“If only,” I hear you cry, “land in Second Life was less expensive! Why things would positively boom!”
But would they? Let’s look at the scenario more closely. You’re not going to like it.
So, let’s say that through the Awesome Might of Rod, Second Life land fees drop – let’s say a full 50% across the board. There’s our hypothetical scenario, and isn’t it a doozy?
Estate holders and large land-owners throw their hats into the air! Everyone cheers! A big ticker-tape parade for Linden Lab, for delivering exactly what people are asking for!
But then there’s reality to deal with, and reality bites.
What doesn’t happen? Well, here’s one thing that doesn’t happen: there’s no seismic (pardon the term) shift in land-sales for one. Got a big estate that’s now costing half as much? Are you going to suddenly expand it? No, you probably aren’t. There just aren’t enough users – yet – to support any rapid expansion.
You might get a noticeable bump as individuals and tiny holders buy up some lots and parcels nearby them… and then they stop. They’ve eaten their fill.
Now, here’s the hell of it.
You’ve got to cut your prices.
If you don’t slash your prices by 50%… well, there’s no shortage of other estate-owners that will. Competition is fierce. It may take a little time, but what you can charge for the use of your land will rapidly become half of what it was – and people can now DIY or become your competitors for half the ongoing costs.
You’re now paying half as much, but ultimately in percentage terms, little will have changed on your month-to-month bottom line – except that if you were running at a loss, your loss is halved. If you were running at a profit, your profit is halved.
Here’s another thing that doesn’t happen: Your workload is not reduced. Not by a single hour. You still have to work as hard to bring in the money as you did. Your costs have been halved, but land-based revenue has been halved as well. Everything has scaled, except your workload.
There’s maybe a small upside here, and that is, that land without business-models becomes a little more affordable for short-term projects (like fund-raisers and art-installations), but as a larger player in the land game, you’re in competition with your peers for that business, and some people might be happy to take it on at a loss, just for the PR. There’s likely little or no direct revenue there.
What about Linden Lab? In this hypothetical price-cut, it’s just slashed its revenue in half, effective immediately. Now, the bulk of Linden Lab’s costs run to people, not premises or equipment. People cost money, and lots of it. So, Linden Lab would be forced to cut back and slow down right away to balance the payroll. Even if it was a short-term cut, those people are largely lost, and any recovery in the revenue stream would mean hiring newbies later on to fill the empty chairs. You can’t just shove skilled staff in the closet for a few months and then air them out again when things improve.
Without a more diverse portfolio of products unrelated to Second Life, Linden Lab just doesn’t have any buffers to soak up jolts from bumps and potholes (or global economic climates or rate reductions, for that matter).
What if you’re not a major land-owner, but instead a major content-creator with a big store full of product?
Your costs have halved, but your revenues aren’t based on land. Instead they’re based on your content sales.
Yay! You only have to sell half as much to pay your costs – or you can double the size of your outlets.
Do you really need to increase your holdings, and/or the number of your outlets? Probably not. It might make sense offline, where people don’t routinely teleport to the shops, but without some special need or circumstance, you’re probably going to be happy with the holdings you’ve got and the reduced costs.
Your losses are much reduced (if you’re losing money) or your profits are greatly increased (if you’re profiting). Hooray! Less work for you!
Except, that the same holds true for smaller players in your field. They have more to gain, now, and lower bars to clear by eating your collective lunch.
Take a rest, take it easy, slack off, stop innovating – and those little fish will eat up your market, leaving you struggling to break even again. A much smaller fish than you were.
And during all of this, the economic pool doesn’t get any deeper without improved retention. There’s only room in the market for a certain total mass of fish, whatever their various sizes.
Now, bear in mind that this scenario is pretty sound for a 50%, across-the-board reduction. You can toy with the idea of larger or smaller reductions, if you like, trading reductions in profit for reductions in losses, for those whose revenue comes from land rather than from goods/services.
Or, as an alternative, you can toy with the idea of a rate reduction that isn’t fair – that is, one that doesn’t apply equally to everyone. A reduction where some people get it and some people don’t. I don’t know about you, but I’m finding it hard to see any scenarios where that’s better, except for say, reductions for non-profits or for educators, which are still sorely missed.
Second Life is profitable and successful, but it isn’t booming and it isn’t easy to make ends meet. In the current economic climate, it’s more difficult to make ends meet anywhere, and Second Life is no exception. Superficial solutions sound superficially tempting, but they don’t necessarily hold up to significant scrutiny. As tempting as it might seem, there’s no magic bullet or miracle cure that lets you put your feet up and relax, while boosting your profits and cutting your costs.
Don’t much care for the prognosis? Would you like a second opinion? Would you like to read more about how the reduction in private regions is affecting Second Life and tier economics? Well, then, Inara Pey’s got you covered.
There is only one reason to reduce land pricing and that is the competition to Second Life. But it’s impossible to battle against unprotected worlds that are poorly maintained and have no economy. Can’t really see that as competition.
SL needs new residents, residents that stay many hours. There should be a continues influx and from those at least 20% should stay to become what we are, addicted and reluctant to leave no matter what.
SL basic is free. I have some very old friends that have no PIOF but do contribute to the SL economy.
What I would like to see is mainland price correction, the mainland tiers. Mainland has more costs, more junk in the sky and more griefing as islands and there should be a reward for having mainland.
I suspect that the amazon cloud is an expensive toy that eats up quite a lot of funds. Well over the cost for staffing. But it is true that less funds means a less flexible staff and there are sufficient issues to tackle. LL should be a fun factory to work for.
I agree that reducing tiers as a whole is not the way to go. In fact, tiers have been stable and from a global perspective that means a reduction.
New addicts is what we need.
Aye, we do, but we have all there are in the world, and a lot have already given up on SL
That’s indeed the problem. “There is nobody else” besides us.
“If you don’t slash your prices by 50%… well, there’s no shortage of other estate-owners that will. Competition is fierce.”
I find this idea totally flawed, and so the rest of your post because its dependent upon it.
Let’s say right now there’s a full region rental for $320 USD a month. $295 of that goes to Linden Lab, leaving $25 dollars in profit to whoever is renting out the region.
Let’s say there’s a lot of those rentals with a lot of different estate owners offering them, and suddenly they all only owe Linden Lab $150 for each region they rent out.
If those estate owners weren’t willing to budge on making at least $25 a month off each full region rental before, why on earth would they suddenly change gears after a tier halving and decide they need to halve the $25 they make too in order to charge $160 a month instead of $175 a month?
With the cost of paying Linden Lab halved, full region rentals and all other smaller parcel subdivisions are instantly in larger markets where there’s more customers for all.
The only reason I’d see for an estate owner to have to halve their profits under this hypothetical 50% price drop from Linden Lab is if the estate owner was paying tier for $150 for a full region and renting it out for $150+. If that was the case, sudden competition in the face of sims bleeding off the grid would be here NOW if any estate owners were pulling 100%+ profit margins.
In reality though, what estate owners earn per region is neglible to what they owe Linden Lab, so its entirely pointless to suppose a scenario where profit margins have to be halved too in order to benefit the grid as a whole with drasticly lower land prices.
You are entirely right that the estate owners can all cheerfully join the price-fixing club – and if they’re providing quality service then many people may be willing to pay the extra for it. However, if the reduction in fees is significant, then if consumers are more price-conscious than service-conscious it only takes a few to break ranks (or a few new little fish) to start eating their lunch.
In fact, the larger the reduction, the more work an estate holder would have to put in to deliver quality service to justify the higher costs – if potential customers can get it cheaper, or DIY (individually or in groups) for less – then an estate-holder has to show more value for the extra cost.
“Price-fixing club”? Why does owning an estate, offering land for rent, and determining whether the cost vs. profit is worth ones time or not count as “price-fixing”?
If you’re aware of some grand price-fixing club; please blog about that, because I’m completely unaware of it and I imagine others are too.
Otherwise, I still don’t get the assumption by you that any tier cost reduction would necessitate an exactly proportional profit reduction. Seems much more obvious to me that the floor of profitability wouldn’t drop out, instead the ceiling of profitability would rise given estate owners would have a range of price offerings to pitch other than the present “ridiculous” to “close the sim”.
Ah, then I misunderstood what you’d said. Apologies.
Second Life land is pretty much completely commoditised – at least as far as privately held full-regions go. The only thing that distinguishes any private region from any other is the estate-holder (which necessarily includes their policies and staff). It’s hardly surprising then that they bear the economic properties of any other undifferentiable commodity.
[...] Mantra “Senkt endlich die Preise!” nicht das Allheilmittel wäre, für das viele es halten, zerlegt Tateru Nino mit Freuden. Die Argumentation selber ist dabei auch nicht viel anders als die Meinige vom März diesen [...]
I would suggest that The Lab has been dropping its prices for years and people just haven’t noticed. Every year The Lab’s prices don’t rise in line with inflation means that the prices are actually falling “in real terms”.
I can’t be bothered doing the maths, but it would be interesting to see what the value of premium fees and tiers would be if they had got an inflation bump every year since they were set.
Well said.
At Linden Lab’s most basic they’re a web host. They sell you uptime of software running on a fixed amount of server resources and customer support. What makes Linden Lab different from any other web hosting company I’m a customer of and any other hosting company they themselves are a customer of is the fact they haven’t dropped prices even as hardware and bandwidth continues to get less expensive.
You can crunch numbers on real-world inflation and try to divine your tier has gotten cheaper, but meanwhile Linden Lab receives email from Amazon’s AWS every 3-6 months defining cheaper pricing structures.
“What makes Linden Lab different from any other web hosting company I’m a customer of ..” is value added by a (relatively) mature software layer and a rather large ready-to-go pool of potential customers to your service.
Comparing LL to a web hosting company is unfair. Kitely is much more like the bare-bones AWS reseller you describe, and their pricing structure reflects the relative value.
I’m not saying SL isn’t overpriced… They could tweak their mainland tier setup and get a lot more customers there. But I doubt they want to. They want the up-sell to the full sim.
What’s needed for real competition is a published open standard for VWs like SL, and inter-grid teleportation out of SL, with your permission-protected inventory. Until that happens, LL will charge whatever they can get away with.
I don’t make any profit from owning a private region, people just did not want to rent it. I actually rent my land out at a loss each month but make up the difference from donations and marketplace business. My ‘profits’ from SL are from my marketplace shop of which LL take a cut. I’d be interested to know what sort of revenue LL make from Marketplace since there are ALOT more Marketplace shop owners than there are Land Owners. Plus you no longer even need land to have a marketplace shop.
I don’t make profit from my private region, so why do i even bother owing a private region? because its not just land to rent out, its a place of importance for me and my friends, important enough to keep shelving out coins to keep it going month after month. These are the places that will remain while non specific regions are abandoned. But thats not to say places like mine are safe from eventual closer. Ive seen it many time in the past year where people get tired, they run out of fire and can’t sustain an interest and eventually give the regions up to start again elsewhere.
So its not just simply being unable to pay tier, it’s loosing interest and deciding ‘i don’t want to have to pay for this anymore when my heart is no longer in it’.
If it’s too late to cut tier then there must be other ideas to consider. Adding more value to owning land somehow or offering quick fix regions that you can rent super cheap for just 1 month for people who need extra region for an event. (maybe barons already do this? i don’t actually know).
For me tier is too expensive but it does not become an issue until my friends an i loose interest in having our own place to build, experiment and play.
I think private islands are about 80% of SL’s income, and the numbers are falling. That doesn’t look good.
Maybe if the 512-free for Premium were increased it would have a better effect. LL is pretty well stuck with having to support the mainland it has. Making Premium membership look more attractive might just work.
[...] calling for is to cut tier. But Tateru Nino has analysed why that would be largely impractical in a great article here – and Inara Pey, insightful as usual, has looked to the future and analysed why Linden [...]
Tateru, May I be so bold as to ask a simple question ?
How much SL land do you current hold ?
a) 1/8 sim ?
b) 1/4 sim ?
c) 1/2 sim ?
d) Homestead ?
e) Full sim ?
F) more than 1 sim ?
Right now? Hardly any. However, I did work through the scenario with a few estate holders of some size, if that helps any.
It’s very telling and interesting that someone like yourself, an avid, passionate and important commentator on the Secondlife experience holds ‘hardly any’ land.
It would be fascinating to learn why you don’t have at least a homestead sim for your base in Secondlife.
Is the reason perhaps that Secondlife land is too expensive to maintain as an ongoing monthly expense even for a 2005 long term, deeply involved resident ?
