Microeconomics 101: A Lesson for Linden Lab

[Czari Zenovka]

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Penny Patton wrote:

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Czari Zenovka wrote:

This is a virtual world, a "second life" - where avatars can be cows.  Not everyone WANTS to "build to scale."  That is like saying everyone wants to look exactly like they do in RL.

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No....it's actually nothing at all like that.

Clearly many people feel that land in SL is overpriced, all I did was show a way to get more, far more in fact, for your money. Literally four times as much for your money.

But while we're on the topic of SL being a birtual world where you can be anything you want, I feel it's worth pointing out that your imagination is limited by what you're capable of creating with the tools and limitations given. If you understand how those tools and limitations work, you can accomplish much more with them, letting your imagination soar.

Once you understand that much, you realize there is no cognitive dissonance between my posts on SL's building tools and my own less than realistic appearance.

 

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I don't feel there's a cognitive dissonance in your proposal, just that it is not one that everyone espouses.

In thinking of this since my last post, I'm wondering about the following:

I understand where your proposal allows one to use less land for buildings, thus freeing up more virtual space; however, the prime "currency" in SL is the prim.  So, for example, let's say I have a 1024 sqm parcel that allows 234 prims.  A building is resized or, in your words, built to RL scale, thus leaving more "space."  Ah, but does that necessarily imply more prims?  I admit I have not done much work with buildings other than to resize them occasionally, but that doesn't change the prim count of the building.  So while there may be more "space" - there are still no more "prims" and, for the average person, more prims is the key.  I'm not factoring in mesh builds and their Li since that is a bit different issue.  I've seen huge mesh houses listed on the MP with a relatively low (compared to prims) Li count, but still need a large parcel footprint for it.  Again, I have no experience with mesh, but I have heard that resizing mesh builds often increases its Li so that doesn't help with the issue of "less prims or Li count."

Would like your comments on this in case I'm missing something.

 

[Czari Zenovka]

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Deltango Vale wrote:

"500 quid today, taking into account inflation, is a lot less than it was in 1981, but I doubt anyone is paying 500 quid for a microwave oven, you can get them for 20 quid, a 500 quid microwave oven would look extremely overpriced in today's market."

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Exactly. $200 per month for a mainland sim ($300 per month for an estate sim) is extremely overpriced in today's market. No wonder Linden Lab is selling fewer "microwaves at 500 quid" in 2013 than it did in 2006. Linden Lab needs to lower the price to increase sales (and increase total revenue).

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I've always wondered about this - re: owning an entire mainland sim, is there any other way to do that besides just buying up parcels as they become available? 

I actually owned a microwave that cost $500.00 USD back in the day.  It was a gift from my grandmother and microwaves were a relatively new phenomena. 

[Perrie Juran]

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Czari Zenovka wrote:

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Deltango Vale wrote:

"500 quid today, taking into account inflation, is a lot less than it was in 1981, but I doubt anyone is paying 500 quid for a microwave oven, you can get them for 20 quid, a 500 quid microwave oven would look extremely overpriced in today's market."

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Exactly. $200 per month for a mainland sim ($300 per month for an estate sim) is extremely overpriced in today's market. No wonder Linden Lab is selling fewer "microwaves at 500 quid" in 2013 than it did in 2006. Linden Lab needs to lower the price to increase sales (and increase total revenue).

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I've always wondered about this - re: owning an entire mainland sim, is there any other way to do that besides just buying up parcels as they become available? 

I actually owned a microwave that cost $500.00 USD back in the day.  It was a gift from my grandmother and microwaves were a relatively new phenomena. 

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They are very rare but occasionally I have seen them for sale.

[Deltango Vale]

"By what percent are you proposing SL reduces tier?"

