Cutting tier prices.

[Porky Gorky]

Tier prices are too high. Tier prices are no longer sustainable. Comments like these seem to be appearing more frequently in posts on this forum. I would like to hear some tier decrease advocates explain how lowering tier could improve SL and the sustainability of LL.

If Linden Labs cut tier they would loose profit. They would hope to generate growth by cutting tier, but this is a risky gamble. 

So what is the current perfect price for tier in this financial market? Where should the price breaks be?

Lowest possible price tier for users = Growth for SL = ultimately more revenue for LL.

If you were in charge of finance for SL how would you achieve this?

 

 

[Jenni Darkwatch]

Hypothetically speaking:

I'd deploy a "server for rent". Not in the assinine way they had for corporations (and predictably bombed). Let people "rent" a connection to the SL grid with sim software we can rent from LL. At that point LL wouldn't need to provide all bandwidth. However: That requires a few structural changes in the way the software works to keep the current level of somewhat tolerable security. Scripts would have to run on a script server, not on the sim. Every other asset already gets streamed to clients and thus is insecure already, so no loss there.

The goal would be to proliferate the SL grid to effectively undermine the existing competition, and to allow a competitive market for sim hosting run by residents. It would shift the burden of hardware upgrades partially off LL, it'd shift bandwidth costs off LL and it should make it easier and cheaper for people to just run their own sim. Of course... if said resident sim owners would need support, they'd pay for it.

All this obviously won't happen. Tier prices won't get reduced, they'll rise. Milk a cash cow until it's dead, then beat it a little so see of you can get a little more out of it, then screw everyone and move on to "projects unrelated to SL".

[Rene Erlanger]

I don't think they can cut Tiers now...it's too late!  :matte-motes-dont-cry:

They should have done it when it was on an upward growth curve. The hike from $195 to $295 in early 2007 was the mistake.....if they wanted an increase, it should have been between $225 to $250....and not the 50+% Tier hikes.

The only way to reduce Tiers now, is to choke off FREE accounts and spread the burden of cost by introducing a modest monthly fee (say $5-$10) to all users......but with concurrency declining over the last 24 mths....its only likely to accelerate it.  LL are notoriously frugal when it comes to Marketing & Advertising costs...so they could not plug that concurrency shortfall with more new accounts.

In short they can't do it.....not when the 2 main drivers are heading Southwards (Concurrency & Tier Income)

 

 

 

 

[Usive]

I suggest you go to one of the free SL alternatives. They allow you to host your own land from your own computer... Basically as you suggest. Though this sounds great the game uality suffers and lag is prevalent even when alone in a server hosted by an average gaming computer.

 

Also, I have seen people recieve actual viewer and computer viruses from items within those systems. In all they ARE much less secure.

 

Also, they are unbelievably confusing to figure out initially which is why many people don't even know how to go through the process.

 

Lastly, if the quality of the game went down to sucha level then players would have no incentive not to just move over to the free SL alternatives which at this point would be exactly the same in all other regards.

[Dartagan Shepherd]

Linden Lab claims $75 Million in profit.

I would start at first year by cutting profit in half (which if applied directly to tier reductions would immediately enable me to reduce tier by $37.5 million dollars) and take the gamble of more volume in land sales.

This would bring me more up to date with modern prices, although still a very pricy form of entertainment.

To offset the hit, I'd be prepared to make the big decisions necessary to get rid of or consolidate systems that really aren't necessary. Such as all the mechanisms that have to handle economy, land auctions, possibly classifieds, the "social" system, etc.

Revamping some of these systems would enable me to offer package deals that I can scale and adjust as needed. For instance, rather than insulting me with a sailboat, my premium account could offer me 200 free texture uploads, or X amount of classifieds.

I could expand upon this by offering more packages.

A new merchant account with a monthly fee that gives me a tier discount, X amount of free advertising on the marketplace, X amount of mesh uploads, deeper discounts on dedicated commercial land, etc.

Let users buy any type of sim without having to own a region.

Bulk discounts. Buy something like an openspace, homestead and full region package for X amount.

