The loss of Second Life island discounts for educational and non profit institutions was an unmitigated disaster for Second Life. EDU and non profit groups added much needed gravitas to the Second Life Grid. They gave Second life a weight and a interest that doesn't exist without them. EDUs had a stabilising and energising effect on the whole ecosystem. Equally so for several non profit organisations. So it's good news to hear that Linden Lab are making 'customer win-back efforts'.
(Full story Here)
But unfortunately, even if they win back 200 EDU sims, which is unlikely, That would only represent the equivalent of approx one months losses at the current rate of decline. As Linden Lab is losing, on average 50 sims a week, 200 sims per month. These are very serious losses. Second Life and Linden Lab are not coasting, they are slowing bleeding to death. The sim bleed is so relentless that in less than 24 months Linden Lab could be operating at cost if they do not stabilise the grid and stop the bleed.
There are two meta-factors causing Second Life island ownership to decline. These two factors are so powerful that no other factor can be considered to be causing the losses until these meta-factors are addressed and the decline will continue
Factor 1 - Tier cost
Tier cost is so high it is actually driving customers away from a product they desire. There is no lack of people wanting to use Second life for thousands of myriad of projects. But there is a serious lack of people ready to spend $1000 USD set-up fee and $295 USD per month, every month.
Let's be really realistic. Tier costs are way too high, confirmed by people abandoning sims at a steady rate. This is not going to improve until tier costs are lowered dramatically - Fact
Factor 2 - The Land Cartel - Special Friends and Special Deals
When Linden Lab introduced the ATLAS Program (discounts for big land barons), they killed Second Life's most important game and game mechanic. They destroyed the land game and effectively created a Land Cartel. Combined with Linden Lab's Land Monopoly we're now facing market failure.
Monopolies and cartels are pernicious and corrosive in all businesses. There is loads of data to prove they cause market failure through stagnation. There is less choice for the customer, High barrier to entry, no new players can enter the market, no need for existing players to improve their product and service. Stagnation and market failure always follow.
Governments break up cartels and monopolies for exactly for this reason. There are very strict Anti-Competition laws in California where Linden Lab is based and in the real world the ATLAS Program and it's secret deals would clearly be in breach of those Anti-Competition laws. In fact since Second Life is an open platform it could be argued Linden Lab may actually be in breach of Californian Anti-Competition laws in this regard. The ATLAS program is basically unfair and kills competition.
No new players can enter the market, nobody can bootstrap themselves to success. Nobody is going to get a sim a try to monetise via creating a new land rental business. Everyone knows the land business is sewn up and the big fish are eating the little fish. No new players can compete with the discounts the big land barons get - So there are no new players - GAME OVER
We can infer from the above that Linden Lab's business model is now completely borked. The ATLAS Program/Land Cartel is killing the Second Life Grid by offering discounts only to a hand full of customers (Land Barons) instead of to the community at large. It's the community at large that deserves and needs the discount not the 'Land Baron Middle Men'
No wonder Linden Lab is losing islands and money every week. Without dramatic change to their business model and land pricing we should not be surprised if this loss of sims and revenue continues
Linden Lab's only option to stabilise the land market and stimulate growth is to break the land cartel and equalise land prices for all.
THINKING THE UNTHINKABLE
Tier cost should be low enough that Educational and Non Profits don't need a discount.
Tier cost should be low enough that everybody and anybody who wants to, can own their own sim. That's the real product Linden Lab should be selling - Sim Ownership for all.
For Second Life to be a free and fair world there should be no secret special deals with special friends. Restore the land game mechanic, break the land cartel - equal pricing for all, lower tier, drop purchase barriers like set-up fees, let anyone buy a Homestead and see sim ownership and the Second Life ecosystem boom.
Linden Lab stop playing favourites.
Make friends with your real customers, there's thousands of them, they love your virtual island product they want one, but they can't afford one. They've been waiting a long time for you to do the right thing,