A response from Caledon.

Hi all,

I've been asked by many many people why I've been relatively quiet on this issue so far - though it's quite debatable if my opinion means much at all beyond the estate borders of Caledon.

For those that do care - oh yes, I'm formulating a response.

* * * * *

In the interim, I think there are a few important topics to consider.

1) The technical facts. It is important we know the rock-bottom unemotional truth about the technical issues facing us, regardless of complexity. With the assistance of many others, I'm taking what steps I can in this direction right now. This won't be a static thing; I doubt anyone would say that the server side software is at its theoretical optimum presently. For what it's worth, I personally trust Prospero Linden's analyses and statements regarding the technical issues.


2) The business side. I obviously think a blanket price hike across the board on openspace regions is the wrong approach. More on this later.


3) Timing. We have Halloween, the United States elections and other distractions approaching. Simply venting in forums this week, burning out on it and then passively but angrily accepting the state of things as fait accompli two weeks later won't work for anyone. It won't work for residents, it won't work for business people, it won't even work for the Company long term.


4) Thinking of the big picture, and others. Some of us are well positioned to survive, but none of us survive in a vacuum. Private estates won't thrive unless the quarter billion square meters of mainland also thrive. But perhaps more to the point, the corporate and educational offerings won't thrive unless regular residents thrive. Those who bring their universities and corporations onto the grid are typically involved residents first. Private-estate-involved residents. For instance, look at the location of the IBM regions on the grid and ask yourselves why it happens to be in that particular spot. Private estates are the gateway to serious business, and few realise that as directly as those of us who work at the grass roots level.

* * * * *

For Caledon residents - regardless of the issues I face here, which are essentially force majeure from my standpoint, I shall be using Caledon's significant reserves for the first time in a national effort to soften the blow to our citizens. At least as best as reasonably can be done, without endangering the estate as a whole.

I thought I was being ridiculously conservative, holding off a long list of residents who wanted openspace regions at almost any price. Yet it appears that I was barely conservative enough. Regardless, as far as I can tell we are stable, with the openspace region issues effecting approximately 10% of our whole financial picture.

* * * * *

If this thread topic is still here and open for a while, I shall say something more here in the coming days.

Reactionary, short-term anger in forums may feel good, but we need more than feel-good, we need a better solution. Likely most of you can imagine how I feel. I may remain civil, but don't mistake that for happiness or resigned acceptance with regard to the announcement.

Perhaps this will be a forgotten issue soon; I don't know. Doesn't matter. I am honourbound to do right by the community of Caledon, her friends, and her larger world as best I can.

ll are coming for you des.
they want your profit.
prepare to be forcibly gommed.

I'm by your side all the way Des. Great post.

One of the MOST annoying parts of the announcement from my point of view is the lack of good guidance to the residents about the technical issues. If LL are going to cite technical problems as the reasons for the enormous hike in tier for void regions, then they need to back this up with good and detailed information for the residents.

Personally I think the best of a bad set of solutions would be a two-tier version of voids, giving people the option to choose the current, lower tier, if they respect the rules which are drawn up to govern openspace sims from now on, which should be explicit and easy to conform with, OR choose to tier up to a higher level, with a different set of rules, and possibly enhanced allowances for prims.

Linden Lab were fully aware that residents were going to town on open space sims the moment the requirement to buy four at a time was dropped and the prim limit was raised. It was quite obvious that the new category of sim allowed people who wouldn't otherwise be able to buy one to get into the market, renting an openspace, and that people like the control and privacy which an openspace gives one over a quarter of a whole sim.

I have found it infuriating that when you ask direct questions about technical performance of sims, asking for clarity on the effects of one course of action or another, it is impossible to get decent answers that allow one to make an informed decision. When Numbakulla opened three years ago, it started to crash ever couple of hours, making playing the gaethere a frustrating and unhappy experience. I tried very hard to get good information about what was going on, we adjusted everythigwe could think of adjusting... but in the end the solution seemed to be in the server code, because a server code update solved the problem. You'd have thought there might have been some progress in three years, but it still seems impossible to get.