And if the reason you don’t hold more land is because of high tier price, at what price point would you be happy to maintain a Homestead sim, year in, year out ?
I don’t require any additional land for my current business and SL projects. Yes, I’ve held larger amounts at times for as long as I required them. My land usage grows and shrinks proportional to my requirements, basically. Right now, I need very little.
The fact that your land usage ‘grows and shrinks proportional to requirements’ clearly indicates you are extremely price sensitive. Holding a usefull amount of land in Secondlife is a non trivial thing because of the high monthly costs.
If a passionate, engaged user like yourself won’t maintain a constant presence because tier costs are clearly too high, who will ?
I’d hardly describe myself as “passionate”. I’m more well known for being dispassionate, I’d have thought
Mostly, I see it in terms of waste. It’s a waste to lease resources that you don’t have a current use for (surely those resources can be used by someone else?), just as it would be a waste to pay for an employee whom you don’t have work for.
Hey, to all you folks who are writing in by email. I gather you feel that posting a comment on this article here calling me a “retarded ****” or a “dumb sack of ****” or hoping that I will die, without any salient discussion of the piece is going to breach the commenting policies and get your comment dumped into the trash and your commenting privileges potentially revoked, and that you feel email will involve considerably less fallout.
Well, that’s a good call. It really does seem pretty likely when you think about, isn’t it?
However, that said, if you start your email off with abuse and insults, I’ve probably junked it by the third or fourth word. Just saying. Being civil doesn’t hurt.
Thanks for your attention. We now return you back to the comment thread.
He, tateru, send them back to IMVU where they belong to and came from.
I just joined SL this spring with a group of friends. After six months of trying out SL, I think having land of your own is essential to experience SL at its best and at its most creative. But land, or rather the amount of prims necessary to create an interesting environment, is indeed much too expensive.
From what I gather currently it’s difficult for people with jobs and businesses of their own in RL to afford enough land in SL to create a public attraction. I cannot imagine how people without a steady income could ever be able to manage that, for example students.
Of course land prices are not the only problem of SL and lowering land prices cannot be a miracle cure, but if it were not as expensive to experience SL at its best, I expect more new Residents would stick around and contribute to SL creatively.
Hi Tateru,
I hope you die … at a very high age, and peacefully in your bed
That aside I guess in your reasoning you focussed too much on large land holders, on business type landlords and shop owners and other upper crust capitalist types.
In reality I guess most of land in SL is used for residential purposes, for recreation rather than to create a profit. And here the price slashing game becomes really important. All us smaltimers could buy parcels of the double size now, making us even more happy and addicted customers.
Plus many many more basic users would be convinced to finally become premium members. That’s what LL wants, isn’t it? Double as many land will be used,and double as many houses need to be furnished. People will spend more money for furniture and trees and whatnot. I guess a reduction in tiers could indeed trigger the boom LL is waiting for since so long.
Let’s face it, IT becomes cheaper all the time. Many companies are shlashing their prices for hosting and other services. This happens all the time, everybody does it. All but a little mediocre IT shack in San Francisco. They refuse to go with the time and will eventually ruin their product and their market.
That’s sad.
Absolutely, I was intentionally looking at multi-sim estates.I talked this all through with several such estate-holders who were barely breaking even (or, in a couple cases, not quite breaking even). So, yes, this reflects strongly on their views. I focused on this group particularly, because they are – you would think – a group who would stand the most to gain from an across-the-board reduction, and because large land-holders form the basis of a significant chunk of Second Life’s bottom line (both Linden Lab’s and the SL economy generally).
There might be a case to be made for reducing fees for Mainland holdings – but how to do so without shooting private estates in the foot? I don’t really know.
Thanks for giving it some thought, in any case. I’m always pleased to hear “I thought about what you wrote, and I disagree.” Why? Because you thought about it
There might be a case to be made for reducing fees for Mainland holdings – but how to do so without shooting private estates in the foot? I don’t really know.
Linearity and end-point.
If you think that cutting the land prices would automatically double user numbers, you are wrong. The average newcomer does not try Second Life with his credit card ready for payment. People drop in and check things before they even think of any kind of payment. And then 1 out of 100 decides to log back, and 99 out of 100 never do so, anyway. Out of the 1 percent who ever log back maybe 10-20 percent will actually pay for anything in SL. Cutting prices will never change this at all.
There is a tremendous amount of pretty well done freebie items in SL, there are lots of active communities of any kind which are glad to offer a free a place for newcomers, hunts for freebies is a predominant sports, and…and…and. One can actually get along very well without any kind of payment.
Sure, it would be nice to have more land for the same price, but what would happen as a result is that the same amount of active users will have more land for the same amount of money. This is a no win game for Linden Lab, it will not help anyone and will not change anything but boost maintainance costs.
Pricing isn´t the problem, it is user retention. SL will not attract more people by lower pricing, but only and only by quality of service, quality of content and quality of entertainment as a whole. A correctly calculating company cannot simply cut prices based on a shaky speculation which does not live up to the facts.
Vivienne,
Price IS clearly the problem that is causing poor user retention.
Even Tateru does not maintain or hold any amount of land. She’s been an active and engaged user of SL since 2005, blogs about SL constantly but holds hardly any land because, let’s face the reality, SL is too expensive.
The sooner LL realise that current tier costs are destructive and unhealthy the sooner we can get Secondlife back on track instead of this slow sad pathetic decline of an awesome technology.
What you are forgetting Vivienne, or not noticing, is that Secondlife the grid and economy are in a downward spiral.
It wouldn’t matter if everything was perfect – if lag went away tomorrow, if sim crossing were perfect, if LL customer service was impeccable etc, etc if the product is too expensive, people will not buy
Secondlife is priced out of reach of it’s customer base
I believe Viv is referring to new user retention, few of any of which last long enough to experience much that’s land-related.
Tateru, Even converted users like yourself don’t maintain land holdings because it’s too expensive.
New user retention is poor, existing converted users will not pay for Linden lab’s product – which is land. What will happen ? where are we going ?
The numbers speak for themselves. Forget new users ! Converted engaged users are abandoning land – the product
Without a good reduction in tier, only further decay and destruction is ahead
SL is not failing because because of SL though, SL’s problems are for the most part external. People are loosing jobs and finding it hard to get and keep new ones. Less money means retaining a presence in SL is harder to justify.
The in world economy is NOT land and more cheap land for everyone will do nothing to improve the fate of Second Life. There are enough empty places already.
If anything less land makes SL more social and more attractive, less land could actually be a good thing and just what the doctor ordered!
I’m certainly not seeing signs of unusual attrition. Nothing I could clearly say, “This is because of [insert SL or LL issue(s) here]“. It’s just that normal attrition isn’t being replaced, because we can’t keep a new user for four minutes straight ( <- only slight hyperbole).
I’m sorry but one of my goals has always been to own a full sim. A goal that is, quite frankly, out of my reach due to the start up costs and tier fees involved.
Even getting one second hand is out of the question and FORGET about renting.
I COULD go with Co-Ownership … provided anyone who signs on understands that the Sim will be set to and owned by a group that they’ll have to join.
That still leaves me with other problems however: I’d have to rely on a steady income from any Co-owner(s) to help pick up the slack …. and let’s face it, with my present income and bills … the most I can afford each month for SL is my Premium membership and about 25 bucks to pay out the rental fee on a plot I have set aside for friends and family.
It’d be nice and all to have a full sim for them to utilize and to host various small events and RP gatherings on … But at the present price ranges?
It’s impossible.
William, please consider that nothing changes by just giving the active user base more land for less money. This will not help. This simply will be not bring in more money (brought in by more users). SL and it´s “economy” only can “grow” by an increase of the user base. The ones who already spend money (obviously) are not willing or able to pay more, but want to pay even less for more. And I am not a selfish enough to let Linden Lab go bankrupt for my own short sighted “savings”. Are you?
I am absolutely with Tateru. If we want Second Life to grow or even survive, we ( Linden Lab as well as us as a community) must deliver better quality, better service, a better user experience, better accessibility, better functionality and a better overall quality – and less trash, less bugs, less product management disasters and less selfishness. So that new users are looking forward to spend a dime on SL – and not log off with no return. Price cuts will not help there at all.
But why All seem to ignore that Second Life is not the only one around anymore?
Get real, see how any can have the land they want to build for free!
http://opensimulator.org/wiki/Main_Page
Foneco, opensim is not an alternative nor competition, and btw., it´s shrinking.
Got a link to back up that claim that opensim land-usage in general is shrinking? oO
http://www.hypergridbusiness.com/2012/05/shakeups-on-the-hypergrid/
Oh yes, I saw that article. It also states that the number of users has gone up, while also suggesting that the drop in number of sims is probably only a temporary thing, since “a bunch of them will come back” before long.
Incidentally, I’m involved in one of the new grids that appeared recently at the bottom of that list of top 40 grids, and that grid has been growing.
I HAVE seen grids go byebye, though. One particular grid that went away last year was more due to the staff not really being up to the challenge of running a grid, though that was more in a lack of public-relations skills than in technical skills, but ultimately it was not taking enough technical precautions that killed them. (They tried to merge two grids, which meant merging two asset server DBs, and I get the impression they didn’t keep complete backups of the two respective DBs before trying to merge them. So, more ineptness than lack of technical skill was at fault here.)
In any event, I DO think OpenSim will continue to grow. I hear there already ARE more sims in opensim (counting ALL the grids and minigrids and private hosted-at-home sims together) than all the sims on SL combined. One of the main things holding back opensim is probably the lack of high-grade physics, but that seems to be coming too.
Yes, open sim has very cheap / free land.
Try get 20 people together for a party and you will see why tier in SL costs what it does.
I fully agree with your comments about reducing tier for education and non-profits, also they are the sort of organisations that may get others hooked and becoming future landowners in sl.
I’d also like to see some sort of ‘open space’ rate (yes, I know it has been tried) for everyone – it could be a great way to fill up empty mainland – ‘a quarter of the tier for an area with a tenth of the prims as normal’ maybe.
I agree with you that in real world terms tier is getting cheaper, but sadly it doesn’t appear that way psychologically, even a 5% drop has a certain feel-good factor and may be fiscally possible for LL. The recent region idling project should reduce server and bandwidth requirements a little, thus reducing LL’s overheads. But really what SL needs is new users who come and stay and give LL and other users cash – so hopefully LL’s money would be put into that.
If LL drop prices by 50% today, by tomorrow the land market will be in freefall.
A 50% drop in price would destabilise the entire land market, the pressure would be on land owners to react with an equal 50% reduction in prices, some will, some will keep their real terms margin and pass most on. This will inspire a mass migration of tenants as everyone revalues the new deal in light of competition.
Freefall comes when those holding empty regions (and there are plenty!) dump them on the market for almost nothing, with reduced incomes you need volume to survive. How do you do that in a small pool with a set number of customers? Crash your prices to ZERO, build volume in the land rush and stabilise prices when the dust settles. Expect lock in deals, pay for 6 months get the first 3 free. Pay nothing to move in. Crazy car showroom deals and contracts.
Chicken Little never fell so far so fast and hit so hard.
Trinity,
if Linden Lab do not reduce their prices soon, it may not exist in a couple of years, we have serious decay, believe it, it’s true
If Linden Lab dropped set up fees and reduced tier by 50%, it would create an incredible boom in land sales. the grid would grow x10 in 24 months. Projects that are not being done would be realised. People could actually start using Secondlife, instead of the current situation where the userbase can’t afford the product.
Only people who do not understand the potential and beauty of this technology think that it is niche and that it will not grow if you lower prices.
Secondlife is important human technology. It has enormous mass market potential but there has been a loss of vision at Linden Lab and their greatest failing is not making this technology affordable and available to all.
if your position had any weight then opensim should be booming and busy. It’s as cheap as cheap can get, there are fewer restrictions on developers and from an end users perspective there is little to distinguish it from SL.
Opensim is vast, empty and of no interest to the people who actually make the metaverse what it is, because guess what, builders do not a social platform make!
You also seem to be missing quite how much work LL actually do to advance the platform, infrastructure and stability.
The reason why Opensim is not booming is beacuse it has very little content. 95% of serious SL creators do not sell in Opensim, why would they ? it doesn’t have a proper economy.
Linden lab are never going to allow hypergrid teleport from the main grid because it would kill their land business over night.
People would abandon SL for cheaper Opensim land, even though it’s more flaky, if they had access to the SL marketplace and their inventories. But that is NEVER going to happen because it would kill the mothership Linden Lab’s main product – Land.