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Two years ago, I proposed a revised land tier schedule. Here is what I would propose today:

• Full Region: $200 per month (setup fee $200)
• Homestead: $100 per month (setup fee $100)
• Openspace: $50 per month (setup fee $50)
• Mainland full sim: $100 ($50 per each additional 1/2 sim)
• Mainland 1/2 sim: $60
• Mainland 1/4 sim: $40
• Mainland  8192m2: $30
• Mainland  4096m2: $20
• Mainland 2048m2: $15
• Mainland 1024m2: $8
• Mainland 1024m2: Premium bonus: free
• Linden Home 512m2: free

I believe this new tier schedule would accomplish the following:

• stop the bleeding of paying residents out of SL
• attract new people into SL
• encourage new and existing residents to become Premium Members
• encourage residents to buy land in SL
• encourage residents to build and furnish homes in SL
• encourage residents to build inworld stores
• increase revenues (and profits) to Linden Lab

There is something else to consider. The current high relative price of land tier is 'hollowing out' the SL economy by destroying the residential base on which the SL economy is built. As the geographic landscape shrinks and deteriorates, residents are increasingly downgrading to Basic Membership, buying their clothes on SL Marketplace and teleporting to their favorite clubs. The high relative price of land tier is converting full-time 'residents' into casual 'players'. Meanwhile, merchants are chasing an ever-dwindling population and being taxed by LL for the privilege.

Linden Lab's biggest problem - its fatal flaw as a company - is that it never understood its own product. Second Life is not Disneyland or 3D Facebook or Minecraft. SL is a complex society and economy decades ahead of its time. Yet Linden Lab can't see beyond its own nose. The company lusts after the success of Angry Birds while starving to death its own golden goose.

[Qie Niangao]

That certainly looks appealing from a customer view. For the Lab's beancounters to take it seriously, however, one would have to demonstrate that it's revenue-neutral or better, using market pricing math more specific than hand-waving about increased demand at a lower price point.

Even the Laffer loonies granted that their curve was non-monotonic (a point too subtle for Norquist and the current GOP, but I digress). There's some optimal price point that maximizes Lab profit over a given timeframe. For all I know, they may have done the math and found that no change can help.

As you rightly point out, however, it's not a simple calculation because so much of Second Life depends on land. Residents who don't own land also don't buy land-related products, don't build land-related content for others to buy, (probably) don't spend as much time in-world, (probably) aren't as "sticky" in retention, etc., etc.

Hence, it's perfectly possible to adopt a local-optimum price point--maximizing current revenue--and doing so, drive the product completely out of the market over time.

That's why there's such a thing as "business strategy." I don't think anybody has thought (or has been allowed to think?) strategically about SL land pricing for a very long time, not since Linden Homes were introduced (a strategy that lacked the follow-up to meet its objective; instead of systematically eroding Linden revenue for the Land product overall).

Thus, I suspect the Lab has been riding a local-optimum into the ground for a good five years now.

Maybe there's a quantitative justification for the specific pricing in that post; I don't know. In lieu of the right data to make such a judgment, there may be steps that would unlock some demand, at any pricing of the tier levels.

• Slash set-up and transfer fees for Estate sims, as rightly recommended in the post. If these represent significant revenue for the Lab, it's a bad sign anyway: that much churn is not healthy. I suspect, however, that the prices are set by fully-loaded labor rates, not by any market strategy, and if so, that's stupid. If somebody wants to buy a new Estate sim and start paying monthly fees, for heaven's sake, don't stand in their way!
• Double the Premium bonus tier for Mainland, again as recommended in the post. The continents have emptied-out because there's no viable upgrade path from Linden Homes. The whole magic of the tier structure is to tempt residents to step into that next level, either on Mainland or Estate, but Linden Homes represents a huge barrier to entry at the bottom end of the market: people get into Linden Homes and there's no comparably appealing next step for them without paying many times their Premium fee net of stipend. It wasn't that way, back when the Land market worked, and it doesn't have to stay that way now.
• Allow Homestead ownership for Mainland owners at Concierge level. Or, if that's too scary, make the criterion full-sim tier level. If necessary, make Mainland owners pay a higher monthly rate than Estates. (If it were me, I'd probably use this opportunity to cut the Estate rate so that all Homesteads got the "grandfathered" rate--removing an inequity that's existed far too long--and let Mainlanders get the current, non-grandfathered rate. I cannot know, however, whether that "re-grandfathering" would be revenue-positive in the short term.)

