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Monday, January 30, 2012


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Pussycat Catnap

Yeah but hey, Marketplace sales are up, amiright? ;)

They take a cut of what? 5%, off Marketplace...

That means ya'll done gotta buyz a whole lotta sexbeds to make up for all this land dat done gone poof.

Then, ya'z gotz to find a place to rez it. but wait, there's no more land left... Ooops.

(ok yeah, -that- kind of furniture will end up in your linden home... but what'cha gonna do after that? Go hit the 80s-rock-band club again in all your Marketplace-gotten-goods? You know, the one that shut its doors cause it couldn't pay tier...)

And short-sighted business models grand? O.o

shockwave yareach

LL charges too much for it. Simple as that. If you drive people away by not letting them enjoy SL anymore then there are fewer paying people to support the sims. And without paying people, we lose our sims. And when we lose our sims, there's less reason for people to stay. Lather, rinse, repeat.

I warned that we were near the tipping point where the disasterous fall would begin. Looks like we have begun our descent. Please fasten your seatbelts and return your stewardess to the full upright position.

Three things can save SL. 1) simply the tos to simply say "What you do on your land is your business so long as it's not visible from any road, and doesn't even appear to involve child sex." Simple and done with. 2) lower the tiers 30%. If you aren't going to do that, nothing else will matter. 3) after you've done the above, offer a "Welcome Back" program for people who have abandoned land -- they can have the exact same size of land back again for no more costs than picking up the new tier again.

LL under the mismanagment of M has loused up the community to the point where people are quitting, and nobody is bothering to fix the holes in the hull while the ship sinks. You can no more sell SL as a system instead of a community than you can sell Facebook as a system instead of a community. People having no community in Facebook don't bother spending time in it. The same is also true in Second Life. And LL is about out of time to figure out that we care about our communities, not their precious platform.

Eddi Haskell

Linden Lab must take an immediate step in lowering the cost of land acquisition and maintenance costs of at least 25% -- or face a situation in which it will never be able to arrest this terminal decline in the future.

The time for lower land costs is now, not when another 10% of land area is lost to an unsustainable pricing model that punishes landowners and rewards those who do not pay a transaction taxes on good and services.

Ignatius Onomatopoeia

@Pussycat, you are correct as usual.

If we were buying from Marketplace in real money, not spacebux, it would make good sense that LL's 5% helps them.

As it is, however, it's just a tax on merchants who will then have to buy more spacebux to pay rent. Or they'll plunk down the credit cards to pay real $ on tier. That is what LL hopes, I guess, but instead we see merchants scaling back their in-world holdings even more.

Less land, then, and less tier. Spiral continues down...so just up those fees when LL needs more income!

Keep following this reductio ad absurdum and you get this: all merchants will eventually have only a 512 with some magic boxes sitting there.

And maybe a sex-bed for after the trip to the 80s rock club.

Sounds like LL is cannibalizing their own customer-base. They ate up the educators and nonprofits. Now it's time for merchants. Roleplayers next!

Then, game over!

Pussycat Catnap

@Ignatius: Oh I didn't even stop to think that that tax isn't real... In effect LLs makes nothing at that 5% - they make it when we hit the 'buy L$s button' and use the 5% to try to get merchants to hit the button more often...

Which is a little odd, because if I were a merchant who sold a good amount of loot, I'd never need to hit that button - all LLs is doing really is putting all my stuff up for sale at 5%, but not letting my customers save 5%. But my customers don't notice that because my inworld price and my MP price are -REQUIRED- to be the same... so they won't hit the button any more because they buy it inworld versus MP or vice versa... I just make less, and yet LLs get nothing for that less...

Hmmm... makes you wonder why they charge that 5% at all.

(btw is it 5% or was my guess wrong?)

LLs is driving promotion of MP though - so if the 5% isn't where it makes money, where is?

Could it be that all they're really doing then, is making their 30-cents off you clicking the buy linden dollars button, and hoping we click that button more often... so much more often that it makes up for the loss of land...

Color me clueless, but I see a problem with this... I just don't see people clicking that button more often just because stuff is on MP.

