Anger, Boycott Threats as Linden Lab Announces Significant Fee Increase for L$-to-US$ Credit Processing, Sharply Impacting Major SL Entrepreneurs

Linden Lab's latest Second Life update includes some pricing changes, with one in particular causing a fair amount of controversy:

Underlying SL’s user-to-user economy and the ability to buy and sell L$’s for real currency is a significant amount of ongoing work to ensure that everything remains compliant with applicable laws and regulations, while also preventing fraud and money laundering. This work comes at a cost, and we are adjusting related fees in order to help cover those costs and enable us to continue to invest in Second Life’s future... On January 3, 2018, the fee for processing credit transactions (i.e. paying real money into a PayPal or Skrill account) will be 2.5% per transaction, with a $3 (USD) minimum, and no maximum. This fee is currently 1.5% per transaction, with a $3 (USD) minimum and a $25 (USD) maximum.

So for example, a Second Life content creator who wants to withdraw USD $1000 in Linden Dollars will have to pay a processing fee of USD $25 where they'd currently pay USD $15 now. This might not seem like a lot, but the top content creators of SL make a real life living from the Linden Dollars they convert to cash, so consider the $25 cap removal and do the math around a yearly income of $50,000+. (Second Life's 1%, so to speak.)

Unsurprisingly, there's a fair amount of anger in some SL quarters over this change. Oobleck Allagash, lead developer of the popular Pocket Gacha platform, for instance, puts it to me this way:

"This is an unprecedented increase that is going to have dramatic impacts, especially for larger brands who have high sales in Second Life. On two levels [Linden Lab has] attacked those who work to create the SL economy by raising the fees to process payments nearly 67% overnight, but more importantly, removing the $25 cap which will, for larger brands, result in exorbitant additional costs. It is hard to see how work that has always been there for LL to process these payments is now requiring such dramatic overnight increases. The question that should be asked is what work has changed specifically that will require LL to generate millions more a year annually? Sounds a bit more like those that drive the SL economy are in fact now paying for the failure of Sansar."

That may or may not be the case, but Allagash notes there's already calls among some developers to protest the change with a virtual economy boycott:

"Many creators are already discussing the idea of retaliating by removing all Marketplace listings until a fairer solution is developed."

To have a real impact, a boycott would have to involve thousands of content creators, so it'll be interesting how deep the anger goes. The cost increase may not have anything to do with Sansar, but instead, at Linden Lab's frequent hints that the company plans to change land pricing options. In any case, we'll see soon. 

UPDATE, 4:06PM: I should add the anger is by no means unanimous. Top SL creator Gizem Akin (of Blueberry) fame, considers it a reasonable fee change.

Comments

[Oobleck]

For content creators an interesting side note is that if they were to cover the costs now that LL has implemented there would need to be a price increase of at least 67% - with some larger mega brands having to increase by as much as 200%. Who loses in the end? Well, creators if they don't increase prices. And consumers if they do. Imagine if the Government just told you that your corporate taxes just increased by at least 67%.

[Comment of the Week]

Somebody has to pay for that wingless flopping golden turkey called Sansar =)
We all knew this was coming with it happening again in just another 6 months.

[Alicia Chenaux]

If Linden Lab had a dollar for every time someone threatened to boycott, they could all easily retire as millionaires.

[Oobleck]

I should clarify that brands would increase by 5% or more at the most in terms of conversion. The big question is always what exactly is this going to cover? LL says that they will use their 67% minimum raise to "cover costs" of compliance. If used to cover lowering land costs and bringing more users I am all for it. Perhaps there needs to be better communication.

[Amanda]

If LL is to ever drop tier prices they need to increase revenue elsewhere. Hopefully this is a precursor to such a change. It'd help if they'd tell us but they never do.

[Chic Aeon]

I was sure you would post on this and happy that you did.

I have said my piece on the SL Forums threadand posting it in here. It is a good thread with some well-known creators (certainly only a handful but still) speaking out. https://community.secondlife.com/forums/topic/413903-process-credit-fees-raised-again/?page=2&tab=comments#comment-1683366

The boycott thing wont work. It didn't work when the TOS change in August 2013 ( I didn't upload for a year and worked in Opensim; did you see the grid decline? LOL).