Consider nixing mainland. Most people would rather be surrounded by water than neighbors. Some people like neighbors. Let land barons make money off neighborhoods and community building. If you can pay $99 as an entry fee to being a landowner, you can give or rent to friends.

Nix Linden Homes, they cost money for no good reason. If tier were cheaper, people would get land on their own. Other perks mentioned above or deeper discounts on tier for premium is enough.

Out of some 30,000 sims, 7,000 are LL owned. More ownership needs to be shifted to vested landowners. Smaller parcels can be rented from independent landowners rather than mainland parcels.

Focus on features that "really" matter to users. Backup or database storage for instance, exporting builds in a specific SL format, ability to store world-wide data on objects, buy my way into a list of random entry points where new users are dumped into, etc. in order to add to product offerings and revenue.

It's a sloppy list, just some thoughts on how to revamp a clunky overpriced product offering into something more useful and appealing.

The profit is there though to cut tier in half tomorrow with no additional revenue. And it doesn't half to be half. But half would blow people away and generate such an amount of goodwill that it'd bring in some users via word of mouth. Many new users wouldn't blink at buying into a region sized openspace for $99. With "reasonable" setup fees of course.

Although if I do pay for a full region, and I want the region name changed in a database, it'd help if they wouldn't charge me $100 to do that. Same with moving that region to another location.

Offer a reseller plan for the marketplace, so that anyone re-selling marketplace goods could earn a bit of cash, on their website, or in-world configurable vendors.

So much "could" be done, depends on how focused management really is on a cool, sexy reasonably priced offering rather than west coast monetization strategies.

Even Zuckerberg knows when you've got a keeper, you toss the startup mentality aside.

But when you're in decline, you've got to start making the harder choices rather than silly patches and offerings on top of an aging concept.

[Rene Erlanger]

---

Dartagan Shepherd wrote:

Linden Lab claims $75 Million in profit.

 

 

---

Not sure that's right...more like $75 Mill. revenues.....not Profit.  Tyche Shepherd has made an approx calculation of Tier income....---> Monthly Tier Estimates - Private Estates c.US$4.920 Million, Mainland c.US$1.008 Million

So total Tier income per annum is $72 Million....no way it would be $75 Profit! At best with the Lindex and all the other extras...it  might be around $100 Mill revenues.

I would say profit is around the $10-15 Million mark.

[161488303349]

like just about everyone said before. more tier steps for mainland. and tier steps for private estate sims. more private sims u get, less tier u pay

if u go over 65536m of mainland then ur tier steps start over again for next 65536

no sim size tier reduction steps for mainland like for estates bc mainland bought by parcel size. so that the best measure. example. if was sim size tier reduction for mainland then how do u factor in linden rightofways. straightout sq meters on mainland more understandable for ppl. is pretty much how it works now. mainland sim boundaries not have anything to do with tier i dont think

set up a public schedule of gradual tier reduction. set some sustainable targets. say between 5-10% each time. make them frequent. say 2 or 3 times each year. ppl can then plan ahead round that. will be some ppl hold off increasing tier til the next tier reduction round. that ok bc thats what planners do. so be prepared for spikes on them dates

set a goal to reduce tier by about 50% over 2-3 year period. maybe longer or shorter depending on response. 75% reduction even, over a longer period maybe depending on how it goes

i worked out one time that need about 74-75,000 sims on the grid to make same amount of money as now if reduce tier to 50%. that will more than double size of the grid. so cant see how to do that in a sustainable way except over a longer period

the main reason for the overs is that if reduce to 50% then many existing landowners will just double their existing land and not pay any more tier anyways. quite a few as well will not double their land. will just take the price cut and keep it. some will spend that on stuff. is hard tho to calculate how much that might be

so to be successful then will need brandnew ppl to come to SL with fresh money to take up the other 14-15,000 sims worth just to break even. that be a nearly 50% increase in tier paying accounts all by itself. that a big number to achieve

is doable i think but have to really careful or can go bust easy if u get it wrong

doing nothing tho is also unsustainable, is slow bleed into oblivion. so if was me then i do the above

[Dartagan Shepherd]

Well, that's what I meant earlier about LL numbers and stats never reconciling.

