Update, May 5th: As indicated by Pete Linden, the Lab’s Director of Communications, in the comments following this piece, the write of the the TCP project article appears to have got his wires crossed in reference to user-to-user transactions and the Lab’s revenue model for Sansar, which has in turn lead my speculations astray in the possible levels of commissions. I’ve now revised the piece to focus on the elements directly related to Ebbe’s comments on other revenue models under consideration.
One of the areas of interest with Project Sansar is how Linden Lab will generate revenue from the platform, given their intention to pivot strongly away from the and land model which has proven so constraining within Second Life.
During assorted presentations at the Virtual Worlds Best Practice in Education conferences, Lab Chat sessions, and in talking to the media, Ebbe Altberg has made it clear that one of the ways in which the Lab intend to more broadly generate revenue from Project Sansar is through a “sales tax” (commission) on the sale of goods and content within the platform.
While no specifics of the possible commission rate(s) has been given, the idea has caused some concern among original content creators as to how much such charges might be and how they’ll be applied. However, in order to be sustainable, Sansar will need other means of revenue generation, something which has caused some speculation in various circles as to what other means the Lab might use. The Lab itself has, until recently, been quiet on the matter. Then, on April 29th, two items caught my attention, offering as they do further hints on the Lab’s thinking.
The first came through a piece penned by D.J. Pangborn, and which appeared in the April 29th edition of The Creator Project (TCP). Entitled Peek Inside Second Life’s Virtual Reality Successor, ‘Project Sansar’, the article doesn’t really offer much that was new it terms of news about Project Sansar for those who have been tracking things, despite its title; but it does include a little snippet which caused my eyebrow to rise when I read it:
As for the monetization of experiences in Sansar, Linden Lab will collect most of their revenues from charging for virtual services, not from renting land. Altberg says they plan to take very little from the user-to-user economy.
The emphasis is mine, but I found these particular parts of the statement interesting for two reasons. The one on taking “very little” from the user-to-user economy suggests that the Lab are looking to keep any “sales tax” / commission on content sales to a minimum. (See the update note at the top of this article / Pete Linden’s comment below).
The idea of the Lab collecting revenues from charging for virtual services suggests they are considering an approach a little similar to that put forward by High Fidelity – revenue can be drawn from services associated with Project Sansar. Obviously, this would likely include fees for virtual currency handling a-la Second Life, but what else?
Speaking to Draxtor Despres for show #114 of The Drax Files Radio Hour, which also appeared on April 29th, the same day, Ebbe Altberg indicated some of the additional ways in which the Lab is thinking of raising revenue through Sansar, starting at the 19:30 mark into the recording. While no fees / percentages were given, the options under consideration (and there could well be more the Lab is thinking about) are defined as:
- Via fees associated with the resources used, e.g. paying for the experiences published through the platform people can visit
- Via a commission on in-world sales (currently for Second Life, the Lab only charges a direct commission for Marketplace sales)
- Through a series of subscription options for users / customers, possibly based on resource usage – capabilities used, size of inventories, hoe many experiences can be published, what kind of privacy controls are provided, etc.
The last idea is based on the view that in order to solve for specific requirements from certain customers, the Lab will likely have to develop very specific tools and capabilities – which those same customers would be willing to pay to access.
While the idea of paying for capabilities might not sit well with those of us using Second Life, given some of the markets the Lab appear to have in mind for Project Sansar, the idea actually isn’t too much of a stretch. Companies and organisations are often willing to pay a little extra for what they feel is a more “tailored” offering.
However, none of the above means that the Lab is abandoning the free-to-play approach entirely. As Ebbe states in the interview, “but at the same time, anyone should be able to come in for free and consume any experience any experience they have access to, whether it’s a private experience or a public experience, that someone has given them access right to. They should be able to come in for free and participate.”
It’ll certainly be interesting to see if / how these ideas develop, precisely what fees / percentages the Lab is considering on the sale of goods, , and what else might emerge as a possible option for revenue generation (price per instance of an experience, for example?).