Hamlet did a survey recently on whether or not we shop inworld more. The real question that needs a new survey maybe is: "do we shop more, period, than we did before MP?"
-but of course it'd need a good sample size, 1-5% of the active userbase at least. Not just us wackadoodles who read this blog. ;)

What I suspect was -desired- would be that merchants would have tried to 'pass off' that 5% fee onto the customers... but aren't we forbidden by the TOS itself from doing that? I know you're not allowed to charge 'less' inworld than you do on MP, but can you charge more? Yet... to pass the cost off, you would expect a merchant to charge 5%-more on MP, the very thing which is forbidden...
- because if you did do it, sane customers would shop inworld.

But of course if sane customers shopped inworld, merchants might stop giving up their land... and then SL would get healthier...

And we can't have that now can we? :)


Merchants won't even need a 512 plot for MB's with the Direct Delivery currently in beta testing. Soon a person will be able to run a completely landless business, offering demos via the MP.

Pussycat Catnap

"Keep following this reductio ad absurdum and you get this: all merchants will eventually have only a 512 with some magic boxes sitting there."

- Direct Delivery coming to an SL near you soon.

ie: no need to have -ANY- land at all. Magic boxes are going away. You can be the top merchant in SL and never log in at all...
- In fact I have to wonder...

Say I make an account 'X' - and I send that account a bunch of fullperm loot. Does that account have to log in to accept the items before she can list them on MP once Direct Delivery does live?

Or could I use an alt that has never ever logged in, not even once, to sell my stuff?


shockwave yareach

I still say that the cure to this disease is to limit the number of items you have on the market place to a number based on how much land you have. Take the number of prims the land your box sits on and divide by 30 and add 10.

A hobo can have 10 items in the marketplace while Chez Habenero sitting on an 8K parcel can have 62+10 items in the marketplace.

Both are essential to the future of SL. We cannot ignore one or the other.

Ann Otoole InSL

Mesh killed SL. The economy was held afloat by hobbyists. LL has time to work on ARC muting but no time to work on the glaring defects. So the aspberger balsa wood linux computer crowd wins. They won't be welcome elsewhere when Gurley shutters SL and heads to the Kapor "SL finally killed off" party.

Metacam Oh

I think the real question is why on earth are we pushing through in 2012 still with this asinine Linden Lab hosting all the servers ridiculousness? Let people buy land licenses or something and host on their own preferred servers for whatever the real cost is. You think low traffic sims need to cost 300 US a month? They can be hosted on peoples home computers for free (Or whatever the reasonable amount is to pay Linden Lab to be able to host your own land) This is the future of virtual worlds, we all know it, yet Linden Lab is fighting this to their own death. Wake up people.

Pussycat Catnap

"I still say that the cure to this disease is to limit the number of items you have on the market place to a number based on how much land you have. Take the number of prims the land your box sits on and divide by 30 and add 10. "

I agree with you, but wouldn't use any formulas.

I'd just say "marketplace can only list items rezzed on your land."

However it then becomes a boxed or not boxed question... But the same exists for shops, so this wouldn't be as much of an issue. Once you needed to have all those boxes rezzed, merchants -and- customers would see the added value of the shop as a place to display it all visually.

Dartagan Shepherd


Marketplace commission, like other sinks can be equated to real money, they're just not thought of as revenue because they're not a direct income. However, ask an accountant how this works and they'll tell you that it is income and on what side of the balance sheet it falls in real world accounting.

Money comes in from whatever source (tier, buying $L, premium accounts, etc.). LL puts some of this money into a global pool of L$ we call the economy. The more they take out of that global pool (which was purchased originally with real money), that's the ammount they get to keep in real dollars.

Take the last published quarterly report, where gross Marketplace sales were published.

Quarterly gross Marketplace sales: $1,183,000,000

5% quarterly commission in L$: L$59,150,000

Converted to real dollars at a rate of 260 (just because), it's roughly $227,500 USD for the quarter.

Roughly $76,000/month USD gross earnings from the Marketplace commission.

This isn't complete because it doesn't include advertising sales or purchases in real dollars (PayPal purchases on thr marketplace, which are inflated substantially from items purchased with L$).

Gross marketplace sales keep increasing as LL guides more and more of sales from in-world to the marketplace.

In real life accounting terms, this is money that just never has to go back out of the system, which is the amount LL gets to keep out of their gross income.

Only in terms of the virtual economy does this money bounce around from user to user and act as some sort of balancing equation or "sink".