Really what makes it worst is that we all have an affection for Second Life, want it to succeed, and this sort of action makes it so much less likely that it will. I joined OpenLife today.
~Cali~

Good luck with that.

I think the technical issues posed by unregulated OSRs are real, but I also think that even if there were no over-use of OSRs LL might have a problem with them. I just suspect that if Openspace sims were working out for LL financially, they would address the issues on the technical side by puting hard restrictions in place for OSR resource consumption, and leave the tier as it is.

While of course I know no details on how OSR's impact LL's finances, a couple of things are obvious. OSRs consume more support $ per tier dollar than regular regions (though perhaps less than smaller mainland parcels). OSRs have also somewhat cannibalized the market for mainland and classic island rentals; I would think that would worry LL, but haven't discussed it with any Lindens.

And, the subleasing of large numbers of OSRs to people who do not own a regular sim appears to have taken LL by surprise - I can see how having large numbers of sim "owners" who LL doesn't know about might be a support issue for LL.

So, while addressing the technical issues is necessary, I don't think it's sufficient. Judging by what they've done and said so far, LL seems to feel that they have to both cut down on the number of OSRs, and restructure the remaining ones to bring in more money.
.

/me always looks forward to Desmond posting something he's put thought into.


The behaviour of most people in these threads really makes me feel ill. Residents have made me feel like maybe SL isn't the place I thought it was far more than LL has this week.

I haven't posted on this issue at all so far, waiting for calm....

The Isles of Fatima are but small players on the grid compared to many, but Des you can count on Fatima's & my support in whatever way is of help.

Inc

Desmond you gave me some good advice to remain cautionary over openspaces not long back. I can't begin to tell you how much i appreciate that now. Although I was always cautious over their use you helped to confirm that view, so thank you very much.

As for being angry and reactionary. biting my tongue doesn't come easily and I'm fuming mad even though the effect to me is minor compared to others. The fact that I purchased my one and only openspace at the end of August, when it appears Linden Lab were aware of the problem does annoy me greatly.

Annoyed is fine. Saying LL totally mismanaged this issue is fine.

Calling for people to try and crash LindeX or spam every Linden they can find in search or calling in the RCMP (btw, is that were Pony Linden went?)/FBI/FTC/etc or flood welcome areas or any of the other score of things that do nothing but hurt even more people is what I was objecting to.

Just wanted to make that clear, though I'm sure I'll now be accused of being a Linden alt. Again..

Set the gun bunnies on them!

Desmond,

Perhaps we should form a Consortium of Estate Owners?

Let me know.

I can't tell you how often I have expressed the wish that LL would take someone like you onto their board of directors. I only wish that LL had 1/10th of your integrity and business acumen.

Second Life is so very vulnerable to a serious competitor - some program like Nurien (search YouTube for demo) will come seemingly out of the blue and devastate them. So much for goodwill ... . I am looking forward to your posting further on this issue.

Best personal Regards ... and if I can help in some way, let me know

Eloquent and understated as always, Des.

What exactly did you have in mind re: this?

Thank you for that.

I am one of the people who has suffered a huge financial loss as a result of this sudden decision. I bought the two Open Space sims alongside the main island from another resident, in good faith, on the basis that Linden allowed residential living/low usage. I asked both the outgoing resident and Linden about this prior to spending a great deal of money on land (and yes I do have the support transcripts saved). On that basis, I saw it is a way to help finance the Spacexcape Project (funded totally by myself). That, of course, did not work because there was no rental market, so the sims have not come close to paying for themselves, so they are rented at cost price to cover the tier. Now I have had to submit two tickets to abandon the two sims and see my investment (made in July) go down the pan. With the £ against $ exchange rate as it is, I am suddenly burdoned with a huge increase in costs that already I struggled to make and now my accounts show this additional loss.

I didn't come here to be a landlord nor to spend my time in anger on forums against the actions of Linden Labs. I have supported and promoted them at my own cost and came here to create something truly inspiring and collaborative. I no longer feel like doing that now. I no longer want one penny of my money to go into the profiteering of a corporation so hell bent on their profits that they are driving the community that creates those profits away.

