Saturday, 26 June 2010

Why hast thou forsaken me?

OK, this is controversial but bear in mind this is just one persons opinion based on 6 years experience within Second Life and 12 months experience of selling on external websites.

Philip Linden AKA Philip Rosedale has stepped back in to as the CEO again.

Official Linden Labs announcement, here. 

For those of you who don't know who he is, he is the very person who created Second Life back in 1999 launching Linden Labs and the client Second Life, from his garage.

He made it into a massive success which peaked in 2006 - 2008.  He had the vision and he is the reason SL exists today.

He left SL to do other things around two years ago and I assume he thought SL was running well enough for him to feel confident enough to do that.

Hindsight eh?

I recall peoples sadness around the time of his departure, they felt he had forsaken them, had made his millions and left. So by the same token, his return has been met with a warm welcome by and large.

The last 2 years SL has had serious problems, too many to mention in one post but needless to say its hard core users (generally people who invest time and money into SL) have been feeling deflated, frustrated and many have left either because they couldn't afford to own land or islands (which cost $280 a month) or because of moral or political disagreements over the direction Linden Labs are moving.

The main bone of contention when you get down to the bones of most complaints is politics and the economy. Where money is short, emotions are high.

People are more aggressive and volatile in general especially in an environment like SL were the main objective for many people is often commercial gain.

Were once people felt they could afford the fees associated with owning virtual land and islands in SL, now they aren't so confident and have reduced their premium (paid accounts) to basic free ones whilst also reducing or sometimes letting their land go in order to loose that monthly rental commitment to Linden Labs.

It may be because they literally can no longer afford it or because consumer confidence in general has created a fear factor.
There are few homes in real life that haven't made cut backs on spending over the last 2 years and I imagine owning a virtual island is a luxury most people feel they can live without right now.

Then you have people who own land and want to keep it but for the same reasons above they don't want the financial commitment of paying cold hard cash each month to Linden Labs.

So instead of using SL as a social platform to play, socialise and create content for fun (like they used to) they set up as merchants in hopes of selling enough content in exchange for the Linden Dollar (SL currency) to "cash out".

Finally, we have the type of people coming to SL.
People who's sole intention is to make and sell content to help pay their real life bills in this troubled  economic climate.

The new breed of SL merchants are becoming more and more 'professional"
By that I mean they will most likely have hands on experience in graphic design and 3D applications and see SL as a good platform to make money from their skill especially in light of the fact most of SLs older content creators learnt their skills "in" SL and so lack the polish a professional animator or 3d Builder may have.

Bottom line? The balance of merchants/consumers is well, unbalanced.

This creates a more aggressive competitive attitude as merchants reduce their prices more and more to win over their competitors customers.

To add to this, SL has merchants from all over the world from countries were $10.00 can often equate to a weeks wage in real life. So a skin designer from a developing country can sell quality skins for a fraction of the price their American or European competitors sell theirs for.

Its complex and trying to re balance the situation cannot be easy.

So whilst the return of SL's "daddy" Philip Rosedale is a comforting and reassuring surprise no one saw coming, for some people he is now expected to wave his magic wand and "make the world right again"
I wouldn't want to carry the burden of expectation he shoulders right now!

SLs economy is effected by real life politics and economy issues and then on a separate level it's also affected by SL politics and economy issues.

I have just had a conversation with a customer who runs a skin and building store.
She told me they had felt forced to put a Midnight Mania board out to compete with the zillions of other stores in the same field who were using the system.
 (Midnight Mania boards are a marketing and traffic generating tool that allow merchants to place free content or gifts inside to attract potential new customers to visit their store)

The problem is, as she pointed out,  traffic may increase but sales don't as many people who are attracted to these types of promotions are often people who have no intention of spending money in SL, Period.

She told me they had created a group for Midnight Mania members to have access to the freebies but they applied a one off charge of L$100 to join the group and had so many complaints from people who resented paying for the privilege. A typical response I imagine would be:
 "Why are you charging people to join your group? No one else does this, I can go else where for just as good free skins"
So is she loosing a spending customer or just a little traffic?
What % of people who do the MM hunts go back to a store and spend money in it?
I have no clue but they are very popular regardless.

