Why SL cannot succeed - a personal opinion.

Second Life wasn't originally designed to be a platform as a replacement for the web, and I think there are an awful lot of problems with suggesting it could become one.

If it does become a web replacement, the very concept of business on SL will fall apart - it'll become just the same as RL business with RL products.

I think rather than a subscription fee model they have a land use fee model.

The amount of money in land use fees monthly is much larger than subscription fees.

You don't charge people to browse your 3D web, only to host content in it.

They would have to abandon the whole 3D web theory to go to an all subscription fee service.

I had heard this is not true any longer.

After years of being in the red, that they are finally making a profit.

How large a profit would heavily influence its ability to do things that people want them to do, of course.

Oh, absolutely - which was what I thought I was saying (but was also rushing out the door at the post time so I may not have been clear.)

There was a very interesting discussion of profitability of LL here:
http://www.secondlifeherald.com/slh/2007/08/linden-labs-met.html

I actually like the whole idea of land use fee/pay to host your content as opposed to subscription fees for everyone. There is a huge resistance to subscription fees in general, lots of web content providers have tried (NY Times being a recent example) and failed to generate the revenue that they expected. I refuse to get a TIVO for the same reason - no interest in paying subscription fees so I can record content I'm already paying fees for via my satellite provider.

SL could be earning a lot more revenue by frankly raising the cost of premium memberships and making it actually worth the money. There have been a lot of ideas floated that would do that such as only allowing premiums to be able to cash out, only allowing premiums to add to traffic counts, having actual working support for premiums, etc... As it is, there just isn't enough carrot to entice people into premium memberships.

There is another reason I meant to touch on earlier as to why there isn't a real competitor to SL yet, which is the content. Any corporatized virtual world is going to have to sanitize the content in order to protect its brand, only a privately owned and financed project like SL can allow the types of freedom that is what draws people to SL.

This one also has some interesting notes by Mitch Kapor on investment and SL long-term (from 1/28/0.

http://www.orient-lodge.com/node/2755

"Mr. Kapor spoke about the investments in Linden Lab as being ‘patient capital’; investments that were waiting patiently and seeking to do something important with capitalism instead of focusing on flipping the company for a profit. As such, he noted that while people contact Linden Lab about investing, they typically reply that they aren’t looking for new investors right now. At some point, a liquidity event, such as a buyout or an IPO might be in the cards, but right now, they spend almost no time talking about such possibilities. Linden Lab is currently profitable so there isn’t any rush to change their capital structure."

The first thing I’d like to point out is our clearly vast differences with the word ‘success.’ Some of you claim SL is not a success. Well, may I ask what you think constitutes a successful business? Linden Labs has a few million customers, thousands of which continue to come back, make profit, and enjoy the hell out of them selves. Second Life has mammoth amounts of fans; fans that have built entire communities in-world, and out of world to celebrate and participate in Second Life related things. Linden Labs also houses a few millionaire businessmen—or at least very well off. Linden Labs has opened offices in several parts of the world, including a budding office in Boston.

My point being, if this doesn’t constitute a ‘successful business’, then I don’t know what does.

Thousands of people enjoy Second Life…regardless the bugs and glitches we as a community have to put up with. Thousands of people are making profit, in spite of the occasional setback or obstruction. I’ve been here for a long time, and I’ve never had a technical problem that has made me second-guess my want to thrive here. I think, overall, LL has done a fan-fuckin-tastic job of creating a metaverse unlike any other before it. I mean, look at VRML Worlds…all the old virtual reality websites…this is what SL was basing their model off of. I think what they did with this concept has been extraordinary.

Sure there are problems. But are they not problems well worth the occasional drawback? I mean, hell, I get 5-15 fps all the time…that sucks. But Second Life is so ‘cool’ and unique…I’ve created a thriving business here, simply because there is so much good in it, I don’t think twice about whether I want to participate and contribute.

Anyway. I’m just saying. So many of you are so harsh, and you don’t realize what you have been given to play with—SL, as an essentially free application, is outstanding, complex, dynamic, and exciting. No, I don’t work for LL…it’s more like, I’ve been waiting for something like SL to come around since VRML 1995, and I’m more than happy with the product I use on a daily basis.

Cheers.

Michaels post made me feel it is necessary to point out that the tone of this thread has changed dramatically.

The title Phil gave this thread is "Why SL Cannot Succeed". That is far different than saying that they are not currently successful. While their current success may be valid in an argument as part of determining their long term success, whether or not they're currently successful was not what the original point of the thread.

The problem is he is stating they have made continual bad business decisions, Which will eventually lead to their undoing.

Which is really hard to know without seeing the books.

If they really are irrefutably bad decisions from a business standpoint.

Well then, lets hear them.

You are correct. I took a side road, I'm sorry. Still, it's relevant, and was the underlying meaning of my post. I feel their success (which was mentioned several times throughout the thread) is in direct relation to their 'future' as a company. Successful companies--usually--don't vanish into thin air. Instead, they tend to grow, all the while augmenting their business model and product. Linden Labs is doing just that--and there should be no greater a fear of failure now, as there was in the past. There are continual ebbs and flows withing every company...SL is no exception. Overall, I find the 'fun factor' and 'stability' of SL to be even more engaging and adapt in their current versions. This, to me, would signify a 'future' for the company, it tells me they will succeed.

Every single one of us has our own opinion of the “way SL ought to be” and we color all our dealings with LL through that lens. None of us is sitting at the big kids table, however, and we don’t get to call the shots. Vote with your feet and wallet. If you don’t like the way things are going then leave. If you think there is something here and you’re willing to invest for the long-haul then accept that this is just one ongoing beta and learn to deal. I’m in for the long-haul and I’ll bail if and when I see the smart business people pulling out. When Desmond Shang, Anshe Chung, Adam Zauis and Stroker Serpentine start walking, I’ll be right behind them. Anybody else predicting doom and failure gets paid no attention.

