Thoughts on Second Life fees, tier and revenue

via: thebluediamondgallery.com

Monday, December 2nd saw the introduction of the new Marketplace (MP) commission fee of 10%, as announced in the Lab’s November 21st blog post The Return of Last Names and Changes to Marketplace, Events & Premium.

The announcement of the fee change unsurprisingly caused some upset, with a couple of forum threads popping-up on the subject (see: MP fees raising to 10% per sale. Thoughts? and Second Life® is still a world of opportunities). Various points are raised in both threads, some fair, some perhaps not-so-fair. While I’m the first to note that I’m not in any way, shape or size a “merchant” or “commercial creator” in SL I thought I’d try to step back and try to take a broader look at fees and tier, etc., in general.

The first point to note is that in making the claim that the increase to the MP transaction fees still leaves them “significantly lower than most digital content commissions across the industry” while citing Apple and Google as examples, the Lab did so with a certain amount of spin.

The 30% charged by Apple, for example, incorporates payment clearing, fraud, indemnity, insurance, and dunning; local tax law enforcement & reporting; service provisioning and distribution, etc. Due to the nature of Second Life these fees are incurred separately to the MP – but they are still incurred by many merchants using the MP, and when taken into consideration, they amount to somewhat more than 10%, a point Cat Hunter makes in this comment.

Also in their blog post, the Lab note that that fee change is to help offset costs incurred at the Lab due to investing in new Marketplace features and improvements. This is fair enough; however, given that the first of these changes is apparently within weeks of being deployed (improved MP search filtering), it might have been an idea to perhaps to wait until these changes had been introduced  before announcing the fee increase – and then to champion them alongside the improvements that have been made over the last 12-18 months, such as the much-requested Store Manager capability and the notifications and redelivery capabilities and wishlists and favourites¹.

However, there is a more intrinsic reason for fee increases – be they with transaction fees or anything else (such as the recent increases in Premium subscriptions), and it is one the Lab perhaps doesn’t communicate clearly: and that’s trying to reduce virtual land tier.

While tier has contributed to the loss of regions in SL, including places such as Venexia (above) and its sister region, Goatswood, lowering it without increasing fees elsewhere would always hurt Linden Lab more than help users

This is something that users have (rightly or wrongly – there are actually arguments on both sides of the coin) been demanding for at least the last decade. And since the start 2018, Linden Lab’s CEO, Ebbe Altberg, has repeatedly stated the company would like to reduce land tier – but would only be able to do so if the resultant loss of revenue the company would suffer as a result could be compensated for through other means².

In fact, the Lab have taken steps to reduce tier: in 2016 there was the private region buy-down offer³ (the interim boost to LL’s revenue as a result of the fees payable likely long since having passed), and in July 2018 reduced private region tier from US $295 to US $249 for Full regions (that now stand at US $229), and Homesteads from US $125 to US $1094.

While it is hard to accurately quantify, given the various factors involved (e.g number of grandfathered, skill and educational regions, the more recent slight increases in region count, etc.), it is – with the help of Tyche Shepherd’s Grid Survey and the Internet Wayback machine – possible to reasonably (conservatively?) estimate the impact of the July 2018 tier reductions at around a LS $300,000 a month fall in the Lab’s land revenue. This may not sound a lot – but it is something LL would likely want to recoup – and it can only be done through increases in other fees, as Altberg noted in his comments on the matter.

This should not be taken to mean the transaction fee is wholly associated with compensating for the tier reduction, but it’s not unreasonable to assume it might nevertheless help, either now or in the future. More to the point, and regardless of where the revenue from the MP fee increase is used, it wouldn’t hurt for the Lab to remind people of the strategy to pivot revenue away from land tier and to other options when making similar fee adjustments elsewhere (or indeed, the introduction of new fees, even it they may also help offset the cost of implementing new options and capabilities).

There are two final points that come to mind when looking at the MP transaction fee change. The first is that of all the fee changes thus far introduced, it is the one that merchants can most directly compensate for, as some in the forum threads have noted. Merchants can raise their MP prices, for example, whilst keeping their in-world prices lower (which is allowed5); or those with in-world stores might focus more on sales through that channel, with associated group advertising.

