MP fees raising to 10% per sale. Thoughts?

[Rya Nitely]

9 hours ago, ChinRey said:

I've never actually seen any statements from LL about this and I assumed they were just keeping very quiet about it all.

It came from Ebbe himself, and Dakota here in the forums. Ebbe stated in a meeting when questioned about the rapid change from 247 to 260 over a few weeks. He said the market controls the exchange rate and LL has nothing to do with it.

Edit to add: Why would Ebbe want to devalue the L$? Because merchants selling L$ would get less, and therefore take out less. Maybe because he wants to see less money flowing out of SL....that $60 million he thought was too much money. And as OptimoMaximo said, it coincided with the fee increases, whereas it was a flat 247 for many many years before that.

Edited December 5, 2019 by Rya Nitely

[ChinRey]

53 minutes ago, Rya Nitely said:

It came from Ebbe himself, and Dakota here in the forums. Ebbe stated in a meeting when questioned about the rapid change from 247 to 260 over a few weeks. He said the market controls the exchange rate and LL has nothing to do with it.

I won't call them liars but they may still be wrong. It only means we can rule out option one on this list:

6 hours ago, ChinRey said:

What we don't know is the policy LL follows for their LindEx sales. Are they deliberately enforcing a specific exchange rate? Are they keeping the total amount of L$ in circulation stable? Are they trying to reduce the volume? Or increase it? Or are they just selling a specific amount every day without thinking about the consequences?

---

53 minutes ago, Rya Nitely said:

Edit to add: Why would Ebbe want to devalue the L$? Because merchants selling L$ would get less, and therefore take out less.

Yes but it also means the fees they are taking out and the Lindens they sell directly themselves are worth less.

 

53 minutes ago, Rya Nitely said:

Maybe because he wants to see less money flowing out of SL....that $60 million he thought was too much money.

Has anybody from LL actually said that?

 

53 minutes ago, Rya Nitely said:

And as OptimoMaximo said, it coincided with the fee increases, whereas it was a flat 247 for many many years before that.

It not really correct that is was flat. There have been several significant bumps and lumps in the curve the few years I've been here.

But yes, the latest one seems related to the fee increase. That's only natural. Once people learned about it, they rushed to sell as much as they could with the lower fee. There is absolutely no way that is the only explanation though. If it was, the rate would have dropped again afterwards when there no long was a rush and many sellers had already gotten rid of everything they were planning to sell for a while. Some other factor came into play and kept the rate at this higher level.

Edited December 5, 2019 by ChinRey

[Rya Nitely]

Perhaps a chart would help here. I know when I first started cashing out around 2009,  I always put 247, and I did that for several years, never more never less. Then a couple of years ago it moved above 252 and started fluctuating. So, when I say flat it was flat for at least 6 years. Again, a chart would help here. I can't access it from my phone. When I get home.

But we agree that if sellers rush to sell before a fee increase you would expect the supply to decrease after the rush, but it doesn't. The value of the L$ should increase again, but it doesn't.

[HisaDrug]

I just noticed the increased fees. First of all, I have no idea why the revenues and fees must increase at all? Linden Lab is discouraging me as a merchant to create contents when I'm aware my earnings will be less every year. It's a slow kill in my opinion, and Second Life will be about just big brands who work in Linden's favour very soon. The great thing about SL used to be small designers who create authentic, fun, fresh contents that increase variety for all kinds of audiences. However, today I'm burdened to pay for premium that promises me nothing (even the customer service seems like an A.I. with the auto-responses), not to mention, commissions that chip away my effort to create. I'm guessing LL would take more away from merchants over absolutely nothing. Is Linden entitled or a merchant? I'm really upset about this.

Think about this vicious cycle that will eventually befall people who BUY your stuff.

Merchants will have to increase their prices to match their earnings, and eventually buyers will suffer. So nobody wins in the sinking boat, and I hate to burden my regulars with this kinda justification every time. I pay premium purely for the love of Second Life. I support Linden. But now I'm gonna reconsider supporting the slowkill the market.

 

[Rya Nitely]

For those interested, here's the chart. 

It was at the end of 2015 that things started to become unstable, with a move from the flat 247-248 level.  In April 2016 it went over 250, and then people started paying serious attention. Within a month it hit 270 due to market panic. Then it moved down again (perhaps because LL decided the market needed more time to adjust to the change)... and now slowly this time, up we go again. Daily volume has been very stable because the amount of L$ sold a day hasn't changed much over the years - supply and demand were in equilibrium for years. Now between 2008 and 2016 there were also major changes in SL - good and bad , and if the market is so sensitive to change we'd see these fluctuations all over the chart, like a normal market exchange.