Communities are built on fairness and transparency.

It sounds like you have a great business model that is resilient to change and is able to adapt to it, and more power to you for taking that approach. I am sure you and your residents will be fine, as you will no doubt be one of the first to identify any changes to the marketplace that can be suitably (and perfectly reasonably) exploited.

I am absolutely sure LL has got quite a sophisticated model and bucket loads of supporting data that justifies this latest change, and that their approach will benefit the vast majority of the population that is not well represented in this Forum.

LL sold the product! There are an estimated 13,000 Openspace regions, with that many affected what sort of representation do you expect to see here? This is close to cutting off your nose to spite your face (LL not you )

There's also the issue of if they'll do it for Openspaces what about the rest, and that's a trust and confidence issue. LL desperately need to regain trust and confidence.

I am absolutely sure there is not a sophisticated model and data, because if there was, ten thousand openspaces would not have been sold before the resource usage issue became a crisis. I don't think this was malice aforethought across several months by any stretch. So no, they weren't tracking things so tightly. Also, almost *any* sophisticated model would have avoided the PR disaster you see unfolding before you today.

I'm not going to give exact details regarding how I'll help Caledon until I see exactly what our service provider does. Otherwise it would be premature and likely be too much response or too little.

But I shall certainly do something; my reputation is on the line. Yes, mine. "You rented a region to me, and now you are telling me the rates are going waaaay up?" What do I tell everyone... if I lost the trust of residents in Caledon, I'd go under really fast.

* * * * *

As for consortiums of residents and so forth, I have no wish to be ringleader of anything, so I'm going to defer on that one.

Still working on a response; I'm going to do my best to be quiet for now until I have something worth saying.

Desmond, let me first say that I have admired your approach to Second Life for some time. Like you, we at Mixtape Islands, have always approached estate ownership as a business. We have a business plan and we do our best to execute that plan. While good businesses adapt to most any situation it is frustrating that we can wake up one day to find our plan ripped to shreds and a need to go back to the drawing board. This is highly unusual in business because almost always there are alternative suppliers that you can turn to if your primary goes haywire.

I too have been at a loss for words when it comes to how poor customer service/communication is with Linden Labs. Where else would a customer receive notice of a devastating price increase by having to go to your supplier’s blog and read it?

Here is a little background on me as it explains how I look at business. I am employed by a billion dollar B2b Corporation and I am responsible for roughly ten million dollars in sales each year. Just this week I drove 3-1/2 hours, each way, to meet with a disgruntled customer who was thinking of leaving. This customer purchases around $13,000 a year from us; technically a drop in the bucket compared to ten million. However, this customer was important enough to me for me to rearrange my schedule to go meet them for lunch; issues were worked out and the account was saved.

With that said I look at our monthly tier, rather modest compared to Caledon and many others at $30,000 a year and I think; how can LL risk losing customers who pay them that much money? When do we become worthy of “personal touch” from this supplier (LL)? Why weren’t we notified directly as they have our contact information?

This is a MAJOR problem for the lab and it is why I have come to the conclusion that this isn’t a ploy to cut the middleman and sell direct on mainland. I have come to this conclusion because LL doesn’t have the skills nor the capacity to service their customers like you do on Caledon, like we do on Mixtape Islands and like so many other fine estate owners do all over the grid. WE actually care about our residents and this is, quite frankly, why this news is so devastating to us because protecting OUR customers and taking care of them is in our DNA. We just can’t flip a switch and say “oh well we will just pass this along to them.”

Currently we have 10 OSR and they are used to connect our full prim regions. We are STRICTLY residential and have always made clear to our residents what type of region they would be living in what it meant to them. We called our private islands (OSR’s) “Little Wonders” as we name most everything we do after a song or a musical term – this is from our website:
“Since we, at Mixtape Islands, believe honesty is the best policy, you should be aware that Little Wonders are "low prim/open spaces" regions. The simulation creator tells us that these were designed for light use as they share assets with other similar regions. They say occasional, slight lag may occur. For this reason we must insist on strictly residential use. Malls, clubs or other commercial businesses are prohibited in Mixtape's Little Wonders estates.”