I posted earlier that different people have different measures of success. For some, their time in SL has already been success enough. Some of us here make RL livelihoods from SL, but I don't think things like that are success enough for LL. I imagine they want SL to be a platform where serious RL business and services can flourish, as well as the type of play that we see now - and that's assuming that they are not looking for this system to be the start of the online future. Anything more than just play is where I think they will fail, unless they get the right brains involved.

This is one view where we differ. The people you mentioned are small potatoes in the real world. It's not such people leaving that anyone needs to watch for - it's whether or not the real world comes in. It's the other way round. SL can carry on infinitely as it is now, and the people you mentioned won't leave, but that's no great success. It would just mean that SL is a place to play, and a place for a few to earn livelihoods.

Well, considering Second Life has been open since 2003 I don't think we can call it a failure by any means.

Will it eventually be replaced? Sure, it is possible - there are some competitors out there, but none of them currently give their residents the amount of freedom SL offers in content creation.

Something better may come along and replace SL, but I don't see anything on the horizon at the moment that could knock it out of its nich.

For folks claiming that it is getting worse... I created my first SL avie in November of 2003 and oh lordy, I do like SL better today.

It's tough to really tell whether LL will survive or not. Typical RW business models do not include a business turning a profit in the first 5 years. LL is about 5 years old and is just starting to turn a profit, so that's a good sign. They are also encountering a very typical problem for start-ups. Busnesses are started by visionaries - people with a dream and talent. Visionaries do not make good business people, but business people often lact the creativity and vision to be good at start-ups. LL's dream is becoming a reality, but as is typical with businesses, after 4-6 years, the growth of the business magnifies the flaws in the business model. Their customer service is not great. They have failed to build a solid foundation, both for SL and for their administrative functions, like customer support, these forums, etc. It's a PITA for visionaries to do things like that because customer support, the community of customers, feedback from users, usable metrics, etc., rarely are part of the vision.

I would argue that LL is at a critical juncture. They need to concentrate on stabilizing the grid and building solid administrative functions, regardless of how boring those tasks are. It's time for a major shift in focus, even though they should never abandon the vision. If they cannot succeed, it will be because they cannot see beyond their vision and recognize that they are running a business and now need to start treating it like a business.

Okay then. My 'simple' answer is this:

LL has to consider legacy content when they make changes.
New competitors won't have that legacy holding them back.

If we still have the same clunky avatar shape in 10 years,
this place will be a museum showcasing "Retro" VR to a small
audience of VR-ophiles and people unable to upgrade their
personal hardware. It might still be viable in that state, but
not on the scale it is now.

As long as LL is willing to risk breaking legacy content bit by
bit to incorporate new(er) technologies it should do okay.

This world was never really about groundbreaking new technology,
it was about using it in a new way. What other virtual world out there lets their customers earn living wages?

(Keeping in mind that 'gold-farming' is expressedly forbidden in nearly all MMORPGS).

Of course Activeworlds is still up and running.

Sure SL might not become the 3D web.

Oh well.



-------

Phil you sound like that guy in that IBM commercial now.

I respectfully disagree.

What is the dropout rate on OI? Look at these forums every day and what is the one mantra you here repeated time and time and time again? Linden Lab does not listen to their customers. Maybe they do, but that is the perception and that's not a good one for a company to have.

Was AOL the best ISP out there? No, they were crap. But they marketed well and they made it easy for the average person to use the internet and they use to provide good customers service.

Linden Lab has the upper hand. It's got it's problems but it's not crap. They need to start listening to their customers and remove the perception that they don't care. They can start showing they care at OI, they can start showing they care by listening to their residents and they can start showing they care by providing some stability. No, not stagnation, but stability.

When I logged into that sign in page I was not acknowledging to be part of a Beta project. I signed up as a paying customer. That's what many people here seem to be forgetting.

The real world has already been and left because they were looking for another dot-com bubble with riches galore for everybody and it wasn't here. Your prediction is that SL cannot succced; nobody is arguing that this isn't a possiblity - just that the jury is still out and it comes down to whether or not you are willing to continue investing in the "maybe." Obviously, you've made your decision, others of us are not so sure.

That's not true. I think you may be meaning investment in LL, but that's not I'm talking about. The real world hasn't yet come into SL to do real world business and provide real word sevices, and it won't until there is a viable platform for it, which is exactly what LL is incapable of creating they way they are now - imo.

Lately, you can't even get to the sign up page without 20 retrys. Fix the goddamn website!!

I'm in no rush to see it. It's nice to have a place to go and not be bothered by the Real World hucksters constantly shilling their garbage.

Same. I must have just tried 10-20 times just to get the home page up. I'm seriously surprised LL have let it remain in this state for what is now five days; it doesn't look good :/

The real world is still very much here, education in particular is embracing Second Life. IBM are expanding their virtual business centre. CRY, a children's rights company have opened an office, Lancia have just launched a car here.

Making your customers feel appreciated and heard is helpful... but I think our expectations for SL are considerably more wide ranging and complex than AOL customers expected of them. AOL provided 'internet dialtone' and 'simple content' services. SL promises a world... and people's imagination runs wild with what they think they're entitled to.

Keep in mind that when you pay LL, you are buying something *specific*, whether that's some new L$, new land or tier fees.

The SERVICE itself is free of charge, and the same for everyone, whether they pay LL for something or not.

Oh Yeah! go active worlds now there's a place for people that don't like change