The second point comes back to the timing of the announcement. It would seem that the increase has been made so that the Lab can benefit from the likely increase in MP sales during the run-up, and indeed over, the holiday season. There’s nothing wrong with this per se; but given the increase has likely been on the cards for a while, it would have perhaps have been preferable had LL given more of a lead time on its implementation so allow merchants more time to prepare for it, and so help them in compensating in what might come across as a reduction in their own ability to generate revenue through the same holiday period.

Related Links

  1. See:
  2. See (all with audio comments by Ebbe Altberg):
  3. Lab: get grandfathered tier in 6-month buy-down offer (April 2016).
  4. Linden Lab announces major SL private region pricing restructure (June 2018) and Looking at the new private region and L$ fees (July 2018).
  5. Web Team Springs some Deploys on you, April 2018.

Get more from the space you have via Mangrovejane’s video tutorial

via Mangrovejane

Blogger and vlogger Mangrovejane (Groves to her friends) has produced a nifty little video tutorial on using Second Life scene rezzers to help give a feeling of greater space in Second Life by allowing you to quickly and easily change the layout of one or more rooms (or even an entire house) without having to manually swap everything from inventory.

Scene rezzers are not new to SL – they’re pretty much as old as the hills (and again, just for clarity, I’m not referring to temp rezzers here – they are a nasty no-no); however, it is surprising how many people haven’t actually come across them – so Infinite Space: Making Your Second Life Land Work for You is liable to be a welcome eye-opener for many. At 17.25 minutes, it is informative and provides all the essential information on what’s required as well as clear and concise instructions on using the rezzer systems she opted to use (the RF Scene Rezzer and the Optimus Multi Rezzer).

I’ve long been an advocate of using rezzing systems (I save every design of out island home to one, allowing use to easily swap between houses / landscapes if we wish), and have blogged on the subject a couple of times in these pages:

In her video, Groves also discusses the use of the Curio Obscura Anywhere Door by Pandora Wrigglesworth, something I’ve used to create doorways in pre-built structures where doors don’t exist, rather than a TP system as we usually look upon them (see Still messing about in (house)boats in Second Life for example), and can again recommend.

Groves is planning a follow-up article to the video on her on her blog in due course, but in the meantime, I’m embedding her video below for those who haven’t seen and who don’t feel like reading my articles on the subject 🙂 . You can also check out more of her videos via her YouTube channel.

 

Lab takes an end-of-year look at Second Life

On Wednesday, December 19th, Linden Lab offered a look back at 2018 and something of a look ahead to 2019. There’s actually been a lot going on, although it is surprising to note that some of the bigger deliveries / anticipated deliveries actually first started to surface in 2017, when I reviewed / previewed them.

I’ll be taking a look through the major changes to Second Life myself in an upcoming blog post, so won’t delve too deeply into things here.

Unsurprisingly, Animesh is featured front-and-centre for the year’s delivery – although it’ll be early 2019 before we really start to see the impact this project has on the grid as a whole; many creators have yet to really embrace it, although there were certainly a lot of creative ideas put forward at the Content Creation User Group meetings.

The Lab’s post also focuses on the changes made to land pricing in SL – arguably the biggest set of changes in 2018. It’s fair to say  that overall, the response to changes both Mainland and Private regions has been positive. In fact, it could be one – and I emphasise one, because there are others – of the reasons people might be spending less: with limited disposal income, people may have diverted some of their Second life spending away from buying things and into premium memberships and  / or land.

For me, the big projects through 2018 and 2019 have been, and remain, the Environmental Enhancement Project (EEP) and the attempt to move Second Life to the cloud. The latter is hard to judge, as it is very much a behind-the-scenes move that has yet to really have an impact on the user-facing side of the platform. however, I fully expect we’ll be hearing more about it in 2019.

EEP, on the other hand, is something I think will help revolutionise the look of Second Life – even if not quite to the extent some may hope. As such, I’m actually more excited about this than Animesh (and have had great fun playing with EEP whilst it has been in beta testing).

