Microeconomics 101: A Lesson for Linden Lab

[Madelaine McMasters]

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Ceka Cianci 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..

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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.

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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..

 

 

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Yes, I know you were just making an observation. I'm the one arguing that LL's server costs are probably declining and not a huge factor in determining SL prices.

[Ceka Cianci]

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Perrie Juran wrote:

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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.  

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i'm really starting to hate google and their smart search that is so stupid..

because i can search for anything now and it just grabs a bunch of crap from unrelated searches..like i'm really gonna be searching the same thing..it's turning into book marks more than a search engine anymore..

 

[Ceka Cianci]

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Madelaine McMasters wrote:

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Ceka Cianci wrote:

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Madelaine McMasters wrote:

---

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.

---

 

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..

 

 

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Yes, I know you were just making an observation. I'm the one arguing that LL's server costs are probably declining and not a huge factor in determining SL prices.

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really what i think it is..

people have always paid it and when enough leave that it starts to hit them hard enough..they will lower them..

that or shut it down..

but since people are still paying and still showing up..

there is no need to lower them..or shut it down..

 

the going price is what people will pay...

not what they want to pay..

LL will get as much as they can..until enough start saying..this is too much..to where they feel the pinch..

for all we know..they could drop back  down to 10 to 12k login's and still have enough to keep going..

if they played it smart..they didn't let the growth go to their heads and make them too big for their britches like smart business people do..

 

people keep saying they are terrible at business..but really..they are still in business after 10 years selling virtual property..that's pretty freakin smart if you ask me hehehehe

 

 

 

 

[Madelaine McMasters]

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Ceka Cianci wrote:

really what i think it is..

people have always paid it and when enough leave that it starts to hit them hard enough..they will lower them..

that or shut it down..

but since people are still paying and still showing up..

there is no need to lower them..or shut it down..

the going price is what people will pay...

not what they want to pay..

LL will get as much as they can..until enough start saying..this is too much..to where they feel the pinch..

for all we know..they could drop back  down to 10 to 12k login's and still have enough to keep going..

if they played it smart..they didn't let the growth go to their heads and make them too big for their britches like smart business people do..

people keep saying they are terrible at business..but really..they are still in business after 10 years selling virtual property..that's pretty freakin smart if you ask me hehehehe

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Smart is relative. The Angry Birds guys were pretty smart too!

It's all conjecture on our part, but I wonder if we aren't funding LL's attempt to escape SL with those other apps they're working on. I don't think they'll be successful, as the mobile market is too fickle.

LL's recent return to reduced academic pricing might be an attempt to measure the price elasticity of the market (I learned that in Econ 101!). My ex-hubby is a marketing VP for a big bank. During our ten years together, we'd often discuss sales, marketing, econ and the like. A company with a varied product portfolio can experiment with pricing on individual products to gauge elasticity (the effect of price on demand) without endangering the company. It's more difficult when you are powered by a single rubber band.

[Perrie Juran]

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Madelaine McMasters wrote:

---

Perrie Juran wrote:

---

Madelaine McMasters wrote:

---

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.

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Building your infrastructure is a Capital Expense.  Maintaining you infrastructure is an Operating Expense.

So one thing to note here is that Linden Lab continues to do both.  They have been investing in improvements however questionable the value of those improvements may be (Pathfinding, CHUI, etc).

And this still does not take into account their daily operational expenses.

My guess is that SL is a very profitable endeavor.  What I don't think is that it is so profitable that they could make some of the price cuts (50%) I've been seeing suggested.

[Madelaine McMasters]

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Perrie Juran wrote:

---

Madelaine McMasters wrote:

---

Perrie Juran wrote:

---

Madelaine McMasters wrote:

---

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.

---

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.

---

Building your infrastructure is a Capital Expense.  Maintaining you infrastructure is an Operating Expense.

So one thing to note here is that Linden Lab continues to do both.  They have been investing in improvements however questionable the value of those improvements may be (Pathfinding, CHUI, etc).

And this still does not take into account their daily operational expenses.

My guess is that SL is a very profitable endeavor.  What I don't think is that it is so profitable that they could make some of the price cuts (50%) I've been seeing suggested.