Content is king and it’s the last thing of value that Linden Lab has in it’s posession – The content creators of Secondlife are LL’s greatest asset. And it’s the content creators of Secondlife that are keeping the system alive. Without content there is nothing.
Sidetracking hearing Opensim a few times. Why doesn’t LL sue the crop out of them? I just browsed through a few websites and I could spot a gazillion obvious copy-write infringements and I’m pretty sure the underlaying code and methods used are not 100% original. I find this very strange.
Linden Lab encouraged and supported the creation of Open Simulator, providing quite a bit of information that it needed in order to be compatible. The Lab was also instrumental in the development and testing of Hypergrid teleportation.
Open Simulator was, to the Lab, a validation of Second Life’s concept, and of Linden Lab’s work. The Lab moved forward laying out the early foundations of interoperability standards that would see diverse sorts of virtual environments able to interconnect and to pass users between them.
Then in 2008 there was new management, and the Lab dropped the whole notion like a hot potato – but there’s no take-backs in this sort of thing.
OpenSimulator has taken great pains to be as sure as they can that they’ve developed an independent implementation. For ages they wouldn’t accept contributions for 6 months from anyone who’d even looked at the viewer code, and they now require the use a contributor’s agreement for anything more that a tiny patch. These are standard industry practices for developing alternate implementations of another platform.
For your average user, it ain’t land. A 1024 parcel is easy to find, is very affordable, and has just enough elbow room for your average user to live in. The probem is prims, or land impact. As someone else pointed out, it’s not necessarily that land is too expensive, it’s that it lacks value for the price.
I remember an interview during M’s reign where he touted the fact that anyone in SL could own a 747. Which is true; you can keep massive builds in your inventory. But unless you own a substantial amount of land, you won’t be able to rez it. Even if you can rez it, you better not plan on rezzing anything else.
Go back to that 1024m parcel. Plop a house on it. Then decorate it. Damn… that gorgeous dining room set you paid L$1000+ for takes up too many prims. Spend a few hours looking for something just as nice but lighter. Repeat for each room in the house. Finally! The house is done. But wait… the yard! Oh no… how will I ever have the yard nice with only 15 prims free?
Enter the specter of things like temp-rezzers.
I’m not sure it should have to be that way. Its a pain for experienced users, and a barrier for new ones.
Marcus you are quite right, it shouldn’t have to be this way. the dream of virtual living really means that everyone should have their own sim.
Some kind of openspace sim – e.g. 1800 prims, capped at 3 agent – should come with every premium account. That’s the real experience of virtual worlds. Anything else is not acceptable
Secondlife is competing with giant virtual world games and MMOs that empower people to feel like super heros.
Linden Lab are not empowering their users if they expect them to live on a 1024 plot with 117 prims. That’s just a feeble versions of the possible virtual world experience that should be available to us all.
Everyone should have their own sim. That’s the real product. Until Linden Lab achieve that Secondlife will continue to limp along giving people a faint taste, a half experience
Tier costs need to come down so everyone can afford their own sim. That’s the real product
I’m not certain a whole region is strictly necessary for a good experience. 65536 square meters is a lot more room that it looks like for 3 people to rattle around in. But I agree a cheaper region option that doesn’t require you to own a full region ought to be an option.
There’s also the issue of neighbors with a full region. Some people want to live next door to a friend, and even two private regions side by side won’t feel quite as neighborly.
I’d love to see someone perform an experiment. Take some average users who’ve been around at least a few months. Give them a huge parcel for the prims, but have them build a home on just 1024m of it. Tell them to try to create a home that is satisfying (they don’t have to give up too much), but to also aim for prim efficiency (they don’t rez freebie 747s). Then see how their prim use actually averages for someone wanting a nice but responsible home.
William, pack 45 k PE onto a sim and then come back and complain on PE. You would not be able to, you´d be stuck in crash orbit or lagged to death. Yeah, i know, opensim. Not enough people there to try such an assault.
Apart from that, it surely is possible to build a complete home on 1024 sqm. One only must search for the few content creators in SL who actually create stuff for exactly this kind of task.
Or, even better, learn how to create low prim objects.
Just to counter-balance the perception I receive from the replies.
Second Life is FREE, Free and more free. If somebody shouts how expensive Second Life is, tell in clear language: Second Life is free. Tell *that* to the future residents since it is 100% true.
Vick, Second Life is free in the same way walking into a restaurant is free. It costs nothing to walk around, but if you want to sit at the bar, or sample the cuisine, it’s going to cost you. You can visit SL for free, but you can’t *live* in it for free.
Second Life is free. I know enough people in SL that do it all for free, even some that make a profit from free.
Heck, for the last two years I’m living in SL for free. I love free and Second Life is
A way they could reduce the price without actually reducing the pricetag would be to offer more for the same price.
They upped the maximum prim limit for regions in the code to 30 or 40,000 some time back. I feel that they are holding back a prim increase for a rainy day, or maybe in an effort to increase mesh uptake.
40,000? Oh well, then prepare for a major breakdown. SL software chokes with even a few of these fabulous mesh items around. Or sculpts. Or prims. Or whatever.
And what are sculpts and mesh good for but an indirect price cut, anyway? Except organic and some sophisticated structures there virtually is nothing which could not be designed and built in-world with a simple geometry combined with good texturing. Prims are adequate for almost everything, they unfortunately only cost much more than sculpts and meshes (in most cases). So in fact, what more do you expect? Isn´t this a price cut per excellance? Oh yes, but only for the chosen few who love Blender more than Second Life, know how to deal with 3DX ripper or can read the google warehouse catalogue, right?
Sculpts were not the savior of SL, Meshes are not the savior of Second Life, and price cuts would be the bane of Second Life. I think it´s time to stop with all the stereotype “savior” populism and start to focus on the real problems and how to solve them.
Regardless of the “economic” impact or business models or competition, the product is over-priced.
No one knows whether it would “harm” LL’s bottom line. To know that you’d have to know how much profit they pull in, because tier reductions only mean taking less profit, not becoming paupers because they can’t meet operating expenses.
In a world of increasingly lighter weight experiences, $300/month for a piece of virtual land that you can walk across in 60 seconds is archaic. And over priced, period. Did I say overpriced?
It may not cause increases in users, but it would make their pricing more realistic. It makes an overvalued Facebook IPO look like a bargain.
A car payment for a chunk of virtual land and hosting? That’s ridiculous. And this for an aging buggy product.
It’s yesterday stuff for $300/month.
Compare to OpenSim or Unity pricing.
Hell I’ve got one project using the same technology that Skyrim Online is developing with. It costs me $99/year for not only all the licensed technologies that go with it, but also includes cloud hosting, seats for 99 developers with real time collaboration, support for virtual goods and micropayments and everything else out of the box.
Compare to their enterprise product at $50,000 and up. The failure was in their pricing, as it has always been.
Everything about SL is overly monetized, from their currency games to sinks to mesh providing less triangles than before with a higher resource cost.
There is no value for dollar here, regardless of all the other factors, which just don’t apply when the price doesn’t match the product offering.
I agree that SL as a whole is overpriced (for what we get). But LL calculates prices, and the reason for these prices are that costs are as high as they are. We can discuss how to lower the costs for technical maintainance and staff, but not land prices. The egg and the hen, you know.
We actually can discuss how “overpriced” it is to see tons of obviously ripped for free content from various sources (games or 3D websites or whatever) being sold at the SL marketplace. Or how “overpriced” it is to sell a 50 prims bed when the same can be done much better with 5 prims – with a little knowledge and true dedication to the SL environment. Or how “overpriced” it is to sell mesh clothes while knowing that these almost never fit the avatars people spent either lots of time or money on. We can discuss a lot of things, but not land pricing.
And yes, maybe the SL software IS yesterdays stuff technically, but I cannot see any of the technologies you mentioned coming even close to SL if you compare the numbers of users and the provided technical structures (mass access).
The fact that no-one knows how much profit LL pulls in is part of the issue. We simply *don’t* know, other than it is “healthy”. We also don’t know their overheads.
People make quick and easy comparisons between the likes of SL and OS (or even SL and other walled gardens) – but the fact is, such comparisons are largely meaningless. Why? Because LL has considerably more overheads than their “rivals”:
- They have 200-250 staff to pay: that’s potentially upwards of $12-$13 million in costs (salaries, etc.)
- They have multiple locations to maintain
- Yes, they do have hardware operating costs of significantly higher proportions than any “rival”
- They have third party support contracts to meet
All of these mean that, whether we like it or not, the company’s baseline costs are going to be a non-trivial factor in any baseline for setting tier.
On top of that, they also have the pressure to ensure their investors have a reasonably healthy return on their own investment.
All this serves to limit how much flexibility the company has in dealing with tier – regardless of whether we believe “land” in SL is too expensive or not (and for the record, I actually think it *is* too expensive).
The basic reality is that the revenue model that currently drives LL is such that *any* tinkering with tier can impact any or all of the above. At the very least, it eats into profits, which again – whether we like it or not – isn’t going to go down well with investors. As Tateru points out, any substantial reduction in tier could do far more than that – up to and including impacting the company’s ability to retain staff.
Unless and until LL moves away from their current model, then this problem remains. As it is, it has been suggested that the current decline in private regions could see LL’s revenue stream reduced by around 8% by the end of the year. This is by no means certain; as we saw last year and whether we agree with it or not, LL have some leeway at their disposal to potentially slow the decline and offset worst-case losses.
Cutting tier doesn’t offer them the same luxury. Once it is cut, it’s gone, which an immediate impact on their bottom line and absolutely *no* guarantee that there will be any resurgence in the land market to offset the loss. Indeed, as everyone is pointing out, it is entirely possible that a tier cut could actually further depress the land market – thus LL weaken their ability to generate revenue and SL continues to wallow in a recession.
To me, and as I’ve argued in my own piece on tier, the only realistic way forward for LL to alleviate the situation is for them to do precisely what they are doing: diversify their product portfolio with completely non-SL products with can do two things:
1. Generate revenue streams of their own which lift the burden from SL.
2. Offer opportunities for greater inward investment to the company.
Clearly (1.) is going to be a longer-term proposition; but even at the current rate of decline in private sims, it would appear LL won’t hit a terminal end-point for perhaps another 2 – 2.5 years: that’s potentially enough time for the new products to make a mark of their own. (2.) potentially offers more immediate leverage, as their is no reason why, if properly package and promoted, new products cannot be used to generate investment ahead of their launch.
Of course, the question then becomes one as to whether LL will leverage the new revenue streams to SL’s benefit. As Trinity Dejavu beautifully summarised things in a comment on my blog: “New income streams for the Lab are only really of benefit if the flow of capital works both ways. SecondLife funded Dio. Will Dio ever return the favour?”
Inara, All of the above is only true if you believe that Seconlife is already dead. Truth is it’s not dead, it’s an amazing and important human technology that is being suffocated by super high prices beyond the reach of it’s user base.
You are talking in such a negative manner about Secondlife. basically what you are saying is – this technology is dead and nobody wants it apart from the already exisiting user base, who would use it less if it was cheaper.
Secondlife and the SL economy would boom with a reduction in tier. People want this technology but it’s just too expensive. That’s why nobody is buying and that’s why Secondlife is dying.
William.
Your argument proceeds from two false assumptions; one is that I believe SL is dead, the other that tier reduction will lead to growth.
To take the second first, so to speak.
Currently, the population density of SL is approximately 2.4 avatar per region. That’s low. So while it is great to make headlines about tier alone being the reason for the current shrinkage in private regions – there is also the far that there is simply too much land as it is. Given this, it is fair to say that while a reduction of tier may well encourage those already involved in SL who do not have land holdings to go out and rent, it will not encourage estates to rush out and lease more regions from LL – because they already have a massive surplus of land.
If anything, all a reduction in tier will achieve is something of a slowing in the rate of attrition with private regions, but the downward trend will likely continue until estates reduce their holdings to a level that actually meets demand.
Nor will tier reduction lead to a massive new influx of people into SL. As it is, few of the 16K-a-day sign-ups the platform enjoys actually remain involved in SL long enough to discover they can obtain land in-world or learn how to do so. As such, there are other elements that need to be fixed well before tier itself becomes an issue. And it is not as if those 16K are all necessarily rushing off other grids because they offer “cheaper” land.
At this point in time (and at the risk of repeating myself and Tateru), the problem with tier reduction is one of simple economics for Linden Research. While a reduction of tier might bring a short-term gain for those of us in-world, it will more than likely do very little to help the company’s balance sheet – because their revenue is so dependent on tier for the immediate future.