Phil still recently blurted $75 million in "profit", not gross or net. Oddly enough you'd have to ask "define profit". Until they start giving some financials that actually make sense, the whole thing could be an embarassing conversation without knowing the real figures.

I'm sure it's amusing to them, either way.

[Rene Erlanger]

---

Dartagan Shepherd wrote:

Well, that's what I meant earlier about LL numbers and stats never reconciling.

Phil still recently blurted $75 million in "profit", not gross or net. Oddly enough you'd have to ask "define profit". Until they start giving some financials that actually make sense, the whole thing could be an embarassing conversation without knowing the real figures.

I'm sure it's amusing to them, either way.

---

Phil is not an Accountant....he might be talking about Gross Profit (Sim Tiers less direct costs)...no way is it Net Profit, otherwise they wouldn't have had the lay-offs in 2010. The clue was in those lay-offs which were around 100 employees....let's assume average salary of $50k, thats a saving of $5 Mill usd......that should give you an idea of their Net Profit levels

We know they lost 1500 sims in last 13 mths ($4 Mill income lost)....hence why i stated that another 3000 - 4000 Estates sims handed back during the course of the year, would probably put them close to break-even point.

Hence why it's extremely risky to cut Tiers at this present time.......and why Rodvik indicated that LL will focus on non-SL related products. They do need to develop other revenue streams......so that their business model won't be as heavily reliant on SL Sim tier income.

 

The only way I can see Tier breaks in the future ....is for LL to develop other products as per Rodvik speech...and instead of 70-80% of their income coming from Sim tiers....bring that down to 50% or less, then they could reduce Tier prices right across the board....otherwise it's a non-starter!

.

 

[Deltango Vale]

In October 2010, I published a proposed tier schedule for 2011:

http://deltango.wordpress.com/2010/10/26/a-proposed-land-tier-fee-schedule/

Here is the core problem: the relative price of tier has tripled since 2006. SL is a 2006 Nokia phone at 2006 prices.To put it another way, ask: what can US$300 buy in 2012 versus 2006?

• 2006: a month of tier or 1 X or 1 Y or 1 Z
• 2012: a month of tier or 3 X or 3 Y or 3 Z or 1 A or 1 B or 1 C or 1 D

Based on this understanding, tier fees should be cut by 2/3 across the board. SL would then be a 2006 Nokia phone at 1/3 2006 prices.

[Rene Erlanger]

There really isn't any room for Tier cuts at the moment....as much as  I would welcome them. They need to get away from the Sim tier model and it's reliance on it.

[Rene Erlanger]

If you own a Sim on Mainland ($195).....the next step is 1.5 sims ($292.50)

It would be much better to have those little Tier steps as you mentioned.

[Seven Overdrive]

---

Porky Gorky wrote:

Tier prices are too high. Tier prices are no longer sustainable. Comments like these seem to be appearing more frequently in posts on this forum. I would like to hear some tier decrease advocates explain how lowering tier could improve SL and the sustainability of LL.

If Linden Labs cut tier they would loose profit. They would hope to generate growth by cutting tier, but this is a risky gamble. 

So what is the current perfect price for tier in this financial market? Where should the price breaks be?

Lowest possible price tier for users = Growth for SL = ultimately more revenue for LL.

If you were in charge of finance for SL how would you achieve this?

 

 

---

Aren't they already losing profit by slowly losing sims each month?  I would buy a sim the moment they rolled back tier for private islands to $195.00 USD per month.  I don't see this as a risky gamble as more people would be able to afford more land.  Estate owners could lower their prices and more people could afford to rent from them.  The cost of providing a venue to help keep people engaged in SL would go down considerably for content creators as well.  I really do not see a losing situation there.  It would be a great stimulus all around.

