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Thursday, April 21, 2011

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Seymore

The Linden Labs Visa Card, for every $10 US you spend, you earn 1L.

Anyway, I just picked up about $21 in L$ just now. Gonna buy me a corvette and a dog. lol.

Rawst Berry

It would be interesting to know how much money LL makes off texture uploads and marketplace tax.

Ezra

Why's it "fragile"?

It doesn't seem like the concept of "parcels" would exist if estates weren't meant to be split up between them by hosting resellers; which with "land" abstractions removed is essentially what estate owners are, resellers of CPU storage and bandwidth.

While 5,500 might be paying Linden Lab directly, how many tens of thousands more are paying those 5,500? And if they disappeared, why isn't it just a case of middle men leaving with the spenders remaining to find new middlemen or pay Linden Lab directly?

sirhc desantis

Oh no, to break it down into truly disasterous numbers - 100% of all estates are owned by the Lab :) Shock horror

Medhue

I think every1 vastly under estimates how much LL makes on the lindex.

Ciaran Laval

Erza hits the nail on the head, those 5,500 may be responsible for paying the bills, but the income generated to pay those bills comes from thousands of others.

Ciaran Laval

Haha sirhc, good point, one landowner to rule them all :)

Hamlet Au

"While 5,500 might be paying Linden Lab directly, how many tens of thousands more are paying those 5,500?"

That's the other problem, the number of Residents participating in the economy (for example, to pay estate owners rent) has remained flat for the last couple years.

Hamlet Au

(I just updated the post to add that point, thanks for bringing it up Ezra.)

Ciaran Laval

The point Ezra makes is extremely important because it permeates through the whole system, be it landlords or people who rent from landlords whom pay their bill due to their sales.

Mr Schnute

so SL is like all the other lifes where finances aren't evenly distributed by all the people.
I agree with Ezra on the middlemen, however, like all lifes, I don't want a single control over everything. Least there's the appearance of variety in business dealing.

Maria Korolov

Linden Lab should be worried... if those estate owners have great relationships with tenants, are good at community events, etc... they might be tempted to start up their own grids. Hosting providers like PioneerX are starting to offer turn-key grid infrastructure, complete with in-world economies, Web-based user account management, and economies. These services are new, but are getting more complete every day.

The OpenSim software itself is free -- grid owners just pay for the servers and add-on management tools. And prices are dropping steadily.

The big estate companies are well positioned to do this, since they already know how to rent our land and meet their tenants' needs. InWorldz and Avination have proven that there are successful business models out there for doing just that. Plus, they're not dependent on Linden Lab. If something happens to Second Life, all their eggs wouldn't be in that one basket.

Meanwhile, as land owners leave SL, land prices drop, squeezing margins for the estate owners. But the base price for a region isn't going down, even as prices in OpenSim continue to drop while service and technology improves. It could easily turn into a snowball effect. This is especially true now, that some grid hosting companies are starting to roll out scalable cloud-based technologies, allowing them to quickly grow their grids if needed. Even six months ago, OpenSim grids wouldn't have been able to scale to meet demand. Today, that doesn't have to be a constraint.

Can Linden Lab adapt fast enough? Or will it ignore the threat until it's too late?

Ann Otoole InSL

Trickle up economy. Thousands of people all making and selling content and buying stuff and renting land. The L$ congregates in the few accounts and those accounts cash it out to pay LL. So it is still the thousands of LL customers paying the bills.

Because of the simple glaring fact that some, or one, refuse to point out, because it serves their anti LL position, that were those 50 or so biggest payers to not have any customers paying them then none of them would be paying LL a single dime. So as long as they have happy customers then LL makes bank.

At least LL knows the real truth and they don't really care about blogger fiction created to cast doubt on LL.