For example, Hamlet estimates the the company might lose as much as 8% on private region revenue due to the current rate of attrition by the end of 2012. That is something of a worrying figure. However, where LL to cut tier by 10% today, that is an immediate loss of revenue to them of (very approximately) $480,000 per month on private regions alone (+/- 5%) with little or no guarantee that it will result in greater land “sales” to compensate.
Ergo, for tier reduction to be effective, it need two things:
1. LL to have decreased its dependency on land tier for revenue. This, as I’ve covered in my own article on this matter, is actually what Linden Research is doing right now by diversifying their product brief into new areas. This doesn’t mean they are abandoning SL or anything else. It simply means they are broadening their market reach and increasing their value as an investment opportunity.
2. There needs to be a pragmatic approach to encouraging people to enter SL and get involved with all that SL has to offer. Again, the company seems to be moving in this direction as well:L they are providing the means for us, the users, to create richly dynamic and immersive environments that will excite and engage incoming users. There is still a good way to go on this, admittedly – and it needs to be be tied-into a more broad-based marketing drive AND a means to ensure that people entering SL can actually get to grips with it quickly and find what they are looking for.
As to my own views on SL, I neither believe it is dead nor dying; rather it has reached yet another of its frequent plateaus. In many respects I’m as positive about SL’s future as I was following SLCC-2011 (with one or two caveats around LL themselves). I do believe the company is on the right track in diversifying their product portfolio for reasons I’ve explained. I also believe that the emerging new capabilities in the platform – the advanced content creation tools and pathfinding (current bugs / issues with both notwithstanding) – have the potential to regenerate SL’s appeal to incoming users.
Again, there are obvious caveats to the latter as well (such as ensuring marketing, sign-up, etc., actually lead to new users understanding a little more about SL from the start and being able to get involved in the environments and opportunities these new tools allow us to build). But overall, I believe that these are good and right moves for LL to be making.
More than that, I believe that in time, they will enable LL to take a fair more flexible approach to tier that both satisfies our demands and doesn’t hurt their bottom line.
I will have to disagree with point number 2 that you make. LL may be adding new toys, but what is the point if many are priced out of putting those new things to use. Many talented creators have already left due to being unable to afford a region. If people cannot afford the prims and space required to build these engaging and immersive environments because of the outrageously high monthly tier, then it sorta renders those tools pointless except for a select few that are lucky enough to afford them.
As it stands now for many, regions must be used as malls or rental land which not only uses limited region resources, but kills the immersive environment that was created. That might be fine for a club, but really makes things difficult for roleplay or art regions.
My opinion is that there needs to be a major change in how LL bills for region use. Regions should be billed for their up time and the number of minutes and avatars that use them per month.
Its fine to say that at the current rate of region loss, it would take a couple years for LL to reach the breaking point, but that is assuming that downward trend doesn’t begin to accelerate. I view it as cracks in a dam. Eventually the cracks will become too numerous for LL to patch with new little toys and the holes will just get bigger. The entire ecosystem that makes SL stable will be affected. Less regions, less creative people engaged in creating interesting places, less people having interesting places to go, less people to rent from barons and less people to purchase items from merchants.
LL needs to make the tough decisions sooner rather than later on their pricing and costs to operate. Unless they just plan on sucking SL dry until it is time to shut off the lights. Just my opinion.
I disagree. Linden Lab did not add anything substantial to the platform since years. They only added import formats which only are of interest for a superminority and which do not add any value for the average user. They added a bunch of shinies and shaders which never worked correctly and did not add much value to the visual appearance of SL, but only narrowed the user base by additional hardware demands and tons of fresh annoying bugs. They mad a series of product management mistakes, they invested millions for attracting “business”, but never realised that business only goes to places where the people are. While the people left cause of frustration over never fixed bugs and a steady devaluing of the in-world experience. That´s not enough to keep a once vital environment growing and not even enough to keep the average user interested.
Linden Lab simply missed the point that the only attraction Second Life ever had to offer is in-world. And not a website sales place, not imported formats, not media on a prim, not their viewer and server software experiments or whatever else they focussed on in their tech geek microcosmos.
Inara, apologies for the delayed response, I’ve been busy clearing and tidying land abandoned by renters because they can’t afford the high tier costs.
These people are not abandoning land because of SL bugs, problems with understanding the viewer or anything else. They are leaving and abandoning SL because it’s too expensive.
You and Linden Lab are underestimating the power and the desire of the existing userbase for the product, which is land. SL would grow from within, dramatically, with a reduction in tier.
Linden Lab are losing and are going to lose more money from not reducing tier.
NOTE : All remaining die hard residents who own a small plot of land – dream of having their own sim. But they can not afford it
Your whole idea is based on the myth that SL is a niche and that’s it’s broken and that nobody wants it. That really is a negative idea and so untrue. People want the product but they just can’t afford it.
It’s a great shame that the evolution of such an awesome product is being killed by absurd pricing
“Currently, the population density of SL is approximately 2.4 avatar per region. That’s low.”
Says who? Second Life is a place for creativity, it doesn’t take a lot for 2 people to think up 7,500 prims and 128 sqm each of things to do.
A lot of people don’t even want anyone other than close friends on their parcel. Second Life should be a place for creativity shared with a few and creativity shared with as much as a sim can hold.
“Nor will tier reduction lead to a massive new influx of people into SL. As it is, few of the 16K-a-day sign-ups the platform enjoys actually remain involved in SL long enough to discover they can obtain land in-world or learn how to do so.”
Yes, a lot of the reason people leave has nothing to do with tier costs, but obviously part of the reason people leave is they find nothing interesting to see or do.
High tier costs limit creativity. The more we can create for a buck the more content there is for ourselves and newcomers. 99.9% of what there is to see on screens and click is made by us, not Linden Lab. Every rezzed prim is afforded by tier payers. It’s impossible to not see the connection between tier costs and new users first day.
We all can recall the one or few things that made us stick around in Second Life and push through the problems. For me, it was a Vampire the Masquerade community/sim that later closed due to high tier costs. Anyone like me that logs into SL for the first time, opens search, and types in some things they’re interested in and comes up short will miss out on the same experience I had.
Lowering tier costs increases the likelihood newcomers find something worth sticking around for.
“While a reduction of tier might bring a short-term gain for those of us in-world, it will more than likely do very little to help the company’s balance sheet – because their revenue is so dependent on tier for the immediate future.”
Who gives a crap? You know the problem most companies face? Figuring out exactly what their customers want and will pay money for. Linden Lab has customers clamoring to pay for prims and land.
We the customers shouldn’t, and won’t change just to protect Linden Lab’s balance sheets. Premium won’t do, 512 sqm housing projects and Wilderness safaris aren’t what we want. Waiting around to see if DIO makes Linden Lab some money won’t do, nor any of their other projects.
Know what will do?
More prims, more land.
Instead of suggesting how we the customers have to exchange expectations and desires, or Linden Lab has to change as a company outside of Second Life, how about investigating exactly why tier is so expensive in the first place and suggesting ways Linden Lab can break free from apparently being the only company in Silicon Valley that hardware and bandwidth doesn’t get cheaper for over time?
Linden Lab’s top priority right now should be figuring out how to make tier cheaper. There’s a thousand case examples out there of how other web hosts do it (and that’s all Linden Lab is, a web host).
Yes hardware costs money, bandwidth costs money, customer support costs money. But that’s true for companies other than Linden Lab. There’s companies I do business with that allow me to make my service cheaper by only getting email support instead of phone support. That allow me to only run my software on their servers the hours that matter to me rather than 24/7. That give me 10-20 different tiers of resources and optional services I can check on and off, upgrade and downgrade to at my leisure.
There’s a lot of ways Linden Lab can make tier cheaper. Get over the land/prim abstraction and realize they’re just selling server uptime and bandwidth. A simulator is just running software not unlike Apache. Certainly there’s smarter, more affordable ways Linden Lab can abstract that out the way other software as a service providers do.
“What doesn’t happen? Well, here’s one thing that doesn’t happen: there’s no seismic (pardon the term) shift in land-sales for one. Got a big estate that’s now costing half as much? Are you going to suddenly expand it? No, you probably aren’t. There just aren’t enough users – yet – to support any rapid expansion.”
I have to gently disagree with this statement. When you lower the price of something people buy more of it. Maybe not the same people will be buying more, but more land would be sold if it was half priced.
You can’t look at the average land baron, note that they wouldn’t expand their business, and then conclude that land wouldn’t expand in aggregate. You have to look at the marginal user who is on the fence about expanding, or the new user who is deciding whether they should buy a 1024 plot or a 2048 plot. This is where the action is, those users who are sitting right smack dab at the intersection of supply and demand.
Similarly it doesn’t matter that the average new user doesn’t stick around for 4 minutes. It matters that the user who *did* stick around and is now looking to buy land is facing a lower price. You can’t say whether a 50% drop in price will cause a more then, less then, or exactly a 50% expansion in quantity of land without knowing the elasticity. And the only times we’ve seen price of land change that I can remember is when the price went UP for educators, and we saw how price sensitive they were.
Your analysis is similar to saying that if the price of oil went down it’s not as if you are going to drive twice as far to work every morning. This is true, but the shift in driving happens on the margins; you might not combine all your shopping trips, you might be willing to drive farther for your vacation, etc…
You are correct that in a commodity market, the lower input price will be passed on to consumers. Big land owner profits will stay exactly the same as before the price was lowered. But the important thing is that their RISK will be lower. Assume 300 bucks supplied enough land for 1 tenant before the price drop. Now that same 300 dollar investment is spread over 2 tenants. Now when 1 tenant leaves and you have to work to re-rent their land, you still have half your income stream in tact. Lower land prices smooths out the cash flow for land barons, which in turn makes them more likely to invest because they face a lower risk.
It’s the small things that eye-in-the-sky blog posts like this completely miss. Anyone who’s brought family and friends to Second Life that actually manage to get pass the viewer issues eventually run into the question of whether or not to buy land.
At first there’s timidity to add real money period, the realization that the best things in SL aren’t free. Virtual rent is harder than a dress sale, but eventually its needed for at the very least, unboxing and dressing some place private.
So if land prices were halved and that $8 USD a month 1024 plot is suddenly $4 dollars, is that a huge change for a first time land owner? Not to you and I, but for the timid first time user it can lend positively towards those split second decisions that decide if they ever open the SL client again.
And it trickles up from there; 1024 to 2048, 1/8ths to 1/4ths, 1/4ths to homesteads, homesteads to full regions. Anyone who’s used SL for a long time have navigated this ladder up and down. More land and more prims = more creativity. The more we’re able to be creative and share the better WE want t ostick around and the more we’re able to consume and see the creations of others the more well…WE want to stick around.
It’s entirely useless to speak to “estate holders” who’re telling you essentially they don’t want increased competition under any circumstances. Why should they? It’s too bad the “estate holders” that apparently back this blog post won’t be named because there’s a lot of estate holders not at all afraid of more competition and would prefer it to SL slowly bleeding away while they still earn a nickel; that could be dimes if only there was more competition and thus more innovation and thus more attractions for people to stick around.
Would cutting tier be the magic bullet for new user retention? No. A viewer that isn’t guaranteed the buggiest, most crash prone, most difficult to control piece of software on a person’s PC will fix that. But tier prices DO figure very early in the conversion funnel of someone dipping their toe in SL to a long time user.
Forget the eye-in-the-sky crunch numbers crap. Think about how YOU buy land and use prims and how those you’ve brought into Second Life do the same. And if you have no need for land or prims, then this isn’t relating and relying instead of “estate holders” who’re any amount profitability and exclaiming they don’t want competition and are fine with tier being where it is, isn’t a reliable backup to trying to relate.
This is completely out of touch and disappointing to see in the wake of so many vocal land owners exclaiming the effects of high tier prices and so many former land owners explaining exactly why beloved sims are suddenly gone; high tier prices.
But it’d make Linden Lab proud. “Shed me no tiers”. Clever, sassy, intentionally condescending, and wholly unsympathetic to all of those who’ve pained to keep the grid alive, interesting and bloggable about.
Who, after all, wouldn’t want to get more resources without having pay any more for it?
However, since you ask how I buy land and use prims, if tier prices took a tumble – I’d take the difference and buy groceries or pay bills with it. I’ve already got the amount of land that I need. I don’t need more.
What did you think of Inara’s take on it, incidentally? We both jumped off from the same topic – Lab profits, tier prices and economic projection – and arrived at our respective conclusions by completely different paths.
“Who, after all, wouldn’t want to get more resources without having pay any more for it?”
