Comment of the Week: Why Linden Lab No Longer Reporting SL Stats Might Be a Good Idea

Last week when I noted that Linden Lab will no longer report Second Life user stats and opined that this was a bad sign, famed steampunk land baron Desmond “the Guvnah” Shang stopped by to offer his thoughts in Comments, and argue that it might actually be a good idea:

"Oddly... this may not be a bad sign. It's one of the few decisions recently made that I wholeheartedly agree with. TL;DR explanation: Behavioral economics." After the break, read Desmond's longer explanation, which I don't quite agree with, but am definitely now considering:

Longer explanation: Say it's your job to keep the grid going at maximum potential. Just as growth has momentum, so does contraction. Speculators, 'word on the street' and all sorts of other factors can amplify positively (2007 era hype) or negatively (now). So why poke yourself in the eye? Why poke existing residents in the eye? There are plenty out there working hard enough to do that already.

In a world where perception is truth, it's especially damaging. And where is that truth, really? It's difficult to get an 'actual value' story except for those two rare instances during the transition from perceived feast to perceived famine (and back) ~ precisely those instants when it's a "non story" anyhow.

Imagine if AOL's image and stock price were properly valued throughout its history. What a fantasy that would be! Instead, we get hype and anti~hype, no exceptions.

So... does this mean they shouldn't be transparent? Of course not. But let me put it this way, if your local mom and pop grocery store, your favourite gas station and your cardiologist all started reporting the number of times they had a downturn, what would you have done? What would everyone have done?

Those of us that really care, have Tyche Sheperd's stats, though really... who honestly needs even those to know about the grid economy? We all feel it.

But the big story isn't an X% decline... it's the fact that we are all still here talking about it. As horrible as things are, there is more right than wrong in this picture. Even now.

Two factors here. One is the individual laundry list of domestic issues; the other is the entire online "log onto a platform of some kind" industry. Both are hurting. I saw a good article on this a month or two ago; can't find it now to cite it but essentially it's a tough time these days to talk people into paying for yet another online subscription for anything, across the board.

I see all this as a sort of natural process; consolidation, or shakeout if you will; time and technology, businesses and markets move forward. In all change, there is opportunity. I see this as a fantastic opportunity for a re~think of the business model; perhaps one that lowers rates and causes the ultimate explosion of such technology across the world. Could it happen? Yeah it could. Perhaps not in a purely 'main grid' style ~ perhaps we all wear Linden Goggles some day and are able to 'see' people's avatars in our living rooms if we wish, who knows, sipping virtual white wine. The future's a big place, and technology... gets adopted, moves forward. In a way it's good to see some forces (economic or otherwise) still molding and shaping the basic premises of the world. Without that, we'd have a giant anchor holding us fast to 2004.

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Comments

[Nyoko Salome]

righteous, sir desmond! ;0

i agree with much of the substance of his post; i think we could "kill the forest" by nitpicking the trees so much. how many times have we heard pundits cry 'sl is dying' (even back in the hype days of 07)... and why? 'because - even if it is comfortably profitable, making money - it isn't 'growing fast enough''...

so it's "successful" but just not enough to satisfy punditry? why does "shelf life" never enter into their opinions?

that's a phrase i've been digging the past few years, "shelf life"... product design that lasts and doesn't outgrow its own "success". i keep getting the feeling that if the pundits had their way, the lab would have sold themselves out to some other big game co, had -all- adult regions and products deleted, then run commercials on tv to "make" people buy it... which we've seen so many casualties in the past five-to-ten years.

:) nope, 'live small; think big; think shelf-life' i think is the bestest way to keep going into the future.

[Deep Semaphore]

What a relief that I am no longer concerned about whether Linden Lab survives or not. Joining the opensim bandwagon is quite liberating.

[Pussycat Catnap]

What gives with all the Open Sim pundits making constant comments about 'join the faithful'?

I'm starting to feel like the Jehovah's Witnesses have come to the door to share the good news... :)

You know, ok... so Open Sim is better than sliced bread. We get that now. Thank you for letting us know. Again.

[shockwave yareach]

This is not a case of the gas station having to give me quarterly reports. I'm not living and working in the gas station. My fiscal health does not depend upon the gas station owners knowing what they are doing.

SL was sold as people OWNING their virtual land. And OWNING their own virtual businesses. As such, LL finds itself a government as well as a private business. And yes, Americans DO expect their governments to be transparent to them. Had Phillip said everyone would be simply leasing server space with copious lists of rules at 8X going prices, nobody would have touched his silly platform. And that still goes for today as well.

We expect our governments to be transparent. We expect our businesses to deliver what we paid for. LL has not done either of these things, and that is the heart of the problem. We cannot trust LL as a business partner or a virtual government.

[Ann Otoole InSL]

OMFG HOW WILL WE KNOW THE SKY IS FALLING!1111

:P

[Ezra]

@Pussycat

And any of 'em that believes OpenSim can survive without Linden Lab doesn't inspire much faith in me about OpenSim-based grids. I'd much rather see a culture of loving the better things Linden Lab accomplishes for Second Life. That'd indicate to me an interest in seeing OpenSim do as well or even better.