Some here are very critical of the resale of OSR and continue to quote the dated description of the regions saying “you should have known better.” We wanted to use OSR as they were intended but there are only a few huge land owners who could possible absorb $75.00 a month for open water. We have a great deal of each OSR underwater so that all our residents can navigate through the entire group. To subsidize to expense for the OSR we rent a portion of it to a maximum of three residents; that’s it. It is rare to see more than a couple dots on any OSR at any one time yet they are available for use to all our residents.

I could go into all the reasons I believe OSR’s were actually encouraged for residential use but I think that has been hashed enough here and I think it is obvious.
Desmond, I like you KNOW this could have been handled so much better. I don’t buy into the excuse given by LL and I don’t because they haven’t done a good job selling it. They have treated us as if we are disposable and perhaps to them, we are? As you stated, they should have come to us, humbly, to make their case. We ARE their customers, we DO pay their bills and salaries, we ARE stakeholders in THEIR business as well, We DESRVE more respect than we have been given.

There are so many knowledgeable people in this community that we could have worked together, brainstormed approaches that LL probably didn’t even consider and come up with a REAL solution that would be beneficial for all. Would the tier have remained the same? Who knows? Would we have been more willing to accept changes, you bet because we would have been part of the solution. We, as business owners in SL, need SL to succeed just as SL needs us to pay their bills. If we had been respected as stakeholders, given data to work with, we, together, could have fashioned a superior solution.

The absolute void of real communication from the lab has really hacked a lot of people off and has created an incredible amount of distrust. This will take a long time to repair but even so it will take a great deal from the lab to get that ball rolling. With the current attitude at the lab they will not be able to withstand new competition, especially one that “gets it.” Remember when Yahoo “was it.” Then from nowhere came Google and Yahoo has been playing catch-up ever since. I say this because WE need to be cognizant of this fact and look out for our welfare because LL is not interested in it.

I saw somewhere a list of investors in SL and I believe Bezos from Amazon was one. Can’t imagine Amazon would have behaved like the lab in a similar situation. Yes, I know typically investors would want to “shore up” an area that may be a financial drain (as OSR MAY have been for LL) on their investment but they would also expect it to be done in a responsible manner to not lose the current cash flow. Disgruntled customers and a mass exodus do not make for a stable investment. Perhaps this is the group we should appeal to; I don’t know.

Well, I have been long-winded enough. Desmond, count me in as an ally in whatever you decide to do. Maybe some sort of consortium IS needed. There have been several groups that have formed but unfortunately they resemble a mob at this point and while that is a place to start, perhaps we need a strong union of estates owners to join together and become an even larger force to protect our businesses.

Desmond

I have read all of your posts on this OSR issue with great interest. I absolutely do not mean any offence by this, but I see your posts as 95% about marketing, and about 5% as concern.

The thing that intrigues me is the 5% concern. This is, substantively, a new feature in your communications. I do not believe for one minute that you are concerned about January 2009, or the impact of LL's decision on your business - the chances are that, if there is any impact at all on the SL market, that you actually stand to benefit, and by no small margin, but perhaps only in the relatively short-term.

This change only impacts you at the very margins of your business, and perhaps, not even that, perhaps it is just at the interface, and I suspect that is the closest any LL policy change has come to impacting on you.

I personally think your concern is about July 2009, or November 2009, or whenever the next step change takes place that will, in all probability, significantly impact you.

I will post on this again, but I want to think about it first.

Thank you Desmond for your always timely and well thought out comments.

I can definitely vouch for Desmond's commitment to his tenants and for his concern about how these changes may affect both individuals and the entire community in both the short run and the long run.

While SL may be a business for Desmond, he is smart enough to do it well and to realize that his reputation and the trust he has built up are worth preserving. If LL had the business sense that Desmond does we would not be in this situation.

