Infrastructure Investment Update: Buy/Sell Fee Change and Land Pricing Effective Mar 6, 2023 DISCUSSION

[bigmoe Whitfield]

4 minutes ago, EliseAnne85 said:

When was this?  Many of us heard over and over by various posters on the forums, AWS cloud will cost less.  There was some panic on the forum at the time as many people in SL don't like big business, Amazon nor Jeff Bezos.  

But, overall as far as forum posts, I think some of the best info is here all across the board about SL, with some posts may be erroneous that's why I used the wording "supposedly" cost less in my post as I wasn't stating a fact.  One needs to verify these thing which I never read any post by Oz nor any other Linden about it one way or the other.  

However, the cost in fees with the new owners as compared to the old Linden owners is quite substantial.  I think with the old Linden's the fee was like .49 cents for everyone or something like that.  There is quite a difference.  

it's in a lab gab, I'll find it.

[Sid Nagy]

Bottom line: If the switch to AWS cloud wasn't somehow profitable or an advantage for the Lab, they would never ever have done so.

This kind of company decisions (and certainly the long term ones) are never taken to harm the company but to cut costs, expand and by that make more profit.

The investors don't run the company to help us out, but to bring themselves further. Just like every other company and investor does.

 

Edited March 9, 2023 by Sid Nagy

[Coffee Pancake]

2 hours ago, Pixels Sideways said:

So LL hired some marketing guy they're prolly forking over a lot $$$ to and yet I see nothing anywhere about SL in the press, on social media, etc., other than things written by residents.

Truly LL has repeatedly failed in this regard and it's no surprise that retention doesn't pan out and attrition increases. And this affects their bottom line.

LL have an entire marketing team .. they even have a stage slot at SLB event where they talk about all the exciting things they've been doing. 

25 minutes ago, bigmoe Whitfield said:

it's in a lab gab, I'll find it.

It was also stated at lot of TPV meetings.

9 minutes ago, Sid Nagy said:

Bottom line: If the switch to AWS cloud wasn't somehow profitable or an advantage for the Lab, they would never ever have done so.

The switch to AWS seems to have been driven by 2 factors .. 1) it might work out cheaper, much hype ... 2) it removed an aging datacenter and support staff from the books in preparation for selling the company / product.

It's important to remember context. While the AWS move was going on, LL were throwing everything they had behind Sansar. OZ had a minimal team for the migration (which is why it took so long) and getting developer time for anything else was almost impossible.

SL was being treated like an old dead product on life support and not expected to remain relevant.

[Love Zhaoying]

2 minutes ago, Coffee Pancake said:

27 minutes ago, Sid Nagy said:

Bottom line: If the switch to AWS cloud wasn't somehow profitable or an advantage for the Lab, they would never ever have done so.

The switch to AWS seems to have been driven by 2 factors .. 1) it might work out cheaper, much hype ... 2) it removed an aging datacenter and support staff from the books in preparation for selling the company / product.

It's important to remember context. While the AWS move was going on, LL were throwing everything they had behind Sansar. OZ had a minimal team for the migration (which is why it took so long) and getting developer time for anything else was almost impossible.

SL was being treated like an old dead product on life support and not expected to remain relevant.

Staff reduction could have been a huge savings that LL wouldn't include in public calculations, because then they'd look bad (for reducing staff) - even if it was the right decision.  Personally, I think having someone else own / run the datacenter - which makes someone else responsible, makes it more scalable, etc. is a brilliant idea.

Even if it cost more. "Long term planning"! Also not shared with us - the possibility that "yes, it costs more NOW" but at some point the cost vs. savings graph crosses over a "break-even" point and it starts SAVING money.  I don't know (obviously, I'm just a dumb beast) but, hey - most PUBLIC companies "take a loss" for a few years on capital expenses..then that goes away.  Who knows, the "costs more" aspect could be some "initial up-front cost" which is still being amortized vs. the "actual month-to-month outlay to Amazon Cloud Services"...

 

[Coffee Pancake]

4 minutes ago, Love Zhaoying said:

Staff reduction could have been a huge savings that LL wouldn't include in public calculations, because then they'd look bad (for reducing staff) - even if it was the right decision.  Personally, I think having someone else own / run the datacenter - which makes someone else responsible, makes it more scalable, etc. is a brilliant idea.

SL is no more scalable now than it has ever been, but it's also smaller so it's less of an issue.

