Virtual Protest Threatens Linden Lab's Profitability

50 Comments

The denizens of Linden Lab’s virtual world Second Life are a passionate lot, so when the San Francisco company recently announced a steep purchase and maintenance fee increase on popular regions of their virtual land, sign-waving avatars were soon gathered outside Linden’s SL office, in protest. Some even set themselves on fire.

There have been protests like this throughout the world’s five-year history, but without a competing virtual world offering all the unique features of Second Life, angry customers have largely stayed put, despite their grumblings. Now, however, there is an increasingly viable alternative: OpenSim, an open-source platform for developing virtual worlds, that was, ironically, made possible after Linden Lab released its viewer code. Though still in beta mode, OpenSim has attracted developers with IBM (s IBM), Microsoft (s MSFT), and numerous startups, so it’s bound to rapidly improve.

Within 24 hours of the price hike announcement, more than 800 frustrated SL users, including influential members of the community, had registered with an attractive OpenSim variation. That might not seem like much, but Linden Lab is profitable primarily through virtual land sales, and less than 17 percent of its 507,000 active users are premium subscribers who can own SL real estate. (Economic stats here, SL reg. req.) That number has been slowly but steadily decreasing — there were 93,000 premium subscribers in December 2007, but in August 2008, the last published figure, less than 85,000. So if a few thousand of its land-owning users quit SL for OpenSim, accelerating this slide, the company will likely feel the pressure.

I contacted freshly minted Linden CEO Mark Kingdon for his comments about the protest. In a statement provided by his publicist, Kingdon told me, “We understand that this price adjustment will affect businesses and other projects of some our Second Life Residents,” and emphasized the cost increases were only directed at select landowners, who have until January 2009 to adjust themselves to the new rates. “To be clear,” Kingdon continued, “this price adjustment affects only a portion of land in Second Life; it does not apply to private islands or regular mainland property. We made this change to ensure an optimal Second Life experience for all Residents.”

That may be, but anger over this increase (which many consider unfair) and concern over future price hikes have become added incentives for users to consider OpenSim grids that charge less for virtual land. Second Life does retain a lot of goodwill among its supporters (including me), which will dampen any calls for a general exodus. Still, one thing remains clear: “I’m moving to OpenSim!” has already become the metaverse version of the “I’m moving to Canada!” threat we hear every U.S. Presidential election.

50 Comments

MoxZ

The difference between those who say they’re moving to Canada and those who say they’re moving to a different grid is that to move to Canada, it cost a lot of money, but to move to another grid, we save a lot of money.

Screw you LL! and your little dog too!

Lynna Lebed

I’m rather shocked about Mark’s statement. He has the stats all wrong! There’s more than just a few of us that are being affected by this price increase. Many of the Estate owners also own these Open space sims. From what the forum writer are saying, they (we) are merely dumping the Open Space sims, but also the Estates and the talk is that these same people are moving to other virtual worlds despite the start up fee losses. Nearly 4000 people (4000 who own numerous Regions)so far have voted against Linden Lab’s increased prices and many more have seriously considered whether staying in Second Life is financially beneficial. Wake up Mark. The clock is ticking and you are affecting much more than just a ‘few’ customers.

MarkTwain White

Thank you for your report on the SL Regressive Tax on Open Space Sims.

We welcome you to view the live video of a large very photogenic PROTEST event in the original open space sims (the type of sims that will likely go away if Linden Lab’s announced policy stands).

Tomorrow morning at 10AM Pacific there will be a large PROTEST REGATTA starting from the four open space sims which were the first such sims created in Second Life (Santa Barbara,Santa Cruz, Santa Rosa, and Santa Catalina sims).

Surrounding Hollywood sim and Starboards Yacht Club these sims will host a PROTEST REGATTA which will be webcast live on the SLCN.TV network (http://slcn.tv). Boats from various SL communities (such as the very popular sailing and pirate role-playing communities) will participate.

The race course will take the protesting fleet through more than 20 open space sims, each of whose very existence is threated by the Linden Lab policy announcement.

Maggie Darwin

Ordinal–

“Increasing prices will make people who wish to continue paying reduce usage?”

Of course not. It will make people who do not wish to pay more reduce usage. OpenSpaces sims may not be an insignificant fraction of the land area. But they may well be an insignificant fraction of Linden research’s profit.

Especially if they are not actually–on the whole–profitable.

me

People don’t understand Lindens business model. That is why I left for the most part the last time they messed everything up. My recommendation is to abandon paying for SL and just use their bandwidth and service for meeting up if you want to stay in SL. I have an opensim grid. It’s not ready for serious builders and scripters.

