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Monday, September 17, 2012


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shockwave yareach

And IF LL gave the same discounts to the little guys with their 5 - 10 sim chains, they'd be able to a) compete FAIRLY with the land barons and b) expand their holdings.

But giving the land barons a discount and still making me pay full price means I'm subsidizing the very people who now undercut my prices, because they get cheaper land than I do! It would be more honest if the lab simply took the islands under some trumped up excuse if it doesn't want us private sim owners to exist inworld anymore.

If the lab wants real growth, give all the private sim owners the same discount in ATLAS. Otherwise it's just a slow death -- contrary to what the lab wants, nobody loses a very expensive private island and grudgingly goes back to the mainland. When our homes are gone, so are we and so is our money. And all the private sim losses without any growth in the mainland should make that painfully clear.

Many deep pockets have been driven away, never to return. Don't lose the rest.

Scarp Godenot

Many people forget to factor into this equation the lousy RL economy, which causes a LOT of people to not be able to affort what they previously were able to.

The downturn in the RL economy which STARTED with the crisis in Oct 2008 continues to the present day.

A more accurate tale will be told when a full recovery of the RL economy is achieved....


"it's important to keep in mind that only 500 people really keep Linden Lab afloat."

You mean those five-hundred's tens of thousands (or hundreds of thousands?) of customers are keeping Second Life afloat.

Of the top land barons and their customers, only one of the two is necessary for Second Life's survival.


LL still makes a profit. They don't care. The end.

Oh, and in case any of you who have been around SL for the last few years have forgotten, the company that owns it is still a behavioral and market research firm....they.don't.care.

Arcadia Codesmith

Ezra nailed it. The "99%" are keeping both the Lab and the barons afloat.

Alberik Rotaru

Gosh. The 500 collect no tier from their tenants and fund the company directly? Damn I need to find one immediately.

More seriously, the thing that keeps an unnecessary oligarchy going in Sl is the idiotic rule that you cannot own a Homestead unless you own a full sim. LL keeps policies in place that ensure the existence of a narrow oligarchy. Amon bother brilliant policies LL decrees that only land barons can own Homesteads and that poor LL's customer base must subsidise the oligarchs.

'Let them eat cake' is not a revenue model.

Archangel Mortenwold

And who is it that's keeping those five hundred or so land barons afloat? They're not shelling out thousands of dollars every month because they can afford to pay it on their own. They're paying Linden Lab directly because they were making a killing renting out those private regions to other people who wanted a viable alternative to the hyper-laggy and crash-prone mainland, and during better economic times were able to pay the weekly tiers to the landlords. But the economy tanked four years ago and isn't bouncing back any time this century, so the renters are leaving, and with them goes the money they were paying the land barons.

So the land barons are looking at the writing on the wall and deciding that they'd best get out while they can keep their shirts. And with them goes Linden Lab's biggest source of profit-making. At some point something's gonna have to give and it's gonna have to be Linden Lab. If the company wants to survive it'll have to cut land prices to something reasonable so more people can afford to buy virtual land. The more people buying virtual land, the better the Lab can make up for any short term losses, which aren't even all that likely once people start flocking back to the grid.

Hamlet Au

"The '99%' are keeping both the Lab and the barons afloat."

Arcadia, do you have a source for how many SLers pay rent to a land baron?

Rin Tae

I have the slight suspicion that if a economy would look like this outside of SLs walled garden someone would have stomped it to it's deserved death by the use of preventing-monopoly, the very normal trade and market access laws ... seriously, I hope there are at least some people in with LL who have the alarm-signs spinning in their heads when they look at this sort of economy.

The less people own all the land, the less competition and the less possibility for otehrs to enter the market. After all no one can compeete with the dicounts the large land barons get and LL get to be bound to keep those few happy no matter what because the more land is owned by a small group of people the bigger the risk that when one of those leavs, the others wont be able to buy all the free land what in turn results in a giant drop in profit for LL.

