Open thoughts to Linden Lab about the real commodity of Second Life

[Gavin Hird]

Did I say it was to be open? :matte-motes-big-grin:

I am talking about Linden Lab licensing their product – which is not open, so the only committee they need is to haggle with themselves. I believe the core gird functionality (give or take) is compelling enough for anyone interested to create new grids would take it as is. 

Competition? Well, yes and no. Obviously LL would sell a license and maintenance, so there you have additinal revenue. They could possibly also sell the backend as a service.

LL's current problem is a scalability one - their business model for a single grid does not scale very much larger given constraints in their gird technology, but scaling by horizontal replication would work. 

Their second problem is a reputational one where SecondLife in many cases = smut. Horizontal scaling through other players would help proliferate their technology significantly faster than they could manage on their own.

Their third problem is that they are incorporated in a legislative environment that imposes constraints on what can be hosted (gambling is one example) in addition to imposing (double) standards that people in other parts of the world find ridiculous or constraining. Horizontal replication through companies incorporated in other geos and therefore different legislations would rid them of this constraint and overall produce greater diversity and proliferation of their technology. LL themselves cannot do this by subsidiaries, so a licensing model would work here. Companies hosting grids in other geos closer to their home market could also target their marketing much more in tune with their customers than the "shoot Halloween at the world" type approach that now comes out of LL communication. (Halloween is totally irrelevant in my part of the world as is zombies just to give an example.)

When it comes to mandatory alt registration with a primary, it is not difficult to implement or enforce. I can see that the transition could be bumpy though. 

[Sassy Romano]

They could do that but then they should have kept it all closed in the first place and licenced the server and viewer code too.  I have a feeling that the opportunity is already lost and that the current Opensim grids will enable asset transportability (with or without some form of security) far faster than LL can keep up.

[Gavin Hird]

I don't think the oportunity is lost - yet. There is a window of oportunity. My experience with opensim so far is that they are in catch-up mode (I have a small 5 sim test grid humming in my backyard.)

The advantage LL can use is the large registered user base and content. Content is currently largely a pain to move to opensim.

[Darrius Gothly]

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Dartagan Shepherd wrote:

I just finished reading an article that detailed the continued decline of a what once was a profitable business model here in SL. Said establishment had been in SL since 2004. Rather than excessively blame SL, they were rather thoughtful in explaining their situation, and how their closing here came to pass. Article here:

http://elfclanvr.grouply.com/message/2233

It points to all of the key elements that are root causes to the slow decline of Second Life.

A Marketplace that never needed to be owned by Linden Lab (whether this truely serves as a sink, or ways to cash in on L$ or use it to pay employees salary or bonuses), thereby destroying not only many in-world businesses, but also leads to the decline of land sales and tier. It also ripped the potential for users to establish profitable commerce ventures of their own.

Increased and obtuse Land impact (previously called Prim Equivanlency) costs to serve as more sinks, thereby taking more money away from users, and further decreasing Merchants profit margins. Scripts have nothing to do with prims. Size has nothing to do with prims. Your lack of hardware resources that you provide for sims have something to do with the impact of prims and their "cost" to the user. A flat "pro" fee on top of a premium account would have scratched your profit itch alongside a very modest upload fee. Reference the original article pointed to here to see how even L$10 uploads impact some of your merchants to the tune of hundreds of dollars. Yes you need to store larger files with Mesh, so be it. For $30/month for a pro account and a L$10 upload sink, you can find a way to afford it.

Repeated attempts to participate in the economy yourselves always fails. (Again, reference the included link.) This latest land sale resulted in roughly 600 new sims for LL. Land barons are not happy, ACS removed nearly 200 sims. Expect this to bite you more as time goes by. Or go whole hog and reduce an already rediculously priced tier down to something reasonable for what people actually get. $300/month is outrageous. Don't fire-sale it, lower the price across the board and create more opportunity, not less. And upgrade the hardware while you're at this, please. A $195 setup and $100/month fee should buy a sim on a dedicated machine at your level of purchasing power. It may not pay as many employees, but then again you don't need so many that don't get their hands dirty with the job of direct maintanence and development.

Commodity #2

Despite these high costs and excessive sinks you continue to decline. Note this is not a sky is falling post, but you do need to start taking notice and action at this stage. Adding features will not help unless they directly relate to the core product, which is one of your key commodities. People bought into SL as it existed for the most part in the 2006-2007 era.

A couple of examples. Lag is often explained away as opposed to games because games are downloaded, pre-rendered content. Then solve this ... once I go to a sim and download the content it should be as fast as a game. If that slows down travel from region to region, bite it on this one. Surely you can get where I'm going with this ... there's room for speed improvement if you change the way you're handling this. Longer download times and pre-processing may break the illusion of contiguous and immediate spaces, but will lead to smarter choices and longer times spent in places travelled to.