[Rya Nitely]

This is also worth posting again. From Ebbe at Lab Chat May 2016

EL:  Well, I’m glad you’re happy. I mean I’ve been saying for quite a while that we’ve been aware that pricing of land has been a core issue, so we’re trying to be sensible about how we start to lower some of the cost, and as you’ve noticed, we’ve also taken some actions to pick-up some of the revenue elsewhere; on the exchange and on the redemption side of the equation to compensate a little bit for this. Because yes, i do believe that the burden of land owners is a bit too high, and we have other people in the world who are sort-of getting away with not being charged enough or taxed enough for how they use the product. So, we’re trying to shift cost from land to other places.

https://modemworld.me/lab-chat-3-bento-and-second-life/#mainland

[OptimoMaximo]

15 hours ago, ChinRey said:

What we don't know is the policy LL follows for their LindEx sales.

You mentioned that: arbitrarily, like it or not. And this falls under the definition of currency manipulation, in my humble opinion

[Paul Hexem]

It bears repeating that landowners are getting absolutely fleeced in SL when you look up the cost of server box rentals, including professional game hosting.

And if you look up virtual servers, it's beyond insulting. 

[Alyona Su]

4 hours ago, Gadget Portal said:

It bears repeating that landowners are getting absolutely fleeced in SL when you look up the cost of server box rentals, including professional game hosting.

And if you look up virtual servers, it's beyond insulting. 

Not fleeced. Cost of doing business. All those extra costs you mention are elective and by choice. A land-flipper, landlord, and anyone else reselling land-use does not have to attempt to automate themselves so heavily. That's like saying you pay a chauffeur to drive your rented limousine 50 miles a day to work and back and telling others that as a commuter you are being fleeced. Just saying.

[Theresa Tennyson]

6 hours ago, Gadget Portal said:

It bears repeating that landowners are getting absolutely fleeced in SL when you look up the cost of server box rentals, including professional game hosting.

And if you look up virtual servers, it's beyond insulting. 

That would be an excellent point - if Linden Lab was in the business of selling server space.

However, they aren't. They're selling "virtual land", and in many cases they're selling it to people who are renting out virtual land. The only way you can have a "land business" at all is if land has value and is scarce. On an island you can't make a living by selling buckets of sea water because anyone can get a bucket of it their own self for free. However, the raw materials of "virtual land" are not particularly expensive, as you point out yourself. Any value or scarcity is by necessity artificial.

In order for something to be scarce it has to be limited in amount. There are three ways of doing this with virtual land:

You can create a limited amount of it and distribute it in an arbitrary or random manner - i.e. the new Linden Homes. This means that whether someone can get the resource or not is largely dependent on luck.

You can create a limited amount of it and auction it off - i.e. Bay City in Second Life. The problem with this is prices can quickly become ridiculous and it becomes unrealistic for somebody new to break into the business.

Or you can make the amount theoretically unlimited but make its upkeep arbitrarily expensive. This means that anyone can get it if they can pay for the recurring expense, but as not everyone can or wants to pay this expense, the total amount will stay scarce and still have value. Prices for "land" in Second Life are high, but there are significant numbers of people who don't actually pay anything out of pocket, or even make a profit, because its scarcity allows them to run a business that subsidizes it.

Meanwhile, there have been "worlds" like Inworldz or Avination that charge significantly less for "land" but have gone belly-up.

 

Edited December 6, 2019 by Theresa Tennyson

[ChinRey]

8 hours ago, Rya Nitely said:

...

we’ve also taken some actions to pick-up some of the revenue elsewhere; on the exchange and on the redemption side of the equation to compensate a little bit for this. Because yes, i do believe that the burden of land owners is a bit too high, and we have other people in the world who are sort-of getting away with not being charged enough or taxed enough

...

https://modemworld.me/lab-chat-3-bento-and-second-life/#mainland

Ok

 

Dear @Ebbe Linden,

We are having a discussion about the increased MP fees. Rya Nitely brought up this quote by you and I don't know if I should laugh or cry. I recommend you read the whole thread but it's a long one so to give you a start:

I am a landowner with a little bit more than two regions of mainland so I am perfectly aware of the problem with bloated tiers and I'm happy to see Linden Lab recognises this. I'm not convinced you understand the magnitude though. (I've commented a bit on that in a different thread.)

I am also a fairly prolific content creator/merchant and know this quite well from that perspective too. The situation is about the same. Yes, there are a few merchants who make good money from SL but that is also the case with landowners. The average actor in either field is struggling just as hard to get something in return for the time and effort spent as it is for those in the other field. The only real difference I notice is that when I contact LL as a landowner, they try their best to help but when I contact them as a content creator or merchants, I'm usually ignored.