An easy observation, but not one to gloss over when it comes to understanding how tier reduction would effect Second Life positively. There’s no ‘but’ after that statement, there is no point more important, its the most important element of understanding and championinng tier cost reduction.
We create, we share, we consume. That’s 100% the point and draw of Second Life. Some of us do one, two, or all three of these things, and all three scale exactly proportional to how many square meters of land there is and how big of prim allotments we have.
If we can create twice as much; we’re twice as likely to rely on and consume scripts, textures, prefabs. If we share twice as much, there’s twice as much for us all to see, experience and consume.
Content will grow with tier reduction. Will content alone fix concurrency all issues? No, not as long as viewer issues are still a barrier to content, but content is still king.
“However, since you ask how I buy land and use prims, if tier prices took a tumble – I’d take the difference and buy groceries or pay bills with it. I’ve already got the amount of land that I need. I don’t need more.”
In a time where sim counts are dropping, you obviously aren’t alone in weighing SL land vs. real world expenditures. Even if you have zero interest in more land and have all that you need, tier cost reduction would lower the likelihood you abandon what you currently need and ease the process of getting more land should you ever need more.
And having a fixed amount of land needs isn’t counter point to the good effects of tier cost reduction. Presumably you’d still benefit from having more to consume in world and blog about, even if you wouldn’t necessarily use a price drop to create more in-world.
“What did you think of Inara’s take on it, incidentally? We both jumped off from the same topic – Lab profits, tier prices and economic projection – and arrived at our respective conclusions by completely different paths.”
Too eye in the sky for me. There’s enough of that out there. Linden Lab itself is already aloof enough to view things starting at their bottom line, down to estate holder’s supposed bottom line, and then fizzle out from there.
What’s needed in response to the “crying” is jumping in the trench with those keeping donation jars filled to keep favorite sims afloat, those taking a loss to operate their store for the love of offering good things to the grid, and others who love Second Life and are responsible for 99% seen when the viewer loads.
All arguments sympathetic to Rod’s grin at SLCC when refusing to discuss tier but bragging about profits vs. sympathy to all the “crying” is useless. That callous, half-informed naive part of the argument has already been repeated over and over again.
Basically, while you would take the difference, someone who isn’t a direct landholder, would become a new direct landholder. It’s more to do with population growth and less to do with the state of the current population. Still, reductions can’t go too low too quickly, a plan would have to go in effect to maintain cash flow until the growth can support the economy.
Anecdotally, as a content creator, the team I was on closed our roleplay sim project within the last year because the sim was too expensive. Not because we didn’t want the project to go forward, or because nobody cared – we had a playerbase that wanted to play and content in development, but the $300 a month was simply too much for the team to absorb after some financial hits.
$150 or $200 even might have been a manageable situation, but $300 meant closing the doors. We could not sell the sim and it was abandoned, and so instead of $300 or even $150, LL gets $0. I am on another project now but we have bought the sim from another person that can’t afford theirs anymore, so the net gain to LL is $0. They don’t even get the $1,000 startup fee.
Half of nothing is nothing. People are dropping sims because they can’t afford it, where some would keep or even might buy in at a reduced cost. The current sim pricing is forcing content creators out, and forcing content off the grid. New users come in, see nothing to do, and leave, or come to create and find out they can’t afford to, and leave. The whole situation is a lose-lose.
It occurs to me that a roleplay sim doesn’t really have to depend on Linden Labs. OpenSim technology is good enough that a much lower level of investment would be enough.
But there are things you miss out on. And there is the advertising problem. It does seem possible that finding new players doesn’t depend on Linden Labs, but is it practical to be isolated from resources such as the Marketplace? And, as a creator, even very specific items might have a wider appeal than just the one roleplay group. I know I was surprised to see how often the “Gor” label was applied to generic pre-gunpowder scenery/prop items.
So moving away from Linden Labs doesn’t look so good an answer, and it seems they know it.
I have searched around for a LONG time when it comes to land let me tell you my reasons why I am not on SL with all my stuff, now this is just the contents of my head and well my opinion does not account ,much as being all important, but it is my opinion.
So please trolls of the world, before you read just note, that I wont’t feed you if you respond. That was my disclaimer and I am sure a lot of “mis-information” will be tossed around by the conspiracy theorists, but i am living proof this does work and I know it will be better than most things out there today.
I am a resident of Spoton3D.com Now i Like Second Life and AM a premium member, in fact I tend to buy land on almost every grid I visit and stay for long periods and try it out and really give it a good go.
I went to avination, what a horrible experience! I was cast into a huge mall w no money no direction and most importantly NO people and the default avis are enough to send you screaming.
I went to inworldz.. It is ok but buggy at best and well they don’t seem very open or friendly to new ideas and kid of clam the entire universe down and seem to really hate second life? the onwer is super nice, and I like her, but the rest is well a so so experience..
Second Life, I Like it and i have some good friends there, but it is JUST TO EXPENSIVE and I can’t justify that amount of money to “play” on top of the copy bots and grieving..
IMVU -im there forever and well it is LLAMA at best the owners don’t give two shits about the community
Nuvera is nice and different and I like it but lacks the life likeness that a platform that works well on an open sim would run.. so I am hesitant ….as much as I like it and LOVE the owner super smart and nice, im keeping my eye on it
SpotOn3D is were i rest a lot of my time cause they CARE about us, they care about what we say and the prices are good as well as you feel like your a part of the team all the time, you feel like what you say is regarded and taken seriously ans they don’t ban you for saying things about other grids to threaten you, there adult enough to know that you dont just play on one grid and no grid “owns” you. So with all the tech stuff and the community the ways it is run I am staying around cause I believe in them simply because They BELIEVE IN ME.. i dont have a fancy degree i just have a lot of passion for 3d worlds!.
Here is some info I dug up about them and you can make your own decision, better yet investigate for yourself?
Want to know the real reasons creators and users aren’t adopting Opensim grids? In its current progression without seriously tweaking the recommended set up and throwing some heavy server power at it is pretty unstable, and terribly insecure. Hypergrid was created to be a boon for cross grid delivery but can be used as a proxy copybot tool. If you the user lands on a self hosted region then that region owner can plunk anything out of your exposed inventory and upload it to the central asset server in their own name, where it eventually ends up in the OpenSim OAR (whole island backups) and IRA (Individual inventory backups) OpenSim databases filled with these “backup” files and advertised as a FREE content resource. *sigh* What creator would trust that? And no user should either, because that means your privacy is null and void too.
There needs to be a platform that has all the functionality of SL, but with real CHANGE:
* Real and fully functional world on the web plugin so users
can get in super easy.
* Real security at the door
* Real stability and smart systems that beat lag down for the
long term – which BTW means merchants will have to adopt
new ways of working with the backend.
* Real ease of use for the new user – its simply too hard for
them to get into things – then aren’t techy like us nor do we
really want them to be – Keep them as consumers by making
it far easier to play.
* A template system for whole region builds to promote DIY
game design with a built in universal roleplay system that is secure and
promotes creators too.
* An engaged & responsive staff and management that
understands creators and works hard to create tools for them.
* And yes, all this at much lower prices – prices that are more
in tune with web hosting services instead of a car note.
Some will say this is a pipe dream. Bah. Its already done. yep. That’s right
Everything listed here is available today and based on the Opensim code base, so same familiar functionality plus a ton more.
Neither OpenSim nor SpotOn3D have all the functionality of Second Life, and it would seem likely they will always be playing catch up. SpotOn3D at least has some paid developers working on it and has developed some good features, though at the moment it must be making a massive operating loss – so maybe it hopes to make money from all the patents it has filed instead.
Hitomi … Your statements are welcome, as it opens a door for me to make clear that no only are we ahead of other Opensim grid, but also Second Life.
1. We have all the building and coding support plus more to match and exceed SL functionality. One proof of that is our 3DWeb Plugin.
LL nor any other OpenSim grid has the ability to run natively on a web page and inside Facebook with full functionality.
2. LL nor any other OpenSim grid has the ability to create and use HotSwap Scenes that allow creators, educators and businesses to swap out whole sim builds on the fly and incorporate any changes in real time – not snap shot backups like OAR files – All done without violating the original creator’s IP rights. Come to think of it Second Life doesn’t even allow OAR files, none the less a HotSwap Scene technology and they take equal IP rights to any content that comes onto their servers. SpotON3D does not, which puts our users, creators and business folks in the forefront of our concentration. Isn’t that how it should be?
3. LL nor any other OpenSim grid has a multi-grid delivery system that is automated, allowing the user to legally replicate their purchases if that creator opts in to allow it to go to that other grid. Unfortunately, there simply aren’t many grids that are secure enough to meet their needs.
4. SpotON3D is – to our knowledge, the most stable, lag free and scalable platform to date developed on top of the OpenSiim core code.
And there is much more, but I don’t want to sound like a commercial.
Now … lets talk about those patents. Some Opensim folks seem to imply at every opportunity that we are patenting Opensim code, or using patents as collateral to sell off later. I can assure you that is patently ( excuse the pun
) untrue and just screams of a lack of vision. We can earn much more revenue from licensing 3DWeb Social Community Template grids then selling off patents *rolls eyes* Can we say DUH?
Yes … I’ve said this repeatedly. Our patented code is NOT OpenSim core code. It is our systems that run on top of the OpenSim core. We’ve set up our platform very differently than any other grid has, making it possible for us to slip seat a new base platform code and tie back into our systems if a better one is created. That’s true innovation.
If folks take the time to actually come by and ask the real questions pertaining to how our technology works they’d know this as fact. Instead, seems many are complacently parroting others instead of thinking for themselves.
That begs the question … When did we start acting like sheep, blindly following everyone else into a melting pot of mediocracy? The reality is that the founders of OpenSim created this platform under a BSD license. That had to be in support of individuality to ensure people could branch off and make their own visions from the base code. It was made modular so people could add their own flavor of functionality to it. If the original founders of the Opensim code hadn’t intended that, then they would have made it GLP licensed.
This technology can’t and should not exist as on path. It must have viable choices or it becomes a single note with little difference between one community or another. Only with encouragement to express individual ideas and goals can we work our way out of a shared software gene pool and let the market choose which version meets their needs. Why the some folks invest so much time fighting that ideal by trying to crowd pressure folks to opensource their separate and independent code is baffling. And unfortunately, the illogical shouts about the patents only gives the OpenSim community a black eye from the real world’s perspective.
Hitomi … Your statements are welcome, as it opens a door for me to make clear that not only are we way ahead of other Opensim grids, but also Second Life.
1. We have all the building and coding support plus more to match and exceed SL functionality. One proof of that is our 3DWeb Plugin.
LL nor any other OpenSim grid has the ability to run natively on a web page and inside Facebook with full functionality.
2. LL nor any other OpenSim grid has the ability to create and use HotSwap Scenes that allow creators, educators and businesses to swap out whole sim builds on the fly and incorporate any changes in real time – not snap shot backups like OAR files – All done without violating the original creator’s IP rights. Come to think of it Second Life doesn’t even allow OAR files, none the less a HotSwap Scene technology and they take equal IP rights to any content that comes onto their servers. SpotON3D does not, which puts our users, creators and business folks in the forefront of our concentration. Isn’t that how it should be?
3. LL nor any other OpenSim grid has a multi-grid delivery system that is automated, allowing the user to legally replicate their purchases if that creator opts in to allow it to go to that other grid. Unfortunately, there simply aren’t many grids that are secure enough to meet their needs.
4. SpotON3D is – to our knowledge, the most stable, lag free and scalable platform to date developed on top of the OpenSiim core code.
And there is much more, but I don’t want to sound like a commercial.
Now … lets talk about those patents. Some Opensim folks seem to imply at every opportunity that we are patenting Opensim code, or using patents as collateral to sell off later. I can assure you that is patently ( excuse the pun
) untrue and just screams of a lack of vision. We can earn much more revenue from licensing 3DWeb Social Community Template grids then selling off patents *rolls eyes* Can we say DUH?
Yes … I’ve said this repeatedly. Our patented code is NOT OpenSim core code. It is our systems that run on top of the OpenSim core. We’ve set up our platform very differently than any other grid has, making it possible for us to slip seat a new base platform code and tie back into our systems if a better one is created. That’s true innovation.
If folks take the time to actually come by and ask the real questions pertaining to how our technology works they’d know this as fact. Instead, seems many are complacently parroting others instead of thinking for themselves.
That begs the question … When did we start acting like sheep, blindly following everyone else into a melting pot of mediocracy? The reality is that the founders of OpenSim created this platform under a BSD license. That had to be in support of individuality to ensure people could branch off and make their own visions from the base code. It was made modular so people could add their own flavor of functionality to it. If the original founders of the Opensim code hadn’t intended that, then they would have made it GLP licensed.