Development. The limits on memory, the amount of data able to be transferred into/out of SL is rediculous. Improve the scripting. After 10 years, you should have had a nice little object oriented, stable scripting language capable of developing some pretty sophisticated applications and open pipes to data and various formats. Stop being so stingy, I feel like I'm developing MUD scripts back in 1992. Go Diku. MUSH code and MUF were better at this 15 years ago, and had less of a memory footprint.

The UI. Just ... ugg. Think game. Think fun. Product managers who know product design dictating to coders, not coders writing for end users. I got behind Viewer2 with open arms. It's still more beastly than any enterprise application on my machine.

Commodity #1

The People. You're not listening. At all. You kind of do, piecemeal, but for the most part, majority says you don't get it after 10 years. Boiled down it relates to the above. Make what works work better. Stay out of the economy. Lower prices. Make people who are here happier to be here. When they get happier they tell more people. Stop getting involved in the world. When your employees want to come up with lots of bright ideas on how to make this thing even cooler? ... Stop them and tell them to get back to work at either keeping things running or get back to developing.

People are here because the most amount of people are here.

You have history to fall back on, with worlds that have come and gone and why they didn't work or stagnated. A dozen VRML worlds, Blue Mars, There.

Are profiles the next big thing? I tend to think no, they weren't worth the effort, or a particularly brilliant idea to try to capture social networking aspects, yet you blew money on this. No one asked for them. Learn from your mistakes.

Ad placement on the Marketplace is even remotely important when core features don't work? Bring back banners and call it done, and focus on the functionality. Don't spam google. Don't face-tweet product listings. Just make it work. Users outside of SL don't buy SL goods and users inside of SL don't need your help selling and advertising it if goods get displayed, searched and delivered properly.

The in-world experience is the most important aspect of your product, the people who populate it would go elsewhere quickly if enough other people were there to dance with them and buy their goods, the resentment comes from a lack of interest in your core product and your true commodities, which are few and simple to focus on.

After that's done, think about re-branding. Second Life sends a message to outsiders not into virtual worlds that we're a bunch of losers who can't cope with first life. Try reading blog comments by non-SL users sometime, it's the majority response.

Go. Do.

 

---

[Mickey Vandeverre]

Thank You

now....on the tweet-like buttons....

those things are Solid Gold.

We are not provided the stats here (major problem), but I've got stats and graphs from another venue that I can evaluate by the minute, the hour....

and Holy Freakin' Cow.

When someone hits that tweet or like button, you better buckle up and get ready.  One of these days you and I will discuss numbers on that.  Large Numbers.  In an instant.  That continue to multiply among circles.  For days.  And weeks.

[Mickey Vandeverre]

Speaking of Tweet buttons.....

Did someone tweet this to The Man?

Great reading here.  Great Insight.

Toy - are ya'll still tweet buddies?  I've got no pull.  But I'll use my once a month tweet anyway.

[Toysoldier Thor]

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Mickey Vandeverre wrote:

Speaking of Tweet buttons.....

Did someone tweet this to The Man?

Great reading here.  Great Insight.

Toy - are ya'll still tweet buddies?  I've got no pull.  But I'll use my once a month tweet anyway.

---

Yes I tweeted it to Da Man and it was retweeted too and I gave to a few other of my blogger friends.

I have a feeling the man in the LL Boy Boy chair is ignoring the bad news stories within his kingdom.

The Elf Clan story hits home crystal clear the fundamental troubles many have been saying.

[Ela Talaj]

It sure does, Toy. This whole thread was started in reference to The Elf Clan and there you are, in the same thread claiming that SL is not a game. Just how many elves have you met lately in real life?

[Toysoldier Thor]

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Ela Talaj wrote:

It sure does, Toy. This whole thread was started in reference to The Elf Clan and there you are, in the same thread claiming that SL is not a game. Just how many elves have you met lately in real life?

---

Yup I said that.  SL is NOT a game.  It a virtual world platform supporting a very large and complex diverse virtual culture economic system.

The Elf Clan of fantasy Role Players is culture in this virtual world.  The fact that this culture of residents do not physically exist in RL makes it a game???  BTW... I am sure that if want to look in RL for a RP culture of people that dress up as elves and goblins and fairies that I could find them and participate.

Ohh and Ela...  this virtural culture of Elves supported and generated and was very active with the SL economic model that LL's Real Life bottom Line revenue was generated from.  It is also a portion of the economic engine that has now joined a growing list of other failing / abandoned sims in SL that LL makes money from.

