Linden Lab CEO on openspace/void price increases
Filed under: Business models, Economy, Opinion, Second Life, Virtual worlds
Mark Kingdon, Linden Lab's shiny new CEO, made a statement to Wagner James Au at GigaOm about the announced openspace/void simulator price rises that have so many Second Life users up in arms, '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.'
We're not sure if this gets points for being intentionally misleading, or unintentionally misleading. Either way, it scores a lot of points.
Lets break it down a piece at a time.
"This price adjustment affects only a portion of land in Second Life"
Technically, that is correct but unhelpful. The only quantities that Kingdon has definitively ruled out are 0% and 100%. "A portion" could easily refer to any figure in between.
Since there's no information available about how many void simulators have actually been purchased and are operating on the Second Life grid, we did a bit of an informal poll to gather users' guesses. Responses suggested that they thought it was between fifty and sixty percent of privately owned simulators.
"It does not apply to private islands"
Well, that depends on how you define 'private island'. If you define it as non-void(openspace) simulator that is a part of a non-Linden-owned estate, then that is technically true. We think a lot of users would call bullshit on that, however.
Privately-owned void/openspace simulators are considered "islands" by both the users and by Linden Lab. The usage of the term in Kingdon's statement is unexpected. Perhaps it reflects some definition in use within the walls of Linden Lab that has never made it to the users or the general public.
"It does not apply to ... regular mainland property"
Perfectly true. We're on nice firm ground here (no pun intended).
"We made this change to ensure an optimal Second Life experience for all Residents"
Now there's the big sticking point. It's for the users' own good, of course, and not for the Lab's benefit. That's a common theme. The question is ... well, how exactly?
The heart of the problem is that there seems to be no announced part of the plan to actually alleviate the problem. What has been announced is a price-rise and some policy changes, but there isn't any indication as to how any of this might act to improve the situation at all.
If an overloaded void simulator impacts other void simulators negatively, could someone explain to us just how charging more money actually acts to reduce the negative impact. Perhaps there are plans to apply additional resources to the problem -- but nobody at the Lab has said anything of the sort yet. We're hoping that someone will, at some point. It seems strange that nobody has yet. If someone at the Lab has this hidden up their sleeve, now might be past time to pull it out.
Worse, the obvious ramification of the price increase appears that it will be to make the problem worse, not better.
If your monthly fee for a simulator rises from US$75 to US$125, you're going to want more bang for your buck. Why shouldn't you increase your usage of the simulator in the hope of getting more of a return?
Worse, using void simulators for what Linden Lab actually says they were originally intended for (unoccupied space, coastline, open ocean for sailing and so forth) becomes considerably more expensive, with little or no opportunity for return on the monthly spend.
Simulators that aren't earning their keep will doubtless be retired and as such, we fully expect to see such 'light' usage of void simulators mostly die out, as a result of the announced price increase. Who can afford a half-dozen of them for the occasional regatta or for empty parkland at the new prices?
Simply put, the 66.6% price-rise encourages the overuse of void simulators, and penalizes those who are using them for actual open space.
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Reader Comments (Page 1 of 1)
sezmra said on 10:09AM 10-31-2008
The problem is we'll just end up having to revisit this issue in 6 months - 1 year/2 years when OSpaces will continue to be abused to new heights and another price increase will be "necessary".
Perpetual profit! WIN!
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Loki said on 10:41AM 10-31-2008
Linden Lab promoted a product that they yet could not cope with.
People bought Openspace Sims in the belief that they could build a residential build. This assumption was backed up by the increase of Prims and the examples set by Linden Labs OWN Openspace Sims.
Linden Lab then send out a message that they can not cope with the high usage of Openspace sims and bolster this statement with lies about the original intentions of use (which are proven faulse with examples such as the Raymond Sims)
Linden Lab proceed to tell us that to cope with the way we use the Openspace Sims they need more money to run the product. There for it would seem, Linden Lab have sold us Products they could not cope with and they knew it.
Linden Lab states that the Openspace Sims can only cope if we use them as originally intended, Yet they promoted them as something they KNEW they could not cope with.
Linden Lab say that the Product we bought has changed into a different Product because of the way we chose to use it, which in turn was encouraged by the rise in Prim usage and examples of Linden Labs own Openspace sims.