The only two ways of how to avoid this that I can think of right now are, finding another source of moeny within SL that diminishes the importance of the land market to the point where loosing large parts of it wont hurt the profits, or lower the prices and/or introduce some discoutns and pricing/land size steps so more people can afford their own sim and the number of individual sim owners grows again placing the land market and LLs profits om a broader and more stable foundation.

Masami Kuramoto

Second Life is a basement room illuminated by 500 lightbulbs. Due to increasing mains voltage, the bulbs fail at an accelerating rate. Linden Lab could prolong the life of the bulbs by dimming them, but according to some blogger this is a bad idea because it would make the room darker. It's much smarter to wait for the total blackout. Yeah, that makes sense.

Two years from now, the blogger will be wondering why Linden Lab failed. Why couldn't they just RAISE prices and stay afloat FOREVER on the shoulders of the last land baron standing? Stupid Lindens...

Maxx Nordlicht

"The '99%' are keeping both the Lab and the barons afloat."

Arcadia, do you have a source for how many SLers pay rent to a land baron?

As the landlords (1%) aren't paying for empty sims someone must be paying the bills for them... 100% - 1% = 99%!

Alberik Rotaru

Hamlet, can you seriously imagine that the land barons do not depend on their tenants to stay afloat? Hint: Check the distribution of land ownership in virtual worlds that do not subsidise a small group of users at the expense of their wider customer base or maintain artificial regulatory restrictions against wider land ownership.

Hamlet Au

"Hamlet, can you seriously imagine that the land barons do not depend on their tenants to stay afloat?"

Of course they do, I'm just asking how many tenants there actually are. I haven't seen a definitive source.

foneco zuzu

LL needs to see United sailing sims convenant rules and make a big sell of private regions that would link Sansara to Satori!
Offer that deal to United sailing sim owners!
Make sure that there will be a way of reaching from Sansara, Satori and from there make sure Nautilius, Corsica gaeta and the Blake Sea can be fully expored by all (At least maje sure there will be only one sim open to all that connects each of the continents!
Then LL would promote living on Mainland as a premium member, by getting advantage of land auctions or abandoned land!
Also would make a discount in tier per m2 for those who would keep their regions open to All, in order to increase the number of regions where any can fly or ride or sail!
Lool at Zindra where most sims are open to all, and how it is lovely to live there and to be able to use all that still makes SL unique (Vehicle physics and how any can use them to travel!)
Ensuring that the main continents would be linked, increasing better cross sims (there are already a reality), making sure users will allow their regions open when not in use, for others to travel by them, that would make SL win on the only thing that keeps it on top of other grids!

Alberik Rotaru

I should correct myself. The land barons rely on LL to force their tenants to rent from them. The ukase that only full region owners can own homesteads has no advantages for LL and certainly has no advantages for any user who is not a land baron. Equally the subsidies to land barons do not increase LL revenues in any way or assist the user base in any way. Indeed the subsidies make the claim that LL cannot reduce tier ridiculous. If land barons own most of the land then most of the land already attracts lower tier prices.

Let us engage in a thought experiment. One fine day all the land barons have a rush of blood to the head and all leave LL at one hit. Does anyone seriously think that LL would simply surrender and shut down the grid?

No. They would change their rules so that anyone could rent directly from them. They might not like it, but that's would they inevitably do.

Arcadia Codesmith

"Arcadia, do you have a source for how many SLers pay rent to a land baron?"

I wonder how you'd nail down that number, or more importantly, how much revenue flows up to LL and how much gets diverted by the middlemen.

My perception is that almost nobody is shelling out the money to purchase and maintain even one sim, much less multiple sims, without the expectation of a decent return on investment... especially since they sold the educational/non-profit users down the river.

Even major SL merchants with private islands usually sublet space to other retailers, partially to diversify their offerings but mostly to offset the tier fees.

All anecdotal, I know, but it's an anecdote that made Ashne Chung a real-life millionaire. She worked her ass off to get there, but ultimately her payday came out of our pockets.


@Hamlet "Of course they do, I'm just asking how many tenants there actually are. I haven't seen a definitive source."

Tyche publishes the names of the top 10 private estates which own the 27% figure you publish. They're all cut from the cloth of their entire value offer being land resell. The other 490 are likely the same if Tyche ever revealed a list that long.

