Where are we headed?- The latest Blog

Dynamic hosting would be a bit like a continuous rolling restart, with sims being loaded into servers as and when someone wanted to TP or log into them. It would work for isolated sims, but not for mainland or individual sims within a group of joined islands.
That process appears to impose great strain on the asset servers.

However, there are probably large numbers of sims that are rarely visited, so that approach could help overall hosting costs.

Added:
BUT - the big problem is concurrency. Dynamic hosting would only impose more load on network bandwidth and asset servers. That would worsen performance already hit at peak times.



Yes, Premium is a nonsense as far as land purchasing is concerned.

Because land represents nearly 8x more revenue to us than premium accounts, our focus has been on the launching of new land products rather than on enhancing the premium subscription.

They seem to have forgotten that only premium or concierge accounts can actually OWN land.

Ah, now I get it. Thanks for the explanation!

There have been a ton of great replies in this thread. And so many brilliant insights. If only LL management would listen.
That's the first thing one must do before deciding on a marketing program: What is SL's competition for those $10? For some people it is online porn subscriptions. For others it's 3D construction software, even RL Legos . For some it competes with console video games or doll houses or some get-rich-quick scheme. For others it's any of a thousand social media networks. LL needs to figure out which is the more valuable fish/fishies and start putting some bait out for it/them.


P.S. I heart Isablan Neva. Every post is a diamond. Wanna get hitched?

That's really what they are doing now anyway.

The one and only reason for me to remain Premium is access to Live Chat. The other Premium "benefits" are a financial wash. I can buy the stipend equivalent in Linden Dollars, and without my tier-free mainland, I could probably find a rental equivalent.

Since any conversion of Basic to Premium accounts comes with an increase in stress on support in the way of things like Live Chat, the increased costs really eat into any real profit from Premium. Another reason that eliminating Basic accounts and requiring Premium accounts creates little, if any, additional revenue to Linden Lab.

Thinking about it, if I could buy the Premium "benefits" separately, but not as a package, I'd probably only buy the support beneift, and leave the stipend and 512 sq m free mainlain tier benefits. Linden Lab could make more money that way. I wonder how many people are like me, who really only care about the support and could leave the other "benefits", while Linden Lab's costs are tied up in those benefits I don't want.

Bots should not go when concurrency hits 50K. Simply, bots should go, totally, completely, fini.

Exactly. This is a point that is missed a lot of time when we talk about who Second Life's competitors are.

At a certain margin, everything on which someone could spend time and money is a competitor to Second Life.

For some people on a severely limited income, the local grocery store and the gas station are competing businesses to Second Life, when it comes to spending 10 bucks a month.

For people with a limited disposable income, Second Life competes with all entertainment products. It competes with cable television. It competes with book stores. It competes with a night at the local bar.

For computer junkies, Second Life competes with all forms of computer entertainment, like the MMORPGs, video games, web surfing, and blogging.

Second Life is unique when it comes to computer entertainment, or virtual worlds. But I would guess that there are very, very few people for whom the unique features of Second Lilfe are so important, that no other means of spending time and money provide a reasonable alternative.

I don't give Linden Lab a lot of credit when it comes to making good business decisions. However, when it comes to the offering of Basic and Premium accounts, Linden Lab has the right idea (whether intentionally or not). It's classic price discrimination. For some people, branding or status is so important, that they will pay extra money for a product with a brand name over a less expensive, but competely identical generic product. Grocery stores do this all the time. Often, when you go to the grocery store, and see something like the brand-name cheese side-by-side with the less expensive, generic brand of cheese, the brand-name and generic cheeses were both made by the same company with only the most insignficant change in formula.

By offering both Basic and Premium accounts, to a certain extent, Linden Lab does not have to choose between a low-income audience and a moderate-income audience. They can get as much money as possible from both.

Concurrency is just that, concurrency. It doesn't mean new people can't come to SL and buy land. Just because there are 60k online at any given time, doesn't mean it's always the same, exact 60k people. There are millions of users, and this is growing.

As well, I want to follow up about something people on the blog kept harping on.