She added that she and her business partner had visited a newbie welcome area and the mentality of new SLers was discouraging to say the least.
It would appear the first thing a new SLer wants to know is "where can I get free stuff?"
Some were appalled and angry at the suggestion that they should/could buy something.

Personally I feel this whole attitude of "everything should be free" is not restricted to SL as its echoed on the www from all corners of the globe. People it seems in this recession "expect" things to be reduced or free.

I sell textures on and when I reduce my items by 25% my sales triple. People resent paying full price these days even if they could afford it.

We also have a texture stock site which allows the free download of most stock at the lowest resolution whilst offering the ability for members to pay between $1.00 and $2.00 for a large image.
We get over 1000 downloads a month and 98% of them are freebies.

In private, many hard working SL business owners are not happy with the huge volume of free content people give away. They feel it's hurting an already weak economy.

Not everyone has the luxury of a real income to allow them to create content for fun and sharing.
Many serious merchants in SL depend on their sales to enable them to pay RL bills and the land fees for their store within SL

People complain and shout down at those that are brave enough to publish their resentment of the "giving community" so many merchants say nothing for fear of rocking the apple cart and being labelled greedy or money motivated.

Right now we have people on free unverified SL accounts running a business on Xstreet which costs them nothing upfront. They are making Linden Dollar and whilst some of it may go back into the economy, in this current economic climate I would imagine most "cash out"

LL need to make it so that anyone who sells content in exchange for currency needs to:

1) Pay for a premium account
2) Verify their real life identity (which is done by default when you upgrade to a premium account)

No one should be able to become a merchant and pay nothing for that opportunity.
In real life, it costs money to run a business and you can't hide your real identity for obvious reasons. Why should SL be any different? The Linden Dollar is not monopoly money, it has the potential to be real cash in peoples pockets.

The bottom line is if everyone stopped buying content from stores and didn't purchase game currency in SL (in order to buy content) SL would crash in less than 6 months in my opinion. Its "because" of the economy that SL continues to exist. Take that away and we wouldn't have SL

And that basic fundamental requirement applies to all other online worlds and SL spin offs despite what the owners may initially say. They need cash flow.

SL never was touted as a charity and unlike real life, you don't die or end up living in a cardboard box if you don't have some spending money.

In RL if we can't afford that cute pair of shoes in the shop window we accept that fact and don't kick up a fuss or start a protest because "things aren't free" We have to goto work and save up our wages until we can afford them.

Who said: "everything should be free in SL"? Us - The merchants, we have created a situation were no ones a winner long term.

Which other game is totally free?

WOW - monthly subscription.
EVE online - Monthly subscription
And these are true games by definition. People understand and accept if they want to play they have to pay.

SL is totally unique in the sense that it's the only platform that allows people a chance of making real money from the sale of their creations and yet ironically and despite this a lot of people feel they shouldn't have to pay for access to SL and further more everything created by people  should be given away.

IMVU has no freebies on the market. I looked and found nothing.
There is cheap stuff but the cheaper stuff was of poor quality. So if members want their avatar to look good they accept they have to spend some money to achieve this.

There were a few members who were sharing their textures in the forums but there was no place that I could find that allowed content creators to "give" their stuff away and as such no one complained, thats just the way it is.

Whilst IMVU does allow free access, its limited. If you want to hang out at the popular places you have to become a VIP member by paying a monthly fee.

In addition, if you wanted to create and sell content, you had to become a VIP and pay a monthly subscription.

IMVU has on average 90,000 people logged in at peak times which should be indicative that the community accept and respect that if you want to have fun, dress your avatar up or furnish your virtual crib, you have to pay.
If you want to create and sell content, again you have to pay.

If you set up a website to sell stuff from whether that be graphics or shampoo you have to first pay to have the site developed then pay a monthly subscription for servers and finally to be found by potential customers you have to pay for marketing.

Owning an e-commerce website is the closest thing to being a virtual merchant so personally, I think it's only fair people should pay "something" for that opportunity.

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