[Perrie Juran]

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Czari Zenovka wrote:

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Perrie Juran wrote:

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Czari Zenovka wrote:

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Deltango Vale wrote:

"500 quid today, taking into account inflation, is a lot less than it was in 1981, but I doubt anyone is paying 500 quid for a microwave oven, you can get them for 20 quid, a 500 quid microwave oven would look extremely overpriced in today's market."

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Exactly. $200 per month for a mainland sim ($300 per month for an estate sim) is extremely overpriced in today's market. No wonder Linden Lab is selling fewer "microwaves at 500 quid" in 2013 than it did in 2006. Linden Lab needs to lower the price to increase sales (and increase total revenue).

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I've always wondered about this - re: owning an entire mainland sim, is there any other way to do that besides just buying up parcels as they become available? 

I actually owned a microwave that cost $500.00 USD back in the day.  It was a gift from my grandmother and microwaves were a relatively new phenomena. 

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They are very rare but occasionally I have seen them for sale.

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Very interesting; thank you, Perrie.

  Do you see them for sale on the auction page or land sales, etc.? (Not that I can afford one...lol.)

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I've seen them while panning around on the map.   It's been a few weeks ago, I was helping a friend looking for 1/4 SIM the last time I saw one.  It was pricey, 10L per sq m as I recall.

[Perrie Juran]

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Qie Niangao wrote:

That certainly looks appealing from a customer view. For the Lab's beancounters to take it seriously, however, one would have to demonstrate that it's revenue-neutral or better, using market pricing math more specific than hand-waving about increased demand at a lower price point.

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Which is why I said determine (guess) a profit margin and then extrapolate the data to establish the amount of growth necessary to be revenue neutral or better.  Grid Survey gives some hard numbers to start with.

It's interesting to note that Tyche Shephard states in his Grid Survey that only around 12% of Mainland is abandoned parcels although anyone perusing the map will also see there is a lot of Mainland up for sale.

http://www.gridsurvey.com/

I'm all for lower prices myself.  Making land more affordable would be a plus for the consumer. 

But honestly, as far as Mainland is concerned, what would benefit it more would be for LL to find a way to introduce zoning, residential and commercial areas. 

 

[Jadeclaw Denfu]

 

Aside from the fact, that you compare apples with cars in your first post, there is a problem:
Revenue & Earnings.
Land is the main source of income for the lab and according to their last reports,
only 10% of the revenue are indeed earnings.
In other words: Your proposal would put the lab into the red. And you don't want that to happen.
As that would lead to a fast way down the drain.

What I do see as possible without jeopardizing the earnings too much would be rebates for educational
institutions, lowering the setup fees for private estates and running special offers from time to time.

 

[Qie Niangao]

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Which is why I said determine (guess) a profit margin and then extrapolate the data to establish the amount of growth necessary to be revenue neutral or better.  Grid Survey gives some hard numbers to start with.

It's interesting to note that Tyche Shephard states in his Grid Survey that only around 12% of Mainland is abandoned parcels although anyone perusing the map will also see there is a lot of Mainland up for sale.

http://www.gridsurvey.com/

I'm all for lower prices myself.  Making land more affordable would be a plus for the consumer. 

But honestly, as far as Mainland is concerned, what would benefit it more would be for LL to find a way to introduce zoning, residential and commercial areas. 

 

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Tyche's survey bots collect a lot more data than is apparent from her gridsurvey site, most recently summarized for the Mainland here.

The 12% of Mainland that's (visibly) abandoned is about a quarter of all Linden-owned Mainland, which includes all the water sims, etc. That is to say, it's considerably more than 12% of the total "habitable" Mainland.

Another thing of interest in that summary is the fact that 71% of Mainland owners pay no tier at all, with holdings of 512sq.m. (the Premium bonus) or less. (That must include many Linden Home owners who have no other Mainland holdings. Of all occupied Mainland 512sq.m parcels, Linden Homes represent more than two-thirds -- 41,264 of 59,821.)