Consumers --- who this isn't directly hurting -- are failing to see that the cost of quality brands doing business in SL --- DOES AFFECT THEM. Anyone thinking can figure that out so not going into it.

Thanks for posting this one! Important.

[Mike Lorrey]

The "fraud protection" costs are their cost of dealing with all of the DMCA violations that happen across the grid, because LL is too cheap, lazy, and inconsiderate of their legal obligations under the TOS to actually create a better DRM system that actually protects creators rights.
But the sheep in the grid will buckle under when the lab bans a few of the more outspoken. For those who see the writing on the wall, head to Opensim (Kitely.com in particular) or High Fidelity. Avoid Sansar at all costs, its the same walled garden, same concentration camp, same owners where some animals are more equal than others, but all are headed for the same slaughterhouse.

[Chic Aeon]

@Mike who wrote: "head to Opensim (Kitely.com in particular) " I am going to paste in my comment on that from the SL Forums as I think it is VERY IMPORTANT.

Quote:

I just wanted to explain the "hidden issues" of Opensim where I split my time about half and half for over two years recently. This in part for anyone thinking of jumping off the LL Titanic for "better waters". Most creators that come to Opensim have no idea how this works and find out sometimes after the fact.

There is plenty of stolen content for sure. I am pretty certain I wore a stolen skin for most of those two years. I don't "know" that but ...

Even overlooking all the stolen content (mostly from SL elites like Trompe Loeil, LAQ and Dutchie along with tons of brands I don't recognize) there is legitimate content being made there WITH good LODs and physics models (oh my). NOT TONS, granted but some.

There are two big problems -- or maybe they are just the biggest in my mind -- one is that there are three types of physics in play and folks have a CHOICE which they use. So all items don't work on all grids. And this "mine is better than yours" fight has been going on for years. THERE IS NO STANDARD.

The second is that anyone selling in Opensim to a personally run grid on the hypergrid is essentially selling full perm. Anyone with their own grid can take an item, use the God Powers of their grid and change the permissions AND list themselves as the creator.

Now most folks are honest, but not everyone and there have been some HUGE exploits and exposees about this issue. I pretty much came to terms with the issue and I still sell though Kitely although I am no longer maintaining a presence in Opensim. I mostly left not because of business but because people couldn't stop bickering and I finally just got too tired of it all. The fact that all my friends there had left played a big part also.

So should another one of the "to the lifeboats of Opensim" exoduses show up on the horizon, please folks --- do your research.

Trying HMTL in a post for the first time so if it doesn't work --- well, darn :D.

[Anonymous]

Valve charges 60% of workshop creator's and 25% of software sales. It's pretty funny to see a 1.5% raise worthy of outrage.

[Oobleck]

@anonymous...How many active users does Valve have in comparison? How much of those fees are being returned to the game with retention and increased sales to a growing market? In the immortal words of someone, not sure who, "It's all about the economy." And right now SL is bleeding users according to land ownership with more creators competing for them now than ever before. So, to quote someone else...perhaps, "Its all about timing."

[Mana]

Everyone's already moving to Decentraland.org

[HS]

There is an easy solution. LL is also increasing the cost of buying Lindens. So customers will have less money to spend and possibly decrease sales. This means that Second Life consumers will also be pissed off. Pissed off enough that retailers might actually be able to convince them to pay with alternatives like PayPal or Bitcoin if they want to be anonymous.

[Leo]

Completely cutting out LL from the transaction stricly using them as a platform rather than dealing with them as a monetary gatekeeper? It's definitely plausible for it to work with trusted brands but I suppose even for sketchy stores there is not much protecting you from having Linden dollars scammed off you!

I like the idea but will enough people be brave enough to make it viable from both the creator and consumer sides?

[Cindy Bolero]

"It costs money to make money", but I quit paying for regions when Sansar team was formed. I didn't want to help pay for Sansar after the previous projects such as the Enterprise product (2009) for business, which should have been for education sector that needed that software 10x more, and had a better networking/community building capability vs private corporate clients. And other projects that didn't involve actual Secondlife use by its residents such as external kiddy games.

I feel for the creators/vendors/store owners but Sansar is a multimillion dollar endeavor and the cash has to come from somewhere.