[Rene Erlanger]

so reducing Sim Costs by $100 ....hmmh, let's see what that translates in terms of reduction in LL Income

23377 Estate Sims

56.4% of Private Estate regions are Full Regions

So that amounts to 13184 Full sims, lets say 2000 are still grandfathered ($195 tiers)

that leaves 11184 Estate sims

=> 11184 x $100 x 12 => $13.42 Million USD

Yep, overnight LL would most likely go into the red!

 

Thats why Tier reductions won't work in LL's current situation. Then again not all SL'ers are Accountants! :matte-motes-wink-tongue:

 

.

[Seven Overdrive]

Then they can slowly bleed to death. LOL

I do remember when they increased private islands to $295.00 per month, they made the statement that it was because people were willing to pay that, and many were, eventually after the grandfathering and protests in the forums died down.  They really had no choice but to pay or not own an island anymore.   But that was also when they were heavily trying to turn SL into a business platform.  Of course companies could afford fees like that.  Now that the whole business love affair has passed, LL is left with just us commoners to support them.  

So if i read you right, they can only slowly bleed to death at this point rather than cut prices to try and grow participation in the platform again?  

 

And it is true.. I am not an accountant.  Then again I wouldn't be very keen on listening to accountants about a company's finances that have never had access to the books either.  :matte-motes-wink:

[Amethyst Jetaime]

What is missing in this discussion about LL profits is that tier may not be their largest profit maker.  I was told straight for the horse's mouth a couple years ago that classifieds were.  (I was surprised at the time and made sure I had heard what he said correctly).   It could well be that marketplace commissions are now days, since so many people use the marketplace rather than inworld shopping. 

The other missing element with this discussion of  tier costs is that there are now more sims running on one server than there were back before the tier increased so much.   The more they stack on a server, the higher the profit from the monthly tier payment and servers are a lot less expensive than they were even 5 years ago.

One way to make the highest profit is to offer something unique or exclusive, provide excellent customer service and charge a premium price.  SL is not the only virtual world out there anymore, let alone the most popular place to socialize and connect on line and frankly their customer service is appalling compared to the way it used to be.  For every person that posts here that their personal experience is so great, I hear 10 - 20 times the number of people complain about it in world.  While the economy is one of the reasons people have given up their sims, half or more of the people I know that have given up estates do so because they no longer feel they are getting the service they should when they spend hundreds or even thousands of RL dollars on tiers per month.  This latter group includes myself.

Another way to make a high profit is to offer things people want a lot cheaper make your profit on volume.  If this weren't a valid alternative. Wal-mart wouldn't be the largest and most profitable retailer in the world. 

Lower land prices will bring more landowners.  More landownership mean people spend more time here and more money on buying things for their land and their avis,  with LL getting a cut of the action through MP commissions and the Lindex as well as higher demand for land for stores.  More landowners mean more venues where people can go to enjoy themselves.  More enjoyment attracts more people to SL who will spend money on their avatars and eventually land.

[Jo Yardley]

I'm not thinking about a general tier cutting but more about several discounts that will help both the people as LL.

For instance, how about they cut tier a little bit every year you own a region.

This will help those regions that are doing ok, it will encourage region owners to try and stick it out longer and not give up before the year is over.

The idea with discounts is that LL does not immediatly lose a lot of tier but that they get more regions rented.

That is why I think they should perhaps bring back different kind of tiers, for instance for educational sims, maybe higher tier for commercial sims, etc.

Keep people who have a sim from leaving by giving them discounts, get people into getting a full region by giving them another kind of discount.

I'm horrible at math so I am just trying out a few things here, I'm sure that you all can think of other, perhaps better suggestions, but the sollution may not be in just cutting tier but in cutting tier for some people in some situations.

What does LL want? Receive more tier so they need to rent out more sims and keep people from stopping renting sims.

By giving everyone a tier discount they will at first lose a lot of money but people will rent more, new regions will pop up everywhere.

So "lure" people into starting new sims and then keep them from abandoning them.

If you start a new sim you get a nice juicy discount for 6 months for instance.

I know that this would have talked me into buying a region sooner then I did.