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I don't think LL is building any infrastructure, they're maintaining it as it shrinks. That distinction is different than the accounting distinction between capital expenses for server replacements and operating expenses. We don't even know if LL buys or leases their server capacity. And I continue to think that we should stop discussing infrastructure. It's a small and declining part of their costs as concurrency falls and infrastructure follows Moore's law (or Amazon's EC2 law, or whatever applies).

SL may be a very profitable endeavor, but it's not something anybody believes can grow. If they did, they'd be investing in it. LL hasn't attracted any venture capital in years. Lithium, the purveyors of our lovely forum platform has, I think, got more venture capital than LL.

[Ceka Cianci]

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Madelaine McMasters wrote:

---

Ceka Cianci wrote:

really what i think it is..

people have always paid it and when enough leave that it starts to hit them hard enough..they will lower them..

that or shut it down..

but since people are still paying and still showing up..

there is no need to lower them..or shut it down..

the going price is what people will pay...

not what they want to pay..

LL will get as much as they can..until enough start saying..this is too much..to where they feel the pinch..

for all we know..they could drop back  down to 10 to 12k login's and still have enough to keep going..

if they played it smart..they didn't let the growth go to their heads and make them too big for their britches like smart business people do..

people keep saying they are terrible at business..but really..they are still in business after 10 years selling virtual property..that's pretty freakin smart if you ask me hehehehe

---

Smart is relative. The Angry Birds guys were pretty smart too!

It's all conjecture on our part, but I wonder if we aren't funding LL's attempt to escape SL with those other apps they're working on. I don't think they'll be successful, as the mobile market is too fickle.

LL's recent return to reduced academic pricing might be an attempt to measure the price elasticity of the market (I learned that in Econ 101!). My ex-hubby is a marketing VP for a big bank. During our ten years together, we'd often discuss sales, marketing, econ and the like. A company with a varied product portfolio can experiment with pricing on individual products to gauge elasticity (the effect of price on demand) without endangering the company. It's more difficult when you are powered by a single rubber band.

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as much as they pay attention to their customers anymore..i would say yes we are at least helping fund other things..

look at who they had here and when they kicked off..they were ahead of the game in that time..they had a different kind of virtual world than most others..offering a dream that a lot of people had back then..

you mean i can make money on the internet in a game like atmosphere from my house?

 

they could have been  on the social network train but missed it..

a lot of what they did after those took off showed they were still trying to catch it..

thier browser version sort of failed which i thought they should have tried to improve on..

that could have maybe gotten them in peoples ipads and hand helds..

 

i think they've pretty much given up on trying to get SL into the game anymore..

and i think now that there are more people seeing the opportunity with the internet..

that they have more competition in great ideas on the net compared to when they started..

 

they seem to be getting into areas that are already established..

where with phil..he had vision and was a startup guy..one of the guys ahead of the game..

he saw internet 2.0 with SL..these other CEO's see something else..

since phillip left it's not really budged..

it's been trying to make SL other things..it lost a lot of personality when he went off to other things..

 

i could sit there and listen to a two hour speech from him..where rod i can listen to a little bit..but really don't see him doing anything but explaining and defending..and M..well he turned me off of his taking this place to the greed factory making people feel like a number or cattle..

don't even know if he had an avatar really..

phillip used to take you to the future when he would talk..

and he got in here and there were phillip sighting..

not like big foot sightings..you had a good chance of running into him..because people got on the horn and would be telling their friends..anyone want to meet phillip! he's here!!

i really liked it when he was around..these other guys just don't seem to have the passion about it like he did..

i'm thinking that's why it doesn't get so exciting for me anymore..

it's way too much keyed on out of inworld things and less keeping us in world..

 

market is a main way to shop for many of the new people and a lot of the older ones..

so a lot of the startups find the market place and say..hey this is a lot cheaper than having land where nobody comes too so they can see my goods..

ok somehow i am in all kinds of different areas now and lost my way in where i was going with this..

lol

it's turning into an i wish phillip was back post more than anything i guess hehehe

so i'll end it here..before it gets too scribbly hehehehe