<soapbox>

Most account holders with land either buy their own islands, or rent from someone who owns one, or rent from someone who owns mainland. To be clear:

- You don’t have to be premium to rent Mainland *nor* Island parcels.
- You don’t have to be premium to *own* an Island.
- You do have to be premium to own Mainland.
- Only 20% of the grid is Mainland.

Premium memberships are probably the most worthless metric. Most people are operating in SL without premium membership, because they don’t require it for anything they do. So please, stop flogging the Premium membership count as proof SL is failing. It doesn't apply to 80% of SL, maybe more.

</soapbox>

/Me taps the syringe blissfully. ... ...

Is this an official "the sky is falling!" thread?

I've seen a few of these before

But keep plugging away guys, one day you may be right

LOL

But people who cannot consistently log in at the times in which they want to log in are not going to make additional investments in things like land.

There will still be churn at the bottom, with old members leaving and new members coming.

I don't see churn as being financially stable for anyone.

I assume that when it comes to tier-related income, it's better to have less turnover. Turnover creates periods during which no one is paying tier on a piece of land; the time between losing the old tenant and installing the new tenant.

Churning makes some money, I assume, when it comes to the Second Life real estate agents who buy and sell. Linden Lab, however, captures none of that profit; it doesn't help Linden Lab financially. Now for the SL real estate agents, there is some money to be made on churning. However, an increase in churning is also going to bid down the profit margins to be had between the buying and selling.

Growth would seem to be far better for everyone. Every user lost to the concurrency cap is money lost. Even mere loss of the time of users- not necessarily the absolute numbers- is a loss of money.

In the short term, the concurrency limit may work fine for the established real estate agents in SL who are comfortable with their current level of work-to-income. But without growth, there is little margin for error for the established SL real estate agent. Make a mistake that loses customers to a competitor, and there isn't a great pool of new customers to fill in the loss.

I'm not following this reasoning. At the point we are now, the only way the user count can grow is if folks spend less time in-world, or use the grid only at non-peak times. Now, however popular SL is on the Solomon Islands, it's gonna be difficult to sustain a lot of profitable growth without higher concurrency figures. For a while, land sales may continue, but if there's never to be more than 64K-ish accounts in-world at the same time, there's a real limit on how much SL can grow its population of active users. And land sales are driven by *growth* in that number. True, that number is not concurrency, but it's ultimately limited by concurrency.

You are right in saying that it's not the exact same 60k people.
However, as more people buy land, that's more people who will want to log in reliably when they want to, and who will want a reliable experience when they do log in.
A NPIOF might just shrug/swear and do something else on the Net.
Someone who has paid up front and continuing tier might take a less philosophical view and perhaps abandon the thing altogether.
As more people buy land, we start heading towards a greater proportion of the 60k being the same people at any given time of day.

Putting more land on the grid without solving the concurrency issue is a disaster waiting to happen.


"Premium memberships are probably the most worthless metric." - Agreed!

Well, for me it's a "we need more land, but way over there under a different sky" thread.

I spend about 60 hours a week in SL, 7 days a week, and a good portion of that is on weekends, when concurrency is the worst (yes I'm addicted ). In the last two years, I can think of only about 4 times I couldn't log in when I wanted to, and one was last week, when they limited logins. I tried 10 min later, and got in, no problems.

I honestly don't believe there is a problem with getting on when one needs to. Not yet, anyway. When I can't get on even 5% of the time I need to, I'll start believing it.

I don't thing that the ability to log in is the issue.
It's what happens with transactions, TPs and other services after you log in that can be the issue.

Yet is the keyword here and if growth is to sustain the ever expanding land market then that "yet" shouldn't be far away and that is a problem on the horizon.

Oh I agree there. If that was your driving point, I stand corrected. The only way to avoid this is the direction LL is going, other grids. SL is maxed out as far as database load capacity is concerned.

Agreed as well. Land isn't a bottomless pit LL can keep feeding indefinitely. Back in late 2006/early 2007, LL fell way behind in keeping up with land demand, and prices soared. They caught up around the end of 2007, but now they have overshot the mark a bit. I think they know this. Question is, what they will do in the coming future.