So yes, marketplace commission and sinks are real money for LL, just not in the sense of revenue. The money has already been made before the commission and sinks kick in. Nevertheless sinks count as income that doesn't have to go back out.


How is it possible to estimate the revenue, when you don´t know what the sim owners pay? As far as I know, a large percentage of the grid is owned by huge estates and land barons. All of those get a significant discount from the Lindens.

Desmond Shang

The brass tacks 'business case' for Second Life is pretty simple.

Unlike many online experiences, it's one of the few that can charge some users hundreds of dollars per month, rather than the typical 14.99 USD or whatever. That's pretty important. It's why the servers stay on; everything else is secondary. Proof: if there were more money to be made by converting Second Life into an online plumbing store, how many among us doubt that we'd see faucets for sale the very next day?

As for the product... we aren't being sold virtual land, or prims, or anything like that. Not really. There is no implicit reason to ever 'own' a prim. Rather... we are being sold a degree of creative control, freedom of expression, and a chance to forge a unique identity. Particularly with land, the ultimate avatar attachment. Of course, selling our own data back to us, indefinitely, doesn't hurt the bottom line either. With the 'killer app' being, of course: each other.

That's the product, besides a few educational purposes which are largely off the beaten track. Opensim is a far better environment for corporations and schools, especially if you are dealing with data security or underage students.

* * * * *

I'm going to go out on a ledge here a little bit, and not blame rank and file Lindens for the decline of the world.

There are two factors: Lab induced and externally induced.

Externally induced: try the falling Euro and the difficult economy there. Nobody here is going to fix that. It's not their fault.

As for internally induced... yes, there are clearly price point issues ~ but I'm not worried about this at all. That's self correcting. 30 dollar Big Macs will come down to a reasonable price sooner or later. If a few execs lose their jobs during that natural process it won't affect the rest of us, or the company too much over the very long run. There's nothing that says a company has to be large, or make hundreds of millions to be successful. A company of 20 workers profiting by 5 million a year is successful.

* * * * *

There have been some severe mis~steps; for instance the last executive team didn't understand that "more bridges to the larger internet" led to an exodus, rather than an influx. It's easier, and cheaper, to keep up with SL friends on Facebook. It's easier, and cheaper, to buy and sell on SL Marketplace than own commercial virtual land.

These and others were business 101 level errors; in fact since the equity of land was destroyed by flooding the market in 2007/08, the current state of the world was pretty much written in stone.

Cutting back on land mass is actually a *healthy* thing for the grid; the fewer regions there are, the more it will balance with demand. I say that as someone who is cutting back regions myself right now.

The only problem with losing private estate land, though, is that other residents are being cut away with them. I see this firsthand. People who have been at a location for years face the choice: move, or simply dump the SL experience altogether. The vast majority aren't choosing that 2007 era product, the mainland. Instead, they are choosing Rift, or Star Wars the Old Republic. Stuff like that. Basically *anything* that can be done for two hours after dinner is Second Life's competition.

There are a fair number of us that could right the ship with little difficulty; the trick to being listened to, however, is not hoarse~throated repetition... that just gets ignored. And information that will put a multimillion dollar corporation back on track is quite valuable... worth a performance based million bucks easily, no?

Kodak was one of the early leaders in the field of digital photography research. Look where they are today, and how they got there ~ I'm sure they had a lot of highly paid, experienced executives all the way down. If only those guys had focused on the basic idea of customers thinking: "I want to take, keep and share pictures." Just saying.

Valentina Kendal

When I'm feeling nostalgic or bored, I ride around the old continents for the hell of it, Sansara being a favorite (Yadni's is still there!). While wonderful new things go on on the mainland, we know that much of it is abandoned SL circa 2008. From numbers I saw LL owns 40-some percent of mainland, and another 7% of it is abandoned. Why not sell some of those lands at a tier discount - get land back in the hands of people, which tends to keep them in world longer, revitalize the mainland, and get $$ into LL hands? Sure, private island owners would scream, but that's why we all live on islands right, because the mainland is kind of cruddy for what it costs? Just an idea.

Ignatius Onomatopoeia

Valentia, I need your computer.

I cannot drive anywhere in my vehicles except at a crawl. Sim-crossings are murder. That means my monthly road-trip is a thing of the past, so I'm thinking of buying a fake horse to try again. That might actually be fun, yet it's sad when you need 19th century technology to navigate what is supposed to be a 21st century environment.