Regarding zoning, the Lab had a brief early flirtation with that. See the regions Brown, Boardman, and (for something quite different) De Haro. However they'd handle Mainland zoning, enforcement would need to be more scalable than the current governance process... perhaps deputizing a local constabulary, or outsourcing to an Estate with a proven track record of such things. But more than that, there would need to be a case made that improving Mainland isn't just a zero-sum game hurting Estates. (I think anything that lures people out of their Linden Homes benefits both Mainland and Estates, so I've been focusing on improving specifically the entry-level non-LH Mainland market. Linden Homes are zoned residential, something lost when graduating from Linden Homes to the Mainland, but maybe zoning is a feature to reserve for Estates, and let non-LH Mainland compete on the basis of cheap space and prims. Maybe.)

I should say one thing the Lab did that I think is positive: they've broken the Governor of her land-flipping habit. Until they sort out what they want to do with the Mainland, there's not much point to simply painting more of it yellow.

[Perrie Juran]

Thanks for the link to more info.  The number of 512 sqm parcels does amaze me.  I would have never guessed it was so high.

As to zoning, much has been written and discussed on it.  We know the original thinking when telehubs were introduced was that a natural occurring thing would be commercial venues would grow around the hubs and the out laying areas would be residential.  But without oversight it didn't happen the way envisioned for a multitude of reasons.

When I started, my Landlord owned three full mainland SIMs that he maintained as residential only.  Was very nice.  But after Linden homes were introduced he had to reduce and finally sold his holdings to another Landlady who already had three residential SIMs of her own.  As rentals continue to drop she was forced to let go of two of her SIMs till I moved out also.  I lost track after that of her status.  By renting  I was able to get a 2048 sqm for slightly less than the cost of a premium membership. 

There is no question in my mind that Linden Homes decimated the rental market.  I have commented on this many times in the past but am not going to get on my soap box about it again now other than to reiterate that some level of zoning could make Mainland much more attractive to live on and develop.

[Penny Patton]

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Czari Zenovka wrote:

In thinking of this since my last post, I'm wondering about the following:

I understand where your proposal allows one to use less land for buildings, thus freeing up more virtual space; however, the prime "currency" in SL is the prim.  So, for example, let's say I have a 1024 sqm parcel that allows 234 prims.  A building is resized or, in your words, built to RL scale, thus leaving more "space."  Ah, but does that necessarily imply more prims? 

 

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Yes, it most definitely implies more prims.

Now that mesh has hit the grid, more and more content will be made using it. Mesh "Land Impact costs", or LI,  (the mesh version of "prim costs") is affected by the size of the mesh. Say you have a mesh house that costs 30 LI (or, 30 "prims") if you reduce that house to half size, depending on the complexity of the mesh and other facts, you might reduce that house to 15-20 LI.

 For smaller items, like furniture, the savings diminish. You might only save one or two LI/prims per piece. Still, once you're dealing with efficient sculpt and mesh content any prims you save at all can mean a good deal more content to flesh out your build.

 

 When dealing with strictly prim based content, you don't free up any prims by shrinking content like that, however if LL had encouraged better use of space and prims to begin with, SL would have seen astounding savings in prim costs. Before mesh, prims were restricted to 10m sizes. A simple room (floor, ceilings, four walls) could be done with only 6 prims if the room was 10x10x10. However, double that to 20x20x20 and you're suddenly using 24 prims to replicate that exact same room, a huge increase in prim cost devoted to just the basic structure of your building.

Of course, now we can stretch prims out to 64m to a side, but look at how much legacy content was made at inflated scale before that was possible. Before mesh I was regularly cutting the prim cost of buildings and other large structures down to 1/2 or less. Not everyone can take a prefab house and edit it to cut out the now redundant prims like that, so if you rely on prim content chances are you're stuck with a build that uses several times more prims that it would have if it were originally made to a smaller scale.