I'm finding it hard not to think that Linden Lab guided us into this 'NEW PRODUCT' with intention.
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Bruno said on 10:43AM 10-31-2008
I've been saying for 4 years that Linden Lab has the worst PR machine in existance and this is just another example of it. Had they just said that this rate hike was necessary because they need the cash, people would still be pissed but not as angry as being told that they abused the stated purposes of OS regions.
If I have a stake in the VC that went their way I'd be pleased with the fact that they will probably only lose 20% of their existing OS payments. The hike will cover that. Plus, you can expect to see more full region purchases. Other estate owners that I have spoken to are looking at the business opportunities and not just whining about this.
You either adapt or die.
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Crap Mariner said on 11:04AM 10-31-2008
This has got me wondering if the new LL approach for overloaded services will end up being "raise the price of it?"
What next... a tax for joining groups because the comms system is laggy and overloaded? Tiers for inventories like land use?
Based on Jack's office hours I'm going to take a wild guess and say the first backpedal will come soon... two tiers of openspace/void with some method of monitoring, enforcement/warning... they have two months to build, test, and roll out the tools for it.
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Kalel Venkman said on 11:54AM 10-31-2008
The consumer backlash on this is remarkable. The forum set up for various discussion threads on the official SecondLife.com web site is gathering about a thousand posts every day, with the larger percentage of them coming from people who are justifiably angry or confused at the apparent bait and switch approach Linden Lab took on this one. There was also a post that stated that the Federal Trade Commission had been alerted to the problem and that there's a possibility - however unmeasurable the probability of that happening might be - that they could become involved.
I agree with the statement that this penalizes the people who bought open sims for the intended use as proscribed by Linden Lab. It is they, who make no direct profit from having purchased them, who will have to abandon these sims by the hundreds.
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Liberty Tesla said on 12:05PM 10-31-2008
"The heart of the problem is that there seems to be no announced part of the plan to actually alleviate the problem."
Say that it costs an average of $250 a month to operate one processor core. (That's just a guess, I may be wildly off. But if it sounds high, remember it includes not just the cost of CPU power/cooling, rackspace, and bandwidth, but *all* expenses, including marketing, developer salaries, office space rental, etc. This is how Linden Lab generates its revenue.)
Running four openspaces per core at $75 per month each yields $300 revenue. That's expenses plus $50 profit, but leaves the servers badly overloaded.
Charging $125 per openspace sim instead allows them to take in $375 at three openspaces per core, or $250 at two openspaces per core. The servers can then handle the load, and Linden still takes in roughly the same amount of cash per processor core.
Assign the new-and-shiny (more expensive, not yet amortized) CPUs to run three sims per core, and the older, slower, paid-for processors to run two sims per core, and that aligns revenue with costs.
So yes, changing prices does alleviate the load problem.
It would be nice though if M (or somebody at Linden Lab) would spell it out, rather than resorting to marketing fluff.
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Tali said on 1:20PM 10-31-2008
While they *could* be using the additional money to improve the servers, it *is*, as Tateru points out, a little strange that nobody has actually said anything about doing that. One interpretation is that it is so obvious that it goes without saying. Another interpretation is that they simply want to make the product unattractive and kill it off.
Even if they do upgrade the servers to handle the strain some are putting on them, I'd consider that a new product (possibly a product LL only realized the profitability of once they saw 3rd-party landowners do it), which LL are now forcing everybody to buy, or lose what they have already invested in the previous (for LL less profitable?) product.
shin said on 12:29PM 10-31-2008
I don't know why you would expect a CEO to know what he is talking about..they have everything fed to them via powerpoint slides with very large typefaces...^_^
SL did promote these for light residential use at the time they doubled the prim allowance on them to equal 1/4 that of a normal region. I had moved to one within a week or so of that happening (I had been renting 1/4 of a normal region..so, my price was the same, as was my prim limits..it just opened up the space I had to play in.), and it worked fine. For a month or 2 there were no problems. Then came the Havok 4 release (see JIRA under cyclical time dilation) which effectively broke the openspace regions (I am not blaming Havok 4 itself, since I have no way of testing that..I am saying that the openspaces started to flake out with that server release...around 1.20 I believe). Suddenly, these same openspaces became lag farms (again, for further details look up the JIRA complaints about this...there is a huge amount of detail regarding the problem..and always keep in mind..the problem was not there before..even with the doubled prim allowance. There is a clear date to the beginning of these problems with openspaces, and they occurred with a server release, not because of all openspace dwellers suddenly changing how they used the land all on the same day...^_^.)