Then after that period you pay the full tier, but you know it is coming, everyone in the sim knows it is coming, you've had half a year to find shopkeepers, tenants, figure out rent and examine if you can keep the sim going.

By this time you (if you are lucky) also have  supporters, a community that wants the sim to stay.

Just an example, in short; give different people differend discounts in different situations.

Maybe a discount for getting an X amount of paying SL members to put your sim in their picks or "donate their support", like with the old land donation system.

If you have people who really support you, they can click something in their profile (paying members only or everyone gets a bunch of alts to do it ) that in stead of donating land, they think your group deserves a discount.

So if say 100 paying members give you their only (?) support vote, you get 5% discount on your tier.

This could give even those that cant afford to pay rent or put money in tier meters in a sim a way to help them, it will even help sims that are not commercial at all to keep their heads above water, it gives people a way to be more involved with other sims.

You could even try and get this kind of support before you start a sim so you can keep it cheap.

Just some crazy ideas.

[Pussycat Catnap]

If there was no Marketplace cutting tier would boost land sales.

As is, thanks to Marketplace, land sales won't go up notably until tier pricing is $0.

Sure, at some point way down there you will get so low that people who don't care to have homes in SL at all will tier up. But by the time you reach this point you will have already killed off every rental estate in SL by having gone low enough to reach that state... giving you a net "gain" of at best... 0.

 

Marketplace has to die, or SL will.

Or at least change, and be tied to land ownership -more- rather than the less of... 0... that is coming soon.

 

[Jo Yardley]

Might be a good idea to charge people who sell on marketplace who don't have a shop inworld.

I prefer to go checkout stuff inworld anyway before I buy it, so Marketplace would end up being more of a shopping guide that you then use to find the stuff inworld.

If you sell something, you have to add "see inworld" option, or pay more?

[Seven Overdrive]

Perhaps the sellers without land could be limited to a few listings on MP, while land owners get more.   Not sure how well that would go over though.  Such a policy might stir up another hornets nest with the community.  Another thing to consider with that idea would be figuring out what land holdings would count.  Would people who rent from a thrid party be eligible for the increased listings on the MP too?

I am not a heavy shopper in SL and usually do search for things on MP before going to the in-world store to see the item.  Honestly it has been a very rare occassion that I have run into a MP seller that didn't have an in-world store, so I am not sure how big of a problem it actually is.

[Rene Erlanger]

---

Seven Overdrive wrote:

Then they can slowly bleed to death. LOL

I do remember when they increased private islands to $295.00 per month, they made the statement that it was because people were willing to pay that, and many were, eventually after the grandfathering and protests in the forums died down.  They really had no choice but to pay or not own an island anymore.   But that was also when they were heavily trying to turn SL into a business platform.  Of course companies could afford fees like that.  Now that the whole business love affair has passed, LL is left with just us commoners to support them.  

So if i read you right, they can only slowly bleed to death at this point rather than cut prices to try and grow participation in the platform again?  

 

And it is true.. I am not an accountant.  Then again I wouldn't be very keen on listening to accountants about a company's finances that have never had access to the books either.  :matte-motes-wink:

---

I agree with your analysis...that $295 tier rise were aimed at the RL businesses that were flocking in at that time...and the likes of you and I became the casualties....as we're stuck with these excessively high Tiers.

There are  pieces of that Financials that we know to be true or a good approximation.

We know Tier income is likely to be around $70-75 mill usd per annum, we know Premium subs income is around $7-8 mill usd...and with the other extra bits of income from Lindex comm and anything else that's chargeable at USD (some land auctions), SIM set-up costs.....that LL are around the $100 Million USD mark in revenues.

The problem area are the overhead costs and trying to get a handle on those. We do know the amount of employees and we could apply industry average salaries to those, we could also obtain information on typical rents for the size of property in Battery St. The  tricky area for me at least.....would be guesstimating all the Server generated costs, storage, insurance, maintenance, software, hardware, leasing, bandwidth....etc etc

If it i had to make a stab at it though....I would say LL's profit margins hover between 10 -15% (15% is very optimistic on my part).....so on $100 Mill revenues.....we're looking at Net Profits before CT Tax around $10-15 Mill.usd

So now you can see why your suggestion of reducing the Tiers by $100 per sim per month...is not really feasible and likely to put the company into the red!