It's not Second Life that's stagnating and failing to wrest free from a niche, its the entire category of virtual worlds that Second Life represents. If Second Life grows, OpenSim grids grow, and vice-versa.

It's the silliest thing in the world for OpenSim proponents to wander around wishing death on Linden Lab and Second Life. Be a fan of this brand of virtual worlds, quit it with the hate.

@shockwave

If all the energy and text spent bashing Linden Lab over the part of that blog post stating this:

"We are discontinuing regular reporting of aggregate economy-level data"

Was instead spent on discussing this:

"Moving forward, we will instead focus on improved reporting tools that help individuals better manage their businesses in SL."

Then maybe we could productively encourage a better solution for Linden Lab to provide, like a return of the daily economic feeds except a whole lot better. Anything except tunnel vision on the bad part.

[Ignatius Onomatopoeia]

Linden Lab is a privately held firm...no stockholders wanting an annual report.

That makes any reporting LL's call. Perhaps the reports were just another relic of Philip's utopian ideas for a world "we own."

Clearly it's the company's decision. Just as, Pussycat, it was mine when I went to OpenSim.

But I hope SL does continue, and thrive, because we educators kicked to the curb by LL do depend on the "Old Country" (Lalo Telling's term for SL) to hold big meetings and showcase bits and pieces of our work, until OS matures as a platform.

[Masami Kuramoto]

In almost all the analysis that I read about the grid's decline these days, there is one important word missing:

Ponzi.

Those who understand what the word means, what it stands for, realize that Second Life has a snowball's chance in hell to survive.

What is the typical life cycle of a Second Life resident? They start as a noob, and then they acquire skills. Some do it fast, others are slower. But given enough time, everyone ends up more experienced than they were on "rez day".

As we all know (or should know by now), Second Life is a zero sum game. Everything has to be paid by someone, and the total amount of money taken out of the game (including Linden Lab's share) cannot exceed the amount that goes in.

So you have all those noobs getting smarter and smarter, and at some point their inventories get saturated with stuff, and their excitement for shopping and 3D chat wears off, and they stop being net consumers and transform into net producers. Now they are content creators or landlords and expect to cash out instead of pouring more cash into the game.

But in order to do that, they need fresh noobs following in their footsteps, assuming the role of net consumers.

This is what we call a pyramid or Ponzi scheme. Such a scheme can work well for a long time, but at some point the game runs out of noobs to pick up the slack, and that is where we are now. The SL economy has too many sellers and too few buyers. Hiding the numbers won't make them go away, and there is one number you cannot hide, and that is a merchant's bottom line.

[elizabeth (16)]

what Ezra said to shockwave

[Arcadia Codesmith]

Read the piece on Raglan Shire. And riddle me this; does Linden Lab have the sole power and responsibility to promote and grow the world?

They need to continuously and aggressively improve our tools and kill bugs and graphic issues (alpha bug in 2012? REALLY???).

But crafting experiences compelling enough to draw people in and keep them here, that's on us. We're the world builders. We're the design team.

Linden Lab better start treating us as such, and we'd better start acting as such.

[shockwave yareach]

@Ezra: As a businessman, I don't do business with companies which fail to deliver products as advertised. That means OWNERSHIP of virtual land.

Now. You may dress it up in any language you like. You may say I'm concentrating on the negatives. You may say that I'm bashing the lab. But the harsh reality is that I USED to be one of LL's biggest Cheerleaders before I figured out that SL's problems are not technological -- they are managerial. And as several CEOs passing through have not been able to fix the management issues with SL, I have to conclude that the board itself is responsible for the actions which would be criminal if *I* were to do them. I don't get to sell you a car and then say no, you don't really own the car despite what the paperwork and receipts say.

SL is declining, faster and faster. Sims are going poof and customers (yes we are customers) are quitting. Any real business owner would be concerned about that and take steps to correct the faults which are causing people to stop spending money with you. LL is not fixing the ship. Your guess as to why is as good as mine, but hiding data like this while promising to one day have better data (like one day they'll fix the simcrossing problem) causes nothing but more distrust in LL and foreboding that the entire thing is about to get switched off.

So if the objective is to avoid panics that make people quit while they are ahead, hiding data so business folks cannot make informed decisions causes the very panic it was designed to prevent. As usual, good(1) work Linden Labs.

(1) for extremely loose interpretations of the word, "good".

[Metacam Oh]

@Arcadia; How does that process work, explain it to me, how a user goes from the Tinys website, to the Tinys in world with the current set up? Good luck getting new signup from A to B.

And I agree that the users are the best promoters, but we have no tools.

Now give the Tinies a developer API so they can sign people up on their website, let them have a tailored viewer that plops the new people down right in Raglan Shire, allow them to offer their own freebie avatars, now we are talking. Currently the situation is you send people off to the SL webpage and pray for the best that they find you.

[Desmond Shang]

Heh!

Hey Hamlet, if you like, I'll write a proper blog post for you, gratis. My comments are never decently crafted for prime time!

