Tom Hale talks Second Life premium accounts
by Tateru Nino 
Nov 21st 2008 at 9:00PM
Filed under: Business models, Economy, News items, Second Life, Virtual worlds
Back in September, when we first noticed the hiring of Tom Hale (T Linden) as Linden Lab's new Chief Product Officer, we had a little difficulty envisioning quite what Hale's role would even be, given that Linden Lab and Second Life was very platform-oriented and had very little product-focus. Apparently, adding that focus as an extra consideration throughout the business seems to be the thing.
Initially, we were more or less expecting Hale to be more focused on, well, the sort of thing that Rivers Run Red's Immersive Workspaces is providing. Perhaps there's some of that in there too. Right now, Hale's looking at Second Life premium accounts and stipends and how they can be improved; a topic which has been much on the Lab's mind of late.
Non-tier-paying premium accounts are apparently in the majority, which obviously suggests that they represent more value for the user than tier-paying premium accounts. Still and all, premium accounts of either stripe are still on the wane, and it would seem to be to everyone's benefit if premium accounts represented better overall value.
Hale is looking for user feedback on the matter, soliciting suggestions via the Second Life forums, and by golly he's getting some.
Of course there's a trade-off. If the Lab succeeds in making premium accounts attractive to the point that the numbers start to swell considerably, then something will have to be done about stipends.
While the mechanism of Supply Linden acts as a stabilizer that eliminates inflation and deflation more effectively than any extant atomic economic mechanisms or policies, if the total stipends paid were to exceed the growth of goods and services within the Second Life economy, considerable inflation would start to occur as a result.
In essence, it seems, the more successful premium accounts are at providing perceived value, the less likely it is that significant stipends will remain a part of that package.
How to handle premium accounts and stipends is going to be quite a challenge for Hale and the Lab, and we'll be watching with interest to see how it develops.
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Reader Comments (Page 1 of 1)
Nightbird Glineux said on 12:03AM 11-22-2008
Why do you think that "it would seem to be to everyone's benefit if premium accounts represented better overall value" (With emphasis on "everyone")?
For me, my premium account gives me:
An insurance policy that if I ever have a problem with my account, I can get help.
The convenience of having tier for land charged directly to a debit card, as opposed to having to remember to pay an SL landlord. OTOH, I'm paying excess tier. I haven't decided yet if that is a problem. The drop in the price of mainland parcels doesn't worry me, I consider all this to be "entertainment expense."
Stipend to me is a rebate on the charge of my account fee. If that is lowered, I'm going to expect something of equal or greater worth *to me* in exchange.
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Markus Breuer (Dana Bergson) said on 4:33AM 11-22-2008
I am not sure about your assumption about the benefits of premium accounts for Linden Lab. Those revenues currently contribute a very small portion to their overall income and - give the "everything in entertainment must be free" attitude of most consumers (especially when looking at the internet) - I doubt, that it is easy to define a premium product, which is more popular, yet does not cost Linden Lab too much. I have some 4 or 5 premium account running currently for technical reasons. I think, they represent good value for money. But I am rather alone with that attitude when talking with "normal" residents.
If I look back at the development of SL's society, it seems, as if this fits the the trend: Most accounts are "casual users" these days and over time I expect this to be even more pronounced when OpenSim grids become a kind of 3D websites spread over the Metaverse. Casual users tend not to like subscription models as they never know in advance, how intense they will use a service . Other platforms - like MMORPGs - have success with subscription based models. But those platforms cater to "intense users" who know in advance, that they will spend many hours inworld each month. 10 or 15$/month seems money well spend to them.
This "thinking about premiums" seems to be another sign of Linden Lab not knowing, which general direction the company should go with the platform. This is understandable, given their current situation and the complicated market - but not very reassuring.
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KaraSpengler said on 12:50PM 11-22-2008
I (and many others) figured the stipend into our cost analysis of getting a premium account. Removing the stipend and I would definitely need to take another look at those figures. I would probably decide to be landless and mooch off the system, plus I would have cut most of my ties preventing me from going to one of their competitors.
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sigmund leominster said on 1:03AM 11-23-2008
Call me cynical - because I am - but I sense the first step in seeing Premium Account Fees changing. And that change is unlikely to be downward. Any company wanting to increase its fees for a service starts by looking at the current benefits and then adding more. But they want to have "value added" benefits, because giving customers more for the same price is, for want of a better word, unprofitable.
My guess is that by April 2009 we'll see a new set of prices, one of which may be the current Premium, but with others that include benefits relative to the price you pay. You want the "no-frills? It's $80 per year. You want first 1028m land tier free? That's $90 per year. No, I'm not going to guess the structures, I'm just speculating that this is where it will go: Tiered Premiums based of fee-per-service.
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TigroSpottystripes Katsu said on 10:10PM 11-23-2008
in short term their profit margins might decrease, but as long as it doesn't get negative, if the additional benefits attract more customer, in the long term, they will be making more money
and depending on what they change, it might even be somthing that they at most have to pay for the costs involving the development of the feature, and after it is done, it migth not cost them anything while still attracting more customers
Lias Leandros said on 9:28AM 11-25-2008
I pay for my mainland server space in Second Life. And I have done so since 2005. This new initiative to improve premium accounts is just lip service. Printing up a few more Lindens is not going to begin to address the issues Linden Lab has with it's mainland product.
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Cristalle Karami said on 1:01AM 12-02-2008
The stipend really isn't that big a deal, but take it away and we will definitely want more value for the money. If you have a business, which is the usual purpose for buying mainland, the stipend is usually gone in advertising fees or payment to staff. If the stipend ended up being more than the value of the premium subscription, I would question it, but even then, LL makes their money on tier. The subscription fee that LL makes after stipends is a marginal amount of money. Paying stipends at the current rate wouldn't break LL's back.
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