I think what's important is, because of Tyche, the answer to your question is knowable. You could right now visit all the regions owned by the top 10 and beyond's estates and count how many tenants they have based on how they've subdivided parcels.

What's relevant though? That obviously they're all utterly and completely dependent upon their renters or the exact count of tenants they have? I'd say the latter is irrelevant, it's sufficiently obvious enough that it's the tenants where the money is and there's absolutely no one working a day job to fork over $10,000+ a month to Linden Lab for fun.

It's also worth remembering that despite the top 500 land holders being responsible for most of the 50-60 million a year of Linden Lab's revenue, user-to-user transactions amongst us all has been as high as $50 million a month (according to the last economy-related press release on Linden Lab's site), so it's easy to see where the top 500's $5 million a month contribution to Linden Lab's yearly revenue comes from.

What's mind boggling is why Linden Lab would choose to sell -desirable- land (meaning not mainland or linden homes) directly only to some 500 estates willing to spend all their time reselling land rather than actually being able to create real value (interesting pixels on screen) for new users and each other.

Why keep the $295 a month after $1000+ in setup fees wall between their sagging $75 million a year revenue and the demonstrated half a billion a year in spending we the userbase have demonstrated spending in years we've been really enthused?

Yeah Linden Lab has probably blown their chance to eradicate the wall between themselves and record amounts of user transactions, but that's no reason to blow it more. If Second Life is in a downward spiral between Linden Lab's revenue and private region ownership then they have to price more flexibly and affordably. They have to price to appeal to more than the top 500.


@Arcadia "I wonder how you'd nail down that number, or more importantly, how much revenue flows up to LL and how much gets diverted by the middlemen."

We know based on Tyche that private regions account for $4.5 million a month or so of Linden Lab's revenue. That's most of their revenue. And ontop of that $4.5 million a month obviously a profit is being made by the land barons or else they wouldn't be doing it.

We also know that despite probably being in a decline from the record $57 million in a month of user to user transactions Second Life had in March 2010, there's still probably tens of millions a month in user to user transactions that easily account for the $4.5 million the land barons fork over to Linden Lab, and whatever profits they earn.

Tracy Redangel

I don't really see LL lowering tier. But I also think if they want to draw in new users, they need more options. Not everyone wants or needs to own a full SIM or Homestead, so why not offer smaller options? My husband and I currently rent a 1/4 of a SIM just for our own use. We really don't need any more. We love our landowners, but would I prefer to own my own 1/4 with my own land covenant? Well certainly.
If they don't want to lower tier...fine. But then I think they should offer MORE prims for that $300 a month. I don't know maybe they could have different options like a full sim with 30,000 prims for $300 USD, a 1/2 sim with 15,000 prims for 200 USD, and a 1/4 for 7500 prims for $100 USD. I don't know, something like that maybe. I wouldn't get my hopes up though.

Ajax Manatiso

Those 500 would scream to high heaven if LL offered partial sims. If you look over the situation, LL is between a rock and a hard place with no way out. Their hope is the spiral will finally hit bottom before their revenue become unviable.

Saffia Widdershins

When we started MetaMakeover (precursor to Designing Worlds), there was discussion at SLCN whether there was a large enough market for a show relating to homes, gardens and furnishings. Back then in 2008, the figures suggested that a tiny % of SL users owned land ... so why should they be interested in such a programme?

The point was - then as now - that although the nesting instinct among SLers is strong, most people choose to rent rather than buy. Buying a sim is a large and ongoing commitment; renting a parcel is comparatively fluid in comparison. So the land remains in the hands of the few (technically).

As a Brit, it's not a situation I'm unfamiliar with - I think the figure over here is something like 7:84 - 7% own 84% of the land. Of course, over here, much of that land isn't seen as suitable for occupation - farms, moorland, Crown properties (not just castles and palaces, but military bases - much of Salisbury Plain is owned by the military and rented to tenant farmers).

The Lab has never seriously sought to challenge this. Even in the Open Space boom, owning a full sim was a pre-requisite for owning an Open Space sim - unless you bought from a land baron who would then still, nominally, hold the land.

