You might be wondering where the Q4 2011/Full-year 2011 Second Life economy figures are. Sure, they’re late, but it isn’t unusual for them to be very late for Q4 and Q1.
Well, those reports are discontinued. We won’t be seeing one for Q4 2011, or any others.
Linden Lab spokesperson, Peter Gray told me today, “We don’t plan to publish a Q4 2011 economic summary. We are discontinuing regular reporting of aggregate economy-level data, because landowners and merchants have told us that the information is of limited value to them. Moving forward, we will instead focus on improved reporting tools that help individuals better manage their businesses in SL.”
Now, before you start pulling the start-cords on your outrage machines or kicking the starter-pedals on your doomsday prediction devices, bear with me for a moment, and keep in mind that I’ve benefited tremendously from those quarterly figures – my write-ups of those reports have pulled in nearly a quarter of a million unique readers each time around; which is pretty good, considering they’re mostly about numbers, statistics and metrics (topics that generally turn people off faster than an icy shower on a Winter evening).
Linden Lab, on the other hand, doesn’t get anywhere near that many readers on their economic reports. At a guess, I’d say they’d be lucky to be in the low hundreds.
Why?
Well, because the figures that have been being published in the last two years are just a shadow of what they once were. They’ve been cut down on something like five different occasions, and what is left can now only be properly interpreted by maybe a handful of people who know the ins and outs of the Second Life economic underpinnings well enough to translate them for others. And yes, for landowners and merchants they’re just not all that useful, even with a translator.
Essentially, over the years, the figures have been progressively stripped of the supporting data that gave them meaning, and now hardly anyone can understand what’s left. That kind of makes it a waste of time to extract the data and generate the reports in the first place.
Of course, the other side of the coin is this: When a company stops reporting some key statistic, it is almost always because the figure suddenly has gone South or otherwise looks bad. The Lab has stripped key items out of the reports on a number of occasions, as I mentioned, and it doesn’t take any great stretch of the imagination to figure that they were taken out because those figures were going sour, or that they appeared to be going sour because other data that would have aided in the interpretation of the figures was absent.
The latter tends to have a bit of a snowball effect. You stop publishing a metric that might be misinterpreted as bad, and then eventually its absence makes another metric misinterpretable as bad, until you’re left with a small set of metrics that don’t tell anyone anything terribly useful.
Now, I can’t tell you what happened here. Are the metrics suddenly taking a dive? Do they just look bad without other data? Or is what’s left just so recondite that it isn’t worth producing them anymore?
I don’t really know – and neither do you. The economy has been stable through the first three quarters last year, with no real signs of decline or signs that anything else that’s been going on has been causing it any trouble. It’s been as steady as you please, and while some might like to see high-growth, there’s something to be said for staying stable. There’s nothing really to indicate that Q4 was troubled.
On the other hand, if it were any almost other company, this would be immediately interpreted as a signal that things had gone bad. Linden Lab isn’t any other company, however.
Once upon a time, this was a company that was prouder of its fumbling attempts at transparency (though its successes in that area were limited and few), or of its successes in any other area of the business/Second Life. I am saddened to see this one pass into history, for whatever reason it might be.
You may start your outrage and/or doomsday-prediction machines now, if it pleases you to do so.
People would be far less pissed if they told us the actual reason, rather than whatever their PR person filtered lawyer person says :v
I will be attempting to lock down the torch and pitchfork market….
If I’d been better prepared, I would have made up a line of angry mob supplies.
You know, people knock the field of public relations. But part of what we do irl is tell our companies how they look to the outside world. That can sometimes change behavior for the better. You can really tell the Lindens never got near anyone in public relations; their view of how they look to the outside world is inexplicable. That said, the company must still be making money through tier and marketplace etc…and since these economic reports have no perceived effect on whether people choose to spend their time in SL, it does seem to make sense to not bother with the reports anymore. Unless transparency is part of your value system or helps you get business, it’s optional.
@Tateru, you’re antepenultimate paragraph says it all.
“On the other hand, if it were any almost other company, this would be immediately interpreted as a signal that things had gone bad. Linden Lab isn’t any other company, however.”
The critical difference is that the stock isn’t publicly traded. What slight market there is can’t react to this change, and most of the stock is held by people who don’t need these reports to know the state of the company.
So maybe they think they can get away with this.
And maybe you scare them. Do they know you get a quarter million unique visitors for you informed and erudite analysis? That alone suggests that the reports were not being done right. Are you a watercooler legend at the Lab, a warped and distorted image of the real Tateru Nino who once worked for them?
