When I looked at the announcement of the elimination of the discount for educators and non-profit organisations yesterday, the only explanation that seemed to make sense was some kind of profit crisis at Linden Lab. A need to pull an ill-informed short-term increase in cash from groups that are poorly-positioned to be able to pay more.
I invited the Lab to offer a better explanation than mine, and I have received a response from a Lab spokesperson.
Firstly, profit-crisis:
No, there is not a profit crisis at Linden Lab.
Now, the reason for slashing the discounts:
Ultimately, we made the business decision that as we focus on improving Second Life for all users, we will no longer provide the level of special treatment previously offered to educators and nonprofits, which includes ending the 50% discount these organizations have received.
If that had come from SecondLie, that would actually be quite funny. Instead, I wound up with an unsightly smear across my glasses from an unplanned facepalm.
The implication just doesn’t seem to connect. It implies that cutting the discount constitutes an improvement to Second Life for all users. I’m just not seeing that connection. So, there’s no apparent financial reason, it just makes things better for everyone. Right.
Also of note is the bit that goes “which includes…”, implying that terminating the discount isn’t the only reduction in support that the Lab has planned for educators and nonprofits.
Quite what else might be in the wings, I can’t imagine. Dunce caps and chicken suits?
You know, they really would do so much better if they stayed at home some days.
I had no idea that non-profits were so detrimental to people. And who would have known that educational sites were hurting our fellow residents?
Would you buy a virtual world that had a number of long-standing contracts to provide half-price service to organizations that can afford to hire lawyers?
One (wild and very speculative) theory could be that the Lab is moving away from the land market. Focusing on tech/development and slowly transferring the land business to private land barons/businesses. Though, i’m not sure if this would make financial sense. It would reduce the cost for staff/support/maintenance, but also reduce the income from the land market.
Another plain theory – i did something similar in my in-world business. I offered a high priced item. On customers request i made a feature reduced and less expensive version. However, after 2 years i decided to stop this 2-version-strategy and focused only on one of the 2 products.
This could mean:
A-the lab is really slimming things down where it can. To free resources and avoid ‘fighting on many frontiers’.
B-the lab is really slimming things down where it can. To make the Lab and/or SL more easy to handle for the mysterious new/next owner.
Anyway, to me it seems that the effort to support edu./no-coms. with discount is more minor…still, sometimes many small steps are also movement, and sometimes small pieces make a big picture.
PS/Edit: The LL blog post about “no increase in land fees for 2011″…it’s nice, of course. But i would be more happy to hear something like “LL has no plans to sell or close LL and/or SL in 2011″.
Simply “no increase in land fees” leaves everything open to turn bad…
Linden Lab also offers discounted tier to the largest land barons (through the “Atlas Program”). If Linden Lab is ending the special treatment of educators and nonprofits, could you ask them if they are also ending the special treatment of the big land baron(s)?
Here’s a reference from Jack Linden Office Hours – June 10, 2010:
http://regentestatessl.com/wordpress/?p=61
“[11:04] Jack Linden: ..as far as how estates price themselves or how they supply land.. that’s largely their call. As far as how *we* [Linden Lab] sell islands to estates – as you know there are programs for the large estates that give them some incentives to grow”
…
“[11:04] Jack Linden: We’ve talked about those programs before during office hours
[11:05] Uni Ninetails: j***s ch**stm**keys but no incentives for small estates thats nice of LL yep yep
[11:05] Equinox Pinion: these is not a program jack…this is unfair competition”
…
“[11:07] Jack Linden: Equinox, it’s absolutely normal in almost any commercial space I can think of that the scale of a customer will affect their buying power and the deals they have access to. As I said, we’ve had that conversation here before. The top estates have invested particularly heavily, and yes, they do get some additional features because of their size”
I’ve been giving things some thought, and will write something else up in a few hours.