This technology can’t and should not exist as on path. It must have viable choices or it becomes a single note with little difference between one community or another. Only with encouragement to express individual ideas and goals can we work our way out of a shared software gene pool and let the market choose which version meets their needs. Why some folks invest so much time fighting that ideal by trying to crowd pressure folks to opensource their separate and independent code is baffling. And unfortunately, the illogical shouts about the patents only gives the OpenSim community a black eye from the real world’s perspective.
The article makes a passing mention of the benefit to non commercial sims, such as roleplay sims. I think this should have been explored more. I have seen countless roleplay sims and communities fall to pieces purely over cost issues. They have as much right to exist as shops and clubs and deserve a cost break.
I confess that I have become ever more confused by how Linden Labs defines the PE value for a mesh object, with the changes there have been, and the quality of the explanation. I have, for years, made mesh objects, and textured then, and built scenes, and rendered them.
Trying to get a predictable PE in SL has stopped being fun.
And, in general, the way SL has been developed, it has gotten in the way of fun. Start with how Viewer 2 was designed and introduced. Too many things seem to be in permanent beta. The company is a hot-bed of half-hearted, ill-explained, enthusiasms. With rare exceptions, Lindens are the masters of the unfinished.
If Walt Disney had been a Linden, would Steamboat Willie have ever tooted his whistle?
Six months after the launch of Linden Realms the new features start to be used on the Main Grid, and the undiscovered security loopholes almost bring down the Grid.
The way things are, I may stop being a Premium Member. It has stopped being fun.
Regrettably, I recall suggesting that trying to calculate or aim for specific resource-usage targets in an accurately-measured SL resource-calculation system would be difficult and tedious, at best. I also seem to recall that the notion was shot down, when I made it.
Okay okay, so cutting tier prices in half would kill the landmarket and the land barons? Did I understand that correctly?
SO BE IT!
Can’t you see that the mere existence of land barons in SL just shows that LL’s pricing policy went wrong right from the beginning? They are bloodsucking vampires, they are true parasites. And they are clever, in a way far more clever then LL. If the market was in order we wouldn’t have any need to feed those greedy people. Don’t get me wrong, I was an estate manager, made some nice profit and transfered money out of SL. I wasn’t even an premium at that time, so I paid nothing but took money out of SL. I’m still ashamed for it and promised to myself to never ever work in that business again. The rental business is everything SL was never suposed to be: it’s not creative, it’s not making SL any more attractive, it doesn’t add to the user experience. The landbarons are fulfilling just one demand: they are not asking you to pay a membership fee and they are keeping their sims in good order. And they learned to live with a minimal profit margin.
Stuff LL should’ve done in the first place.
Anyway, if LL would calculate their prices in regards to RL economy and RL competition we’d never had such high tier rates, we’d have the ability to buy land directly from LL without paying premium fees … and LL would still make more money. And, best of all, all those estates would be a thing of the past! YAY!
There ARE quite a lot of people on SL who expressly do NOT like the land barons. When the iconic mainland sim Abbott’s Aerodrome changed hands,bypassing the land barons and being sold directly to someone else who intended to run it himself, it turned out after a few months that the *new* owner couldn’t keep it going AND keep his other sims going too. This new owner then went OUT OF HIS WAY to not have it go to any one of the land barons, either. He was ready to *abandon* the sim rather than have it go to one of those hated land barons. At the very last minute he finally DID find someone else to buy it, though.
I would not shed a tear if all the land barons dried up and blew away, so long as it was still easy and painless to buy land. They could perhaps be replaced with land brokers, though, whos main purpose was to connect buyer with seller, but that could probably be better handled by software instead of brokers.
Truth is land barons make land more expensive for the end user. I should know, I’m one of them.
But the time has come for LL to reduce tier and drop set up fees for all to stop the decay and decline of SL
The simple reality is that the reduced tier rates for larger land parcels mean that somebody can buy land, pay the lower-rate tier, and rent it to others in small parcels at a lower rate than Linden Lab would charge the end user.
And the customer doesn’t need to be a premium member.
The value of the free-512 can be calculated from the cost of premium membership, the exchange rate, and the value of the Stipend. Do you give a positive value to the LL support provision that premium membership entitles you to? I am not sure.
Land rentals for small parcels seem consistent with such calculations, though I am not sure if they have taken into account the slow shift in the USD value of the Linden dollar.
It’s also possible that people outside the USA can get a better deal through a third-party L$ exchange that accepts their local currency. It’s easy to forget the real-world currency exchange fees.
Also, premium membership attracts a VAT charge for customers in Europe. Buying L$ does not.
There’s room for a Land Baron to both undercut Linden Lab prices and make a profit. But can they rent a high enough proportion of their land to do so?
I think the times of big money in SL land have gone. They depended on an expanding population, and the Great SL Boom seems to be over.
[...] Tier – Many people have suggested lowering tier so land was more affordable. Tateru and Inara explain why that is just a bad idea better than I can. It is paramount to demanding less [...]
We all know the old equation 1 server = 1 full sim or 4 homesteads.
That was in 2008, when hardware was considerably more expensive than today.
Today LL puts up to 16 sims on 1 server! And they pay less for each server.
In short: LL have a license to print money! If they are not profitable it’s due to the many many mistakes and errors in judgement they make. One of those mistakes is trying to sell a grossly overprized product to an underfinanced market.
It’s one of the oldest economical wisdoms, it’s general knowledge: if I’m fully stocked but can’t find enough buyers I lower the prices. Every kid knows that, only LL pretend they don’t.
Actually, it’s never been less than one sim (or four homesteads/voids/quads – whatever you prefer to call them) per core. Originally there were four cores per server, so you’d get 16 lightweight sims per physical server, or four full-sims.
Well, I suppose I should say “regions”, since the number of sims is different. A sim can (and usually does) handle multiple regions. That’s a gotcha when you’re listening to the Lab talk about servers, sims and regions. They use the terms very specifically and rather differently to how we do. A region is the area we walk around in. The sim is a unit of the software in the back.
Maybe far enough along in the interesting comments about an interesting post, by people who obviously care, to be able to re-frame a little.
What can be done to a listless body of SL? What part/s can be prodded or poked from inside or out, added or chopped, to rally and revitalise, economy, community, creativity and fun? A place where many more people, from a broader cross section of humanity will want to go.
My feeling is, that *the* pivot point is being able to have a lot (more) users able to be in close proximity in the landscape, freely moving seeing and enjoying things. When this can happen, then an increased user base can happen, because then places and creations will be a lot more compelling, fun and economically vital, and far less off putting. *Then* (more users *able* to be attracted), metrics tweaking costs becomes more realistically viable IMO, and more reasonable assumptions gaging desirability (market) of paying this or that for land and prims.
My sense is this, that recoding/refitting SL to be that place where 100+ avatars could be “free” in a venue/concert/shop/discussion at the same time.. has been in the “too hard basket” for so long, that a parallel look at profitability has perhaps become the norm.. looking more at some bottom line status quo of late life cycle settling, addicted or preoccupied users, somehow with the money to finance what they are doing. in other words, a stasis, which is profitable *enough* for those profiting at Linden Lab who could be cynical, uninspired, frustrated, resentful, resting on laurels, bygone days.. etc, new waves of hirings simply inheriting these sensibilities.
My speculation (RE: lab employees) itself is maybe cynical, and overly simplistic. I am hopeful, and on board for fresh, genuine technical accomplishments that rejuvenate the aging and lagging body, inspire, make easier and fun, truly empower, a new generation of Second Lifers. It’s complicated!
Finally, I also support reductions for non-profits ~ a good idea from several angles.
I don’t see much benefit to the land barons from it other than adding a few more sea or park regions to their continents, but I do remember a lot of excitement when the 3750 prim regions first became available.
I suspect a lot of the people who rent and own regions would increase their holdings.There would be more noncommercial spaces like Loki’s, art sims and exploratory spaces, region-sized games, and non-profit run spaces. People involved in SL breedables always want more prims. Many rp areas would love to expand if they could afford to.
Would that result in more revenue for the Lab? No idea.
Second Life is dying a slow death. It has been for many years now. What once had such promise… What once was such a ground breaking place is no more… LL killed it. SL is dying from a thousand cuts…. None of them caused by their users. All of them caused by LL management, investors, and employees. It is fast becoming a big fail… A Big Joke… LL knows it, the investors know it, and for the past few years the user base knows it. The only true believers left are hard core koolaid drinkers and they just can’t visualize a world without SL in it. I feel sorry for them…. So much wrapped up in a company and software product that keeps failing them over and over and over.
LL had a window of opportunity and it has passed… For those youngsters and noobs to virtual worlds research Active Worlds. History is repeating itself…. ; )
I tend to agree with you, Robert. Tho I still think SL as an environment of significance could still be saved by some radical and probably painful reforms at Linden Lab.
From my own (and very limited) point of view, SL has become overpriced when my RL job has gone from full time to part time.
So I closed my land, and lost the strongest tie I had with Second Life.
I maintain contact with SL friends via a french SL forum (JOL), Facebook and Flickr and I rarely log-in.
Had it be half as expensive, I would still have my land… and be more often in SL.
Now, most interesting things are done in Opensims where the pioneer spirit of my SL 2006 beginnings is still strong.
Tier prices could be lowered gradually over time to avoid any ‘shocks’ to the economic system. L.L. doesn’t need to do immediate 50%/75% reductions. At the same time L.L. could focus on improving their Marketplace revenues (where the majority of future growth lies) by increasing their 5% cut to something higher. Again this could be done harmlessly over time.
That’s true, although according to the last figures we have Marketplace revenues were an almost negligible amount.
Actually, there’s something I’d like to get clarified, if I may. The term “overpriced” keeps coming up, and I wonder if we’re all meaning the same thing by it – or indeed, exactly what we do mean when we say it.
Do we mean “overpriced” as in “more than you want to pay for it”? Or is it “overpriced” as in “charged at far more than it costs Linden Lab to provide it”? Or is there a third or fourth meaning in use?
“Overpriced” as in the product is priced more than what seems fair, Tateru.
To me, the price of a helicopter is fair. I want one but I can’t afford it, I don’t think its overpriced.
$300 a month for 1 core of a multitenant server averaging 2.4 concurrent users a month of bandwidth and customer support costs does not seem fair.
It can, and has been argued that tier is priced as necessary for appeasing investors and accountants, but we’re customers, what’s fair to them isn’t fair to us. Their side of the equation is obvious, they need profits so Philip can go off and blow six or seven digits on work experiments, and so Rod can fund five or six other side projects and acquire LittleTextPeople.
What’s overpriced to us as customers should be defined solely by what seems fair on our end. It’s comparing $300 dollars a month spent for tier vs. $300 dollars a month we spend for similar and dissimilar things.
I think that “overpriced” only can apply to comparisons of several vendors offering the same product. One can compare middle class cars and conclude that one or two models are overpriced in relation to other cars. It´s a market term in very first place. Maybe “overpriced” can be used in case of a monopoly, where revenue allows a huge profit margin which obviously does not get re-invested in product quality but yachts at the Bahamas.
As a comparison, here is the pricing of Active Worlds, which is pretty similar to Second Life, is not cheaper and has been mismanaged into insignificance in the same way as Linden Lab currently mismanages Second Life into insignificance.
http://www.activeworlds.com/products/uniserver.asp
Pricing certainly is not the problem with Second Life.
Vivienne,
Second Life pricing may not be a problem for you, but I know for a fact it is a problem for many (myself included). I know and have known a lot of people that gave up their regions due to the high cost. Some completely left Second Life and others scaled down to a small parcel. Just because someone is on a small parcel of “land” doesn’t mean they are happy about it. They simply have no choice. Well they do have a choice. The alternative is just to quit.
I’m currently in a Linden Home and am not happy about it at all, which is why I barely log in anymore. I could be satisfied with a homestead, but I refuse to even pay one dollar more to a land baron for it when I should be able to pay Linden Lab for it with out a mark-up to some estate baron.
Since I am not creatively engaged in Second Life anymore due to the prices for regions, I am no longer purchasing content and not contributing to the economy. How many like myself do you think there are in Second Life? I would suspect many.
Oh and I think you linked to the wrong price list for active worlds. I saw other lists for worlds closer to the size of a Second Life region that costs much less annually even the hosting price and ftp storage price combined seemed to be cheaper. However I am not sure what exactly is needed for active worlds. Looks like they offer many product options, even though I really wouldn’t compare them with Second Life anyway.