It's a real gamble to assume that if LL lowers the Tiers by $100 p/mth, more people will buy sims and concurrency might be boosted. You might be right....but what if you're wrong? Is there really a demand to join SL? is there really a demand to own sims?

I only see 2 courses that LL could pursue, that might help reduce Tiers in the future.....either  a) Spend real $bucks marketing SL across the Internet much like IMVU did over the last 4 years and really grow its concurrency  or b) develop other revenue streams non-SL related, so that there's less reliance on SIM Tier income.

 

 

 

[Seven Overdrive]

---

Rene Erlanger wrote:

I agree with your analysis...that $295 tier rise was aimed at the RL businesses that were flocking in at that time...the likes of you and I became the casualties....as we're stuck with these excessively high Tiers.

There are  pieces of that Financials that we know to be true or a good approximation.

We know Tier income is likely to be around $70-75 mill usd per annum, we know Premium subs income is around $7-8 mill usd...and with the other extra bits of income from Lindex comm and anything else that's chargeable at USD (some land auctions), SIM set-up costs.....that LL are around the $100 Million USD mark.

The problem area are the overhead costs and tyring to get a handle on those. We do know the amount of employees and we could apply industry average salaries to those, we could also obtain information on typical rents for the size of property in Battery St. The  tricky area for me at least.....would be guesstimating all the Server generated costs, storage, insurance, maintenance, software, hardware, leasing, bandwidth....etc etc

If it i had to make a stab at it though....I would say LL's profit margins hover between 10 -15% (15% is very optimistic on my part).....so on $100 Mill revenues.....we're looking at Net Profits before CT Tax around $10-15 Mill.usd

So now you can see why your suggestion of reducing the Tiers by $100 per sim per month...is not really feasible and likely to put the company into the red!

It's a real gamble to assume that if LL lowers the Tiers by $100 p/mth, more people will buy sims and concurrency might be boosted. You might be right....but what if you're wrong? Is there really a demand to join SL? is there really a demand to own sims?

I only see 2 courses that LL could pursue, that might help reduce Tiers in the future.....either  a) Spend real $bucks marketing SL across the Internet much like IMVU did over the last 4 years and really grow its concurrency  or b) develop other revenue streams non-SL related, so that there's less reliance on SIM Tier income.

 

 

 

---

Agreed on your two points at the end, although,  I'm not convinced that any non-SL  ventures will translate into major benefits for SL, including the much desired reduction in tier fees.  One can hope they would be willing to take the profit from one product to prop up another.  

 

I guess the fact that this thread is relatively quiet on the subject,  may be an indicator that there just isn't a huge demand for lower tiers after all.  

[Rene Erlanger]

---

Amethyst Jetaime wrote:

What is missing in this discussion about LL profits is that tier may not be their largest profit maker.  I was told straight for the horse's mouth a couple years ago that classifieds were.  (

I was surprised at the time and made sure I had heard what he said correctly).   It could well be that marketplace commissions are now days, since so many people use the marketplace rather than inworld shopping. 

The other missing element with this discussion of  tier costs is that there are now more sims running on one server than there were back before the tier increased so much.   The more they stack on a server, the higher the profit from the monthly tier payment and servers are a lot less expensive than they were even 5 years ago.

One way to make the highest profit is to offer something unique or exclusive, provide excellent customer service and charge a premium price.  SL is not the only virtual world out there anymore, let alone the most popular place to socialize and connect on line and frankly their customer service is appalling compared to the way it used to be.  For every person that posts here that their personal experience is so great, I hear 10 - 20 times the number of people complain about it in world.  While the economy is one of the reasons people have given up their sims, half or more of the people I know that have given up estates do so because they no longer feel they are getting the service they should when they spend hundreds or even thousands of RL dollars on tiers per month.  This latter group includes myself.