 Seeing is believing, tho. Check out the pictures I posted earlier in my thread. That island in the first screenshot is my private home, 1/8th of a sim, uses only 2000 prims total, more detailed than most environments twice that size. Here's an SLURL directly to Milk & Cream, the location the rest of those screenshots are from. It's only 1/4th of a sim, houses a full club and mall area as well as a role-play sim quality island area filled with hidden rooms and secret teleporters. And it's not even using all of its LI/prims yet as it's still under construction.

 

 Still not convinced? Check out the RP sim "Doomed Ship", the public RP area of the sim uses only maybe 3/4th of the sim's LI allotment and it's so large you can literally wander for hours, getting lost in the process, and still not see it all.

[Deltango Vale]

"That certainly looks appealing from a customer view."

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Yes, and that is a good thing. It returns the relative price of land tier back to the 2006 price point (approximately) at which SL was growing. Holding the nominal price of land tier at the 2006 level has resulted in a slow and steady relative price increase, which (ceteris paribus) has slowly and steadily pushed down sales and revenues.

For those who still don't understand relative prices, imagine that a pizza costs $10 in 2013 and a steak costs $15. Now imagine what would happen if in 2020 a pizza still costs $10 while a steak has gone up in quality and and down in price (to $9). From 2013 to 2020, the nominal price of pizza stays the same ($10), but the relative price (compared to steak) increases (from 10/15 to 10/9). Pizza sales fall because more and more people switch from pizza to steak. In order to regain sales, pizza makers must reduce the relative price of pizza back to 2/3 the price of a steak (reduce the price of a pizza from $10 to $6). This is precisely the problem Linden Lab faces with the high and still rising relative price of tier (compared to a broad and expanding basket of technology-driven infotainment goods and services).

[Drake1 Nightfire]

A 2006 chevy impala, brand new, cost $19,511. Stock, no bells and whistles..

A 2013 chevy impala starts at $26,725. Stock, no bells and whistles.

Why complain that LL did NOT raise prices for better product?

[Deltango Vale]

In January 2007, an iPhone 1 cost $500.

In January 2007, an estate sim cost $295 per month.

In July 2013, an iPhone 5 costs $200.

In July 2013, an estate sim costs $295 per month.

See the problem?

[Drake1 Nightfire]

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Deltango Vale wrote:

In January 2007, an iPhone

1

cost $500.

In January 2007, an estate sim cost $295 per month.

In July 2013, an iPhone

5

costs $200.

In July 2013, an estate sim costs $295 per month.

See the problem?

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nope.. it is cheaper to make the iphone now.. rent, energy and staff cost more than in 07  and the price is still the same. I say thats a good thing. If it cost more to make the iphone now and the cost was the same it would be a good comparison.

btw that cost is with a 2 year contract.. the contract free one is $649.

[Ceka Cianci]

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Drake1 Nightfire wrote:

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Deltango Vale wrote:

In January 2007, an iPhone

1

cost $500.

In January 2007, an estate sim cost $295 per month.

In July 2013, an iPhone

5

costs $200.

In July 2013, an estate sim costs $295 per month.

See the problem?

---

nope.. it is cheaper to make the iphone now.. rent, energy and staff cost more than in 07  and the price is still the same. I say thats a good thing. If it cost more to make the iphone now and the cost was the same it would be a good comparison.

btw that cost is with a 2 year contract.. the contract free one is $649.

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GM is not the best example of stable company in those years hehehe

GM had that whole bailout they had to pay back..

2013 the market is actually better than it was in 2008 ..people getting loans a lot easier now than in 2008..

the economey is actually slowly getting better..

they almost folded back then..a lot of people more worried about trying to keep their homes and not able to keep that second car loan up..let alone all those people suckered into flucuating interest loans that should have never been given a loan in the first place..

[Ceka Cianci]

a lot of people don't think that SL or LL for that matter was feeling the U.S. crunch back in 2008..

 if you look at the times when they did increase tier and make the change in price for the void sims..it kind of lines up..

66% increase if you wanted to put prims on it..

it stayed thesame price if you wanted to just have a nice view of the water in a place you used to be able to put prims in..