Metacam Oh

WOW SL is truly f'ed if Linden Lab thinks they can't make a pricing move because 500 people act as land middle men.

That's pretty staggering and scary at the same time, if users take off for greener pastures, you know who is on the hook for the tier right? Because we all know you have to pay the full month, lets hope Second Life's Armageddon is close to the end of "Tier Time"

If anything, those 500 peoples business rely on Linden Lab more than vice versa. I doubt these land barons have the capital to cover a mass exodus.

Hamlet Au

"SL is truly f'ed if Linden Lab thinks they can't make a pricing move because 500 people act as land middle men"

I wouldn't say SL is f'ed, but yes, LL is very afraid of alienating this 500. Look at it from the Lindens' perspective: These land barons are providing lots and lots of community and tech support (including land management) that Linden Lab would otherwise have to provide -- while also keeping the company very profitable. They'd be crazy to jeopardize that relationship.

"because of Tyche, the answer to your question is knowable"

I checked with her, Ezra, getting the answer via her data isn't feasible for a number of reasons. So I hesitate to assume we know how many renters there are.


The shrinking feudal system. Accelerated.

Emperor Norton

Hamlet @ "only 500 people really keep Linden Lab afloat"

You really don't know anything on how SL really words do?

That is 500 people who act as middlemen between LL and their customers. They are basically outsourced LL employees.

Hamlet Au

Yes, I just wrote that. I can literally see where I wrote the words "These land barons are providing lots and lots of community and tech support (including land management) that Linden Lab would otherwise have to provide" on the very same screen you just wrote this comment. :)

Alberik Rotaru

Oh wow. It's in LL's interests for revenue and land to shrink as long as the land barons are happy? On the other hand they would not have to provide any tech support or community at all if those pesky users would just go away and leave the land barons and LL in peace?

Eve Kazan

and what about the deletion of half price for non-profit region ? It was a very very stupid and unfair decision for little structure and associations. Lot of campus school have reduced the number of their region ...

Desmond Shang

Hamlet, even we don't really know the exact percentages of paying customers on our estates.

Sure, we can record avatars, payments and all that, but it's not terribly revealing. Remember that a lot of these people are anonymous. One person may have a few alts renting (very common). Friends often pool their money and get a place, too.

That said, here are some *very* rough figures from a small estate (at about 2.5 million square meters, Caledon is not one of the mega baron estates by any means).

~ roughly 500 paying residents
~ 19 standard regions
~ 22 homesteads

... and yes, being an older estate, I have some 195/mo regions. What's done with those? Probably not what most people think.

a) Any parcel that was never abandoned back to me (kept or traded) is still at 2006 era tier; there are a lot of these and most residents stay on them for *years* ~ margins on these aren't that great

b) Parcels abandoned back offered at rates that would keep 2012 tier alive

c) The so called "profit" from the older tier is used to hold up quite a bit of abandoned land. I've had upwards of 900 USD/month in land let go this summer ~ the main reason people leave? "Going back to real life; costs too high." It's true, too; I know my residents outside of SL as friends. They aren't lying. So yes, 9 regions of old tier 'advantage' goes straight to our service provider to keep 3 regions worth of land at current tier still on the grid. Am I a sentimental old fool? The only answer to that is yes. If this were only about money, I would have cashed out back when it was still possible to transfer old tier regions. Many did.

* * * * *

What needs to happen ~ yes, prices must come down, this is so obvious it goes without saying. It would even help the barons. Try selling Big Macs at 30 dollars a pop ~ that's the issue. Right now we are in negative growth territory; I'm not sure why this is sustained, other than perhaps they are shy of breaking the economy by improper action. That's a fairly realistic fear; a mere "weekend estate sale" of about a year ago heralded the pervasive decline and was a clear indication to the barons that they (well, we) had better be ready to downsize, *fast* if necessary.

Why do people put up with land barons in the first place? From my perspective: lots of reasons, many historical. First: basic zoning, which when push comes to shove, the mainland still lacks. Second, billing issues. Having seen upstanding people's credit cards fail acceptance with Linden Research many, many times ~ a smart baron will give a decent resident sufficient time to work it out. Finally: just knowing who you are dealing with: their passion for the grid, their character, and simply knowing who they are.