In particular, it will finally bring environment control down to the parcel level, as well as allowing different environment settings at different altitudes. These two capabilities have, until EEP, been dependent on purely viewer-side support and limited to the use of the likes of Firestorm. With these capabilities now moving server-side, everyone gets to benefit from them, regardless of the viewer they’re using, and region / parcel holders finally get the opportunity to have users see their regions and locations as they desire (allow for people retaining the ability to override, viewer-side), and without having to request they change their viewer settings manually, or having to worry about whether or not the windlight they are using is generally available.

Again, EEP won’t be appearing fully until 2019, but the Lab’s blog post includes a nice little preview video by Silas Merlin that I’m taking the liberty of reproducing here.

For me, the most interesting part of the Lab’s blog post comes at the end, starting with a chart showing average concurrency over the last two years. It shows levels to be relatively stable.

Of course, there might be a temptation to offer contrasts between this chart and others that report more in the way of averages over shorter periods – such as those found on the Firestorm log-in screen or via infographics such as those shown on Tateru Nino’s stats pages (which appear to be recording again after having problems earlier in the year). However, given there is no actual benchmark for the Lab’s chart, such comparisons would be somewhat off-base; the chart isn’t designed to show averages or daily high-lows. It simply shows a 730-day period in which the peak daily log-ins (I would assume) have remained pretty constant, despite all the claims of falling numbers.

The Lab’s two-year concurrency chart

The flipside of this of course, is that equally, it’s hard to really judge such a broad trend like as this, simply because it is likely taken from one data point, be it peak daily log-ins or something else. For example: if it is tracking just peak log-ins, what were the daily minimums? How long per day were the peak periods? have there been any changes in this over the two years?

A more interesting stat is that for the amount of USD cashed-out. Put at $65 million, this is only $2 million less than that quoted for 2017, and still above the US $60 million for 2016. As such, it stands at odds with claims that the Second Life economy has been in some kind of slump during at least the second half of 2018, suggesting that things have been relatively stable overall. Which is not to say that some merchants haven’t seen a downturn in sales; but these could be the result of people shifting their spending habits more that not spending their money – see my comment re land, above.

The final two listings on the Marketplace and the Destination Guide make for interesting reading, but little more – although the fact that men’s apparel comes in 10th on the Marketplace  while women’s comes in second might be an interesting topic to plumb. Is it simply because there are fewer creators focusing on menswear, or is it a combination of fewer creators and male Second Life users perhaps being less driven by the demands of fashion?

As noted, I’ll have more on the technical and other updates to Second Life in an upcoming article, and for now will leave you to read the Lab’s summation in peace 🙂 .

Ebbe and Oz talk Second Life in the cloud

Credit: Linden Lab / Amazon Web Services Inc.

It’s a huge effort. Right now the Second Life grid is a proprietary set-up in a hosting facility that we have customised for the purposes of what we’re doing – which made sense a decade and half ago. But these days, with the services from Google and Amazon and Microsoft with cloud infrastructures, it makes a lot of sense to shift our technologies to be on top of those cloud infrastructures instead of having our own.

Ebbe Altberg, VWPBE, March 15th, 2018.

That the Lab is working on moving Second Life to the cloud is becoming more and more widely known. First mentioned by Landon Linden (aka, Landon McDowell, the Lab’s Chief Product Officer) during his SL14B Meet the Lindens session, it was “officially” announced in August 2017 via a blog post.

Landon Linden, June 2017, talking about the Lab’s hope to move Second Life services to the cloud.

It’s a long-term project, which will extend well into 2019 (at least), building on a relationship with Amazon dating back to 2008, and which today both Blocksworld and Sansar (see: “Project Sansar”: an Amazon ECS case study), from which the Lab hope to gain a range of benefits, including – in time – perhaps the opportunity to offer a broader range of products at more comfortable (for users) price points.

