Economic Stimulus Needed In #SecondLife? Some musings.

News of yet another closure in Second Life, by way of NWN:

Molaskey’s Pub, a popular Second Life location for live music, is closing at the end of this month, unless a buyer steps in. This sad news comes from staff member Nasus Dumart Sue Martin Mahar IRL, who tells me despite having 1000 group members, and being listed on Linden Lab’s official Destination Guide, they’re unable to sustain it…

via New World Notes: Sim Deathwatch: Molaskey’s Pub, Popular Spot for Live SL Musicians, Closing This Month Unless a Buyer Steps In.

Despite a huge user group (more than 1000 members) Molaskey’s may close as a venue for live inworld entertainment unless someone steps forward and buys the place. Many people in Second Life have been complaining more and more loudly about the cost of “tier,” the monthly fee that Linden Labs assesses paid users when they take more than the “free” allotment of 512m of virtual land. People who are not paid users can “rent” land from owners if they pay their share of tier as a usage fee.

I can’t imagine owning or running a sim – I pay $25.00USD a month for the land I own, which is “group” owned, so my holdings include an extra 10% bonus land area. I also rent land in a privately owned sim (actually, a group of sims) and Dhughan rents his little railcar shop. These costs, to me, are affordable because they’re funded by a kind of micropayment incentive plan (my RL self is in a kind of sales-y field).

My friend Mistletoe is much more creative than I am, and can pay for her tier through the sales of her virtual victuals (Hey! there’s only one letter difference!). I’m selling a few items (and Dhughan is selling a few more) just by having them listed on SLM, though I know that I should be making more stuffs and doing more to promote them, having just attended a marketing class inworld on Monday similar to this one. The lack of spare time is a major factor; also a bloated inventory that makes it hard to find that texture or that prefab prim that I need to get something started.

I hope to find some more time to work on stuff rather than just moving it around in my inventory – Dhughan too.

In the meantime getting back to Mist’s post – she thinks using Second Life Marketplace to sell your product is still a good idea, and so did Kat Alderson the other night, despite the commission paid to Linden Labs. Mist was refuting this opinion from another marketer:

Now if one falsely assumes that LL’s new SLM (that just replaced Xstreet) is a well-run site with very few delivery problems and loaded with tons of advanced bells and whistles that make the life of Shopper & Merchant much better than Xstreet, then one can also initially believe that the 5% commission on all sold items is fair.

But, let us all remember one thing about LL’s SLM that is completely unique to almost any other online shopping sites (like eBay, Amazon, etc.) that are selling goods to shoppers. Regardless if you are buying a $0L freebie/demo item or a $50,000L castle the size of half your sim, the cost to LL to process and deliver the SLM product you bought is identical! There is absolutely no difference in shipping costs between a $0L 1-Prim BeachBall or a $50,000L 500-Prim castle – basically near-ZERO process/shipping cost!

So, if there is absolutely no difference in cost to process & deliver ANY sold item on SLM to your inventory, then why would the commission be percent based? Think about this for a second. You can make 100 SLM purchases for a $0L beachball freebie from one Merchant of which LL makes $0L in commission. Then you can make 1 purchase of a $50,000L castle from another Merchant and LL collects $2,500L – that is $2500L that this Merchant does not get. The 100 $0L purchases you made on SLM put much more burden on the site and the inworld environment and lag than the 1 purchase of the $50,000 castle, but they contributed $0L to operating the site.

It’s not about the difference in cost to process and delivery items, I think; it’s about making money, and Linden Labs owns the money-making machines and gets to set policy to suit themselves. We’re not talking about delivering books (as in Amazon) or T-Shirts (as in Cafepress), we’re talking virtual goods. Delivery costs aren’t the right commission-setting model for this kind of product, but value is; LL is just making the right business decision for themselves. They own the servers and they have costs: they must pay rent or mortgage on their office, pay utilities (power and water), pay salaries and insurance, pay for new technology, travel expenses, you name it.

