and who play in various combat-RP universes.

I have seen many combat sims/universes fail largely because of the tier costs. The die-hard 'combat junkies' who can generate lots of traffic tend not to want to rent parcels in these places. And mostly, RP alone does not generate significant traffic. More and more of my friends are migrating to MMO's because they're fed up with one place after another going out of business, and they want to stay with their friends who are going elsewhere to have fun.

Lately,I've been seeking out places with high traffic to do critiques of fashion and sim design. I have been really shocked to see that, overwhelmingly, most places are empty. These include combat universes, shopping malls, sims featured in the Destination Guide, and event locations. Mostly, the ones with consistently high traffic are a few sex sims and some dance clubs.

If the bulk of SL traffic is going to consist of dance club patrons and pixel sex seekers, I'll be leaving SL. And I'd be sorry to do that because I've seen some absolutely stunning builds, I've had huge fun in combat/RP sims, and I've spent a small fortune on textures and clothes. My friends who are creators make things in SL for fun rather than profit, but I can imagine many of them will lose heart if no-one's interested in buying what they sell.

I know a LOT of people who would love to have a sim and who would spend more time in SL if they could afford one. Their activities would help to generate more interest by other people in spending more time in SL.

At some point the tier and sim costs become absurd for many people unless you can profit from it. My earnings per hour in RL far outweigh anything I could earn in SL and the last thing I want to do in SL is be engaged in business. I simply will not fork out $US295 monthly for tier but I WOULD pay a third of that tomorrow if the tier cost were reduced. And so would many other people I know.

When I started playing in SL, Lindens used to do customer surveys. I haven't seen one of those for years and that bothers me.

Perhaps the remaining SL residents should do a petition to Lindens or some kind of protest action!

Nomad

LLs profit was estimated at 75 million for 2011, in 2012 they lost 12% of the private grid they = a 9 million loss for 2012. these figures might be more a less a little but the 12% loss of regions is legit and LL cant run like that for very long

The economy will push tenants off full regions to parceled lands the smaller estates will benefit from that. I expanded my estate by 8 regions in 2012 and run in the high 90% occupied area..

The larger barons created sub estates ( a bulk of regions managed by another, parceled and run by someone that appears as a owner on the land but really rents the regions from the larger estate barons)or acts as a manager. The problem is service, the larger estate barons still have the only call me if its region related and impersonal but for clicks of friends in themed areas. This management style dribbled to the smaller sub estates which are not doing so well.

LL has to lower tiers or at least standardize them for all owners if not with the OSGRID availability a lot of the smaller estates will take there friends off grid and call it a day utilizing the LL linden token exchange to be used as a pay system medium for it and there will be heavy issues..

Also to be viable for new platforms entering mainstream areas that flow billions vs millions they will have to clean up the logo image of their flagship SL. If not it will as with any business be used against them if they get to large in mainstream. Most games in mainstream cater to the 8 to 30 bracket and premium accts give you everything, so to really beef premium accts hows this.. Free HS, free starter nice avatars, boats, planes, cars, bikes, creative support ect for premium acct. That would bring in subscribers.

The mainstream area of gaming platform owners and critics are not concerned with how much a logo makes that can be fudged nor how many avatars are in the game, that can be fudged also, the value of the company is based on how many CC cards monthly is paying or how many subscribers however they pay it.

They will have to do something who knows what sooner or later, its just a matter of when.

SaveSecondLife

The problem with the decline in SL is not the monthly tier fee. The root of the problem is the rise of freebies on The Market Place. Content creators and builders are being undercut by people giving away products for free or selling for paltry L$ on The Marketplace. Decreased revenues for builders and sim owners translates into more and more sim owners not being able to pay their monthly tier anymore.

pixels

The Land Barons are revolting. I so do love a good double entendre. :)

I like the sliding scalable menu concept for stand alone private regions -- based on a $75 set up / $75 month tier fee for a Homestead with 3750 prims. Pay less for less space and/or fewer prims, pay more for more space and/or additional prims. Have minimum and maximum limits for private region size and number of prims.

And standardize the set up fee @ $75, regardless of what size private region you get.

LL can still offer their premium monthly membership with special perks/services/access/privileges.

People are leaving SL -- not because it's a ghost town -- though that is becoming a more frequent experience -- but everyone I know who has bolted left because it's too expensive -- stores are closing left and right because of the full region costs -- the real world economy is not rapidly improving -- justifying spending thousands of dollars on virtual land and goods that could at any time go "poof" is simply not an option for more and more people.

LL could do so much to encourage growth -- beside lowering land fees they could also offer discount incentives to bring back the non-profit and academic sims which got driven out when LL nixed their discounts.

LL has made improvements to SL, albeit they've been slow in coming and they've had some bizarre missteps along the way like the clunky and fugly Darth Vader viewer. However, the addition of mesh has given creators far more to play with and the ability to create more realistic content.

Lowering sim costs is a win for everyone, including LL.

And they also need to stand behind their own currency. They should allow tier fees to be paid to Linden Labs in Linden Currency -- making people cash out their Lindens or pay with credit cards or Pay Pal to pay their monthly tier on their sims doesn't make any sense whatsoever if a resident/member can pay the owed amount in Linden Currency.

I still see endless possibilities and potential for virtual worlds but if LL continues with it's current pricing policy, they will price SL out of the virtual worlds market.

Posted by: pixels |

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