To say that creators and merchants are "sort-of getting away with not being charged enough or taxed enough" is not only factually wrong, it's also an insult.

---

The MP fee is only one of the transaction fees and costs you charge merchants. The effective fee MP merchants have to pay is about 30%. That's about the same as some of the biggest online sales portals (you mention Apple's and Google's app stores yourself) but you can't in all fairness compare SL's Marketplace to them. The market you give access to is much smaller and the quality of the services you offer merchants is much, much lower. Also, if we want to be fair, the bulk of the work done to maintain and improve Second Life is done by independent cotnent creators and merchants. I have a lot of respect for what others (including LL's employees) contribute but even if we combine them all, the working hours they put into SL is still dwarfed by the time merchants and content creators spend. Yet most of the revenue stream is channeled elsewhere.

We can't demand that you play fair of course but even if you choose not to, you still have to face two very real and very serious challenges:

---

Second Life needs independent content creators. Even if you hired a thousand Moles, LDPW still wouldn't have the capacity to provide more than a tiny fraction of the quantity and variety of new content SL depends on.

Independent content creators do not need Second Life. We used to back when LL effectively had a monopoly on open virtual worlds and prims were the main builidng material but today we have several other channels for distributing our works. I make better money with less effort and time spent on Kitely than I do in SL and that's only one of the better alternatives we have today. Why should we bother to upload and sell in SL at all? More and more content creators are beginning to realize this and if they stay in SL at all, it's more due to habits than anything else. Well, old habit die hard but they're not immortal.

Linden Lab is used to having the upper hand when dealing with content creators. You don't anymore and if you can't adjust to this new reality, you're heading for serious trouble.

---

In a recent interview on the nwn blog you mentioned the problem poorly optimized user content creates, even comparing it to a DDOS attack. I am one of a small informal group of content creators who try to fight this (so far with no noticeable support from LL, thank you very much) by improving our own builds and by providing free help, support an advice to other content creators.

Optimization isn't nearly as difficult as many seem to think but it still takes a little bit of time, thought and effort. With the marginal ROI we face, it's very hard to justify to spend even that little on factors that don't sell. Now that you have decided to reduce the already marginal margins even further you have to expect far more poorly optimized content.

As for the time we spend providing free support to others, why would we want to keep doing that when all we get in return from the ones who ultimately profit from it are insults?

---

I wish this message wasn't as harsh and I did my best to tone it down. But it is what it is. If you ever see and read it, let us know.

 

Sincerely

Rey (ChinRey Resident)

Edited December 6, 2019 by ChinRey

[ChinRey]

48 minutes ago, Theresa Tennyson said:

Meanwhile, there have been "worlds" like Inworldz or Avination that charge significantly less for "land" but have gone belly-up.

I gave your post a well deserved like because you had a lot of very good point. The last sentence needs some comments though.

The weaknesses of Inworldz and Avination were clear right from the start and for Avination at least, the only thing strange is that it managed to last as long as it did.

But there are several other actors in the field that are far more serious and better founded. They show no signs of going belly-up anytime soon, right now they seem to be going from strength to strength.

If you want to use Inworldz and Avination as examples, it's Second Life that is showing most of the fundamental weaknesses that eventually caused those two to fall.

Edited December 6, 2019 by ChinRey

[Luna Bliss]

7 hours ago, Rya Nitely said:

i do believe that the burden of land owners is a bit too high, and we have other people in the world who are sort-of getting away with not being charged enough or taxed enough

 

[Coffee Pancake]

10 hours ago, Gadget Portal said:

And if you look up virtual servers, it's beyond insulting. 

It's fairly common practice to over provision virtual machines (especially at lower price points) - you're often not buying a hard slice of the cpus and rams, you're buying a maximum 'peak use' allocation. This is why there is an acceptable usage in the T&C, if you had rented a actual slice of the pie, it wouldn't matter if you consumed all of it.

3 hours ago, ChinRey said:

The weaknesses of Inworldz and Avination were clear right from the start and for Avination at least, the only thing strange is that it managed to last as long as it did.

If Opensim has proved anything, it's that cheap land is not enough to create sustainable growth for SL like platforms. LL are going to be seriously disappointed if they attempt the same exercise here. We might all buy a bit more land, but that's a short term spike and not the new customer growth that SL needs to survive.

[ChinRey]

48 minutes ago, CoffeeDujour said:

If Opensim has proved anything, it's that cheap land is not enough to create sustainable growth for SL like platforms.

I have some reservations to what you say but I do agree that SL shouldn't try to compete against opensim on price. They wouldn't stand a chance for a start. Ten times as high a price level too much though.