* * * * *

Should Linden Research ever get rid of what is essentially an aristocratic system, equalise everything, and move on?

That's a very good question. I can only say what I would do, which is: adapt if I can, and if not: shut down (which is most likely). For others it may be abstract, but if you are paying say, 50,000 or 100,000 USD worth of tier (or even a million) each year ~ and a change in policy would mean > 30% of your customers would leave, then yes: you are exposed to substantial risk. Unless a land baron is a complete crook, there are high costs associated with closing regions. For instance ~ to move the last 30% of residents off a financially unviable region, takes time. Which we all know, equals tier. When do you finally make the call? How long do you give remaining residents? What if they only log in once a month? Closing a region with fairness and grace can easily cost hundreds of dollars.

I do know that if the land barons left, and the residents stayed ~ the change would be seismic. I'm going to overstep and maybe say something that other land holders may not agree with... or maybe they will silently nod their heads. Basically it's this: many of us are looking at other options, and some of us are pursuing them quite diligently (if not diversified already). Diversification is the first thing you do, when the core business model is called into question.

If there was ever a compelling reason to invest heavily in the main grid, I certainly would do so, as I have in the past. But that day isn't today. There's not a lot of reason to envy the big barons either; imagine being in their place right now, and their 1, 5 and 10 year prospects. If "SL Estate" were weighed against say, "Fast Food Franchise" as a business, any baron with the slightest glimmer of accounting skills would have fled the grid years ago.

val kendal

here's what I don't get in this conversation - have things ever been any different - I really don't know, so I'm asking?

- so the number of private sims has dropped down from it's all time peak, coinciding with a bad RL economy - seems perfectly reasonable.
- so there's a huge churn in sim owners over two years - has it been different in the past? is this unexpected or unusual?
- so 500 people own most of the private land; they're making a profit, they rent to other people - it's a food chain. I'd own my own home in RL if I could afford it, but I can't, so I rent there too. and I'll just point out that my SL rent has been exactly the same for 4 1/2 years, unlike RL
- and finally, has LL *ever* lowered tier? why does anyone think for a moment they would? this ecosystem they've built seems pretty stable as long as they don't do anything stupid to disrupt the cash flow of those 500

(I do agree that shafting the non-profits/edus was a bad choice for the cultural well being of the world. Although the LEAs *slightly* make up for it)

shockwave yareach

There is a place for landlords in our world. Look at Caledon for examples of what good can be done by people who want to create a world of a certain look and find others willing to share the dream.

The problem comes from too many landlords becoming not world creators, but mere middlemen who do nothing but rent land to people who don't want entire sims due to cost. If the cost was lower, they'd be more inclined to have a whole sim or perhaps stay with the landlord and have a bigger place. High prices are the biggest thing driving people (including renters) out of SL. And while I like some region renters (my own for example) there are some that take people's rent money and then kick them out without warning, stealing their renter's funds with no recourse to the renter. There are also those who up and quit and suddenly all their renters have no homes anymore. You can't say it doesn't happen as the forums are filled with people asking what they can do about it -- you rent rather than buy, you take your chances...

The entirety of SL shouldn't be beholden to a handful of people. There is nothing stopping them from up and saying "thanks for all the fish" and simply cancelling their credit card and letting all their lands expire. And what good would a sudden instantaneous burst of consumers who have lost their homes be to SL? Driving the private sim owners out of business did not drive them back to mainland -- they just sucked up the huge monetary losses and left. Thousands of refugee customers would likely do the same.

foneco zuzu

Now this is way scaring, it was supposed to be solved but suddenly all the worse is back again!

Pussycat Catnap

"I have the slight suspicion that if a economy would look like this outside of SLs walled garden someone would have stomped it to it's deserved death by the use of preventing-monopoly, the very normal trade and market access laws ..."

No... It looks MUCH WORSE in the real world. The 1% are called that because they own 80% or more of EVERYTHING. Not just land.

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