Active Worlds was a big thing long before Second Life appeared on the scene. And yes, they still have a marketplace for imported 3D objects and all this. And yes, they still have a bunch of never fixed bugs. And yes, no people left to buy all the glory.
It wasn’t very long ago (to me, at least) that that was actually a pretty good pricing for that sort of thing. However, I agree at this point in time it would be overpriced if that’s all you were paying for. Remember, you’re also paying for a share of first-party development costs (we’re not talking about a 5-50 person Web-hosting business), licensing the physics engine for 1 million or so active users, the voice services (probably billed per speaker – or per listener – per minute), the supplementary asset system (charged by data transfer), and probably a few other things that have escaped me just at this moment.
Yes, but Linden Lab isn’t the only service provider, software or otherwise, that offers tiered services with optional extras. Or rather, Linden Lab is the only service provider in my life right now with the rigid pricing structure it has.
You mentioned physics engine. We have a checkbox to turn some physics off in the estate manager; why doesn’t that reduce my bill? You mentioned voice, we have a checkbox to turn off voice via estate manager; why doesn’t that reduce my bill?
If I reduce the amount of minutes I’m allowed a month on my cell plan, my bill goes down despite what it costs AT&T to launch satellites and bid in auctions for more spectrum.
If I unsubscribe from HBO, my cable bill is less without it mattering that HBO still has to pay actors.
If I turn off my A/C, my electricity bill is less without it mattering my power company still needs tons of coal.
If I tell my car insurance company to cover the damage I do to others, but to hell with me, I have that option for a smaller bill.
There’s some sims built entirely around voice-chat in Second Life. Maybe they don’t care at all about physics, so why no option to pay less for things they don’t need? Some sims disable scripts altogether, so why should they foot whatever costs bubble up from developing the new Linden Realms LSL stuff?
Every company I’m a customer of that I can think of tier their services off and create optionals to account for all the things you mentioned, Tat. Kids selling candy have this figured out. I don’t think myself and others are asking Linden Lab to go above and beyond other companies we’re customers of, but to at least price half as flexibly and fairly.
Because, as I mentioned, you’re paying for a share. That applies whether you’re using it yourself or not. For an offline, analogy, your taxes (and various other fees) pay a share of all the roads in your district – even if you go no further than the corner store – because the larger road network has to exist in order for it to be useful.
Physics is built into the software so that everyone can have the option to use it or not. Havok doesn’t care whether you’re using physics or not – they care whether it is included in the software that you use and how many ‘seats’ that works out to. That’s the basis under which it is licensed. Voice is likely much the same. We’re talking around about a million seats, but the money to pay for that million comes from the much smaller pool of land-holders. People who are paying tier or leasing regions. The… well, one percent, if you care to think of it like that.
* I don’t know the actual percentage.
“Because, as I mentioned, you’re paying for a share. That applies whether you’re using it yourself or not. For an offline, analogy, your taxes (and various other fees) pay a share of all the roads in your district – even if you go no further than the corner store – because the larger road network has to exist in order for it to be useful.”
But Tat, you just mentioned Vivox charges Linden Lab likely per speaker/per user/per minute. Why hasn’t that flexibility of pricing branched down to us? If I own a club and its empty except 8-10 each night when there’s a live performer, why no option to turn the sim off so I only pay for 14 hours a week instead of 168 a week?
We’ve seen evidence that Linden Lab is able to negotiate with Havok over licensing lately by extending sub-licensing to TPVs. So why can’t they negotiate a “only some of our customers are interested in physics” licensing agreement?
And IF dependencies like these are the reason tier prices are so high and theres nothing they can do about it, why isn’t it a priority of Linden Lab to remove the dependencies vs. acquiring all the companies they have over the years and now starting half a dozen different experiments/products?
I think my point and others’ point isn’t whether we’re right or not on the particulars of why Linden Lab charges so much, but that THIS should be the conversation. Not what investors and accountants need and want, but what we as customers are willing to pay for and what Linden Lab has to do to offer that.
For exactly the same reason that it isn’t done with roads, public schools, health, and more. Because this way the costs are massively distributed. If they weren’t, you probably couldn’t afford it.
Let’s take electricity. You’re charged maybe 9000% of the actual cost per kilowatt of generating the power. Why? Because there’s all sorts of overheads in distribution, and in getting it to you, personally. You pay for the people who get special discounts. You pay for the organisations who don’t pay at all. You pay so that hooking power up to a new premises costs hundreds of dollars, rather than tens of thousands or hundreds of thousands of dollars per connection.
All the unpredictable unevenness of service costs are flattened out. Everyone pays for everyone, because if everyone was paying only for themselves, their usage and the path to their own premises, only the very rich could afford to actually get hooked up to get electricity.
The schools system, the transport system, the telephone system, the postal system and more work in similar ways. As someone said of the telephone network, “The first phone call of the day costs about a billion dollars. After that, everything else is free.”
“For exactly the same reason that it isn’t done with roads, public schools, health, and more. Because this way the costs are massively distributed. If they weren’t, you probably couldn’t afford it.”
Not everyone pays the same taxes, you know. A lot pay none. If you’re going to create an analogy between government and Linden Lab, then Linden Lab should charge customers a fixed percentage of their income. A private region for me would cost a whole lot less than a private region for Anshe Chung.
And that aside, government can mandate what people need, customers tell private companies what they want.
I specifically used features that we can check on and off in Estate Manager as an example because Linden Lab has already deemed it a-ok for some regions not to have physics, some regions not to have running scripts, some regions not to have voice. States and cities don’t let neighborhoods opt out of roads, public schools and hospitals. If they did, it’d be fair to question why that neighborhood’s taxes should be as high.
“Let’s take electricity. You’re charged maybe 9000% of the actual cost per kilowatt of generating the power. Why? Because there’s all sorts of overheads in distribution, and in getting it to you, personally. You pay for the people who get special discounts.”
Doesn’t change the fact that I have control over my bill. If I want it less and can stand to be hotter, I can run my A/C less. You can value a minute of region uptime however you want, but the argument still stands tier pricing is too inflexible and unfair compared to service providers who believe we should only pay for what we have use of and actually use.
“All the unpredictable unevenness of service costs are flattened out. Everyone pays for everyone, because if everyone was paying only for themselves, their usage and the path to their own premises, only the very rich could afford to actually get hooked up to get electricity.”
Flattening out to $300 a month and that’s that is ridiculous. What you’re presenting isn’t a counter-argument, all you’re telling me is that other companies have to deal with the same issue of making everyone somewhat pay for everyone, and at the same time make sure there’s enough options and tiers of service offered that a person that uses an order of magnitude less of a service pays an order of magnitude less.
“The schools system, the transport system, the telephone system, the postal system and more work in similar ways. As someone said of the telephone network, “The first phone call of the day costs about a billion dollars. After that, everything else is free.””
And telephone companies still manage to divide up costs across a range of packages and per-minute pricing structures.
Again, all we can do is guess what the real monetary cost of hosting 1 region is for Linden Lab, and if they can cut tier costs right now as is or if they’d need to make a bunch of engineering and business changes to accomplish tier cost cuts.
As a customer, I don’t care what they have to do. I won’t make excuses for them. Especially not when they’re hiring for and building other products and the founders and investors are blowing money in the open elsewhere. I don’t care to be understanding and sympathetic of that. Price Second Life land ownership better.
The former has got to be the single most economical thing the Lab has ever done. Absolutely a bargain, and probably the smartest monetary decision I’ve seen from the Lab. It gives them potential revenue streams that could be used to put more resources on Second Life, takes no man-hours away, and the whole lot came at negligible cost. Plainly speaking, the Lab should have had the foresight to have done it in 2004, but the future is a difficult thing to predict.
I’d like to see more decisions with that level of business-sense and economy from the Lab. If there had been more like that, we probably wouldn’t be talking about expensive land prices.
As for the founders and investors? It’s their own money they’re using, not the Lab’s. They can spend their money how and where they please – and that has nothing to do with us, or with Second Life.
In any case – and in case you or anyone else is in doubt: Yes, land prices are expensive. I have no dispute with that.
Yes, perhaps they could have been much lower if the system was structured and licensed differently from the get-go. I’m not disputing that either. Fact is, not a one of us has any factual information about the floor cost of a region (including staff, licenses and all that). I can guess. You can guess. We’re both just as likely to be wrong, so none of that is really open to rational disputation.
But, I know SL users, and particularly new users (including some data on those that never get as far as logging in), and I know the SL economy (some folks at the Lab have said that I know it better than anyone there does), and I know how highly competitive commodity markets behave in response to reductions in supply costs. Given the state of the global economy, I feel the analysis is sound. Yes, there’ll be a perceptible positive bump, but not sustainable growth and not a boom by any means – and a boom is something you don’t want. Pick up any economics textbook for the reasons why you don’t want a boom.
However, I’ve yet to see a case presented that convincingly contraindicates the scenario’s projection (which isn’t to say that I’m right and you’re wrong. Not by any means. Just that I haven’t seen a convincing case yet, though I’m holding out hope that one will turn up) – I’m glad you’re all thinking about it, though. Perhaps we can talk further about some of those other factors (they’re perennially interesting topics in and of themselves) in another piece as well, because I would definitely like to see such energetic and thoughtful debate on some of those.
“The former has got to be the single most economical thing the Lab has ever done. Absolutely a bargain, and probably the smartest monetary decision I’ve seen from the Lab. It gives them potential revenue streams that could be used to put more resources on Second Life, takes no man-hours away, and the whole lot came at negligible cost.”
Letting users crowdfund a mesh deformer while firing at least one key member of the mesh team can be seen as smart and of neglible cost too, but from who’s vantage point? Certainly not the customers’. So as true as that statement of yours may be, its not the most important thing to consider.
Linden Lab either believes in Second Life or they don’t. If the best way to provide for Second Life is to acquire other companies and hire for other products rather than invest in further enabling the creativity of Second Life users then Second Life is entirely pointless. You could argue investing profits in Apple or another growing company is a better bet than using profits to work towards tier cost reduction, but I argue investing in Second Life users is the best way to improve Second Life; for us and Linden Lab’s balance sheets.
And to be fair, Linden Lab has invested in the Linden Realms tools, pathfinding, etc. But that’s a bone throw compared to what they really need to do. Those pathfinding and Linden Realms features are entirely pointless in the 512 sqm sardine cans they’re attempting to hoard Premium members into.
“As for the founders and investors? It’s their own money they’re using, not the Lab’s. They can spend their money how and where they please – and that has nothing to do with us, or with Second Life.”
If its going to be considered relevant to discuss Linden Lab’s bottom line then it also has to be fair game to discuss where those profits go. I myself am encouraging we not be concerned with anything except what we as customers should be concerned with.
“However, I’ve yet to see a case presented that convincingly contraindicates the scenario’s projection”
A hypothesis’ projection, apparently in part based on what unnameable estate holders have to say on more competition vs. status quo of being profitable now despite how unhealthy the grid is.
The post is a hypothesis and projection completely one-sided towards Linden Lab and select estate holders of that particular opinion so it contradicts itself. Lend more weight to customers -telling you- what they’d do with reduced tier prices instead of writing the effect off as a mere: “You might get a noticeable bump as individuals and tiny holders buy up some lots and parcels nearby them… and then they stop. They’ve eaten their fill.” Land and prims aren’t nice extras in Second Life to nibble on, they’re the entire point except maybe next to other people.
“Not everyone pays the same taxes, you know. A lot pay none.”
AFAIK only people like those that live on donations for everything or live on the wild or on the sea and grab their food etc from nature don’t pay taxes. If you don’t have any sort of housing but you still buy your own food part of the price you’re paying for the food indirectly counts as taxes and if you grow your own food on your own little patch of ground there are taxes there are supposed to be paid for the land.
Let’s see. Profits. Second Life’s profits (to the best of my knowledge) go almost exclusively back into Second Life – with the obvious exception of the relative pittance used for developing the new product lines. If you know differently, say so.
Okay, I can see you’re not convinced in the projection – which is fine. It isn’t the point anyway. But, there’s been no new data or information come up, so suppose there’s nothing more to be said on it.
It was Inara who said:
“On top of that, they also have the pressure to ensure their investors have a reasonably healthy return on their own investment.
All this serves to limit how much flexibility the company has in dealing with tier”
So it wasn’t you Tat that insinuated dividends play a part in tier pricing, but I assumed you agreed with Inara on that point too.