It's never a "brilliant" business decision to put the core business expense in the hands of another profit driven corporation. If anything, the move to AWS has significantly raised minimum platform viability, it's also put that population low tide in the hands of a random business manager far far away.

This kills us a lot sooner, with far more people still at the party and very little predicability or warning.

4 minutes ago, Love Zhaoying said:

Even if it cost more. "Long term planning"! Also not shared with us - the possibility that "yes, it costs more NOW" but at some point the cost vs. savings graph crosses over a "break-even" point and it starts SAVING money. 

.. that's how owning your own datacenter works, and had worked for LL. They owned it all. It was cheap.

 

[Love Zhaoying]

8 minutes ago, Coffee Pancake said:

SL is no more scalable now than it has ever been,

That's weird. When you pay someone else to run a data center, if the web services are deployed in a modern fashion, you can take advantage of the host datacenter's ability to "spin up" more instances (whether containerized / Kerberos) or not.

[Arielle Popstar]

7 minutes ago, Coffee Pancake said:

.. that's how owning your own datacenter works, and had worked for LL. They owned it all. It was cheap.

But not very portable if one is hoping to sell it. The move to AWS made it much easier to relocate.

[Rowan Amore]

1 hour ago, EliseAnne85 said:

When was this?  Many of us heard over and over by various posters on the forums, AWS cloud will cost less.  There was some panic on the forum at the time as many people in SL don't like big business, Amazon nor Jeff Bezos.  

But, overall as far as forum posts, I think some of the best info is here all across the board about SL, with some posts that may be erroneous that's why I used the wording "supposedly" in my post as I wasn't stating a fact.  One needs to verify these thing which I never read any post by Oz nor any other Linden about it one way or the other.  

However, the cost in fees with the new owners as compared to the old Linden owners is quite substantial.  I think with the old Linden's the fee was like .49 cents for everyone or something like that.  There is quite a difference.  

https://modemworld.me/2021/02/26/lab-gab-feb-26-summary-aws-update-and-a-farewell-to-oz/

WILL THE MIGRATION MEAN LOWER PRICES FOR USERS?

[5:46-9:02]

Sort answer for the foreseeable future: no.

There has been an idea circulating among users that running SL on AWS is “dramatically cheaper” for Linden Lab; but this is actually not accurate.

Prior to the migration, all of SL and its services had been running on LL’s own hardware  for which there had been no capital expenditure for years, and which had completely depreciated.

The move to AWS represents something of a new capex spend, increasing the Lab’s costs [although it is not unfair to say that the capex involved is liable to be significantly less over time than repeatedly buying-in new server clusters to allow SL to run on more modern systems].

Rather than presenting LL with reduced costs, the move to AWS is designed to:

Present the company with far broader options for delivering a more performant and capable service to users – although as noted above, it will take time for all of this to be delivered.

Improve the overall longevity of the Second Life service through the noted performance improvements and access to better hardware and infrastructure services.

[Love Zhaoying]

17 minutes ago, Rowan Amore said:

Prior to the migration, all of SL and its services had been running on LL’s own hardware  for which there had been no capital expenditure for years, and which had completely depreciated.

The move to AWS represents something of a new capex spend, increasing the Lab’s costs [although it is not unfair to say that the capex involved is liable to be significantly less over time than repeatedly buying-in new server clusters to allow SL to run on more modern systems].

Ahah!!

[Mariusz Ivanovic]

9 hours ago, Theresa Tennyson said:

So, can you cash out the game currency you bought in any of the other environments you mentioned? Because if you can't, every cent you spent on them is a "service charge." And that's the difference between Lindens and "game currency."

I don't understand why you keep stressing this irrelevant point that really has no impact on what I'm talking about. I NEVER cash out currency in SL, I only PURCHASE currency, so the fact I CAN do something that I NEVER do, doesn't add any value to my 15$ fee. If you buy tickets to a live performance, and the tickets were always 50$, but now they are 100$, and when you inquire about the increase in cost, you get the response of..."The cost increase is to cover free wheelchairs for all attendees." and you are an able bodied person who doesn't require a wheelchair, does that have any impact on you, other than having to spend an extra 50$ for your ticket? Your argument is like me looking at this scenario and saying "Yeah but...FREE WHEELCHAIR! Do other live performances provide FREE WHEELCHAIRS??" If you don't need or require a wheelchair, then the point of having one provided to you, is irrelevant, as is your repeated posts. I don't understand why you would say every cent I pay is a service charge in other situations, since I buy currency (with NO TRANSACTION FEE) and then with that currency, I PURCHASE digital goods, just like I do in SL. 