In all reality, that was another reason to leave SL in the first place. Too many people thinking they are going to make a buck in SL. Only the scammers can make anything and it starts with the head scammer Linden. When they advertise “OWN VIRTUAL LAND” and then you basically purchase the server, remove the advertisement off the front page, and change their TOS as they do to hide their tracks… They should be called as it’s seen. If it’s produced this way by the Company, then what are you thinking you will see from the people? You cannot give something you don’t have control over and no one in SL has any control whatsoever over ANYTHING.

That’s my opinion.

Virtual World 3D

It is a complete outrage towards your clients to increase pricing with such a high % ratio. Linden really goes way out of line by forcing such a large upgrade fee to their clients by increasing their tier fees with 67%. I’m sure we will see a blog post by CEO M Linden telling how much money that Linden Lab is making like he did a few months back.

I also remember reading the blog where a Linden stated that technology got cheaper and because of this they were lowering the purchase price for sims from 1675 USD to 1000 USD a while ago. I’m wondering if technology just became hugely more expensive again.

The only thing that I see is Linden using very agressive tactics to rake in an extra 10 million USD per year from their client base. Second Life isn’t growing anymore, it stagnates, to keep investors happy they have to generate more income otherwise their investors will back out or demand changes at the top. The technique Linden used now might work short term but will have huge impact on their profit margins in the future as people won’t forget how they got scammed by the platform Second Life. It’s a good thing more new virtual worlds are coming online as we speak to that people will have an alternative to Second Life and will not be forced anymore to just swallow these rediculous price increases by Linden who had a monopoly the past few years.

Bettina Tizzy

Blogger doesn’t do trackbacks, but here’s a post I did yesterday that was inspired by yours, James, wherein I inform Mark Kingdon that Linden Lab owes me $950US now.

Mark Kingdon: Come down, come down from your Ivory Tower and listen to your Residents: A dose of perspective

Ari Blackthorneâ„¢

I’ll be the bad guy. I’ll take all the flame posts and be your sacrificial barbecue at the stake:

http://sociallymundane.com/2008/10/openspaces-communication-opened-again.html

I don’t like it any better than anyone else.
I hate that Linden does this.
But – in a BUSINESS SENSE, it’s pure genius.

No, I am not referring to PR-wise. But that problem will blow-over quickly because people have short memories. Remember the KinderPorn hoopla? The Gambling-Ban-fiasco? All those other reasons for people to scream in shrill voices?

I am not saying they (the screamers) are wrong or without merit.
What I /am/ saying is this: what can you do about it?

The smart thing to do is simple: we have 60-days to choose. So, use that sixty days to first discover is you will be able to raise the funding to maintain the Openspace sim. if not, decide how much into the hole you are willing to go.

If that’s a no-go, sit and wait to see if Linden Lab adjusts these price changes in a way that is more digestible or most people, say for example and ranked system or a “use-tier’ rate based on how your OS sim is used.

Then finally, when the time to pay the new tier fee is near, if all else fails then – and only then – submit your ticket of abandonment. You, we, all who own OS sims (or rather, lease) don’t have to act in such a knee-jerk way. if you are shrill about it, who will listen to you other than those in your camp?

but if you are calm and collected and reenforce your argument, instead of raising your voice, you are more likely to open a real dialog and possible actual results may come of it.

As for all of you “threatening” to bail to OpenSim grids: good riddance. take your dramafest with you. And when you go, you also take with you competition, drama, and bandwidth. In short, you make the grid better for those of us with a calm and collected mind.

A more stable grid, less competition in business (whatever that business might be) and less nonsense drama for a more peaceful existence. Unfortunately, 99% of the “I’m done with SL” crowd are all bark and no bite. Just like all those whom have made that same threat day-in and day-out throughout Second Life’s history and you know a few already.

Either they just can’t leave, or they leave and return, or the find some ‘positive’ reason that ‘placates’ them into returning or they create more alts.

I have had accounts on six or seven OpenSim grids. They are Second Life back in 2004. the reason people stay with second Life even through these infuriating scenarios is simple: Second Life is /established/. And so are you. Both financially and through “sweat equity.”

So my suggestion is simply: stop the rhetoric, calm down, put your thinking caps on and let’s open a civilized, calm, progressive dialog with linden lab – and not as much with Jack linden, but rather to the top-shop: Robin and “M” linden.

shit. I should have just made all this a post on my own blog LOL
meh, think I will.

