Tyche Shepherd this week reported that the grid is ligher to the tune of another 61 private regions, this brings the losses for this year to roughly around 235, I say roughly because I’m basing this on Tyche’s last four reports and there’s a little bit of carry over from the last day or two of last year and the last report was on January 27th, so it is almost certainly slighly higher.
Now a lot of people want Linden Lab to slash tier and in many ways, that would halt the decline, for example they could slash the tier on homesteads back down to USD$75.00, or slash the tier on Openspaces to USD$25.00 a month and insist they’re only used for scenery with a stingy prim count. Openspaces at USD$75.00 a month seems extremely high to me. They could even slash tier on full regions to say USD$195.00 a month. All of these moves would halt the decline of sim losses, temporarily at least. However another route would be to introduce new products.
Now there’s no doubt that one way Linden Lab could halt the losses is to introduce new land products, such as a region that supports 7,500 prims for around USD$150.00 per month, or a region that supports 11,250 prims for USD$225.00 a month, or mega regions that were double, treble or quadruple the size of current regions in terms of prim count and land mass but had a pro-rata rata tier rate that was a fair bit cheaper than four individual regions, that might appeal to the large Land Barons.
There is a precedent for new products increasing the land mass, it came with the Openspace fiasco. When Linden Lab removed the requirement to buy Openspaces in packs of four and then allowed them to be placed anywhere on the grid, the land mass exploded, so much so that on July 8th 2008 Zee Linden opened his blog post with:
“Linden Lab is pleased to announce results for Second Life the second Quarter.
Land mass grew over 44%. The total number of regions owned by residents increased 44.2% over Q1 to just over 1.5 billion square meters. Our growth was due to the popularity of our newly launched “Openspace” land product along with a change in pricing to make the purchase of land more accessible to first time buyers.”
Now as those of us who were around at the time know, this didn’t end well, but in terms of bringing new land to the grid, the Openspace initiative produced staggering results.
There’s no doubt that the explosion in land mass was due to the Openspace initiative because that was introduced near the end of Q1, by July Zee was blogging on the results of Q2, where the initiative had fully grabbed the public’s attention. Well largely, I was moaning about them not being used as intended and undermining land that should have been used for the purposes Openspaces were, I still hadn’t purchased one by this stage. I would in August when I gave up moaning about them, more fool me.
Anyway the initiative was a success in terms of land mass, however it was a temporary boost, a spectacular temporary boost, but a temporary boost all the same. The sales of the product started to tail off in September and then, well I’m not getting into it, but it simply didn’t end well.
So what would be the purpose of any such initiative if it only provides a boost over the course of a few months? Good question because many people would increase their land mass and reduce their tier liabilities if Linden Lab introduced new products now. For example, many who could grab the half region option, would switch their full sim to two regions and then ditch one of them. However others wouldn’t, they would split their full sim into two half regions, which would increase the land mass but do bugger all in terms of increased revenue for Linden Lab. Tyche’s graphs would see an upward trajectory, Linden Lab’s revenue would show a downward trajectory and that is why such initiatives are unlikely to happen. Linden Lab could of course introduce new products but not allow people to convert regions, that would still see some reducing their tier liability whereas others may well be tempted to dip their toes into the water but I wouldn’t expect to see anything spectacular.
The other issue with new products would also be that many who were here during the Openspace boom would take a once bitten, twice shy attitude to new land products, even though there’s a new management team in place these days.
Revenue is the issue for Linden Lab, as Inara Pey pointed out so graphically in her blog post : Tier cuts: looking from the lab’s perspective, the fall in revenue Linden Lab would get from tier cuts far outstrips the fall in revenue Linden Lab are getting from losing around sixty sims a week. Inara pointed out that cutting tier by a third would lost the lab $1,400,520 in tier revenue, to make up for that, growth would need to be 1,337 private regions a month and that simply would not happen.
This is why I’ve long been arguing that Linden Lab need more revenue streams before they can cut tier, because the bottom line for Linden Lab always will be and always has to be, revenue. One way of course of increasing revenue is increasing the number of paying customers. Linden Lab’s moves to Amazon and Steam are surely aimed at doing this, improving the new user experience would help too. This is why I wish Linden Lab the very best with these ventures and want them to succeed.
