Server class distinction to be eliminated

https://blogs.secondlife.com/community/land/blog/2009/11/10/moving-away-from-server-class

There will soon no longer be a server class distinction based on the class of server you purchased, for example if you've purchased a class 4 you could soon be upgraded to a class 5 for no cost.

Then in the future we will be upgraded as and when hardware improves. Those on grandfathered deals will remain on grandfathered deals.

The only issue I have is that grandfathered status should now go on transfer, class 4 sims are now effectively class 5 so there's no longer going to be the performance argument.

What do you think of this move?

/me saw that but had a difficult time posting anything constructive.

I guess it's not a horrible idea but I find it hard to believe that LL is doing it for the good of residents.

It will be interesting to see how well this works once the Nehalem sim hosts start getting deployed..

edit: /me laughs with Desmond below. I'm speaking as somebody who doesn't own any regions - I can definitely see how the sim owners that have been around for a while would be excited about this but I think there will be implications. Not sure what they will be - maybe danger of people getting a temporary seat upgrade for a while then getting pissed when they're shuffled back to coach. Maybe I'm just cynical. Dunno..

Ten grandfathered class fours here.


\m/ I THINK THIS ROCKS!!!!!!!!!1111111 \m/






Sorry. Back under control now. Outburst over... continue on, please.

Well I think it's the right thing to do, Jack hinted this was in the pipeline a few months ago. Des is obviously happy I see, but what was the alternative? Wait until we only had 2000 class 5 servers and then switch them over? It must be a pain having to ensure class 4 sims stay on class 4 hardware, now any available server will be used when they're reset etc.

I think it's just making the status quo official, and cutting inventory costs from having to maintain the old inefficient servers. There have already been lots of examples of grandfathered sims showing up on class 5 hardware.

And this kind of windfall discount is a common marketing scheme. It lets them get money from marginal users without alienating the big spenders who can't wait for a grandfathered server to come up for sale.

Yeah, it's about time.

And I really don't see what LL gains by perpetuating the grandfathering through transfers. Doing so would seem to hasten the day that they just expire all the grandfathering for current owners, too.

Keep in mind that at the start of the "November 2006 rush" they only had a handful of class 4 left so pretty much any grandfathered sim that was bought then (and I think that was a few thousand?) was already class 5.

Yeah I think grandfathering should then cease on any transfer to a new owner. Certain large estate owners are paying reduced tier on class 5 sims now, I don't believe that "reduced tier" transfers if ther resell them.

Well, I think it is a good idea, from a hartware perspective. It makes no sense to hang on to old hardware indefinitely.

I have mixed feelings though about the grandfathered rates for people on Class 4 sims now. Many of those Grandfathered sims only survive today because of the slim profit margin that they manage with their grandfathered tier rate. Increase their tier by $100, with no say in the matter, and no time to plan transition, and I predict many will fold. Yet at the same time, there's no logic in allowing those who stuck with Class 4 all this time to suddenly get Class 5 at the class 4 rate, indefinitely.

Grandfathering is playing the same game airlines do offering special deals if you buy your tickets six months in advance. They're picking up a little extra business with people who are willing to put up with some inconvenience in buying the product for a better price, without having to cut the price for the people willing to pay a premium.

I guess I don't follow the analogy because I don't understand how the people who pay a lower price put up with any incremental inconvenience over those who buy non-grandfathered sims at resale. What it seems to do, as far as I can see, is perpetuate a separate product class (grandfathered sims) that trade at resale for a substantial premium, none of which goes to LL, generates lower monthly fees to LL, and thereby makes sale of LL's full-fee sims comparatively less attractive.

A comparably priced product offering from LL would probably be warmly received (and seems likely). That makes sense to me, but perpetuating a discount that undercuts new buyers of LL's own offerings doesn't seem like good marketing, unless I'm misunderstanding your point.

They have to wait for a grandfathered sim to come on the market. They don't get to walk into Linden Airlines and buy a ticket for full price right away, or pick up an almost-full-price ticket from the scalpers standing around out front, they have to wait until one of the rare cheap tickets comes up and compete with the other people looking for a deal.

Hmm, not sure this works. You're comparing to a standby ticket or something where someone has to wait for a seat to be available. However keeping the deal on transfer is more like when people get bumped and then someone agrees to give up their seat for a payment.

As someone who was forced to convert my two class 4 sims to class 5 due to the horrendous performance of class 4 sims after the introduction of Mono, I can only hope they will do the right thing and grandfather original sim owners who paid to upgrade to class 5. I sure would like to get that extra $200/month back.

AHAHAHAHAHAHA!!!

Wait.. you weren't being sarcastic, were you?

This IS Linden "OpenSpace Fiasco" Lab we're talking about here, right?

I don't know, they're actually pretty generous with grandfathering (the grandfathered Class 5s from 2006 are STILL $195/month, and they refunded a lot of people who were screwed by the initial openspace announcements). I don't think it's out of the question, even if it's probably something they haven't thought about yet.

Yeah, but are you willing to put up with having to get together a few hundred to a few thousand residents to jump up and down and scream at them for a few months until they finally cave (which was what happened in both situations, btw)?