Dana Bergson

The “portion of SL” M is mentioning so casually is more than a third of SLs “land mass” …

@RaR and I think it is utterly naive to expect more earnings in the ballpark of 700,000. What will happen if this goes through is, that many of the owners of Open Spaces will simply give up their regions. You, me, some other of the bigger real estate operations, some RL backed projects, we might be able to weather this storm but I see a lot of our competitors giving up as well as some “little guys” who own just 1 or two regions (which is technically impossible but a practical reality) simply leaving SL in anger.

I would not be surprised if SL had to face LOWER earnings in the first months … and what will happen then. I don’t know.

Currently, I don’t see OpenSim as a viable alternative. It’s just not a product that most of our customers would accept. But this will change sometime in 2009. So …. This could be the beginning of the end of Second Life’s dominant position in the open Metaverse. King Philip might say cheerfully smiling “but this is exactly what I wanted!” I doubt if Linden Lab’s other investors will look at it just as relaxed …

Please check Otherland’s official position on the topic here: http://otherland.blogs.com/group/2008/10/linden-lab-revamps-pricing-for-openspaces-insults-residents.html?cid=137152713#comments

rightasrain

We took a swipe at some estimates for the pay-off that Linden might be thinking about as a result of the “jack-it-up” strategy (cross posted from our blog http://rezzable.com/blog/rightasrain-rimbaud/linden-ceo-price-change-needed-optimal-second-life-experience#comment-1601 ):

So what is the pay-off that Linden is looking for as a result of all of this “immersive workspace” guided strategy? Considering they are “saying” they will charge everyone (I would like to see the invoice to ACS actually) including academic users who already have sweet-deals and old-time sim owners who basically pay $25/month for a void, it looks their opportunity top end is 13,000 x 50 = $USD650,000 maybe $USD700,000 per month. But that really won’t possibly happen as people either 1) abandon their sim 2) consolidate 4 voids back into 1 full at $295/month = no uplift for LL. So maybe there is $200,000 monthly on the table for them–plus whatever new voids are sold (but what landowner is gonna suck up the new terms–and pls if you are pls call me first as I can make a great deal on the London Bridge for you–we here in London and I know people who know people).

So all of this mess to gain $USD 2.4 million in 2009? What is all the global bad PR gonna costs? But what all the people that are going to dump their full sims as a result of this? We will drop sims (not all of them as we still want to maintain our brands and connection with the SL community). We will drop sims, not directly as a result of this “jack-it-up” crisis, but because this point in time is were we have finally lost faith that Linden Lab will ever be a professional organization. Meet the new boss…same as the old boss.

Aminom

Completely biased article. There is no mention that the protest movement is the largest such movement Second Life has ever seen so far, breaking records in group size, JIRA (bug reporting system) voting against this policy, and with massive protests all over the grid. Nearly every user of SL is angry at this. Thousands upon thousands of users are involved; this isn’t a small number of users complaining.

Even the title “Virtual Protest Threatens Linden Lab’s Profitability” shows spin. It is this irrational new policy which threatens profitability; if instated, the damage caused by people leaving, and in lost customer confidence and trust, will far exceed any profit gains.

Drwyndwn Tyne

“To be clear,” Kingdon continued, “this price adjustment affects only a portion of land in Second Life; it does not apply to private islands or regular mainland property. We made this change to ensure an optimal Second Life experience for all Residents.”

This “portion” of Second Life is some tens of thousands of Open Space sims — and they are all private islands. It is not some insignificant number. The people involved have lodged close to 3000 comments on the forum set up to respond to this — and 90% or so are outraged. A protest group was formed in-world and now has over 2000 members. That’s in two days. The JIRA post (http://jira.secondlife.com/browse/MISC-1776) has, at this writing, 3504 votes. The next most voted for JIRA has 405. This is hardly some small portion of Second Life.

Next, exactly how does M think this is going to ensure an “optimal Second Life experience for all Residents.”? By eliminating a significant proportion of its userbase? Many people are right now closing up shop and going home.

Especially in the economic environment, this seems to me to be a very poor business decision taken, not to improve an experience as much to improve an income statement. I suspect it will have the opposite effect.

Bettina Tizzy

No idea what you are talking about, TIGGS. Are you suggesting that this was caused by Openspaces? Or? Do tell us more and how it relates to this story.

Lol, Dirk, I’ve got a nice tall glass of ice-blue raspberry koolaid waiting for you. Step AWAY from SL and come with us!