I’m not sure I can find to much fault with a business raising its prices. I’ve been quietly wondering for some time when it will be that premium membership fees double. What I do find annoying is The Big Mac Syndrome, where a business will not only put up prices, but reduce the quantity and quality of the product, while at the same time claiming that the disgusting burger flavored styrofoam is exactly the same size in 2010 as it was in 1974…
I saw and even retweeted this article site unseen. I was thinking “FINALLY they’re talking to us and helping us understand”! I feel really let down again by LL. As the manager of an EDU sim, I seriously have no idea what they are talking about for the special treatment. When I needed support, I got the same level of crummy help that non-EDU land managers complain about. In fact, I feel I was being extra patient because, after all, I was paying less for my land.
@Troy: Thank you for posting your comments. Honestly, I had no idea that the bigger your estate was, the bigger your DISCOUNT was!!! I can understand providing VIP-level support for those with more land mass (and probably more frequent issues), but to let them pay LESS?
My heart is heavy. How can I be honest with teaching my students that SL is one of the important future technologies that they need to understand and get excited about when I am beginning to doubt it?
-= MZ =-
I think that in some ways what they are trying to say is more like:
Incidentally, I was reading some of the comments around recent unexpectedly brain-dead decision by the lab recently. I think that a few have been missed/slipped through the nets.
And these specifically pertain to how the lab deals with Special Events – such as BurningLife, and major charity events such as RelayForLife-of-SL and the associated multi-sim major event faires: Clothing/Fantasy/Hair/Skin/Jewellery/etc.
In 2008, these events were all able to get access to Event Sims (temporary sims for 2-4 weeks) for a reasonable fee (in the range of US$50-100/week per sim – about US$3000 UP FRONT for a 9 sim event with 14-20 days public access).
In 2009, the newer of these major events were asked to pay commercial rates for their event sims (in the range of US$20-50 per DAY per sim – about $12,000 UP FRONT for the same event) – it was relatively easy, however, to get the discounted rate if you asked the right people. (I have no personal knowledge of how the BurningLife sims were dealt with commercially.)
In 2010, the charity events were expected to pay full commercial rate for the sims, and only last minute intercession by Lab executives prevented the cancellation of 2 (or more) high profile multi-sim major events (that were both advertised & press-released by the Lab’s PR team as well as included in the destinations guide). Even so, over 30% of the total funds raised by one of the premiere charity events went to the Lab for Sim fees.
Also in 2010, the lab removed support for the single largest public design and arts festival in all the virtual worlds – BurningLife. Burn2.0 was also expected – as a now external organisation and event – to pay the commercial rate for the sims. The bill was to be over US$40,000 for an event that is both free to enter, and does not solicit donations. Instead, the event has been drastically reduced in scale and scope.
BurningLife was the premiere arts and design event of the secondlife calendar. Despite the so-called Linden Endowment for the Arts the Lab’s real commitment to the arts and artists has drastically reduced in 2010.
The University of Western Australia with it’s art & design competitions has ably demonstrated through the last 12 months that it is not all that expensive to make a major difference to the Arts in SL. (Blog.)
Personally, I strongly suspect that there will not be a Burn3.0.
[Supposition] As for RFLoSF … if the American Cancer Society had not pre-organised 2010/2011 with the Lab early in 2010, I suspect that the relay would not run in 2011.
[Posters note: For the life of me, I cannot remember the specific prices per-day/week for these sims. I can remember losing a keyboard (under the mouthful of coffee I was drinking) when I was told what it would cost to run FF in 2010. I was ... dumbfounded!]
As much as i see the ‘unfairness’ by providing discounts to big land holders, i must break a lance for the Lab here. As said, it IS frustrating for the ‘small’ buyer (and for the ‘little’ guest), but:
Basically every company i can think of atm does this. It simply a common business practise.
- The small car repair shop will have to pay a certain amount for replacement pars, and maybe buys 2 parts a month.
+ The big car repair shop has to pay less, because they order maybe 20 pieces per month.
- Even to me as end user: my bakery charges 0.30€ for a roll.
+ If i buy 10 rolls, they discount to 0.25€ per roll.