I'm still going with Sinewave.Space (open BETA). Capabilities: WebGL, Mobile, Whitelabel (yay!), incredible support by Sinewave team, and built on the very versatile and flexible (free) Unity3D game engine software. SineSpace is how you serve the rest of the world. Its more than just another social and fantasy virtual world. Let's break out of the mold eh?

[MJ]

The last time I sold L$ is likely the last time I'll bother. It was not a quick and easy transaction as it has been in the past, despite having an account since BETA. Lots of questions about where did I get the L$, how did I make the L$.. when LL has the entire user history to determine all of that. It just seemed like they didn't want to complete the transaction.

[Han Held]

Anyone who goes into opensim for commercial reasons not only doesn't understand their target audience; they miss the point of opensim as well (the point being to be able to have a DIY server and the control that goes with it. Not to be the second coming of Anshe). The home server grids aren't the outliers; they're the *raison d'etre!*

Chic Aeon; Secondlife has declined already, and continues to. Consider the sim losses. I'd be surprised if you haven't read the same articles (some on NWN) that I have, so you know that as well as I.

I've got a pointy hat and a seat in the corner for anyone who thought SL's decline was going to be rapid. I mean -Activeworlds is still around, ffs!

[manga]

LL knows that most slaves "get uppity" but are too stupid to do anything about it.

[Chic Aeon]

@ MJ who wrote: "The last time I sold L$ is likely the last time I'll bother. It was not a quick and easy transaction as it has been in the past, despite having an account since BETA. Lots of questions about where did I get the L$, how did I make the L$.. when LL has the entire user history to determine all of that. It just seemed like they didn't want to complete the transaction."

I just cashed out a couple of days ago (literally) with no questions and a few clicks. I got my money almost instantaneously which was a surprise as that has not been the norm for me.

And yes Hand Held we all do know that SL has less active users and land mass than it did a few years ago and creators are having to work harder for the same amount of Lindens. The "glory days" are likely gone. I have to admit though that I question many of the Opensim growth statistics as historically the reports seemed less than standard from month to month and really concurrency (for me) is the only really barometer since land is almost free (and actually free if you run your own grid -- well electricity :D). So easy enough to have plenty of empty land mass.

The fact that most grids are owned by single proprietors which close abruptly is also an issue and a quick bit of research tells me that two more just closed down, one pretty big. For those that want to run the techie side themselves and enjoy all that -- well it is a fun place to be and learn. No argument there.

Absolutely agree that moving to OS as a retailer intent on filling coffers is pie in the sky thinking. Still happening I am sure.

[Han Held]

>And yes Hand Held

Han. As in Solo. No D.

I ignore that from illiterates and trolls -but I've never counted you as either.

>we all do know that SL has less active users and land mass than it did a few years ago and creators are having to work harder for the same amount of Lindens.

Which means that LL is taking in increasingly less tier -which is what's fueling measures like this.

Opensim's land mass statistics are irrelevant, and always have been ...for the reasons you stated. What's more relevant are the statistics tracked by Tyche Shepard on Gridsurvey and on SLU in the "New Sim in Past week" thread.

>For those that want to run the techie side themselves and enjoy all that -- well it is a fun place to be and learn. No argument there.

Thanks to Fred Fredericks' "outworldz dreamworldz installer" anyone on windows can have a fairly painless install on their desktop. The "Techie" barrier to entry has come down quite a bit.

>Absolutely agree that moving to OS as a retailer intent on filling coffers is pie in the sky thinking. Still happening I am sure.

Yep, and it always will.

What the hypergrid lacks in sex malls it makes up for in Walter Mittys and scammers -that's for sure!

[Dartagan Shepherd]

This is where LL pretends that they don't have good margins to bite into rather than pushing it off onto their customers.

Look for more increases as it declines. LL is not going to let their margins shrink with LL declining until they absolutely have to.

But hey, those LL salaries are still pretty good.

[Audri]

I hear a whole lot of "I am taking my toys and going home hmmpt". SO? And removing their items from Marketplace? Is that hurting LL or the creator? There are many lazy shoppers that refuse to go to sims for various reasons such as the already mentioned laziness, lag issues, the spamming of "do not accept gift cards from anyone" spammers and many other reasons. So your going to cut off a source of revenue to boycott? Makes loads of sense.