None of us know exactly how much Linden Lab pays out in dividends, but I’ll have to agree with Inara it’s probably not some pittance in the sense that it does have an effect on tier pricing. No proof, but tier pricing is high, and I think pointing finger at likely dividends of the company that invented the Love Machine is as valid as pointing finger at Havok and Vivox. More valid even.
And its not all about Linden Lab’s expansion now; but expansion the last 3-4 years or however long they weren’t dependent upon VC money any longer and could hire like crazy, build offices over seas, work on Enterprise, etc. It’s not all about what Rod is doing now. It’s about every opportunity they’ve had to invest in Second Life but instead squandered on side projects.
So there’s two parts to the profits: what Linden Lab invests in other than Second Life and what investors are eating. For our part as customers, who cares I don’t think we should sympathize with either. Invest in Second Life in ways that matter, ways that lead to tier reduction via either more flexible pricing models or reducing costs of offering regions.
Inara and I started with the same questions, but proceeded to do our own research and make our own conclusions. Our assumptions are, necessarily, somewhat divergent, as a result. For example mine included that the board are only picking up directors’ fees, with a possibility of negligible dividends – which I found to be consistent with the little that I know about the Lab’s past finances. Each of them have access to other monetary sources considerably larger than they’re likely to get if you split the Lab’s total profit roughly six ways, and assume no reinvestment. Sums too small to be able to be of any use for venture capital investment.
Second Life grosses 100 million USD in a year. We know that the costs cannot be less than 40 million, for the same period, unless the business is using furniture and buildings made of papier-mâché. So, that’s a wildly optimistic low-end for costs. Costs are probably not higher than 99.5 million. So, that leaves the Lab somewhere between 60 million USD and 500,000 USD profit between the most and least optimistic estimates.
If I had to guess, I’d say that the Lab’s costs for SL are in the ballpark of 95 million USD. Though the nature of many of the expenses probably mean that variance could (but do not necessarily do) exceed the margin in any given year.
What Rod had to say about Linden Lab’s numbers and profitability. From the Joystiq article a year ago:
“I was taken aback by just how big Second Life was,” Humble says. “To be honest, it had fallen off my radar until I got the call offering me the position. And I looked at their numbers; this is a world that has got 1 million people logging in every month, generating well in excess of $75 million a year — it’s extremely profitable.”
Extremely profitable.
So if we have to guess what profit Linden Lab earns within the supposed range of $500,000 to $60,000,000 yearly, where does “extremely” fall?
Not sure I’d call a 5% profit margin “extremely” profitable. EA, the company Rod left, has a maximum profit margin of near 30% right now. So I wonder what “extremely profitable” means for him.
Of course it could just mean that Linden Lab is never in loss-mode compared to a company like EA and is consistently profitable no matter how meager, but still worth thinking about.
Rod’s echoed numerous times since his early interviews how profitable Linden Lab is. The last SLCC he said “very” profitable.
So given the range of possible profit you provided, I think its fair to guess towards a number closer to “very” and “extremely” rather than barely profitable, and judge based on that thinking whether or not tier pricing could be lower either through Linden Lab directly taking less profits and charging less, or investing in necessary software, infrastructure and business model improvements to make tier cheaper and pricing more flexible.
I think you slipped a decimal place there. EA’s GAAP net profit is closer to 3%.
I went by: http://www.google.com/finance?cid=168725 which says their net profit margin is 29% right now. Certainly not always that number for a company usually in losses. But still useful in determining what Rod may think “very” and “extremely” profitable might mean.
(rechecking)… I’m looking at EA’s full-year financials posted 16 May this year (for the year ending 31 March). That’s US$76 million in net profit from revenues of US$4.14 billion. I make that 1.83% profit plus change for the full year. The full year before that was a US$276 million loss.
That’s why I said “maximum” profit before failing quarters of that type of one big launch a year business erases everything.
So like I said, Rod’s idea of “extremely” and “very” profitable could merely mean being profitable at all coming from EA. But also could mean “extremely” and “very” in comparison to EA’s best quarter.
Could and probably have jack to do with ideas of profitability from EA at all and “extremely” and “very” mean just what the words mean.
Point is Rod’s repeated strong wording on just how profitable Linden Lab is, is important to consider when guessing where in a range of profitability Linden Lab likely is. I think so anyway.
Ezra says: Linden Lab’s top priority right now should be figuring out how to make tier cheaper.
Quite so Ezra. It’s almost like Linden Lab have gone insane, lost all perspective. Right now we’re in a situation of such decay and loss of land mass that they’re actually losing money and damaging their bottom line by not reducing tier. Every month they are losing sims and losing money.
Dropping set up fees and even a small reduction in tier would stop the rot and encourage growth.
10%/20% reduction in tier and no setup fees would easily increase their revenue and botom line over the next 12 months.
Secondlife is an awesome product but people are leaving because they can not afford the land they need to realise their dreams. A terrible shame
I’m late to this show. The problem with this analysis is that it is based on current dynamics, of which high tier costs are a barrier.
Lowering tier opens doors to new ventures. Linden Lab are developing their pathfinding tools which aren’t going to be put to widespread use with tier prices this high, people aren’t going to develop fun sims with NPC experiences, tier is too big a barrier.
As you point out, reductions in tier for education are sorely missed.
Linden Lab need more revenue streams, they are too reliant on tier and that leads to tier being the big problem it is. Lowering tier without improving other revenue streams would be economic suicide, but tier really needs to come down.
Well said, and cogently expressed.
Some believe that lowering tier costs would reduce revenue from tier, others like myself are arguing that lowering tier costs would increase revenue from tier. It’d be great if Linden Lab can add new revenue streams from their other projects, but there’s still an argument that tier as a revenue stream can take care of itself, that what’s lost in cutting profit margin via tier reduction can be made up for by volume of profit by increased land ownership, creativity and economic activity.
Now, would that actually happen? Would Linden Lab stumble upon math that dictates say, every 10 dollars cut from tier leads to an increase of 11 dollars to their bottom line? Totally a random number, but what’s fact is that every dollar cut would lead to the average user having this amount more prims allotted, which leads to this amount more builds rezzed and prefabs purchased, which adds this amount more things for new users to see and shop outfits for, which encourages this amount of store owners to create more, which encourages this amount of users to buy more which…so on and so forth.
If high tier costs are understood as a barrier, its worth asking exactly what are the high costs barrier to? The high costs can’t be a barrier to anything other than all the things we do in Second Life.
Everything we do in Second Life is through the medium of prims and land, so more of it means we do more. Everything we do is connected to the 10-20 million USD a month in user to user transactions we have with one another, and all of it inevitably earns Linden Lab some proportional chunk when tier needs to be paid or a marketplace item needs to be listed or LindeX transactions need to happen.
There’s a link between tier reduction and everything else that happens in the Second Life. Tier reduction effects Linden Lab’s bottom line negatively, but it also circles right back positively. The question is, are the effects during the circling back positive enough on the bottom line? If not, why not? What else can be done?
It’s all worth mulling over rather than immediately dismissing tier reduction as a revenue cut as if that’s the end all be all of tier reduction.
Some honed study doesn’t need to be conducted over the indirect effect of say, tier reduction and a pole dancer’s tip jar, but it’s worth at least acknowledging there is in fact a link between tier reduction and tip jars, along with every single thing else in Second Life.
High tier costs might also be a barrier to tier remaining viable, growing revenue stream.
I know the Lab has data about effects of different tier-pricing, because they’ve run differential pricing experiments on it in the past. I’m not sure how useful the actual results of it actually are, since a data-based prediction requires a set of macroeconomics models tailored to Second Life to turn that data into a firm data outcome (and I’m not sure if the Lab still has an in-house economist or not).
Weird and often counter-intuitive things happen in living economies (for example, the cure for a recession/depression is deficit-spending, whereas a balanced or surplus budget makes things worse). Does anyone know an available, deeply Second-Life-aware economist that I can quiz?
One does not need to be an economist to decipher supply and demand. LL´s recent problem is not a lack of land supply, but there obviously is not enough demand to establish a continuous growth.
The existing user base would surely go for a lower price supply, but unlikely would spend more in volume than now. As a result this isn´t enough reason to risk too much by cutting prices.
The crucial question is if Linden Lab can attract more potential users going for virtual land or not. And if a lower pricing would help demand there. Looking at the retention rates i doubt that this is possible at this stage. SL (as it is now) simply isn´t attractive enough for most potential and new users to spend ANY money on it or even to give it a second log-in try.
In fact, it is all about demand and all about product quality. And the product is in-world. As long as Linden Lab is not able to improve the in-world experience and the overall quality of service decisively and maintain a certain value for in-world activities of all kinds price cuts will not attract anyone out there.
There’s two parts to the new user experience, the first is how usable the viewer is and stable the servers are, and the second is entirely on us the existing users of Second Life to have provided 99.9% of what comes up in search results, destination guide, and eventually rezzed on screen.
For the latter, there’s a direct relationship between tier pricing and new users. Every single one of us still in Second Life now saw something as a new user that compelled us to stay. Linden Lab didn’t create that, and despite how crappy the viewer or server may have been at that time we stayed.
The issue is, a lot of the places that were around to compelled us to stay when we were new, might not be there anymore, and if they’re gone, better versions of those places might not be around.
With region counts generally going down, the likelihood of new, interesting things for new users to see dwindles away with it. This matters, this has to do with tier.
That said, you’re right and I’d say viewer usability and server performance matters many times more than having something to do and see while working through all of Second Life’s technical quirks.
That’s very interesting.
And I wish there was such an economist. Kind of weird that in a world where Eve Online has a PhD as an economist that communicates regularly, Linden Lab doesn’t have at least 10 (do they?).
LL has accountants and techies. The lack of any PhD influence shows thru most of their often silly decisions and techie play.
Oh and I love the mentioning of the pathfinding tools, because it always reminds me of something that’d have been perfect for Rod’s original want as a new user.
Back during his initial interview rounds, this one Metaverse Journal, when Rod was new as CEO and a new user to Second Life, he mentioned of the very few things he wanted to accomplish in Second Life that he wanted to create a miniature war games set.
Now, I’m sure that’d be no issue for him, I’m sure Linden Lab has provided whatever land he wants. But imagine if Rod wasn’t Rod.
If Rod wasn’t Rod and came into Second Life wanting to create a miniature war games set, his options are strictly this if he wants to be a direct customer of Linden Lab:
1. Build on a premium parcel and choose between not having a living room rezzed or house at all to save prims for making a miniature game in mesh pieces, or have that living room and concede to using something like textures instead of mesh.
2. Come up with over a thousand for a full region then 300 dollars a month.
3. Sift around mainland or what land barons have to offer where prices go up in power of 2.
4. Build in some sandbox against a ticking time clock of return rules.
Having to deal with the above might not sound bad to those of us that’ve been around and numb to it. But for a new user in Second Life that wants to create a miniature war games set…should it be that difficult and likely expensive? Is there no observable effect between tier reduction and even what a new user like Rod came to Second Life desiring? And the worthwhileness of these new tools they creating that mean little if too expensive to work with and rez.
good post Tateru and i fully agree with your thesis
as you know, i had 19 sims for two years – it is a lot of work for very little money
LL has very good revenues and should continue for years, even with its declining size
i doubt there will ever be steady growth again but 70 million a year isn’t bad
Sometimes it feels like there is a land mafia LL set up between themselves and the largest estate barons to keep prices high. There really is no reason why they can’t decouple homesteads from private islands.
The only thing the current homestead policy accomplishes is allowing estate barons to fleece the customers that can’t afford the expense of having to own a private island in order to have a homestead. If I could afford a private island, then I would own a private island. Why is the more affordable homestead product only available to the people that obviously don’t need it because they can afford a private island to begin with? That whole set up really stinks.
I think it’s a service-cost issue. Being an estate-holder automatically gives you access to the highest level of service the Lab and its outsourced call-centre provides. I assume – yes, I’m just guessing – that there’s a minimum per-person cost associated with that service that the fees on a single homestead region just don’t cover.
A little late to this commentary since I just came across this article. I think the one thing LL could do to encourage new, more permanent residents is increase the Premium tier allowance to 1024. At that point, I’d put my alt on premium too.
Next thing would be to change tier calculations so buying hacked up smaller pieces like 300m wouldn’t jump you into a full new range costing you another full tier level to pay. Tier should be based on your actual holdings with a discount for each level instead of fixed tiers no matter how much in that range you hold. For example, if I hold 4096 sq. m of land and I want to buy another 512 next door, it will cost me an extra $15/mo since the tier for up to 4097 – 8192m is $40/mo. It should only cost me 1/8 of that or about another $2/mo.