Customer service is the basis for survival for all good companies. Be they internal or external customers. Desmond lives that model for us and we are grateful.

Katrina Pugilist

Desmond is very proud of his estate, and his pride does show in most of his posts- but he is well-liked and respected in the community, and he contributes a lot more here than just "marketing." There are a thousand and one rental estate owners in Second Life, and only a fraction of them ever visit the forums- and the great majority of those who DO only come here to spam the land subforums with identical "L@@K L$1 LANDDDDDD" threads. Desmond, on the other hand, regularly shares his experience and knowledge to help other estate owners- his competition- in these forums.

While I am quite sure Mr. Shang IS concerned about what else Linden Lab might spring on estate owners in coming months, I think you're really underestimating the impact that a move like LL's recent price hike can have on even a very successful estate owner like Desmond. I don't know what Desmond charges for his openspace sims, but I believe he's on the lowish end of rental rates. Anyway, I bet he's going to have to raise his OS prices by a significant amount just to break even on them (I think he even has some class 4 openspaces around, and LL is forcing an upgrade to class 5 at new tier).

But worse than the financial impact is the prospect of telling one's tenants that you need to raise their rent. A reputable estate owner prides oneself for NOT being the idiot who keeps raising prices on their tenants because they don't know what they're doing, for NOT being the one who just throws in the towel one day and evicts all tenants without refunds or warning. To be FORCED to raise one's prices, even if it's only for a portion of your tenants, really sucks for someone who works very hard to be reliable and responsible for one's customers.

Yes, I totally agree with everything you have said. My comment about marketing was probably a bit misguided, or could be misconstrued (I sensed DS seeking to provide assurance). My main point is that if Desmond Shang is concerned, then there is real potential for concern. I have not fully formed my thoughts on this yet, but I suspect that in the future, established stakeholders like Desmond will see their role substantially change. If Des is exposed to the OSR marketplace, even in a limited way, then he is, probably for the first time, exposed to general policy changes by LL that previously did not really impact on him (and potentially provided him with benefit).

As I have said, I have not fully formed my views, but to give you a hint, the SL marketplace is now reaching a new level of maturity, one which could see, just as an example, the future removal of all grandfathered tiers (this is happening with the OSRs, it is the first time it has happened, and it could happen again for other types of region). In the past such a move would have resulted in LL genuinely cutting its nose off to spite its face, but now, maybe it would have little impact on LL, but would remove the shelter provided by the entitlement to grandfather rights for people like Des.

Something I had to do last night, after sending out a general notecard to all our residents alerting them to the tier changes the day before.

I have to say I have been somewhat humbled by the response - the general reaction has been one of "it's going to be difficult financially but we're staying - you can count on us". We still have to restructure somewhat as one or two immediately quit SL in disgust and there is simply no prospect of leasing the sims as they stand for the immediate future. That said, one lesson I learned early from Desmond was about the need for a strategic reserve, and one I will be employing if necessary over the coming few months to ease the way forward for our estate and our residents whilst we wait for the situation to settle and the market return to "normality" and we get a better view on the future.

Inc

You do not intend to offend yet you proceed to question the intentions behind the post?

/me laughs and shakes his head.. jealousy is an ugly thing.

You are confusing marketing with good business sense. I have no doubt that Desmond is concerned about this change. He is right that for the estate business to be successful in SL all communities have to thrive. We are all intertwined, the SL economy is not made up of separate isolated silos.

I agree with many that believe that LL is trying to cover for their incompetence. They did not model what OS sims would do and did not model the level of success they would have. The way they tried to solve their problem made things worse, this public relations debacle could have been prevented. I am sure they have not modeled the consequences of the change and the impact on the overall SL economy. The CEO seems detached and unaware of what is going on in-wold, it seems that he is getting told everything is ok and that it only affects a limited number of people.

I only hope that they take a page from Desmond's book and come up with a plan that treats their current customers with the respect and integrity that Desmond is showing for his. I intend to follow his example and make sure that my customers have a good path forward that does not endanger the over all business.

Keep it up Desmod

.d