Another way to make a high profit is to offer things people want a lot cheaper make your profit on volume.  If this weren't a valid alternative. Wal-mart wouldn't be the largest and most profitable retailer in the world. 

Lower land prices will bring more landowners.  More landownership mean people spend more time here and more money on buying things for their land and their avis,  with LL getting a cut of the action through MP commissions and the Lindex as well as higher demand for land for stores.  More landowners mean more venues where people can go to enjoy themselves.  More enjoyment attracts more people to SL who will spend money on their avatars and eventually land.

---

That's simply not true at all...payment of Classified Adverts is done using Linden dollars....it's just another "sink" that extracts from the existing circulating money supply. The Lindex is controlled by balancing out sinks & sources.

Even the figures for Classifieds expenditure don't tally up if one directly converts it into USD.....one could total up the costs of  Top 200 classifieds (as a guideline) and divide it by 260...and you'll see it's nowhere near the $6 Mill usd p/mth made from Sim tiers. 

To but it into perspective $6 mill USD is like 1.6 Billion Lindens!!! ...Just by looking at the 1st few pages of expensive  Classifieds I can already see we're talking in millions as opposed to anything near to a Billion???.......i'd be surprised if Total Classifieds amounted to much more than 50 Million Lindens per week (or 200-250 Mill per mth)

Marketplace commissions are another "sink". Dartagan Shepherd extracted from Q3 Financials for MP total sales figure and applied 5% and divided by 260....it amounted to about 76000 USD p/mth total for commissions (did not account for Enhancement fees)......annualised it would be around $1 Mill USD at Q3 run-rate.......again it's not going to be anywhere near Sim tier incomes.

 

I use to be a believer of your analysis (even up to a year ago)..-> "Lower land prices will bring more landowners.  More landownership mean people spend more time here and more money on buying things for their land and their avis, "

I'm not so sure anymore, regarding SL general popularity or demand for it,  it's old Tech.....and most importantly the Platform won't scale.....ex-Linden employees have said as much! It would have to be done in a different way....SL is a mothership and to it would have smaller Grids connected to it (different login)....like Fantasy World, Vampire World, Gaming World, Gorean World  etc etc.....and connected via Interportability technology, which they started developing with the OS Grids a few years back.

 

 

 

[Qie Niangao]

I generally agree that they have no real choice but to ride this tier model as long as it still throws off enough profit to justify keeping the servers running, or until they find another cash cow to subsidize Second Life through a major change to get things growing again.  They can't afford the disruption in cash flow to make such changes now -- especially as they're relying on the Second Life revenues to bankroll development of new initiatives.

Meanwhile, however, they might be able to afford some minor tweaks.  I think, for example, they could double the "Premium Bonus" tier allotment to 1024sq.m.  It only (directly) affects Mainland ownership (where god knows they have plenty of idle capacity), and might be enough to get people the heck out of their Linden Homes and into proper land ownership, some of which would eventually convert to Estate rentals. As-is, there's a prohibitive barrier to graduating off those little prim-subsidized LH 512s.

The downside of doubling the premium bonus tier is that it would further encourage the making of many premium alts to donate their tier to land-owning groups.  If you run the numbers on annual membership cost net of stipend, even the current 512 premium bonus tier is, um, "advantageous."

They might also be able to smooth out the tier steps, but I'm not enough of a marketing quant to know whether that would really work for them, or if the current tier structure is actually more profitable.

[Ceka Cianci]

i haven't read the thread..but i would say land sitting there  empty not generating anything would be a good motivator to creating some profit..

they over extended themselves in the good times and now they are stuck is probably what the case is..

you can see it in the way they just keep adding this or that to it to try to get new users.. when before ..they were doing just fine with getting new users..

they should have been socking it away so they didn't have to pass such a high cost onto their bread and butter..

overhead'll kill ya especially when it's just sitting there doing nothing but eating..

kind of like breeding horses..

all they do is eat no matter if there is a good market or bad market..sometimes you just have to take a loss ..but hopefully the return in the future will cover what you lost..

thats business..over the long run you have  hopefully more gains than losses and end up being able to retire from it lol