There are some significant technology challenges the Lab faces with the move. However, progress is being made. Some non-user visible services are already running in the cloud, and more recently, the Lab has started preliminary testing with cloud-based simulators – although they are fair from ready for users to access, as Oz Linden outlined at the March 16th TPV Developer meeting:

We have actually run experimental regions on cloud servers, and it worked. There were some functional limitations that we have to do a lot of work to solve before we could begin to do regions that ordinary users can get to … It’s something we’re pursuing as aggressively as we can [but] I’m not even sure we have a sufficiently comprehensive view of the problems … some of them will only become apparent as we actually put things into production.

Oz Linden, TPVD meeting, March 16th, 2018 – full audio below.

Oz Linden, March 16th, 2018, talking about progress to date, and how things are likely to progress.

For the Lab, the benefits of the move to the cloud include things like a reduction in their capital expenditure  – no need to maintain their own dedicated hardware (or continuously update / replace it) within a dedicated operating environment. It also means they can more dynamically scale consumption according to needs – this could be beneficial for a number of the back-end systems within Second Life.

It turns it into less capital expenditure to have to buy all the equipment and doing all the maintenance on that. You kind-of pay for what you use; with Second Life [right now], once we’ve bought a piece of hardware, we have to sit on it whether it’s being utilised or not, whereas you can kind-of dynamically scale your consumption as necessary when you use something like AWS … which we believe will reduce costs for use and then ultimately, we hope to pass that on to customers.

Ebbe Altberg, VWBPE, March 15th 2018.

Once the transition has been completed and the Lab has had time to evaluate things, the move might allow them to offer a more varied land product – something again touched upon in Ebbe Altberg’s 2018 VWBPE address, and allow them to more extensively “re-balance” the revenue model – something that is also an ongoing project at the Lab.

We’re really thinking hard about the economic model of Second Life. We share a belief inside the Lab that land is quite expensive. so we’re constantly looking at ways to lower land prices and find other ways to find revenues. So I think you will see us try to shift from what I would say [are] high real estate taxes to more consumption taxes or fees to create an environment where it’s easy for people to create and own experiences, and we [the Lab] participate more in all the transactions that take place.

Ebbe Altberg, VWBPE, March 15th, 2018.

Given that land tier provides the lion’s share of the Lab’s revenue, this re-balancing is far from easy to say nothing of the potential for user outcry at any fee increases). Ergo, having better means to lower fees such as through reduced operating costs and a broader spread of more “affordable” products could – depending on the time frames involved – go a long way towards helping the Lab achieving that re-balancing goal.

So what might the move to the cloud mean for users? That’s hard to quantify at the moment, simply because the project has so far to go.However, some hints at what might happen have been offered.

For one thing – and on the subject of different land products – it might allow the Lab to offer two broad categories of region / server type; I’ll call them “always on” and “on demand”.

  • “Always on” would be simulators running 24/7 as with SL at present. These would be ideal for handling Mainland, large open spaces like Blake Sea and the larger, contiguous private estates. Such regions might have a similar type of fixed-fee tier cost associated with them as we have today (although not necessarily the same price points).
  • “On demand” would be simulators that are only active (and charged for) when in active use. When devoid of avatars, they are saved to disk and spun down. These types of region could be ideal for special events, or for private business / residential regions which don’t have any surrounding regions, and would only be charged for when avatars are present; once the last avatar leaves, following an appropriate pause, the region is saved, and the instance spun-down.

Such an approach has been alluded to by Ebbe Altberg:

Some experiences might want to have continuous persistence over time, and maybe that’s one type of pricing model, for an “always on” type of scenario. Maybe other will be fine with, “hey, I’m only using this for a few hours in a class a few times a week” or something. and if that can spin-up in a few seconds, and then I just need to basically pay for the time that I’m utilising it. Those could be potential options for us to explore.

Ebbe Altberg, VWBPE, March 15th, 2018.

Land offerings could be broadened in other ways. Again, as Ebbe Altberg indicated at VWBPE 2018, there might be high-performance, high-capacity, “upper tier” servers available for those needing them for specific uses (e.g. events need high concurrency levels or similar), sitting alongside more moderate, lower-cost servers for things like residential use.