More importantly, higher prices mean they have to excel in both the other fields and they aren't. It's a bit different for different kinds of SL users of course but when it comes to commercial and semi-commercial content providers, they are failing miserably in all three.

Edited December 6, 2019 by ChinRey

[Mollymews]

On 12/5/2019 at 11:22 AM, ChinRey said:

What Linden Lab is doing with the combination of reduced tier and increased fees, is take from one group and give to another. I happen to belong to both groups and by sheer coincidence my balance between them means that the two changes more or less evens out for me. That's a very unusual situation and I can't imagine there are many others - if there are any at all - who just happen to be right on that fine line.

this is the Linden goal - to re/balance their revenue sources. And I think from what you have experienced it shows that Linden is achieving their goal

where Linden are looking to increase their revenues is from the purely consumer residents.  I am a pure consumer, the amount of money I pay for my Second Life has increased, by my own choice and because I can afford it at this time in my life

i upgraded from Basic to Premium because I could get double tier (512m to 1024m) for the same dollars as before.  Then when the 12 month Premium extension was offered, I took it.  So I ended up giving Linden $US144 which I wouldn't have otherwise. Then when I got the land, I started buying stuff to put on the parcel.  About another $US200 altogether so far, I spent on stuff for my parcel

because I put my 1024m tier into a group, so I could get another 96m land for the same tiers, I had to create an alt account to have the group and protect my land.  Since one year my alt was a Library avatar. But just recently I kinda start to feel sorry for them, because festive season I suppose. I ended up kitting my alt with some outfits. Ended up spending about US120 to do this. Money which I would never have spent, if I never had an alt

i think that what I am saying is that when the costs are spread as widely as possible then savings/bargains offers can lead to increased consumer spend. In the same way as: Buy a chocolate bar for $US2.  Special offer: Buy two chocolate bars for $US3.  I pretty much always buy the two chocolate bars,. Because while I tell myself that I saved a dollar. I didn't actually. I spent $US1 more than I would have otherwise

is the same with animation dance packs.  10 dances for 200L each bought separately. Or buy a 10 pack for L1500.  Instead of buying the 5 dances I like the most for 1000L.  I end up buy the whole pack, because I get the other 5 for half price.  End up spending 1500L instead of 1000L because bargain.  Spending 500L more than otherwise may be a bargain but is not a saving. Saving meaning actual money left in my own bank account

as a consumer I am well aware of this behaviour in myself and in others. How spending money in one area can and often does lead to spending in another area. And the idea that I can get a bargain tempts me to spend more money than I would have otherwise

[Paul Hexem]

7 hours ago, Alyona Su said:

Not fleeced. Cost of doing business. All those extra costs you mention are elective and by choice. A land-flipper, landlord, and anyone else reselling land-use does not have to attempt to automate themselves so heavily.

 

6 hours ago, Theresa Tennyson said:

That would be an excellent point - if Linden Lab was in the business of selling server space.

However, they aren't. They're selling "virtual land", and in many cases they're selling it to people who are renting out virtual land. The only way you can have a "land business" at all is if land has value and is scarce. On an island you can't make a living by selling buckets of sea water because anyone can get a bucket of it their own self for free. However, the raw materials of "virtual land" are not particularly expensive, as you point out yourself. Any value or scarcity is by necessity artificial.

Except most landowners in SL are doing it as consumers, not as businesses. Many more houses and hangouts than stores and rental offices. 

If we're talking about LL needing to keep themselves in business, they should get out of the business of keeping land barons in business, and cut costs to make the direct money from the consumers.

Cut land barons out of the equation and make premium worth it either through perks or restrictions on basic, and LL will make plenty of money without needing to resort to unreasonable land prices or taxes on merchants. 

 

2 hours ago, CoffeeDujour said:

It's fairly common practice to over provision virtual machines (especially at lower price points) - you're often not buying a hard slice of the cpus and rams, you're buying a maximum 'peak use' allocation. This is why there is an acceptable usage in the T&C, if you had rented a actual slice of the pie, it wouldn't matter if you consumed all of it.

Renting a virtual server for a few bucks to host your Minecraft game vs a parcel on a crowded sim? Same problem in both cases. The point remains the same regarding how much virtual server you get for that few bucks. 

[ChinRey]

1 hour ago, Mollymews said:

this is the Linden goal - to re/balance their revenue sources. And I think from what you have experienced it shows that Linden is achieving their goal

Yes but their goal is based on a false premise. They believe that content providers are better off than landowners and that simply isn't true. This is an example of a principle from the early days of computer programming: GIGO - Garbage In, Garbage Out. In other words, if you base your decisions on incorrect data, it will be wrong.