However, as painful as tier is, and as painful as it is to watch sims struggle and vanish, the issue is one of revenue. I am firmly in the tier is too damn high camp, it is simply stifling for creative ventures, which means Second Life misses out on some of the creativity that would attract people to sign up and stay. The circle is unfortunately vicious. However, Linden Lab’s options are limited. However, as I’ve said many times before, tier income is still healthy, Second Life isn’t going away anytime soon, so Linden Lab have time to take more measures to attract new users, but they really need to get their thinking caps on.
I think that, even if LL diversify their range of land products, it won’t solve much of anything at the moment, simply because of something that’s painfully obvious and evades the attention of most pundits:
Due to the (artificial, but that’s irrelevant, as there’s nothing we can do about it) multiple-dip, self-regenerating global debt crisis and the idiotic “let’s all impose extreme austerity and choke our economies to death” policy followed by every government in the world, SL’s users no longer have the money to keep renting land.
This means, in simple words, that, even if LL cut their tier, they’d still keep losing full prim sims (their main source of income); maybe they’d see a rise in homestead sales (and maybe sales of land products that could come between homestead and full-prim sims, if they introduced them), but they’d still lose income, with no warranty whatsoever that this loss would be compensated in the foreseeable future.
To put it simply: Under today’s circumstances, LL’s pricing model is unsustainable, and the same applies to any other virtual world that applies it. Oh, and the grid is far too big.
LL needs to take some pretty drastic measures to cut its losses. Several ideas have been put forward; for instance, Hamlet Au keeps saying – with three (!) consecutive posts, at that – that LL should charge users for handling their inventory, a policy that is not only far too late for LL to introduce, but would also potentially hurt the consumerism that drives part of SL’s economy (and, thus, would reduce the turnover). I have personally written against this proposal and have put forward a modest proposal that consists of:
1. Housekeeping, in the style of Gameforge (of Ikariam fame) and InnoGames (of Grepolis fame): Start axing inactive accounts. They have inventories, many of them very large; they no longer log into SL; their inventories still take up lots of space and need expensive servers to maintain.
2. Charge users who wish to stay away from SL, but still want to keep their accounts (and their inventories), just in case they might one day change their minds and become active in SL again.
3. Put an end to the “four free alt accounts” policy; it only adds strain to SL’s inventory database, does not contribute to SL’s economy at all and has been used and abused by griefers and trolls to a ridiculous extent. Reduce the number of free alts to ONE per master account – any extra alt should cost $50 to create, and all alts should be (a) controlled from the main account’s control panel on SL’s website, (b) whatever actions a person takes to violate the ToS using an alt should have an impact on all of his/her accounts – it’s the same physical person/operator behind the master and the alt accounts, so there’s no logic in separating the master and the alt account. Such a policy would make LL look like it does impose a degree of user accountability for their actions and would perhaps go some way towards combating trolling and griefing.
Furthermore, SL should take drastic steps to improve its image: regarding griefing, extortion, privacy violation etc, it should be a lot more dynamic in its actions (and act posthaste to remove the smear several of its employees gave it with their affiliation with various vigilante groups known for violating users’ privacy for their own petty agendas). Not to mention it needs to fully enforce US and EU legislation on privacy matters and demand that all of its users who collect users’ data in their virtual enterprises comply too.
Anyway, these are just a few thoughts and I’ll stop here to avoid making my response TL;DR.
I agree about the inventory discussions, the horse hasn’t just bolted, it’s gone across several continents and has a new home! We’re way past the stage for capping inventory.
I disagree on the one alt, packs of five for premium members are fine but we’re a little into horse has bolted territory there too, some people have a lot more than four alts. However I’ve long been a fan of the master account idea and certainly think it should be explored.
I agree that the RL economic circumstances and without getting too political, absurd austerity measures, which have also seen VAT rise in many countries across Europe are not helping Second Life and I certainly agree that the tier is too damn high, the tier would be too damn high without economies around the world going tits up.
I do feel LL could do with a little more oomph on what is their core product, I’m still awaiting the result of the Steam venture, but that won’t fix the other issues.