So you still belive LL is running a GAME and that their interest in trying to support and grow the virtual world economy is only a game they have no interest in supporting?

See Ela - you think just like a LL staffer.  That is why LL is declining as a business.... to them its a game and treated like a game and has a CEO that came from and understands a business like a Game.

BUT ITS NOT A GAME!

[Darrius Gothly]

Toy, I wanna gently disagree with one thing you said:

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Toysoldier Thor wrote:

[..]

and has a CEO that came from and understands a business like a Game.

BUT ITS NOT A GAME!

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I don't believe Rodvik sees SL as "just" a game. From his statements I get the distinct impression that he understands it's a whole whopping lot more .. it's just that he cut his 3D Virtual World teeth on a game. But in listening to his recent words and reading his recent interviews, I'd say he sees the world we live in as much more, both in scope and promise, than the Sims or WoW or anything similar.

[Ela Talaj]

I think you are somewhat misunderstanding and devaluing the word "game". Football is a game, baseball is a game, basketball is a game,  no one's going to deny this. Olympic Games is what the name says: games. Yet they all are also multi-billion dollars businesses for those involved. In each one, the bottom line is the fans who are willing to watch. The NFL can do many things but it cannot force people to watch badly performing teams. Who is to blame there?  The fans or the NFL or the team?

Seems to me that some people in these forums behave like a player blaming the NFL every time he misses the ball...

[Toysoldier Thor]

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Ela Talaj wrote:

I think you are somewhat misunderstanding and devaluing the word "game". Football is a game, baseball is a game, basketball is a game,  no one's going to deny this. Olympic Games is what the name says: games. Yet they all are also multi-billion dollars businesses for those involved. In each one, the bottom line is the fans who are willing to watch. The NFL can do many things but it cannot force people to watch badly performing teams. Who is to blame there?  The fans or the NFL or the team?

Seems to me that some people in these forums behave like a player blaming the NFL every time he misses the ball...

---

So I am very happy you used the example of the NFL as maybe by using your own example - I can show you how LL is screwing up over and over on its policies, actions, poor / immature business & IT development practice based on its misundertanding of who it is and what business it offers and its poor level of customer focus.

I will agree with you actually in your NFL example... FOOTBALL is a GAME, the NFL is a business.  But add one thing, an "ORGANIZED LEAGUE OF AMERICAN RULES FOOTBALL TEAMS" is the product/service they offer to the market.

So lets try to explore and compare The NFL to LL.  This is not a perfect match since they offer different types of products to the market but there should be a lot of commonalities since they both are some form of business offering a product with a target market and competitors.

Company / Business Operation offering the Product to the Market:

1. The NFL
2. Linden Lab Inc (aka LL)

Primary Product / Service Description offered to the Market:

1. Entertainment:  An organised league of franchised teams of amercan rules football
2. Multi-Purpose MMO:  Virtual World Simulator Massively Multiplayer Online Platform Host / Service Provider

Primary Product Name in the Market:

1. The NFL
2. SecondLife

Business Model / Structure:

1. Franchised - NFL Football teams that make up the NFL League
2. Centralized Corporate Operations

Target End-Customer for the business (whos primarily putting money in the business's pockets):

1. "Corp - Media" - those willing to pay the business for the rights to distribute the product to the target market

   "Corp - Advertising" - those willing to pay to use the product's branding in any way for advetising/promotion

   "Corp - Sponsorships/Affilations" - those willing to pay to extend the product's offerings in any way

      (Notice how the actual Fan of the NFL is not a primary target customer for the NFL - the Fan is actually a target customer of the NFL's franchise holders who as a part of their own revenue model make $ from selling seats at the statiums..  The Fan is part of the NFL's product target market.  As such, for the NFL, the Fan is part of the PRODUCT used to reach its Target Customer and make them spend as much as possible to have access to this product.  See the difference here)

2. "Individual Consumer"  Persons with varying interests of an Online experience of one or many of the following:

   Social Networking

   Social Interaction

   Love, Relations, Sexual Encounters, etc.

   Role Playing of various interests, cultures, fantasies, beliefs

   The Arts (many aspect of Art : photography, 3D, digitial, mixed media, poetry)

   Music (both professional and hobby / casual karaoke)

   Business Operations using the SL platform and customer base as a target market

   Education

   Social / Political Awareness and Expression

   (Notice here that the the target end customer for LL's SL product is not a person "playing a game".  LL's Target customer is widely varied in the same manner as any ASP host, Utility provider, Service Provider would be.  Saying that LL is business that provides a GAME to its target customer is like saying the Power company that runs LL's Data Center servers is in the Game business because they drive the power that runs the servers that offers the SL "GAME" to the market.  Of course this is stupid since the Power company simply provide excellent power with good reliable service to countless customers of varying interest in the use of this power.)