On another note, there is a HUGE difference between a TAX regardless if its state, or federal, and a FEE. A tax may pay for roads, infrastructure, schools, and public amenities, where this (a) fee is a source of revenue for the company applying that fee. Also, if LL does not charge a tax on something, it is not LL's obligation to PAY that tax, it's the consumers responsibility to report that they didn't pay it, and then pay the tax themselves, LL would NEVER be responsible for paying those kinds of taxes, unless it was from the state they are headquartered in and are required to pay state taxes on transactions there. So for people saying that LL soaks up the costs of these taxes people aren't paying on transactions, unless you are a tax attorney, you should probably stay in your lane, and not speculate on LL's tax obligations.

Edited March 9, 2023 by Mariusz Ivanovic

[Rowan Amore]

19 minutes ago, Mariusz Ivanovic said:

On another note, there is a HUGE difference between a TAX regardless if its state, or federal, and a FEE. A tax may pay for roads, infrastructure, schools, and public amenities, where this (a) fee is a source of revenue for the company applying that fee.

LL could collect sales tax on your Linden purchase but they do not at this time.  THEY cover that cost themselves.  The difference between what they collect in the fee and what they pay out in sales tax would be interesting to know, however.

From LL's blog post last year...

"We will continue to absorb the taxes at point-of-sale purchases such as one-time L$ buys, first-time premium subscriptions, and name changes. At some point in the future we will need to begin passing those taxes on to you. We will make another announcement when those charges are phased in."

 

 

Edited March 9, 2023 by Rowan Amore

[Mariusz Ivanovic]

17 minutes ago, Rowan Amore said:

LL could collect sales tax on your Linden purchase but they do not at this time.  THEY cover that cost themselves.  The difference between what they collect in the fee and what they pay out in sales tax would be interesting to know, however.

From LL's blog post last year...

"We will continue to absorb the taxes at point-of-sale purchases such as one-time L$ buys, first-time premium subscriptions, and name changes. At some point in the future we will need to begin passing those taxes on to you. We will make another announcement when those charges are phased in."

If LL collects the tax, then they have to pay the tax to the applicable agency, if they do not, its the consumers responsibility to report and pay that tax, LL is not absorbing crap, other than perhaps California state sales taxes, because that is where they are located, and are probably/possibly required to add state sales tax on purchases from people LIVING IN CALIFORNIA. I live in Florida, and they have NO SALES TAX, so why would I pay, or LL "absorb" anything from my purchases? Its the consumers responsibility, not LL's responsibility to "absorb" anything, other than what I mentioned above. LL saying this is a big nothing burger to make themselves look good...it's a meaningless gesture.

 

EDIT: I'm gonna take my own advice and stay in my lane since I'm NOT a tax attorney, and this topic has strayed way off the rails of my original complaint about transaction fees, and just as a final addition, when I said Florida has no sales taxes, I meant on online purchases, not in general.

Edited March 9, 2023 by Mariusz Ivanovic

[Love Zhaoying]

6 minutes ago, Rowan Amore said:

LL could collect sales tax on your Linden purchase but they do not at this time.  THEY cover that cost themselves.  The difference between what they collect in the fee and what they pay out in sales tax would be interesting to know, however.

From LL's blog post last year...

"We will continue to absorb the taxes at point-of-sale purchases such as one-time L$ buys, first-time premium subscriptions, and name changes. At some point in the future we will need to begin passing those taxes on to you. We will make another announcement when those charges are phased in."

Who knows - LL may "write off" a "loss" due to paying our taxes (which has a positive impact on their bottom line), but it may ACTUALLY cost LL MORE if they were to charge everyone taxes, do the calculations, etc. (which they can't necessarily write off). Who. Knows. (Not me, I'se dumbarse lion.)

[Rowan Amore]

4 minutes ago, Mariusz Ivanovic said:

If LL collects the tax, then they have to pay the tax to the applicable agency, if they do not, its the consumers responsibility to report and pay that tax, LL is not absorbing crap, other than perhaps California state sales taxes, because that is where they are located, and are probably/possibly required to add state sales tax on purchases from people LIVING IN CALIFORNIA. I live in Florida, and they have NO SALES TAX, so why would I pay, or LL "absorb" anything from my purchases? Its the consumers responsibility, not LL's responsibility to "absorb" anything, other than what I mentioned above. LL saying this is a big nothing burger to make themselves look good...it's a meaningless gesture.