Pretty sure what I'd say would rock some people's worlds... grin

If you want it, of course. I'll tell you why Second Life still matters, in a *huge* way, and it looks to me like we are going to begin another incredibly massive, much longer cycle Virtual Worlds round of hype (hype 2.0?) later this year that will swamp anything anyone has ever considered. Think: tablet market pre~Apple. Though not directly to do with SL, it will be close enough. I'm dead sure this platform and all the opensim variants will benefit to some extent, from the knock~on effects eventually.

And I know I'm not the only one seeing it; in fact the clues are everywhere, and I'm seeing certain companies make definite 'early adopter' business moves all around me. I wonder if one of Linden Research's 'black projects' will cash in on this? If not, I'll be quite surprised. I presume they have people 50 steps ahead of all of us, paid to think about these things full time.

* * * * *

Regarding the Ponzi thing... this is a worthwhile thing to consider, but I really doubt that Second Life is a Ponzi.

Though I'm open to being proven otherwise I just don't see that. Ponzi schemes rely on 'new money' to support the old, and generally go gangbusters until they pop.

What I see, appears to be the opposite. Oldbie user's 'old money' appears to be supporting the new residents, far more than the converse. It's the people who have held land for two to five years, and continue to do so, that pay for power, data centers, streaming, voice and all those other expenses that the "won't spend a dime on land, $L or goods" people happily consume.

Do remember, though I can't share it, I have seen retention and lots of other stats for the entire grid for *years* from my time as a community gateway owner. If there was a huge influx of cash from noobs, trust me, my little capitalist hands would have been all over it. In a word... there isn't, really. It's the dedicated longtimers that are propping up this world. And that, is both the answer *and* the problem, in a nutshell. But fret not, the world is about to change :)

Des

[Tony Rossini]

Second Life hasn't grown for 2 reasons and both are historical problems that have nothing to do with outside forces like a RL recession or even Tier costs.

LL has had a long history of not marketing it's own platform. Where do you really see it being advertised? LL have either been lazy or behaved "Scrooge" like when it comes to Advertising & Marketing bucks$$$ By contrast other MMOG platforms have grown during a recessionary period...the likes of IMVU 3-fold in it's online concurrency since 2008/9....Habbo Hotel has also grown. These are inferior platforms to Second Life...so there's no valid excuse really!

I'm not saying that LL should spend huge amounts on TV commercials like Blizzard on WOW (They couldn't afford it anyway)....but they should be at least be matching the likes of IMVU & Habbo Hotel with Banner advertisements across the Internet. That's do-able!

Second Life is FREE to play, so no hurdles there whichever way you cut it. At least 50& of repeat monthly logins don't spend a single Linden Dollar in SL. The platform is being carried by the 20-25% that do spend more than 2k Lindens per month. A new Avatar can practically get by on the masses of quality freebies found In-world or listed on Marketplace....that includes all Avatar related products.

The 2nd pitfall that prevents growth to Second Life, are it's low historical retention rates. If Linden Lab can unlcok the secret of keeping it's new accounts and they have tried various means....then we'll see gradual growth again.
I think bringing in more fun things to do..is the way forward. Linden Realsm and the growth in the Gaming community is in the right direction....to really maximise that potential it will require better server coding & physics.

Of course SIM tiers are overpriced, they were ever since they were increased way back in Nov 2006 (announcement), however the reality is that LL has large overhead costs and salaries....and wouldn't be able to reduce them by much. You cannot make comparisons with other OS Grids, they don't carry the same level of infrastructure nor overhead costs....so of course they can rent out their Sims at $75 p/mth! (How many staff does Inworldz have? Do they have their own Offices?)

LL are not going to reduce them right now anyway, as they've lost 1800 Estate sims since Jan 2011, that's approx about $4.75 Million USD annualised income gone (that's assuming very few Grandfathered Sims were handed back to LL) There's no guarantee that by cutting $50 off ther current SIM Tier rates would stop the slide....it would be a real gamble.

LL tried a promo exercise back in Oct ....giving away free SIMs (no set-up costs) for Tier only....how did that work out? Apparently only 350 took up the offer....and i'll place money that a good number of those have now been returned back to the Lab.

Ultimately I don't think Tiers are responsible for stagnant growth. Majority of new accounts entering SL are not thinking of buying land or Sims or creating businesses ....if they can learn to walk and fly in straight line that would be an achievement in itself.!!
Since the introduction of Free accounts, approx. 50% of SL'ers don't or won't contribute to the economy. They will log in for free and continue to play it freely.....all the more reason to be flabbergasted at Second Life's lack of growth. It's FREE!!!!

[Ann Otoole InSL]

yea well reducing salaries is easily doable. Move LL to Austin Texas and don't bring then baggage along.

[Arcadia Codesmith]

Actually, I think Austin ought to be moved to SoCal. It's too cool for Texas.

@Metacam, yes! That's what happens when creators are treated as a nece$$ary evil rather than the essential core team that drives the enterprise.

When LL sees something like the Raglan Shire initiative, they ought to be all over it with offers of logistics and promotional support. Everything you mention in your post would be a good starting point.

When you stop shaking down your design team for lunch money and start providing them support and resources, you get much better design. And better design means more consumers.