Thursday, 14 March 2013


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.

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,

1 comment:

  1. I do agree in most of what you said above. I have been in SL since only 2009, but, I have seen a load of sim owners drop there sims because they can no longer afford it since the "cartels" have taken root. The idea of giving the "cartels" huge cuts in costs or cuts in costs at all is stupid.

    What LL is doing now reminds me of a few other "online" systems in the past years. One in particular comes to mind. Active Worlds.. I was a member there LONG before Second Life acme to being. And it was great, for a few years. Then, as LL is doing now more and more, there intrests dropped from supporting the "users", raising costs and moving more to big business deals and pretty much giving up on private users worlds. When I started there, AW had an average of over 5,000 users online at any given time. This may not seem like a lot, but back then it was, in a manor of speaking. But, they soon lost interest in helping the "user", raised there prices for membership and world owning, thus, lost a load of people and worlds. Now days, they are lucky to have 50-100 people online at any given time.

    LL is headed that way now, and have been for a while now. There interests seem to be rolling toward the bigger business than "private" people. Sure, they can make money that way, but, just for so long.

    As for the land prices, I do apologize, but I do NOT see the need to have a $1000 setup and a $295 monthly "maintenance fee". Sure, they have servers to maintain, they have employees to pay and stock holders to kiss ass with. Pardon.. But, if you truly think about it, servers do not cost what they used to. Sure electricity costs, but, with the right equipment, you can cut those costs a little. I also reckon the employees there are making a rather nice living from the pay they get. If not, then the owners are being rippers. Needless to say, they CAN lower the costs some what and still MAKE BIG BUCKS regardless as to what some people think. I dont mean dropping tiers from 295 to say 75, no, but they can drop to 125 or so and lower the stupid "setup fee" a lot.. I know it does NOT take a lot of effort to setup a sim.. It takes perhaps a few minutes at most. And in actuality, that can be automated as well, and simply. GET REAL people!!!

    All in all, SL is going to drown if they do not stop pissing on the little guys, just like AW is doing. Yea, AW is alive still, but only because they have major companies that rent worlds and universes from them yet. But, there "user" base is pretty much non existent any more. Just as I see SL going that direction if they do not start looking after the little guys a lot better.

    My 2 cents for what its worth. And I am disabled so I do go into SL for reasons other than "playing" if you get my drift.