I guess “includes” would also cover letting go their edu-related Lindens and maybe withdrawing support, if there was any this year, for large organised events such as VWBPE. I don’t think I’ll be leaving SL but I’ll be giving up the sim when it comes up for renewal and ducking out of my premium account too. Inevitably I’ll be spending less time and money in SL. OpenSim is the way to go for me now, I’m afraid. While I feel somewhat aggrieved by the casual way in which this affair has been handled, the people I feel really sorry for are the contractors. I hope enough of the large US institutions stay inworld to provide work — the financial climate in the UK will mean slim pickings over the next couple of years and the diaspora will make it much harder to target a market or platform. I won’t be breaking any more lances for the Lab.
[...] Linden Lab have made a follow-up statement with a rather interesting take on things. AKPC_IDS += "2854,";Popularity: 1% [?]Readers who viewed [...]
I think “which includes…” is also related to the closing of the Teen Grid.
I run Whitmyre Island. It is the most trafficked RL university sim in SL, it’s had that distinction for about 3 years running now. I don’t know what other universities are doing, but I assume they are doing what I just did. I sent a proposal to the appropriate university decision making committee to consider open sim alternatives. I’m thinking in a few weeks something will come together where the educational and non-profit organizations in SL will come together and build an os grid. Even organizations who can afford the price hike would want to be in on something like that, I think.
@ Tateru: Damn straight you better post again in a few hours. *cracks whip* Get to work, blog monkey, before I get bored again! XD
They’ve been splashing out on doublespeak courses.
I’ve said it before. Double your prices, alienate half your customer base, and collect the same level of profits with a highly reduced support overhead. (._.)
@bubblesort, there are a couple of fledgling edugrids: mediagrid.org and the NZVWG (as per http://www.hypergridbusiness.com/2010/10/education-discounts-in-second-life-loss-or-gain/)
To be fair, on receipt I let the Lab know how I felt the statement would be interpreted, and offered a window of a few hours for the Lab to come up with an improved version. Also, to be fair, that was a bit late in the day – but some things just won’t keep long. Not with a global audience.
You would wonder if Linden Research has decided to commit seppuku?
The advantages of Open Simulator for educators goes far beyond price, the ability to allow scripting in “recognized” languages as opposed to LSL being just one of many (teaching computer language can be fun and interactive, as opposed to dry and sterile). There is also access directly to the server code, which means that more advanced educators such as universities can make modules to suit their own specific needs, perhaps even as part of an IT course project.
The downside of this for the Lab is that any modules or improvements are quite likely to make it back into the main code, accelerating it’s development considerably.
Looked at that way, an effort to keep educators on their side, and not on the side of what could well become a viable alternative would seem far more sensible?
P.S. It is not as though a server unit would be running at a loss by being rented out at the lower rate to not for profit organizations (feel free to compare the labs profit per server with the equivalent server from an outside supplier).
Whoever has pointed out that Linden Lab will be charging these nonprofit/education folks full price while Jack Linden hands out steep discounts on setup fees, tier, and instant support packages to the biggest landbarons if they promise 5% growth under his Atlas Program has hit the nail on the head.
The LL Titanic is heading for every hunk of ice in the water, and Jack’s busying himself with handing out champagne and canapes to the first class passengers.
Philip needs to toss this joker overboard… unless he’s been the Crazy Ivan at the wheel all along, and he’s steering for the ice to break it up for Jack’s drink tray.
-ls/cm
Interesting quote that doesn’t really say anything. Come on, Linden Lab!
Never believe anything PR tells you.
Heck, back last May, you (Tateru) had figured out from looking at their public numbers that LL was in financial trouble evidently before they had figured it out on the inside. So maybe they really don’t think this is a financial crisis.
But the PR spin here is particularly transparent corporate-speak (i.e. prevarication made up to be seeming to give a reason when in fact they’re not really saying anything). The spin is really weak. There are only two explanations that make sense: sacrificing the long term to the needs of the short term (i.e. we know this is a long term bad move, but we really need the cash influx we’ll get if less than half of our non-profits ditch us), or simple rectal defilade.