TIGGS Beaumont

Was anything mentioned about a resource bleed? Was anything mentioned about the “cache” bleed situation? Did they explain at all about anything in regards to the, I believe Sept. Band aid fix LL introduced to stop the crashing causing the rendering flood, or the rendering back ups? Now mind you these are not questions using computer technology, but simple lay terms. My understanding is a fix introduced in Sept to correct an update bug, (a patch as it were) created an issue that crept in slowly to the system. The fix created a slow bleed (my term) of resources to reduce cache loads, that were causing crashes?……..and then it apparently began to accumulate world wide with each avatar in world affected simultaneously.(since it was the fix LL itself introduced worldwide) If an avatar stood stock still and loaded all about in a low prim area it was fine, but if a few more joined the loading (rendering slowed to a near crawl pace, at different speeds of course, depending on the computer system one was on) and each time you moved your line of vision the process would go back to square one. This would be happening to every avatar in world at the same time, creating a massive draw on the resource servers and the subsequent heavy load issue on servers. Several avatars in world tested this, sent data to LL and apparently it was the actual issue causing the lag and overload of the servers.
Was any of this explained by jack Linden? Was any of it mentioned by any technician there for the Linden labs?

dirktalamasca

Ohh Bettina.. I like ya this way. I knew you’d spill your Kool-Aid eventually.

JeremyUS

At this point I would like to advise all Second Life users to do what I did for a full couple of hours this afternoon: take a pen and a paper, go to Edit Appearance, then hand-write all the codes corresponding to your avatar’s shape, hair, eyes and skin.

This way if LL go South you won’t be left “avatar-less” and can re-create it in one of the other virtual worlds using the same codes (OpenLife for instance)

Ciaran Laval

Has anyone told him how big a portion of the land mass openspaces represent? I think he’s missing a very important point here, especially as he himself was talking about how much land there is not long ago.

Bettina Tizzy

Content creators, unite! Join me in exploring new virtual worlds. Together we can identify, support, and MAKE OUR WORLD, OUR DREAMS. Let’s face it.. without great content creators, SL is not much more than a lame laggy social space. We’ve got the POWAHH!

And to those who don’t own Openspace sims, just you wait… I’m sure LL will screw you soon in some new and delicious way, maybe even to the tune of a 65% increase 9 months after a product introduction.

@matt, yes, I do find self-immolation over this to be a waste of time. Best to get cracking as we have work to do…

Ordinal Malaprop

Oh dear. He really has missed the point. Phrases such as “We made this change to ensure an optimal Second Life experience for all Residents” are clearly just fluff – so, increasing prices will make people who wish to continue paying reduce usage? Of course it will not. What is more, everybody knows this.

rightasrain

So…maybe someone will crack the truth from Linden Labs about just how many of the 31,000 regions Kingdon claims SL now has ( http://rezzable.com/blog/rightasrain-rimbaud/vw-conf-kingdon-speaks ) are voids sims. How many of these have been sold in the last 5 months since he has been on watch? How many of the education market sims will have their prices go up? If it is not a lot–then there is not a lot to be gained in this “bait and switch” move. So if there is not a lot to be gained…why flame out the SL community?

And for how long did they know they were going to raise the price? And will they refund sales to customers?

Trickly Suisan

I moved to Canada three years ago, and now I have moved to OpenLife. The best two moves I have ever made in my life.

matt

Is it just me or is it somewhat petty to set yourself on fire in a virtual world in response to a price hike? I mean seriously, that somewhat mocks the inspiration for that action don’t you think? But, I guess I’ve never seen the love for SL. It feels like a modern version of IRC to me — clickish, juvenile, a place for people to go who don’t really have a place to go in the physical world, etc.

My 2 cents.

-matt

Seven Shikami

“To be clear,” Kingdon continued, “this price adjustment affects only a portion of land in Second Life; it does not apply to private islands or regular mainland property. We made this change to ensure an optimal Second Life experience for all Residents.”

Uh… people aren’t upset because they think NORMAL sims are being priceboosted. It’s not like we were desperately seeking clarification on that point. Why is this misdirected response the only communication we’ve had?

Unless he means “We’re only raising prices on people who abused OpenSpaces, not on all OpenSpaces in general including the folks who used them properly”, which I highly doubt, this is kind of a let-them-eat-cake line.

CyFishy Traveler

Still, one thing remains clear: “I’m moving to OpenSim!” has already become the metaverse version of the “I’m moving to Canada!” threat we hear every U.S. Presidential election.

*snerk!*

I think I may borrow that line.

Comments are closed.