Target Market for the Service provided (who needs to be interested in the product on the market):

1. "Individual Consumer"  - Fans of the sport of american-rules football
2. Same as LL's Target End-Customers

   (notice the big difference here between the NFL and LL - The NFL has a focus to make their product as desirable as possible on the market to the target customers by making sure its Target Market is as pleased as possible about the product it offers.  The NFL knows intimately who is paying their bills and who is critical to making their product as desired as possible to the target customer.  For LL, the Target Customer and Market are the same - not for the NFL.  LL needs to know that the target customer that pays their bills is also the target market that they need to keep as happy as possible since they are one and the same.  If LL provides poor customer service to the target market... they eventually look for other options then the product LL offers and LL then loses both the target market and target customer at the same time.  This is what happened with ELF CLAN and countless others)

Direct Competition & Positioning:

1. >  Other Football Leagues (College, CFL, UFL etc.) - NFL is by far the leader in this market space
   >  Other Sport Leagues (NBA, NHL, MLB, etc.) - In the NorthAmerican Market - NFL is a big player but does have strong competition with MLB - luckily these leagues tend to stay out of each others seasons for the most part.

   >  Other branding products / services competing for the Media, Advertising, Sponsorship Target Customer

2. >  OpenSims Grids (Inworlds, Avanation, etc.) - LL's SL is still the near monopoly leader in this marketspace but is watching its lead erode because of it lost attention to keeping its Target Market happy (poor customer service, lag, constant impacts to the inworld operation and interests of the target market) and keeping its product competitive to its competition for its Target Customers (i.e. cheaper services / better value proposition to SL)

   >  Other Online MMO's MMOG's, Social Media platforms, Art communities, Music communities (WOW, SIMs, Facebook, eBay, SingSnap, etc.) - LL's competitors in this space are all those that want one or more of the several target customers that LL needs to make its money.  As you see, since LL must cater to countless micro-groups of target customers - unlike the NFL), its must try to keep and grow and is losting its battle in a death of a thousand cuts to several competitors from several avenues)

So I can go on comparing but I have described enough to now show how LL is screwing up because of its lack of understanding who its Target Market is and its Target Customer is.

LL's biggest risks in my opinion are:

1. LL built a business model whereby its Target Customer is not focused.  i.e. the people paying LL's bills is so wide ranging and varied that even for the most mature and amazingly talented business management, this would be a steep challenge to provide a competitive product to such a wide variety of target customers.
2. LL built a business model where the product they are offering needs to satisfy such a wide target market of customers that often there could be conflicts in satisfying one may damage another (i.e to make all the users of SL sims happy they could reduce the monthly price of mainlands but then they would tick off those that are in SL to make money on the land they buy and rent from LL).
3. LL has a model where the Target customer and Target Market for their product are the same in addition to the two risks mentioned above.  So a policy that might satisfy one faction of the target customer needs might and often does anger a need of a faction of the target market
4. LL's youth as a company and immaturity as an organisation compounds the huge risks already existing in their business model they created.  They have proven time and time again that they dont understand Customer Service.  Their new service delivery/deployment skills are near non-existent.  Their ability to effectively listen to customer demands is terrible.  Their staff is still in a Startup culture with no corporate controls.  Their staff are often willing to take advice only from those of their customer base that strokes their egos and not those that are critisizing their actions for legit reasons.  Their ability to develop and execute on a long term Strategy has proven to be horrid.  Since LL doesnt really understand what their product is and who their target customer & target market is, their strategy has been what ever the will of the next Tech Geek is in their staff or management
5. LL's willingness to actually participate in the economy and compete with its own target markets within the virtual world economy.  Selling/offering homes on LL public land.  Establishing MP that is destroying all forms of inworld selling.  Favoring / executing on partnering marketing relationships with select target market players that makes it non-competitive for others in the same space.  etc. etc. etc.

So Ela, some examples of how LL's mistakes screw themselve up?  If LL were the NFL, here are some scenarios of how a good product can be damaged by a company that makes stupid decisions...