We’re closing our campus island at the end of January. We pay tier with discretionary funds, and they cannot cover this increase.
Bright side: I will have an entire region in an OpenSim grid for less than $20US/month. We’ll rebuild the one simulation we use for classes and have premade avatars ready to go for students. And every bit of it will be in OAR files we can back up and export to other grids.
Students will lose a jumping off “home base” before they visit the larger world for other projects.
I am not mad at the land-barons. I am pissed that LL did not justify why the edu sector needs more care-and-feeding than do other customers.
For what it’s worth, and the Interim CEO may use it for toilet paper, I hope to give him and “Smilin’ Jack” Linden a notecard with the names of colleges and universities that are scaling back or leaving. We’ll see how many sims LL loses.
Some social users of the platform state that “fair is fair” and we should all pay the same. My answer is “you one-sim owners and renters will be the next victim of a sudden change you don’t like.”
See you in the other grids. Get a Plan B, because LL won’t be around in a year or two.
Solo wrote:
“Would you buy a virtual world that had a number of long-standing contracts to provide half-price service to organizations that can afford to hire lawyers?”
Well, “ka-ching!” As we say in higher ed. LL is going to sell. The questions become:
–who would want it?
–if someone did, what would they do with the database?
/me feels a “big moment of being bent over by marketers” coming on. Or maybe it’s because I’m on a Windows box today and not my Mac XD
Crap pontificated:
“The LL Titanic is heading for every hunk of ice in the water, and Jack’s busying himself with handing out champagne and canapes to the first class passengers.
Philip needs to toss this joker overboard… unless he’s been the Crazy Ivan at the wheel all along, and he’s steering for the ice to break it up for Jack’s drink tray.”
If I weren’t married and you made good cannoli, I’d propose to you, Crap.
I’ll volunteer to help toss Jack. Or be a waiting shark.
Well, one of the things Philip announced was to stop fragmenting SL by doing specialized things for subgroups, instead building one platform for everybody.
This seems like rather unexpected collateral damage from that principle, and somewhat backwards, considering Jack’s defense of specialized discounts for other landowners.
In any case, OpenSim certainly got another massive boost here. Perhaps we’ll see innovation there as various groups simply have to use it rather than SL, and can tweak it to their liking.
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Consider that a lot — and by that, I really mean a lot — of communities in SL sell land that actually are held by non-profits, which just resell it, undercutting land prices because they have a 50% discount. And yes, although this is forbidden by the LL policies, some of those non-profits have lawyers. Good, solid lawyers that are fully well able to argue with anyone at LL that what they do is not “selling land” but “raising funds to sponsor their cultural activities”, while allowing residents to “use” that land “privately” (in effect: getting a deed to the land, just like anywhere else on the grid).
Land barons, either individuals or small corporations, simply cannot compete with that. Unless they create their own non-profits too. They might have threatened to do exactly that if LL didn’t step in and “level the market”.
Also, don’t think “US laws”, which seem to be very strict about non-profit status. In Europe, the laws regulating non-profits are extremely simple: if you don’t wish your profits to be shared by the shareholders, but simply reinvested over and over again (while paying yourself and your staff the salary you like), you can simply create a not-for-profit association. It’s very easy to set up, and has very easy accounting, too. And they have absolutely no restrictions on the kind of business they do, or services they provide — although some might restrict it to “services provided to members”. Well, any such organisation can prove very easily that all group members in a SL community are “members of the non-profit” and “share the costs” of the land by paying a “monthly membership fee” — exactly what their laws demand for members to be able to have access to products and services provided by the association to all its members.
In Europe, these associations don’t even pay VAT. So very likely they can even persuade LL not to charge them any VAT on top of everything!
Now, I have always known about a few groups which operate exactly that way; some have thousands of members and two dozens of sims at least. I just didn’t think it was very widespread. Perhaps LL did the math and actually figured out that, say, half of the sims on the grid are actually held by non-profits — and excepting the universities, and a few scattered honest examples, almost all the others are either building shops or reselling cheap land.