Maybe I'll get a Steampunk mechanical horse, at least.

You are correct that so much of the mainland is abandoned. My old plot, abandoned in 2009, still sits there, unclaimed and unwiped. I just walked away when I was unable to sell it.

val kendal

Ignatius - nah, I have the same problems nowadays and it makes me sad. I ride on an old motorcycle from 2008, if I use anything more modern and primmy the sim crossings suck. I ride with only minimal prims and scripts on myself. I use only basic graphics, nothign fancy, but turn the draw up a little so I can see farther. I think part of the problem is that my inventory is much larger than it was back in the day, so that handoff must take longer - I haven't tried doing the same crossings with a newb alt. I was just riding around the snowy parts of Sansara and it was tolerable.

Alazarin Mobius

Increasing the premium account tier allowance to 1024 sq m would go a long way towards mopping up the abandoned land on the mainland without putting a dent in LL's revenue stream vis-a-vis tier payments. While it might not generate any extra income initially I feel it would improve the mainland aesthetically so that residents and n00bs alike would be less likely to flee the mainland. It would also help drive up the cost of mainland in a robust non-bubble manner due to the simple mechanics of supply-and-demand which can only be a good thing for LL.

Lowering tier costs and/or making the increments more granular would be very useful. It's those heart-stopping increases in tier that have kept me from expaning my land holdings.

Pussycat Catnap

"You are correct that so much of the mainland is abandoned. My old plot, abandoned in 2009, still sits there, unclaimed and unwiped. I just walked away when I was unable to sell it."

Older abandoned land stays that way unless a ticket is filed to have it listed for sale.

Many neighbors of such plots do not file those tickets because they prefer the safety of the known to the risks of a blighted build.

Outside of estates with "heavy handed themes" like Desmonds (bear with me for a sec on the term 'heavy handed' - I'm rolling my eyes with that term and will explain shortly), a -LOT- of estate land is even more blighted looking that mainland.

But its fragmented more, so we notice it less. Lots and lots of isolated ugly builds.

Those 'heavy handed' places? That's just a sanity covenant. A 'folks, there's a theme here, stick to it and don't get too fugly' - though there are a goodly number of horrid builds even in Caledon, most of them end up nicer, or move out...
- and put up rants about the 'heavy handed' covenant... :D

Mainland has this too... these folks show up everywhere. But since we're interlinked, you find them easier.

I originally left Zindra because these fugly blightly builds got too much to bear. I moved back to Zindra because the extreme prices of it have somewhat walled them into certain parts of the continent... ;)

I don' have any trouble at all with sim crossings myself, most of the time.

My systems:
1) a basic 2011 iMac. Bottom end one.
2) a 2009 Toshiba Laptop priced at $500, now $350 for the better updated version of same.

My avatar: under 1mb in scripts. Usually around 300kbs -or less-.
My camera: 64m distance 90% of the time. Usually only higher when doing screenshots that need a backdrop. Particles off or at 256.

Rarely do I get tossed, or lag, when crossing a sim. Over time I've learned to predict where it will occur if it occurs. I've also learned how fast my vehicle should be going, based on how primmy the builds around me are, and I've tossed some problematic vehicles in favor of smoother ones.

The thing is, I'd rather have rough sim crossings (mainland), than no sim crossings at all (most of estate).

I've moved fast enough to swim through the entire river chain of Zindra in under 30 minutes, and then around all of the linked up coast - and that's land FULL of over-scripted content/avatars...

I've done the same on old mainland roads, albeit at a slower 'touring' pace. And I've sailed vast tracks of Blake Sea and the Sansera oceans.

I can tour an interconnected estate, but in a half hour, I'd have hit all the roads and be done...

Pussycat Catnap

I agree that basic tier should be a 1024 - and that this would have a major impact on land usage on mainland.

My own solution to the tier breaks is that I have 5 premium accounts. But in the end I tiered up anyway and pay about what I would pay if I had had one account.

However... it made the road getting to that point easier to accept. I'm comfortable paying that now, but the jump to it would have been a shock when I first went from what would have been about the 8000m allocation to about the 16000m one.
- 5 accounts let me do it, as Alazarin desires, in steps rather than one smack across the face.