It's possible that Linden Lab just doesn't care about ever having more than 60,000 concurrent users.

Since I have no access to hard numbers, I can just make a somewhat educated guess on the makeup of the SL user-base. My guess is that the overwhelming majority are just casually socializing. Chatting, playing house, exploring. Like me.

Users like me who are just casually socializing cannot be a great source of profit. Sure, I pay for a premium account (and I'm in the minority on that), I incur the occasional 30 cent transaction fee to buy Linden Dollars. But that's about it. I have no access to LL's financial records, but I just cannot possibly believe that I am the kind of customer that turns a profit for LL.

A lot of other things confirm that suspicion that residents like me do not turn profit for LL. One is the fact that LL can't seem to secure investment capital. If residents like me were a gold mine, then some investor is looking to cash-in on me.

Another is the fact that LL has horrible customer service and a history of disconnect with the resident base. That may be in part due to bad management at LL. But another possibility is that the vast majority of residents aren't throwing enough money LL's way for LL to care.

And another is the fact that the concurrency limit has been looming for a while, and has been a problem for at least several months now, and LL isn't showing much interest at all in solving it. Again, this could be poor management at LL. But that assumes that by halting growth, LL is throwing away money. Maybe there is just no money to be had on additional growth.

So maybe the 60,000 limit is just fine with Linden Lab. Perhaps the next goal is to phase out residents like me- socializers who don't throw around a ton of money- and replacing residents like me with the IBMs and Sun Microsystems holding their virtual business meetings.

The drive to increase the resident base may not have been directly about making money. The resident base serves as cheap beta-testers. The increased resident base has driven up media visibility for SL. And the numbers of residents- both total and concurrent- are a selling point to potential business partners.

60,000 concurrent users may be the magic number that Linden Lab needs for beta-testing and advertising purposes. Now Linden Lab can forget resident base growth in raw numbers, and concentrate on resident-base composition.

If you want to assume that there is some business sense at Linden Lab, maybe what we should be learning is that Linden Lab has seen the future, and the future doesn't include a vast majority of us- the casual socializers.

Even if you don't give Linden Lab credit for business sense, then you have to wonder why the market hasn't done what it often does to companies with great potential that is unrealized to poor management: Another company buys the underperforming company and replaces the management.

And then there is a company like Google, making what it touts as a competitor to Second Life, without making it operate with many of the great features of Second Life that many of us enjoy. I have to think that a company like Google looked at Second Life and said, "There's just no money in doing it the way they are doing it. There's profit in the 3D Chatroom aspect, but no profit for us in the penny-ante, virtual economy aspect."

This is a forecasting thread for SL business. So my guess is that SL business that operate dependant on the socializing residents would not be wise to invest in expanding business. Starting a business dependant on the socializing residents would not be wise. The most clear future in SL business is in catering to corporate presences in SL.

I often assume that LL is just poorly managed by a group of people with no business sense. But whether you assume they are incompetent or very competent, I think the future looks the same either way.

A few months ago CFO said they were unconcerned that the premium subscriber base was flatlined at 90k since last year. Premium subscriber base is what buys the land.

Maybe I am overtired but am I interpreting that the focus is accounts generating land revenue but not the accounts that generate the land revenue ?

Island sales do not require premium membership. And islands have been the cash cow, not mainland auctions, despite the fact that mainland auctions for more money, thanks to islands having $100 extra tier per month.

I see, I never realized that.

I still think the numbers are counted twice when they turn over as well, added twice into the economy total for bought and sold.

I'd like to see the average tier income of a mainland sim. They can potentially fetch more than an island, although I doubt few do.

Still they do not really take good care of concierge members either. And a premium who isn't being taken care of has no reason to throw more money in to become concierge.

I don't know. Even at my discounted rate, the sims where I own approximately half have other landholders with significant holdings, and a few scattered ones. How many people out there hold more than a half a sim in one place? Four people holding a quarter sim equate to one island's tier, plus $5.