(There are some rather good superhero outfits available in-world, and some of the female ones are not the usual teenage wank-fodder of today’s comics.)
http://youtu.be/Wg3oRtN0iqE
But this bear thinks he looks silly in a bowler hat…
Cut .. cut … cut! Eventually all the fat is gone, then the meat, and finally you’ve carved the bone down to a toothpick. Well, not even a toothpick is useful past that first annoying morsel removed. Sad to see yet another harbinger of attention from LL pulled off SL … and presumably pointed at some other internal venture which will be announced and heralded as “the greatest thing since …” MMO Sims anyone? LOL
well I claim bragging rights on predicting that the Friday stealth announcement would be a doozy this week.
Well, I had my outrage machine all fired up and ready to go, but reading your analysis of why they likely made this decision (the data was basically worthless) kinda took the wind out of my gas tank…
They did the exact same thing they did with last names, first they crippled it, and then when everyone was annoyed they messed it up, instead of fixing they just threw it out the window…
I don’t have a doomsday post in mind, nor am I pulling out the pitchforks. However, I think Tateru summed it up nicely:
A company that doesn’t publish growth figures… doesn’t have growth figures to publish.
(well, I almost got away with a short post this time, but han’s post brought out the ebil in me.
…)
han held: “Well, I had my outrage machine all fired up and ready to go, but reading your analysis of why they likely made this decision (the data was basically worthless) kinda took the wind out of my gas tank…”
Naw, you can still fire it up. Just like with LL’s past “figures”, we have to read between the lines:
* Over the years, Linden Lab growth and figures have been uncomplimentary, and they have consistently either tried to 1) Skew the data 2) Used spin to try to make the figures look better or 3) Removed the data.
* They have done this so many times, the remaining data has become useless for most purposes (that’s what happens when companies repeatedly intentionally hide data… eventually there’s no data to evaluate)
* Linden Lab prefers to run the company in a “we-say-so” manner and then obscure the results… rather than dealing openly and honestly with customers, providing what we need and want, and winding up with good results they’d be happy to post.
That’s pretty much how it’s been, for years. Cause and effect. They’ve decided to stop publishing those figures because their method of business has so crippled those figures they’ve become negative. For quite some time I’ve questioned their economic data (several puzzle pieces didn’t fit… such as how is it SL Marketplace sales boomed while L$ sales remained about the same. Answer: in-world markets collapsing because SLM is taking their sales. In-world markets collapse, merchants stop renting land, sims close down… guess what those figures show?)
How do we know these things? Because we’ve read Tateru’s posts and watched those figures consistently for quite some time now, and having actually gone to school at sometime in our lives, some of us can actually perform statistical and trend analysis, obscured or not. When the information is intentionally hidden… it just makes us all that much more curious.
My analysis based on this latest piece of data: Second Life overall is not in good condition. Their competition is hurting them, just as we’ve predicted would happen.
How do we know this? Simple: because if Linden Lab stats were doing well, rather than removing the data entirely they could just re-vamp it to work like it should have all along. They fact they’ve decided to remove the stats reports rather than fix them indicates that in truth, they really don’t want their customers pouring over their stats.
Although to be honest, I don’t see why it should bother them now; it hasn’t bothered them for the past several years we’ve been doing so. Tells me either they’re becoming more sensitive regarding their damaged public reputation, or the stats are starting to look really, really bad. Because one thing holds out true overall:
If the stats weren’t tanking, there’s no harm in them leaving them where they are. I mean, it’s an automated process, right? No skin off their nose to leave it in place. So why remove it?
The answer would seem evident: they don’t like what even those limited stats are revealing. Based on the evidence, I feel if they did publish the stats for this quarter, the real stats– including all SL figures and demographics, people would be a whole lot more alarmed than they already are. There’s no reason to believe differently. The company is hiding information.
There isn’t a need to get the pitchforks out! We already knew from Tyche Shepherd’s recorded data what was going on with Second Life over the last 2-3 years.
One can’t really hide that both Land mass and average concurrency have slowly but gradually declined over the last 24 months….which probably impacts all the other related data the LL Quarterly Financials reports on.
Of course Marketplace sales (LL commissions) would continue to boom….but at the expense of sales & traffic from In-World commerce! The knock-on effect are the increased abandonments of commerical land in SL. Rob Peter to pay Paul scenario!