Florida has a 6% state sales tax on purchases over the internet.

Many citizens are not aware that Florida has a "use tax." Use tax normally applies to items purchased outside Florida, including another country, that are brought or delivered into the state and would have been taxed if purchased in Florida. The use tax rate for consumers who are not registered dealers is 6%, the same as the general sales tax rate.

Examples include:

• Purchases made through the Internet.
• Mail-order catalog purchases.
• Purchases made in another country.
• Furniture purchased from dealers located in another state.
• Computer equipment ordered from out-of-state vendors advertising in magazines.

[Rowan Amore]

13 minutes ago, Love Zhaoying said:

Who knows - LL may "write off" a "loss" due to paying our taxes (which has a positive impact on their bottom line), but it may ACTUALLY cost LL MORE if they were to charge everyone taxes, do the calculations, etc. (which they can't necessarily write off). Who. Knows. (Not me, I'se dumbarse lion.)

Their blog post says that for the sales.tax.they do collect, it is noted where you.live and is sent to.the appropriate state.  One could assume.their accounting also knows when you purchase Lindens and would calculate that sales tax.(which you aren't charged for) and send it to your state.  

Maybe the increase in fees is to cover their losses in paying our taxes.  Who knows?

[Mariusz Ivanovic]

32 minutes ago, Rowan Amore said:

Florida has a 6% state sales tax on purchases over the internet.

Many citizens are not aware that Florida has a "use tax." Use tax normally applies to items purchased outside Florida, including another country, that are brought or delivered into the state and would have been taxed if purchased in Florida. The use tax rate for consumers who are not registered dealers is 6%, the same as the general sales tax rate.

Examples include:

• Purchases made through the Internet.
• Mail-order catalog purchases.
• Purchases made in another country.
• Furniture purchased from dealers located in another state.
• Computer equipment ordered from out-of-state vendors advertising in magazines.

This tax law in on PHYSICAL GOODS, not digital, and was put in place to account for the people who live outside of Florida, and spend a few months a year here in a 2nd home when the weather is nice (Snowbirds). It was becoming a real problem that people were buying furniture and home items where they lived, and bringing them into Florida to fill their winter homes. I just wanted to address this local issue that you took out of context and went through the trouble of looking up Florida state tax laws, but it really has no bearing on the discussion here which encompasses DIGITAL GOODS. 

EDIT: This is for physical goods that cross state lines.

Edited March 9, 2023 by Mariusz Ivanovic

[bigmoe Whitfield]

2 hours ago, Coffee Pancake said:

LL have an entire marketing team .. they even have a stage slot at SLB event where they talk about all the exciting things they've been doing. 

It was also stated at lot of TPV meetings.

The switch to AWS seems to have been driven by 2 factors .. 1) it might work out cheaper, much hype ... 2) it removed an aging datacenter and support staff from the books in preparation for selling the company / product.

It's important to remember context. While the AWS move was going on, LL were throwing everything they had behind Sansar. OZ had a minimal team for the migration (which is why it took so long) and getting developer time for anything else was almost impossible.

SL was being treated like an old dead product on life support and not expected to remain relevant.

Thank you!  I'm currently looking through lab gabs.  but since it was in the tvp meetings too.  it's all there for people to go look at.

[Qie Niangao]

5 minutes ago, Rowan Amore said:

Maybe the increase in fees is to cover their losses in paying our taxes.  Who knows?

Customers will better serve their own sanity by deciding whether they're getting their money's worth from a service rather than trying to divine how each fee percolates down to the corporation's bottom line. Who has the detailed information needed to speculate how LL's accountants expense State sales taxes when calculating their Federal income tax, for example? How many individuals even do that on their own taxes, or are eligible?

It's just as crazy-making to fret over whether AWS costs or saves expense or capital—especially when we don't even know what proportion of LL's total budget is computing (server or cloud) vs payroll vs everything else.

For that matter, did they capitalize the cloud migration project? Reading that Oz quote again now, it kinda sounds as if they did. And were we to somehow magically suss that bit of accounting, how would it help anybody make more informed decisions about what SL services to buy with the newly increased fees and freshly decreased rates?