As for Open Sim? Long long ways to go before it can really serve much in the way SL does. The rubber band physics are hilarious though. But Open sim is useful for static displays and very simple non physical simulations. But you can run one on your own computer and build static structures in private. There are use cases of interest for Open Sim. Maybe in 10 years Open sim will be where SL is today. Took LL 10 years to get this far. In 10 years I predict everything will have changed to something else so whatever.

Hamlet Au

"So as long as they have happy customers then LL makes bank."

But again, Ann, they're not gaining any new paying customers, and those that are in-world aren't noticeably paying more. This isn't an "anti SL" opinion; as I just wrote, this a big reason why Linden is pushing its ecommerce site, and expressed hope they succeed.

Ann Otoole InSL

I get new residents buying stuff all the time Hamlet.

Perhaps you should begin questioning the stats.

Ann Otoole InSL

Also, in respect to alternative grids, Meta7 is shutting down due to legal issues: http://forum.meta7.com/viewtopic.php?f=4&t=677

Graham Mills

I wouldn't underestimate OpenSim. My avatar attended the Intel ScienceSim stress test last week when a cloud-hosted megaregion got to at least 655 bots and avatars. For much of the time flight and chat were lag-free. Even at the end when avatar simulation crashed we could still chat and build. Granted that's not the out-of-the-box OpenSim experience but it shows what's possible.

Graham Mills

Again, as regards "very simple non physical simulations", I grant you that physics is an issue but for most educators that is not a problem. It depends a little by what you mean by "simulations" but I don't regard the work of Aaron Duffy, Wizard Gynoid or Erich Bremer as "simple" in their respective contexts. While I don't aspire to their level of sophistication, I've managed to rebuild much of what I created originally in SL and have used it at a basic level with classes of up to 20.

(...and the Intel stress test was this week, of course, not last)

Aliasi Stonebender

I'll concur with the general feeling that saying "5500 users pay 80 percent" is a case of lies, damn lies, and statistics. For example, the Confederation of Democratic Simulators has several dozen citizens/landholders, but only one 'owner' of record - the alt devised for the purpose of holding the sims.

I imagine it is much the same, if with less bureaucracy, with other 'landlord' accounts. Desmond Shang may own Caledon - but it's only because a lot of people pay him money so they can live in Caledon.

Emperor Norton

"So in other words, just 500 people (or groups of people) are paying 73% of that $60 "

It means Linden Lab has 500 more employees than it admits to. That's what those estate managers basically are.

Ignatius Onomatopoeia

If OpenSim is as primitive as Ann claims it to be, one wonders why so many defense contractors and the DoD itself moved to it (and Olive, a very different and robust technology) when SL Enterprise ended.

Dusan Writer told our edu group that before that time, about two dozen DoD groups were active in SL Enterprise.

Of course, we folks in "regular" OpenSim grids don't get to see the classified work with the technology. We're like Case in Neuromancer, who moves about in his little world, yet "high and very far away he saw the spiral arms of military systems, forever beyond his reach."

I'm sure these very serious VW users miss us, our drama, and our pie-charts.

Cinder Eichel

"But again, Ann, they're not gaining any new paying customers, and those that are in-world aren't noticeably paying more."

I wonder why two of my newer resident friends (three weeks old, and two weeks old) have just gone premium and bought their own parcels above the premium bonus land.

Landlords and (to a lesser extent) barons provide held hand and the step into land ownership, understanding management, prim count, etc things like Linden Homes can't provide, as far as no new paying customers, maybe go out and make some new friends rather than hunker on the 2D web supposing and "reporting" from facts and figures other people have produced you use to draw broad conclusions.

Medhue

Though, I might agree that LL has done some things in the direction of helping merchants, the results are questionable, and at the cost of hours and hours of pointless work by merchants. LL could do more to help commerce by fixing the inworld search, than any other thing that they could ever do for merchants.