Even still, a lot of people in similar situations such as yourself did NOT get compensation, especially those who "pre-adjusted" to the changes.

There are all kinds of mechanisms companies use to create these kinds of discount classes, so it's pointless trying to draw too precise an analogy with any particular example.

Some of them aren't explicitly created by the seller, like cab sharing, but still benefit it. The cabby would rather have three fares than one fare, but he'd rather have one fare than have the three guys sharing the cab take the subway instead.

Some don't even have a direct benefit. If there's spare seats in the symphony the company's better off if I can't make it and sell my ticket for half price to a friend than I don't go at all... because that's an extra parking fee and an extra cappuccino and bagel at intermission.

This general mechanism... pulling in people who wouldn't otherwise be customers with a special deal that doesn't work for the bulk of their customers... is common.

Okay, that's inconvenient enough, I guess. I'm trying not to stretch the analogy beyond what you meant for it; I understand the point to be that LL benefits because it gets customers it otherwise wouldn't--it puts passengers in Linden Airline seats that would otherwise go unfilled. Even if that's true, I'm not sure it's a net win for LL in this case because the existence of these cheap seats make non-passengers of other prospective customers who would otherwise pay full fare because they simply can't compete with the lower-cost grandfathered sims when trying to rent them out.

Except, on transfer, that's not quite right either. Ignoring the analogy, what happens is that grandfathered sims command an extra up-front capital investment to buy, on the premise that ongoing operating expense will be lower for however long the grandfathering stays in force, and that resale value will be higher as long as a future buyer will also be able to project lower operating expense for continued grandfathering. That lower operating cost, extended to perpetuity, is like some weird annuity, the proper price of which is the net present value of all future cash flows (fee discounts), which is to say: quite a lot. (For the sake of example, US $100/month perpetuity at 5% annual interest is worth about US $24,000.)

Of course nothing in SL is forever, and obviously grandfathered sims are deeply discounted from that kind of pricing at resale, but someone buying a grandfathered sim right now has to base the valuation on a big chunk of unquantifiable risk: how to guess whether this grandfathering will continue, and whether it will continue for a future buyer?

As I type this, I'm coming around to the view that instead of terminating the grandfathering at transfer, LL should just set a date when the grandfathering will end; without doing any research, I'd guess that a cut-off date of one year after the announcement would be more than generous to account for the pricing differential for a newly-resold sim.

It's been ages since they announced it but LL committed itself to a 6 month advance notice if they were to ever change their mind so that's all anyone can - or should - expect.

That's not really the big deal, because as you say you can recover that when you sell. The real inconvenience... the selection factor... is that there's a relatively small number of them, so they're in demand, so you can't just walk up and buy one when you need it. So they're selecting for people who are willing to put up with the uncertainty of when they're going to be able to get a sim at all.

For people who have 50 regular sims and 10 grandfathered ones, that lets them give a moderate sized longstanding customer a volume discount without having to even deal with the question of offering it to everyone.

So long as picking up that extra business and encouraging customer loyalty is profitable for Linden Lab, there's no incentive for them to terminate it. You have to look at this from the point of view of the Lab, not the outsider, to understand it. If you want to know when they'll terminate it... ask yourself what changes in circumstances would make it unprofitable. When do they go "OK, the profit margin on a GF sim is A%, and on a regular sim is B%, and if we stop the deal we'll lose X% of the sims, but the difference in profit on the remaining Y% will make up for it"? And don't forget "Z% of the GF sim buyers go on to buy a regular sim from us, so we'd need to make an extra C% margin to make up for that loss of future sales..."

Yeah, I know; believe it or not, that's what I was trying to do before.

I *think* where we most differ in assessing the marginal utility for LL is that you believe there'd be about the same number of non-grandfathered sims with or without the grandfathered ones, whereas I believe that there'd be about the same number of total sims, with or without the grandfathered ones. In your model, people own grandfathered sims who just wouldn't own full-fee sims so any margin from them is gravy; in my model, if nobody owned those grandfathered sims, others would buy almost as many more full-fee sims to satisfy the end-user demand currently being filled by the grandfathered ones.

I do appreciate your point about quantity discounts. I'm not sure it's the best way to go about that, but I acknowledge it has that effect, at least for some of the larger accounts. (I'm now also wondering if there may be something like a "loyalty reward" motivating the idea of perpetuating grandfathering for current owners even if grandfathering were to expire at transfer. There must be some reason why, subjectively, it just feels harsher to terminate grandfathering for current owners than to revoke it at transfer.)

I'm going out on a positive limb here and say, "I have a feeling that within the next year, we're going to see a drop in private sim tier to match those of the grandfathered."

Of course, this is LL we're talking about, so I'm really just reaching with this.

this is all good, but what happens when a class 6 server comes along, are SL stating that instantly everyone in SL will be put onto Class 6 servers, or does this mean that LL can always say that everyone now as the same server, so any problems isn't down to that, and/or that they really don't have to update servers for a long time to come?

Actually, it will more likely mean that LL will silently phase servers out as they fail, rather than just doing a wholesale replacement. So, you could actually expect wildly fluctuating sim performance from day to day.