[Love Zhaoying]

3 minutes ago, Qie Niangao said:

For that matter, did they capitalize the cloud migration project? Reading that Oz quote again now, it kinda sounds as if they did. And were we to somehow magically suss that bit of accounting, how would it help anybody make more informed decisions about what SL services to buy with the newly increased fees and freshly decreased rates?

That was my thought too, thus the "Ahah!"

[Rolig Loon]

3 minutes ago, Qie Niangao said:

Customers will better serve their own sanity by deciding whether they're getting their money's worth from a service rather than trying to divine how each fee percolates down to the corporation's bottom line. Who has the detailed information needed to speculate how LL's accountants expense State sales taxes when calculating their Federal income tax, for example? How many individuals even do that on their own taxes, or are eligible?

It's just as crazy-making to fret over whether AWS costs or saves expense or capital—especially when we don't even know what proportion of LL's total budget is computing (server or cloud) vs payroll vs everything else.

For that matter, did they capitalize the cloud migration project? Reading that Oz quote again now, it kinda sounds as if they did. And were we to somehow magically suss that bit of accounting, how would it help anybody make more informed decisions about what SL services to buy with the newly increased fees and freshly decreased rates?

The bottom line is that we have almost no idea what Linden Lab's business model looks like, so all this speculation about how they ought to rebalance the fees is wasted energy. You can make yourself crazy trying to second guess corporate planning from a distant armchair.  Make your own decisions about how to spend your time and L$. That's all you have control over.

[Rowan Amore]

59 minutes ago, Mariusz Ivanovic said:

This tax law in on PHYSICAL GOODS, not digital, and was put in place to account for the people who live outside of Florida, and spend a few months a year here in a 2nd home when the weather is nice (Snowbirds). It was becoming a real problem that people were buying furniture and home items where they lived, and bringing them into Florida to fill their winter homes. I just wanted to address this local issue that you took out of context and went through the trouble of looking up Florida state tax laws, but it really has no bearing on the discussion here which encompasses DIGITAL GOODS. 

EDIT: This is for physical goods that cross state lines.

As you're edit to the post I quoted addresses this, I'll concede the point.

However, my state does require sales tax on digital goods.  That doesn't appear when I purchase Lindens.  LL IS  paying those to the appropriate tax agency as they have said.  Eventually, they will be charging us and I expect there will be another outcry from.the masses.  

[Tech Robonaught]

10 hours ago, Rowan Amore said:

I don't know many place online where they don't charge sales tax or some other fee added onto the price of whatever product you're buying and Ls are a product.  Sales tax in San Francisco is nearly 8.7%.  They COULD charge sales tax also on top of fees so...

https://community.secondlife.com/blogs/entry/10207-sales-tax-on-us-purchases/

 

If you live in San Fran they probably could.  Wouldn't be legal anywhere else.

[Tech Robonaught]

3 hours ago, Rowan Amore said:

LL could collect sales tax on your Linden purchase but they do not at this time.  THEY cover that cost themselves.  The difference between what they collect in the fee and what they pay out in sales tax would be interesting to know, however.

From LL's blog post last year...

"We will continue to absorb the taxes at point-of-sale purchases such as one-time L$ buys, first-time premium subscriptions, and name changes. At some point in the future we will need to begin passing those taxes on to you. We will make another announcement when those charges are phased in."

 

 

So the 3+ million a month they make on Land doesn't cover the AWS servers, office and seemingly 2 employees one of which we cant talk to on the phone?

Seems right.

[Tech Robonaught]

On 3/6/2023 at 5:51 PM, Rowan Amore said:

So...how would you (the general you) propose LL increase revenue?  They are, I assume, not a non-profit business.  

I'm certainly not thrilled with the increases in fees either but honestly, for me, It's still a rather inexpensive form of entertainment.  

We all want different things as far as the infrastructure of SL is concerned which involves hiring people.  That costs more money every day.  

LL is NOT - a non profit business.

I don't know what their overhead is, but based on the difficulty getting a human on the phone at their office and the fact their office hasn't moved in 2 decades, I'm going to have to say other than the AWS portion, not much compared to the 3+ million a month they collect in Land fees.

[MoiraKathleen]

21 minutes ago, Tech Robonaught said:

the fact their office hasn't moved in 2 decades

What does that have to do with anything being discussed in this thread?