75usd for a veiw of the water..and 125 if you decided to build on it after the change..

then the cutting of staff...

california asking for a bailout..

 

i remember so many threads where people would ask if the U.S.economy was affecting people in sl..

a lot would say no..because it was a cheaper form of entertainment..

but a lot of places that had sims for a lot of other reasons than making money..

they folded...

because they did feel the pinch..

LL probably couldn't reduce prices because they were feeling the pinch..

with the economy slowly getting better..(only hope it keeps doing that) they might get into a position to where they may lower tier..

but myself..i sort of never lined the two up much before..them maybe not being in a position to not be able to lower it..

but looking at it ..i can see they may have been feeling the pinch like the rest of us since 2008..

[Aethelwine]

I think the Lindens could increase revenue by reducing tier costs, introducing larger sized regions (512Mx512M or 1024mx1024M would be awesome for those that like vehicles) and opening up a new continent with roads and waterways and rules like private estates have for keeping builds in theme. And finally doing something sensible with unused land on the rest of mainland that hasn't sold to make that more attractive.

Ohh and better payment options.

Edit to add: spending a little time on putting a spam filter in on the forums so they look like they know how to run something basic like a forum !

[Deltango Vale]

Let's try that again:

In January 2007, an iPhone 1 cost $500 + contract cost.

In January 2007, an estate sim cost $295 per month.

In July 2013, an iPhone 5 costs $200 + contract cost.

In July 2013, an estate sim costs $295 per month.

2013 cellphone contracts offer more and much better services at a lower price than 2007 contracts.

[Drake1 Nightfire]

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Deltango Vale wrote:

Let's try that again:

In January 2007, an iPhone

1

cost $500 + contract cost.

In January 2007, an estate sim cost $295 per month.

In July 2013, an iPhone

5

costs $200 + contract cost.

In July 2013, an estate sim costs $295 per month.

2013 cellphone contracts offer more and much better services at a lower price than 2007 contracts.

---

Here's the difference.. You can't get an iPhone1 from apple anymore.. comparing phones to SL is a poor analogy.. SL has improved over the years, but the underlying cost of doing business for them has gone up and they have not raised prices.

I agree they should lower tier. I also think they should allow basic members to buy land. that's the only real difference between basic and premium. Support is a joke, and the linden home is too.  I just don't think the argument of "tech is cheaper now" holds any water. It has nothing to to with tech being cheaper. They still have to pay utilities and staff for more money than back in 07. whereas most tech now is made solely by machines and there are fewer people involved.

Yes LL cut staff by 33%, they still have to pay for the buildings and servers and cooling said servers. which i would bet is a huge cost. With more sims added more servers are needed. which brings more cooling cost. They never did say where their staff cuts were from.. or if they are counting security and janitorial staff as part of that. my guess is they were only counting tech staff.

BTW, i found an Iphone1 on ebay for $50 usd..

[Ceka Cianci]

didn't they start putting more sims on each server a few years back..

didn't it used to be like 4 full prim sims per server and like 8 homesteads?

 

then getting those number 5 servers or maybe it was the higher ones..

and now it's like 8 and 16?

 

i thought i remembered that going up per server at some point..

[Madelaine McMasters]

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Ceka Cianci wrote:

didn't they start putting more sims on each server a few years back..

didn't it used to be like 4 full prim sims per server and like 8 homesteads?

 

then getting those number 5 servers or maybe it was the higher ones..

and now it's like 8 and 16?

 

i thought i remembered that going up per server at some point..

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If so, this bolsters the argument that LL's infrastructure costs are declining. This is why I think it's wrong to focus on infrastructure when discussing LLs costs.

Unfortunately, there is no Moore's law for business competence.

[Perrie Juran]

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Madelaine McMasters wrote:

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Ceka Cianci wrote:

didn't they start putting more sims on each server a few years back..

didn't it used to be like 4 full prim sims per server and like 8 homesteads?

 

then getting those number 5 servers or maybe it was the higher ones..

and now it's like 8 and 16?