Making tier steps more granular would cause a -LOT- more people to tier up. Maybe not 'all the way' but event hat partial bit would be a revenue increase.

Though it has to be said... why tier up at all? There is only one reason left to own land now in SL: personal enjoyment.

Rental market: killed by linden homes.
Shops: killed by marketplace.
Roleplay Sim: Kill by no revenue because of above two.
Club Sim: See RP sim.
Art Sim: See RP sim.
Education sim: See RP sim.
[insert here] sim: See RP sim.

How much does -anyone- need to entertain themselves? Sane people (self -not- included) do not need 1000 prims to rez their personal home, furniture, and sanbox. Something I was thinking about this morning when looking at my land, realizing I was panicking because I -only- had about 560 prims left, then telling myself I was nuts...

There's no reason left in SL, really, to own more than a 1024 lot... Unless you're a crazy neko, er cat lady...

Arcadia Codesmith

Tier is unsustainable when other worlds offer so much more for so much less.

You might be able to get away with charging as much as $15 a month for a region. That's high end.

But with some clever instancing technology, they could drop their hosting costs enough to compensate.


Arcadia as usual hits the nail!
Look at me, im hosting now 3 full regions for free, being God on them via console!
And more and more contnet i found every day!
High heels, boots, great skins, well all any fashion like, can get on Os grid!
Plus free land if you can host it, as i do now, or really cheap good 1!
Lack of Havock physics make it a no go for same thing i love, like surfing and racing on the best cars, but then as you start building you realize there are many more things that you can use already and keep me fully occupied there!
So LL needs to do something really soon and better be to lift the burden on the ones that make it alive, the ones that rent and use their land!

Ciaran Laval

@Dartagnan There is only one way Linden Lab can turn Linden dollars into US dollars, that's by selling them, there is no other way of doing it, there are no accounting tricks that can do it.

Only LL know if that shoe is dropping. Zee once blogged that they could in theory, accept Linden dollars in lieu of tier payments, this would have caused all sorts of economic mayhem but in theory it can work, but both shoes need to drop for it to work.

As for the general post, tier is too high in the current market, Linden Lab need to boost other revenue streams before they can reduce tier, they need to work hard on this.

Dartagan Shepherd

@Ciaran They don't have to turn them into L$, they already have the cash L$ are based on.

Example: I start a game, I make $1,000 USD.

I say "behold, there is an economy" and convert $500 worth of cash into tokens that I invent.

I then charge $250 worth of sinks from those tokens from my users.

Bingo, now I have an extra $250. Never had to convert it. That $250 worth of tokens was only ever cash to me, I don't need to buy it or sell it as a company. I had the $250 all along, I just took away the ability for anyone else to get at it by charging sinks, and thereby get to keep $250 from a $500 "economy" I "gave" to my users.

So instead of keeping just $500 out of my original $1,000, I get to keep $750.

Like I said, really need to talk to an accountant on this one, there is no "conversion" for the company itself, it's never anything more than cash for the company, they're only tokens to the users and for whenever the company wants to substitute cash payments with tokens.

As for LL needing more revenue elsewhere to lower tier, sorry but that's false.

LL makes $75 million USD in profit. If for some reason lighting struck and they decided to only take $35 million in profit, they could then lower tier by $35 million a year with no extra revenue.

Ciaran Laval

@Dartagnan Linden Lab make their money on the sale of Linden dollars, be it direct sale of the tokens or the commission they charge on their sale.

I see what you're getting at, if you follow a Linden dollar sale circle around the marketplace, a customer who purchased L$1,000 and then spends all of it on the marketplace has in effect only spent L$950 because of the commission, but not all of the money follows the marketplace route and it still takes the customer or someone else to spend more money elsewhere in the system for it to hit the bank account of Linden Lab.

When you throw in direct delivery and the temptation for merchants to rid themselves of sinks such as show in search places and inworld classifieds, it becomes even harder to track this money cycle.

Sinks can most definitely generate cash, but other cogs in the wheel have to turn along with them, tier is direct income, it's easier to follow.


Personally as a land renter... I'm sick of paying 300 USD a month while sales continue to decline. An all time low and no adjustments being made to tiers to support the decrease. Further more... Why bother renting from some estate when they are gonna charge just a bit more then linden labs. Forget it!

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