They are not balancing or rebalancing their revenue sources with these changes, they are unbalancing them.

On top of that, there isn't nearly as much money in content creation as many people seem to think and there's a lot more in land tier than we usually consider.

At the last grid survey, less than a week ago, there were 16,145 private estates in SL. In addition there are a few thousand mainland sims. I don't know how many of them are on various discount schemes and how many are homesteads so I can't tell exactly how much LL make from tier but should be somewhere between 25,000,000 and 50,000,000 USD a year.

The total sales volume on the Marketplace is about 20,000,000 dollars a year. That includes LL's current fees as well what the owners of the 218,000 stores get to keep. (Average yearly gross income for an MP store is about 90 dollars a year btw but that doesn't really mean anything. Some stores make tens of thousands, others don' sell at all so what a typical MP store can expect to earn is anybody's guess.)

We can discuss what a reasonable tier would be. I do agree with Coffee that cutting it down to opensim level is unrealistic but on the other hand, the 10% reduction we've seen so far is just peanuts. I actually think Ebbe would agree when I say 50% isn't enough but let's go for that. At least it's a significant improvement.

To cover that income loss through MP, LL would have to add at least a 60% on top of the current 30% effective fee. So let's go for that, 90% effective commission for content providers because those lazy bastards have it way too easy.

Edited December 6, 2019 by ChinRey

[ChinRey]

18 minutes ago, Gadget Portal said:

Cut land barons out of the equation and make premium worth it either through perks or restrictions on basic, and LL will make plenty of money without needing to resort to unreasonable land prices or taxes on merchants.

LL could probably manage to handle what the "generic land" estate owners do today but then they would also have to take over the work. Those places don't run themselves after all. Based on what I know of how estates and LL are run, I'd say LL would need to hire two new people for every estate owner/employee they replace is they want to maintain the same level of service to the tenants. The cruel TCO is definitely not in LL's favour there.

There are also those specialized estates - Caledon, Winterfell, Fruit Islands, Second Norway... you name them. A lot of people appreciate the unique flavour these places offer and they will not be happy to be forced to move to less satisfactory accomodations. LL should be able to duplicate the services these places offer but not before Hell freezes over.

Finally, all experience shows that when a residental sim closes, although some of the tenants will move elsewhere, many - usually most - will leave Second Life.

[Rya Nitely]

I don't know what landowners do.

I know what merchants/creators have to do - learn mesh; provide customer support; fix things that break because something has changed - all my boats for instance, the camera view has suddenly changed and I don't know why. And this happens too often with scripted items, good for years and then something stuffs up - thank you LL; the tedious task of listing items on MP; the hours...days....weeks of trying to get that item/texture/script just right to avoid the dreaded 1 star, and then stop in the middle of your concentration to give customer support and have a friendly, polite chat. 

And am I working now? No, because I just don't feel any drive to do it. All those boats with the stuffed up camera view that was good for over 10 years, I'll probably end up getting 1 star before too long. But I need to work on the script so people can change the cam view themselves, and I'm not a scripter but I have to learn since my partner is gone from SL. Anyway after many many hours I finally have it working and have to add it to all my boats, and then rezzers too. 

And that's a snapshot of my life as a merchant - yes, I get more money for this than I deserve 😕

Please fill me in on what landowners do?

[ChinRey]

6 minutes ago, Rya Nitely said:

Please fill me in on what landowners do?

This among other things:

7 minutes ago, Rya Nitely said:

 provide customer support; fix things that break because something has changed

 

[Theresa Tennyson]

11 minutes ago, Rya Nitely said:

Please fill me in on what landowners do?

Send Linden Lab money even if Second Life doesn't provide them any income. 

[Rya Nitely]

sounds terrible for them

[ChinRey]

2 hours ago, Rya Nitely said:

sounds terrible for them

There are also advantages such as better support from LL and recurring payment from renters. As I've said several times already, all in all, we're pretty much even.

Edited December 7, 2019 by ChinRey

[ChinRey]

34 minutes ago, Rya Nitely said:

the tedious task of listing items on MP;

I think we should explain this a little bit to those who aren't MP merchants.

One of my best SL friends who used to run a very succesfull SL store is the daughter of a Russian ogliarch who knows a thing or two about ecommerce. She once showed her dad the merchants' parts of MP and his only comment was a disgusted "What's this?"

LL has made some minor tweaks (or "significant improvements" as they call it) since then but not much substantial. The whole thing is still a time wasting and frustrating train wreck of dodgy html and worse cgi.

Edited December 6, 2019 by ChinRey