More intriguingly, cloud hosting might even allow the Lab to more readily geo-locate simulators / regions with their physical world audience. Such regions wouldn’t necessarily have to be grouped together in-world, they are simply located a lot close to the user base that most frequently uses them, potentially improving performance for that audience.

Today we are located in the US, which means that people from Australia or Asia or Europe have to travel quite a ways, which is hundreds of extra milliseconds of latency. So if you want to have a very dedicated community in Australia or somewhere, we could maybe start to distribute our server infrastructure to be closer to where the actual customers of those regions are, which would make things more performant.

Ebbe Altberg, VWBPE, 15th, March 2018.

There will be more to come on SL and the cloud and the Lab provide further updates as the work progresses, and I’ll hopefully report on them as they are made public. In the meantime, and for those who haven’t waded all the way through the VWBPE 2018 video with Ebbe Altberg (and Brett Linden), or who don’t want to read either my transcript of that event or the bullet-point summary, here’s the audio of Ebbe’s comments on SL and the cloud:

Linden Lab: images, logos and IP

Image via lawdonut.co.uk

Update, December 14th, 10:07 UT: Linden Lab has issued an apology on the specific situation involving Strawberry. Included in the blog post is a broader statement concerning the use of their trademarks and the guidelines thereto, and how the Lab will be revising things somewhat for the future. 

The apology and statement are both welcome (not the least by Berry herself!), and kudos is offered to the Lab for openly admitting the error both reasonably quickly and positively.

 

As I was heading for bed last night, I caught a blog post by Strawberry Singh concerning  a trademark complaint she has received from Linden Lab.

Specifically, Berry was informed that a video tutorial she had produced a year ago had been found to be in violation of the Lab’s Trademark Guidelines. These guideline specify how terms like Second Life®, Blocksworld®, SL™ , InSL™, and the eye-in-hand logo might be used.

The guidelines are reasonably clear, and even include a point that journalists and media outlets have special permission to use these marks in articles, vis:

License for Press Use of the Second Life Eye-in-Hand Logo. We’ve given journalists and media outlets special permission to use the Second Life Eye-in-Hand Logo in published articles, blog entries, and news programs specifically about the Second Life virtual world, subject to our Guidelines and Terms and Conditions

Berry, as a blogger / vlogger, thought she was in compliance with the above requirement. The replies she’s had from the Lab – both through Tia Linden, the Lab’s IP Specialist, and other Lab personnel indicate this is not the case.

One possible way of looking at this issue – and according Linden Lab due fairness in their possible concerns – is that YouTube is a platform with a reach that goes well beyond that of a Second Life audience. As such there could be concerns about the use of the various logos and trademarks, etc., being seen as some form of “official” production  – or, were they to be used with other content related to Second Life – as an implied “endorsement” of products, activities, etc. However, were this the case, the matter could perhaps have been dealt with through a request for a suitable disclaimer to the start / end of the video and to its YouTube description.

Admittedly, this doesn’t cover concerns around licensing / monetisation which some might see as being a possible cause behind the notice being issued. But then, this doesn’t appear to be the Lab’s primary concern. Rather, as indicated in Tia’s e-mail – and underscored by the updates Berry has provided since I first read and responded to her post – is over the use of images from specific Second Life web properties and the use of a logo which had – according to the trademark guideline quoted above – previously been allowed. To quote from Tia’s e-mail response to Berry:

More specifically, we do not allow images of our avatar building page, home pages or Second Life Eye In Hand Logo to be used in any capacity. Please do not use images of any Second Life web pages or logos ( with the exception of our inSL logo noted at http://secondlife.com/corporate/brand/insl/#) in your video or any other work. You may provide a link to our website or registration page in your video if you wish.

Note the bold emphasis is mine, to underscore the specific issue: the statement that certain images and logos now cannot be use in any capacity.

If this is now the case, it is worrying for many of us who routinely blog about Second Life and have used such images and logos. I  have, for example, used the eye-in-hand logo in what I have believed to be in accordance with the trademark and branding requirements. Where do we now stand if we are now seeing a shift in position from Linden Lab? Are we now in violation of a new prohibition on image use? Are the various guidelines on trademark and brand use about to be revised? If so, how do such chances sit with conception such as Fair Use?