I made a rough calculation, that the loss of about 1300 Private Estate sims from 1st Jan 2011 to the end of Jan 2012…would result in about $4 million USD lost of annual Tiers revenue (income)…..since then we’ve lost another 400 PE sims.
The question remains where is the LL break-even point likely to be?
@Rene It’s hard to say for certain. I’d say about 6,000 regions lower than it presently is – but that’s just an estimate.
I gave it some thought back in January…i thought it would be nearer 4000 PE sims. ( I think i was working off 10 or 15% Net profit margins)…..but regardless, it wouldn’t necessarily mean the end of LL anyway, but most likely lead to another round of staff lay-offs.
Rodvik’s announcement of LL diversifying into non-SL products (imo a good idea)…seems to suggest they have looked at the trends and crunched the numbers…..and come up with a Plan B.
In the absence of statistics under LL control, people will turn to statistics LL doesn’t control.
“On the other hand, if it were any almost other company, this would be immediately interpreted as a signal that things had gone bad. Linden Lab isn’t any other company, however.”
No, since this is LL, it’s not a sign that things have just gone bad. It’s a sign that things have been going bad for a while, and they’ve just now decide to deep-six the stats.
I’m sorry Tateru – but it is because it went bad. There was no way they could spin the figures to be good this time.
If SL ever does pick up expect them to suddenly reappear “because our users requested them”.
There are two things at this point that catch my attention:
1) Linden Lab business as usual. “Things aren’t as we want them, so let’s hide.” They might consider the alternative of Rodvik laying all the stats out there openly, saying “Okay, I don’t like how all this is looking and I’m determined to improve this product”. That might be a little more confidence building than sweeping the stats under a carpet. They really don’t seem to make any effort to increase their respect, do they?
2) For the first time in ages, what Linden Lab is doing overall is starting to make sense from a business standpoint, and that’s even more worrisome than when they weren’t making any sense. Here’s why:
When they weren’t making any sense, at lest there was a vague hope among users that they had something going on in the back room that would take everyone by surprise and come out the hero. Extremely optimistic I know, but there was that underlying expectation.
However, now that the company seems to be making sense, what is apparent is that they’re aware the product is tanking, has a potentially grim future, and they’re battening down the hatches. They’re hiding the stats so customers don’t get alarmed and bail even further, they’re diversifying into other products (most likely because they know it’s not wise to put all their eggs in the SL basket), and they’re clamping down on security and product control. These are all smart business steps all things considered. There’s not much they can do at this point to stop the competition (as predicted, it’s already cost them millions of dollars in revenue). The day of the $300 sim is coming to a close. (When that happens is of course anyone’s guess. I’m predicting this year, but we’ll see.)
If as Rene estimates they’re losing $4 million in revenue annually… that is a significant chunk of their profit line. Since I’ve estimated they pull down $5 million in profits a month and reliable sources have put that closer to $7 million, it’s not devastating, but it certainly would catch the attention of stockholders… and is an indication Rodvik isn’t the savior everyone hoped he would be.
What I’m seeing here, is that Rodvik might be a smart businessman who can read the writing on the wall. And if he has a lick-o-sense, he’ll probably recognize the best thing he can do at this time is get everyone to the lifeboats. Why? Likely he has not been granted the power required to pull an Iacocca. Lacking that power, all he can do is frustratedly try to keep the ship– and his job– afloat as long as possible.
It’s not that Second Life is unfixable. It’s that no one is willing to take the steps necessary to fix it. It’s the old monkey and the peanut scenario: the critter has his fist in the jar and he’s not going to let go of the peanut, even if it means his survival. That being the case, I think we can continue to expect Linden Lab to be an iron-curtain, we-say-so, profit-first company… right down to the very end. We customers have tried to help them for years, free of charge, yes?. But they’ve ignored us… the consequences we’ve predicted are coming to pass as predicted… and at this point I don’t think they’d be willing to write enough zeroes on a check to interest me. ;D
Hitomi: “I’m sorry Tateru – but it is because it went bad. There was no way they could spin the figures to be good this time. If SL ever does pick up expect them to suddenly reappear “because our users requested them”.”
Yes, it’s that obvious, isn’t it Hitomi. So we have to wonder why LL doesn’t seem to realize it’s that obvious. It’s almost humorous. ;D
@Wolf Well, they know how much traffic I was getting on them now – but previously, no, probably not. From the tracking statistics I have, few people clicked through from my analysis to the Lab’s report.