1. The new LL/NFL decides on week #1 of the season that to ensure there are no empty seats at any games, they enforce a policy to all its franchise owners that Gate Prices for tickets will now be lower than season ticket prices.  Wont that be better for attendance?  Seems like a good idea. right??
2. The new LL/NFL will offer media rights to all broadcasters in the world that want to broadcast any NFL game for a set price per game televised.  WOW isnt that a great idea?  Think of all the extra TV revenue we could get now?
3. There is a quickly growing market of illegal counterfit NFL Team Branded material flooding the market.  The new LL/NFL decides... "well if the NFL Chargers jerseys are being made sold illegally that is the franchise's probem not ours.  Let the franchises figure out a way to stop it.".  Hmm sound similar to LL not protecting IP for merchant?
4. The new LL/NFL decides that all game tickets will only be bought through an Amex Credit Card. 
5. the new LL/NFL will tolerate Players are not accountable in any way for their conduct on or off the field.  We dont wanna lose good players because they might be a criminal... right?
6. The new LL/NFL decides in mid season because there are not enough points being scored on a game and to make fans happier, effective immediately the rules will change to allow 6 downs per drive and field goals will now be worth 4 points.  Its our rules - we can do what we want with the rules.  I am sure the fans wont mind and even if they do... they will get over it.  Afterall, we are the top league, where will our fans go if then dont like it?

Anyways... as you can see, if the NFL was run like LL manages SL, you can see that the fault of the NFL business failing would be solely in the hands of the NFL/LL.  You could not blame anyone else.

This Ela... is where you and I fundamentally disagree.  To me, you do not understand what LL is as a company and the level of responsibility LL has for their own success and their own demise.  LL is failing because LL is causing it to fail.

[Gavin Hird]

> LL built a business model whereby its Target Customer is not focused.  i.e. the people paying LL's bills is so wide ranging and varied that even for the most mature and amazingly talented business management, this would be a steep challenge to provide a competitive product to such a wide variety of target customers.

This is the core of the pains SecondLife is going through and the reason why it is virtually impossible to scale the current business model unless you alienate a large customer set.

The solution is horizontal scaling through connected grids, but with different owners and where the grids have different target customers and different TOS adapted to their focus and the legislation they are incorporated in. In this model LL's business will shift to the platform, technology development and provisioning of core services. 

 

[Ela Talaj]

Toy, I did make it thru your...hmm... article, but I just don't have strength left to respond. Hopefully you'd understand and forgive

[Rhotis Paine]

I can see you are a master of the red herring.  Well played.  

[Montana Corleone]

The biggest problem was the land speculators (for that read most land agents) who believed the misleading stats of LL that growth was exponential, and ignoring users who were pointing out that sims were getting empty, down to one resident per sim at peak concurrency, and LL selling it to them for big bucks.

In addition it was in the economic stats (till they took it out) that they were ignoring declines, and the reasons why. EU users in 2006 far outnumbered US, and yet lack of language and tech support, customer support, delivery failures at night California time and weekends made people drift away. The Brighton/VAT fiasco was the final nail in the coffin. French speakers alone made up 17% of total users for which they eventually got 1 French speaking Linden, on California time not EU time, w<hereas they had two Koreans for less than 0.1% of users.

They also spent huge amounts of time and money on Windlight and Voice that most users preferred to not have, orn at least wait for until significant bugs and inv loss issues had been dealt with. Perhaps the classic case was trying to push concurrency to 20K by the end of 2006: they did it and the system fell over and was offline for 13 hours, but they bragged about it.

They were loath to do anything to police the grid, from griefers to copyright protection. The result was a big exodus of users, masked by press and advertising pulling in new registrations, but online hours were regularly decreasing too. At most turns L policy has been detrimental to the economy. Open sourcing the code without a form of global ID is just asking for IP to be ripped off, but that never upsets open sourcers who have the view that everything should be free anyway, including our creative skills.

I've been away for a little over a year for reasons beyond my control, but it's sad to se the death knell changes. SL is basically just a cartoon sex world now. The MP has killed off the need for inworld stores and malls; and hence need for land, but without a world to move and act in, there is no SL.

As in RL greed, both by residents and SL, for short term gain, seriously messed with the concept. That and allowing the whole reseller thing seriously damaged the reputation of SL.

[Zanara Zenovka]

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Montana Corleone wrote:The MP has killed off the need for inworld stores and malls; and hence need for land, but without a world to move and act in, there is no SL.

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I see this said so often, yet everything bought on the marketplace is still for use inworld...

Just sayin'...

I sell scripts and gadgets almost exclusively to business people and store owners, and they keep on buying and wanting more, so I tend to wonder how many people are really getting rid of inworld shops, apart from the odd drama queen who pops on the forums to wail about how they're closing down because LL ruined their business, etc, blah.

I've always seen the idea of selling solely on the SLM as being very short sighted - sure you might save a bit of tier, but you're losing a hell of a lot of marketing opportunities.