 

i thought i remembered that going up per server at some point..

---

If so, this bolsters the argument that LL's infrastructure costs are declining. This is why I think it's wrong to focus on infrastructure when discussing LLs costs.

Unfortunately, there is no Moore's law for business competence.

---

So what if they can host more SIMs per Server?  Overall, hardware has gotten cheaper and better for all of us.  But that is a Capital Expenditure.  My current Desktop with a 3G processor and 4MB of Ram with way superior graphics processing cost less then my first Desktop did with a 500mhz processor and 256MB of Ram.

But my operational expenses have not gone down.  In fact my operational expenses (cost of living) continue to rise.

Tell me, why hasn't the cost of Cable TV gone down?  Why does it continue to rise?  My 26 inch flat screen TV I just got (my capital expense) cost a hell of a lot less than the equivalent thing did five years ago.  But my net cost of watching the thing has gone up.

 

on a side note i tried finding some graphs that tracked the trends in server costs over the years but my google-fu failed me.  but even knowing this, we still would not know what percent of LL's  net expenses that represents.

[Madelaine McMasters]

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Perrie Juran wrote:

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Madelaine McMasters wrote:

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Ceka Cianci wrote:

didn't they start putting more sims on each server a few years back..

didn't it used to be like 4 full prim sims per server and like 8 homesteads?

 

then getting those number 5 servers or maybe it was the higher ones..

and now it's like 8 and 16?

 

i thought i remembered that going up per server at some point..

---

If so, this bolsters the argument that LL's infrastructure costs are declining. This is why I think it's wrong to focus on infrastructure when discussing LLs costs.

Unfortunately, there is no Moore's law for business competence.

---

So what if they can host more SIMs per Server?  Overall, hardware has gotten cheaper and better for all of us.  But that is a Capital Expenditure.  My current Desktop with a 3G processor and 4MB of Ram with way superior graphics processing cost less then my first Desktop did with a 500mhz processor and 256MB of Ram.

But my operational expenses have not gone down.  In fact my operational expenses (cost of living) continue to rise.

Tell me, why hasn't the cost of Cable TV gone down?  Why does it continue to rise?  My 26 inch flat screen TV I just got (my capital expense) cost a hell of a lot less than the equivalent thing did five years ago.  But my net cost of watching the thing has gone up.

 

on a side note i tried finding some graphs that tracked the trends in server costs over the years but my google-fu failed me.  but even knowing this, we still would not know what percent of LL's  net expenses that represents.

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Well, this is the argument I've been making. We can't compare LL to something like GoDaddy or Bluehost, which does increase what you get every year for the same price, or lower the price every year, or do both.

Cable TV prices are what they are because of a mix of monopoly pricing power and content licensing costs. The underlying infrastructure costs are declining, which is why Google is causing so much grief for cable operators in Kansas City. They can march in with a completely different cost structure and raise hell by disrupting the cable business model.

I've said elsewhere that I think LL's infrastructure costs are small and declining. Our money is going elsewhere.

[Ceka Cianci]

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Madelaine McMasters wrote:

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Ceka Cianci wrote:

didn't they start putting more sims on each server a few years back..

didn't it used to be like 4 full prim sims per server and like 8 homesteads?

 

then getting those number 5 servers or maybe it was the higher ones..

and now it's like 8 and 16?

 

i thought i remembered that going up per server at some point..

---

If so, this bolsters the argument that LL's infrastructure costs are declining. This is why I think it's wrong to focus on infrastructure when discussing LLs costs.

Unfortunately, there is no Moore's law for business competence.

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i wasn't commenting on cost..i was commenting on them needing more servrs or not..me thinking not..

 

they mentioned more sims are added so more servers were needed..i wasn't arguing anything other than..

can't they put more sims in servers now?

when a sim doesn't get paid for..it gets pulled offline..it doesn't sit out there like mainland does..

so it's not constantly adding new sims even when old sim owners leave..

they go offline..then someone comes along and gets that old spot..

there is not as many sims as there used to be..so they more than likely have more than enough servers..