Of course it could come down to poor wording within an e-mail, and the underpinning reasons for the notice don’t extend beyond the one specific video. But if this is the case, then we should still be given further clarification on the use of images and logos.

I’ve written to Linden Lab raising these broader questions on the use of logos and images. Hopefully, I’ll receive a reply and will follow-up with a post should this be the case.

Our Digital Selves: living within a virtualised world

Coming to a screen near you in 2018  – and not to be missed. Via: Draxtor Despres

In 2016 I wrote about the work of Tom Boellstorff and Donna Z Davis (respectively Tom Bukowski  and Tredi Felisimo in Second Life). Since 2015 Donna – a strategic communications professor at the University of Oregon specialising in mass media & society, public relations, strategic communication, virtual environments and digital ethnography – and Tom –  a professor of anthropology at the University of California, Irvine – have been engaged in a National Science Foundation funded study formally entitled  Virtual Worlds, Disability, and New Cultures of the Embodied Selfand more informally referred to as Our Digital Selves.

Their work, which will continue through into 2018, focuses on the experiences of people with disabilities – visible and invisible – who are using immersive virtual spaces to represent themselves, possibly free of the shadow of any disability, engage with others and do things they may not be able to do in the physical world.

Donna Z Davis and Tom Boellstorff (Tredi Felisimo and Tom Bukowski in Second Life), co-researchers in Virtual Worlds, Disability, and New Cultures of the Embodied Self, supported by the University of California, Irvine; the University of Oregon; and the National Science Foundation.

The work encompasses many aspects – physical, mental, technical, for example – of occupying both a physical space and a digital environment when living with both visible and invisible disabilities – the benefits that can be enjoyed, together with the potential risks / fears. Some of these aspects, particularly the more positive, are perhaps familiar to us: the power of being defined by who we are as a person, rather than in terms of a disability; the freedom presented by the ability to embody ourselves within an avatar howsoever we like, and so on. Other may not have been fully recognised for the fear they can create; while the “new era” for VR system may well be liberating for the able, it can be a frightening / debilitating threat for some with disabilities.

Given the extent of the study, it obviously crosses the physical / digital divide.  There have been experiments and discussions in-world. And there have been real-world interactions between Tom and Donna and those participating in the study.

One of those who has been following the study closely is Draxtor Despres. He has featured Tom’s work in The Drax Files World Makers, and is now engaged in producing a documentary  – also entitled Our Digital Selves – about the study, travelling with Donna and Tom to meet some of those participating in the work. While not due for release until early 2018, the first official trailer for the documentary was made public on Tuesday, October 11th, 2017.

Members of the study meet in-world. Credit: Draxtor Despres

“I’m not sure how long the finished piece will be,” Drax informed me in an exclusive one-to-one about the trailer and the film. “I’m aiming for around 40 minutes, but am currently editing an hour-long cut. It’s a massive project. We’ve been travelling across the United States and across the Atlantic meeting with people and interviewing them.”

It’s a massive undertaking; Drax goes on to note that there are around 15 participants in the study who have been involved in the filming, and he has around 3 hours of recording with each. Some of this was necessary simply to get to know people and overcome perfectly natural barriers – shyness, nervousness, and so on – and establish trust; however, it still means there is a lot which needs to be synthesised into a cohesive whole, whilst also doing justice to the stories of all of those volunteering to participate in the film.

Part of the study has involved participants being provided with a 32m x 32m parcel on Ethnographia Island which they could use to share their experiences, insights, and thoughts on their disability. Shown here, Jadyn Firehawk sands before her exhibition space (May 2016).

Nevertheless, the first public trailer does much to establish the structure of the documentary and present an accessible framework against which the broader story will naturally unfold.

This promises to be one of the most engaging, moving and informative documentaries on virtual living, embodiment and personal expression since, perhaps, Login2Life, and something that should not be missed once available. In the meantime, I’ll leave you with the trailer  – and the hope that, subject to feedback from Donna, Tom, Drax and those involved the work, I’ll be able to bring more on the documentary and the study in the run-up to the release of the completed film.