If you ask me, the problem has never been attracting new users. The stats point that out. The problem was keeping them. So the problem had more to do with what happened after than getting people to sign up. Now you can argue about whether V2 is better or not, but all the same problems still exist when it comes to doing anything in SL. You have to know how to do something, then you better hope you have rights to do that on the land you are on. So even when you do learn how something works, you could waste hours trying to figure out why you can't do that everywhere. Not hours, maybe months. Then you throw on all the 4 year old bugs that LL refuses to fix, and you got a big mess.

Hamlet Au

Linden Lab's own published figures show flat growth of Residents spending L$, consistently over the last couple years. I'm not sure how "I know some new Residents spending Linden Dollars" is a compelling response to that data. New spenders there may be, but the overall trend remains flat (probably as old spenders leave or pull back their own spending.)

Ann Otoole InSL

Yet IMVU with it's horrible graphics, monster avatars, and hideous animations is growing and IMVU is likely to be on par with LL revenue this year after doubling annually from 11m to 25m in 2009 to 40m in 2010.

That is what all those ads on google adsense and youtube and all those prepaid cards to imvu credits you can buy in the grocery store do.

I think LL needs to revisit it's position on paranoia around accounts/L$ and start burning a ton of cash pounding the internet with advertising. The basic viewer and destination guide is there and the grid is pretty much empty of avatars so LL should be able to get new customers to places quickly. Plenty of room for more.

This is more popular than SL?

http://www.youtube.com/watch?v=dqy8UCa3Uq4

hookay. mass marketing works.

Markus Breuer (Pham Neutra)

The fact that a service provider like Linden Lab has some 500 resellers responsible for 75% of revenues should not be surprising to anyone. It says nothing about the number of actual "customers".

You would not confuse the number of Apple dealers or distribution networks reselling Apple products with Apple customers, wouldn't you? :)

And, while it is disillusioning - and maybe points to some significantly bad decision making at Linden Lab - the number of resellers does not even tell much about growing or shrinking population or paying population.

I am not sure 100% but I guess, that actually the number of resellers responsible for 75% of LLs earnings was lower three or four years ago, when big estates like ACS, Azure etc. were more dominant in the land market. The land market has become more fragmented after LL tried to "optimize" it, making it harder for professional outfits to achieve the margins needed for a professional operation. This has probably resulted in an improvement of short term results at the Lab. It might be one of the causes for making SL less attractive for regular (and new) users, though.

If you think back to the beauty of the early Dreamland, the great holistic concept of Azure landscaping or the first years of Otherland you might understand what I mean. All this beauty and diversity was financed by gross margins of the operations of large enthusiastic resellers. This is all gone. Due to Linden Lab's many optimizations the land business has become more "efficient" and low margin. The large estates have all cut out all "unnecessary" luxuries - otherwise they would be broke by now. The smaller estates are running in self-exploitation mode rarely a scalable business model.

A larger number of "customers" (the way you are using the term) points to a more fragmented market with lots of fluctuations for the real "customers" (those renting smaller patches of land). 10 Big resellers with healthy margins might actually lead to a more attractive offering to the real customers. But Linden Lab's CFO would immediately see opportunities for the Lab in such a market, probably. CFOs always think this way. Its their job. That's why CFO-dominated companies usually do not have a "great" customer experience ;-)


Arcadia Codesmith

The tier model is a dinosaur watching a meteor bearing down on the Yucatan with big, stupid, reptilian eyes.

IMVU, as silly and primitive as it is, gives you your own apartment for free. So does YoVille. So does Free Realms. So does Star Trek Online. Almost all virtual worlds and MMOs with any sort of housing system either give you a home or allow you to buy housing with currency you earn from game systems, "free" in real world terms.

SL is one of the only worlds in existance that extracts real money from your wallet for a place to live.

The land market is flat and stagnant because it's saturated -- there aren't enough suckers on the planet to support another level of the pyramid scheme.

Ultimately, the 500 aren't carrying SL, they're leeching it for their own enrichment. It's become rather remarkably like the real world.

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