So...rather than fix the problem, they have let it sit around for over 6 months..while continuing to sell more and more openspaces that they knew were broken....and have now decided to blame the users? And on top of that raise the prices...so everyone can pay more for the same broken services? Truly a new business model to be proud of.
Maybe it can be used by other industries? Perhaps auto manufacturers should charge more for the occasional lemon, and refuse to fix them at all. I'm sure they can see the money making possibilities there much better than I can...^_^
As for me..it's back to the 1/4 private region, and goodbye to cyclical lag and slow scripts. I do feel sorry for those who invested in openspaces though..for they seem to be SOL. (..and sometimes people ask me why I rent and don't invest in my own land....well..I did once....but, I've been around almost 3 years now..and have seen similar happenings...so..I sold out. Basically, I don't trust them any further than they can protect my password. (..and I often wonder how many times that has leaked out..^_^).
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TigroSpottystripes Katsu said on 1:36AM 11-01-2008
I can't stop thinking they might be dong this really with the intention of making people stop using OS sims in general as the means to deal with the performance issues, sounds absurd but doing it for the motives that can be understood by taking their messages literally also sounds quite absurd...
tohgh now I'm thinking, some places do have bigger taxes for older car models, that are less fuel efficient and pollute more, it does kinda make some sense if you think that way, though if it eally is like that, they're doing a shitty job at communicating with users (which would be no surprise by now)
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TigroSpottystripes Katsu said on 1:43AM 11-01-2008
(damn typos, though luckly it seems it all still looks more like the intended words than ones with different meanings)
shin said on 8:01AM 11-01-2008
Tigro, I basically agree. They want people to stop using them. I would suspect that the complaint level of them not working properly (even from those who really do use them for the original purposes, not the light residential purposes that LL started promoting almost a year ago) has gotten too high. This is what comes of selling hundreds if not thousands of a product that is known to be defective over a period of 8 months or so.
Again, I state..the OS regions worked great even for light residential use..right up to server release 1.20.xx. If they want people to stop using them because they can't fix it without doing something silly like junking Havok 4, they should just say so. Say they are taking them off the market as they no longer work as advertised, they won't be selling any new ones, and just note that anyone who owns or lives on one does so with the understanding that this particular configuration is broken and not fixable.
Blaming the users and making people pay 66% more to retain a known defective product, and continuing to sell a known defective product...at a higher price...is the part I consider an interesting business plan..^_^
(By the way..this same cyclical time dilation problem has been noticed to occur on "normal" regions as well..just not a bad and not for as long...although sometimes it seems to crop up worse. Easier for a normal region to fix though by hopping to another server where it's less noticeable. The fact that OS regions are 4 to a core seems to quadruple the severity of the problem..making it more likely to crop up. Again, see JIRA under cyclical (or cyclic, I forget) time dilation)
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JayR Cela said on 8:19AM 11-01-2008
Hmmm, perhaps the recent statements from Alan Greenspan, before a US Congressional hearing, regarding the current United States & now Global Economic Problems, encouraged LL to take a similar approach. If they would just come out and be truthful, perhaps people would not be quite as upset
it is unfortunate that the lifting of regulations, and lack of oversight on our part has led to abuse of the current system. We did not think this sort of thing would ever happen. We are sorry for our incompetence and lack of sound judgment. Thus, we must now put the screws to all of you that had put your trust in us, to do the right thing. Have a nice day, suckers !!!! HaHaHaHa
JayR Cela
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Dana Bergson said on 11:34PM 11-02-2008
A somewhat belated addition caused by a comment I posted over at Nexeus blog.
I really do admire the nice spin Linden Lab put on their price hike. If you read Jack and M, all they want to do is to protect The Grid (especially the innocent main land residents) from the evil Openspace abusers - by raising prices, that is …
I can not resist asking a rhetorical question: Do you really believe, that the OPEC is trying to save the environment, when they raise prices on crude oil? ;-)
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