Not that I don’t think they’re overcharging on some things – like tier. Once they’ve got servers up and running, with either regions or sims humming along nicely, their costs are pretty fixed. They really screwed a lot of people, including themselves, over the Openspace issue a few years ago. And these people remember, and expect that Linden Labs will pull another “oops, I did it again” move and mess with something that affects peoples’ tier costs or sales of their virtual goods.

As for Second Life Marketplace (which used to be Xstreet, before a major changeover that caused much gnashing of teeth) it continues to be a convenient and easy way to shop for “stuffs.” As everybody and their alt complains, “search is borked” and getting your sales items to show up in the comically underwhelming “inworld search” is definitely not fast, nor easy, nor nary a bit fun.

Kat Alderson’s marketing thing at Builder’s Brewery the other night, which I’ve been mulling over ever since, highlighted SLM as one of many very useful tools for selling pixel products. She had absolutely no problem with LL’s commissions, because like Mistletoe, she had concluded that her sales from SLM were a very large chunk of her total sales, and she made no mention of any big “delivery problems.” In my own, much more modest experience, I also get those emails from SLM (so does Dhughan) and I’ve never even seen a problem with something not being delivered (eventually).

Of course, if I’d worked really hard on a big architectural build that I dared ask $50,000 for, I’d grieve for that lost commission, but I sure wouldn’t refund a customer the net amount as suggested by Toysoldier – that’s just asking for trouble between seller and buyer. Better to lay out a really clear returns/refunds policy, and (as Kat suggested) make darn sure it’s given to the buyer before they click “pay.”

I recently shopped at an animation place that had a unique take on giving their “terms and conditions;” you had to sit on the product poster (it was displayed on an easel) and the EULA was displayed on your screen so that you had to accept it. The product in question was a “builder’s pack” with full perms, so of course the content creator was protecting the investment in their product (which was mostly the time spent animating, if you ask me).

It’s a shame about Molaskey’s that it’s closing,  and it’s a shame that the high costs associated with providing places like it will prevent more people from being content providers. Linden Labs should really take a look at the troubling trend of sim and venue closures and take steps to stem the tide by offering lower tier levels. Even a symbolic gesture might encourage more owners and creators to give it a try, or to keep on doing what they do best.


Comments

Economic Stimulus Needed In #SecondLife? Some musings. — 2 Comments

  1. First thing, thanks for the link and the shoutout. And for the compliment, though I may not necessarily agree with it.

    It’s not that I’m more creative than you. It may or may not be that I’m more business savvy than you (though I lean toward “not”). I have been at it longer. I started very very small with Clover’s Kitchen, as just one booth in the Northfarthing market, and it’s taken literally years to get where it is now: on one 1024m parcel. I’ve since had shops that opened and closed and taken gambles that have gobbled up time and money. And there has been no motivator quite like not being able to spend RL money on lindens.

    Why don’t you and I talk sometime soon about your shop(s), and see if there’s anything that can be done to help them grow. Meantime, you know I got the Know-It-All Pages at my blog, with a whole section on SL business. And, I don’t know if I’ve ever pointed you to them before, but there’s a fantastic blog called Virtual World Business at http://xdfusion.wordpress.com/ (the fellow who made Bridget!). That blog was a HUGE eye-opener and help for me, by offering practical advice without using words like “metrics” or “synergy”.

  2. The main limitation I seem to have is time; I tend to have a few hours most weeknights, and more on weekends, but lately a slew of RL appointments and gatherings have cut into that.

    Second limitation is lack of clarity about goals and priorities, though my and Dhughan’s roles are coming into focus.

    Third is lack of skill or confidence; the learning curve is steep on some of the things I’ve been learning lately.

    However, that last item is definitely getting better, although I seem to have to re-learn techniques that I don’t use frequently. 😉

    I hope I don’t have any “let’s get together with the folks” moments tomorrow, I need to do some shop work.

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