We have a saying around here: “the just pay for the faults of the sinful”. In order to stop those non-profits to undercut land prices and leave the rest of the land barons with overexpensive land that is impossible to sell/lease — or perhaps to avoid that all major land barons use the same strategy! — LL prefers to “sacrifice” the legitimate non-profits and academic institutions. Even if the land-barons-turned-non-profit all suddenly leave, this would push a high number of residents (not all!) towards the “for-profit” land barons. If just half of the residents moves over to more expensive land, this translates into a 50% increase of the non-discounted landmass, which would neatly cover the costs of losing all the discounted sims.
I think that’s what LL is after. A pity that they incidentally have wiped out the legitimate universities, schools, and non-profits out of Second Life in this process; and I would predict a 20-30% contraction of the landmass (but LL would still have the same income!) starting in January. The good news, of course, is that this will bring a lot of people to the OpenSim grids, which in turn will encourage much more development of that technology, give rise to a plethora of new grid operators, and start making OpenSim far more significant than it currently is: it might rise from the estimated 50-150 thousand registered users to a million or two from 2010 to 2011, which would be simply fantastic.
What I hope is that the educators, after a year of “cooling down” their (very reasonable) disgust and hate about LL, might start pushing LL to finally finish their promised interoperability with the OpenSim grids… but I guess that’s just wishful thinking.
[...] Linden Lab have made a follow-up statement with a rather interesting take on [...]
Gwen +1 Very insightful and articulated. Thank you.
I have really enjoyed this thread.
Open Source grids work great if you are using the virtual world to demonstrate concepts using builds, for example. But that is really only one small part of what SL actually offers.
The courses that my school teaches in SL are asynchronous. Students are given tasks to do and they log in at their own convenience. They are asked to explore many aspects of the virtual world and avatarhood that exist because of how internationally popular SL has become.
Teaching on an OS grid just will not have the depth of experiences available to use to teach. Students won’t be able to explore the art, music, creativeness, social interactions, economy, and educational builds that we all currently share and enjoy. SL has a synergy that would be very difficult to duplicate.
IMHO, if the grid connectors were in place, the virtual worlds would explode with wondrous vigor. I could see EDU’s using their own grids that they can control and SL-like grids will be providing the social and entertainment aspects.
If LL wanted to really make money, they would charge (a fair price) to connect to their grid.
OK…end of my ramble. I’m off to bed. Goodnight friends.
-= MZ =-
Just so as you know, the quote comes from Linden Lab PR who sometimes – but not always – attribute the source to an individual employee. There wasn’t any attribution for this one, so I have no idea if it came from Jack or not. All I know is that it’s Linden Lab’s official statement, whoever wrote it.
[...] wondering, though, what implications Linden Labs’ new policy of no longer offering discounted prices on land and such to educators will have. Some people have [...]
[...] Linden Lab made a follow-up announcement, which is captured and discussed in the blog of Tateru Nino and their explanation is unrelated to profit (not entirely believable) and based on the principle [...]
Well. What can i say? You just dont understand what its all about ppl.
It is not platform for people with money “on the edge”. Its not for struggle, it is for enjoy !
If you can’t afford 300 bucks a month please leave and stop moaning, because you sound ridiculous!
What are you up to? Start nagging MB that price for each new car is far out of your wallet! Lol! And they should quickly change their pricing!
Come down! Tell yourself truth! You are not into this sort of simulator and it is beyond your pocket capacity. Stop! Some things have its price set and you cant change it! You can only say thanks for LL for making price cut for those edu type customers for some time.
Believe me, there are more and more people considering buying server space there and 300 or 500 bucks does not mean a thing even weekly
Lol
Thanx for reading
Gwen +1, your explanation looks more realistic than any other vanilla one available.
However the present LL option could well be just transient. With some TOS amendments and new legal tools and garantees, real non profit activities could be re-hosted more appropriatly. Otherwise, there would be a lack of consistency with the recent wider opening of SL to teens.