Is LindenLabs going to turn of the new land spigot?

Elex, its really fun to talk with someone who knows how to use a calculator. This is rare, even with all those residents giving the Lindens sound advice for a successfull business with SL A stable capitalistic economy needs both producers and consumers. Compared with RL: not only the bigest tax payers (tier being a kind of tax) are important for an economy. Those tax payers need willing consumers or they would not make a profit which can be taxed.

Your "ideal" for SL seems to be an economy where everyone is a producer and consumer, creating some sellable goods or services, consuming others. Nice idea. I would like such a society. But a lot of residents are either not able to produce much in the way of sellable stuff or are not willing to do it. Like in RL. And if you are only "in to have some fun", you don't need your own land. Why should you buy it?
Looking at the bidding frenzies at the auctions in the last weeks this is hard to believe But maybe its true. On the other side: if the pricing model LL is offering was structured in a way that would make it unprofitable to buy and resell (or rent) land, those already active obviously would loose interest.

Obviously most of the residents don't dislike living in what you call a "dependancy economy" that much And opinions differ on what exactly is important for a thriving economy in SL. I don't seem to be the only one thinking a growing number of basic accounts is good for SL economy (and LLs bottom line). LLs management seems to think so too (otherwise they would not have have introduced free accounts). And I assume they have a little understanding of the SL economy - at least of LLs business plan.

I could not aggree more And its my opinion that having more basic account residents which buy goods and services from those premium account holders makes SL more attractive for potential premium account holders.

As I said before: The number of basic accounts is growing not by accident but because of intentional actions by Linden Lab. They do it because they believe that a growing number of Basic Accounts is good for SL economy and LLs bottom line. If your business is growing, margins get lower sometimes. Thats no sign of a doomed company.

What you are wittnessing right now is a change in the user structure (SLs population) shifting from early adopters which are highly motivated (to pay, too) to a higher share of people just enjoying SL. The result will be a different society and a different economy from the one at the end of 2004. I don't believe it will be a less interesting or less profitable (for LL and residents active in inworld business) society.

The ratio is less than that because you're assuming the maximum possible revenue from the mainland sim, which you're never going to get even if you set it up all as First Land: people will buy the land and then sell it to other landowners because 512 squares is so small and supports so few prims you HAVE to combine plots. You're also ignoring Linden protected lands and the time cost of how long it takes to sell the land. Plus, they don't nearly the same kind of overhead for islands because there's only one person they have to deal with no matter how many residents there are. If the islands were hurting the Lindens wouldn't be pushing them the way they are.

They're the only ones who know what the actual return is on an island, but it's unreasonable to assume that it's outrageously less than a mainland sim... if it was they'd have to increase the price.
1. You don't have that choice. Linden Labs owns SL and all the servers, the only thing you can do is rent time on them to run your scripts and simulate your property. Look, if I own physical property, and I stop paying my taxes, the county can't just take it. They have to go through a long and elaborate process and eventually obtain a lein on my land and sell it, take the tax out of that sale, and if there's anything left after taxes, court costs, and fines... that's my money. There's no such recourse in SL. There can't be.

2. Basic accounts are not "dependents". I've pumped more real dollars into SL through my basic account in two months than I would have in a year sitting on my First Land with a Premium account. I may upgrade to a premium account for the 2000 L$ a month, but given the slumlike conditions for First Land holders on the mainland I'm not likely to bother renting my land there... so I won't be any more or less a "dependant" afterwards.

3. It doesn't matter what I want. What I want isn't ever going to change the way economics works, even in the toy economy of Second Life. And there's a reason economics is called "the dismal science".
And where do you think those tier fees come from? Every Linden that's bought on the LindeX came from LL, so right off the bat the existence of that exchange makes people willing to buy those premium accounts... and those Lindens in circulation end up transferring US$ back to LL. If I buy L$5000 for US$20, and spend L$3500 on a really nice car like a Dominus, at the end of the month Dominus takes my Lindens and sells them for US$ and pays for tier with them. That US$20 ended up in Linden Labs' pocket one way or the other.

Yes, I know there's other things that money can be spent on, but even if it's cashed out that profit's what's keeping the Linden economy running. Almost every person in SL is contributing one way or another, if only as an audience for the people with nice cars to show off to ... because the Dominus owners I've met sure wouldn't have bothered with a Dominus if they didn't have people like me to oooh and aaah at them... and vendors wouldn't be paying tier for car lots if they weren't making money off them.

Economics is complex, and it works the way it works, and waffling on about an ownership economy or a dependency economy won't change the fact that it's always going to be a mixed economy... no matter whatit's a mixture OF and no matter how you might want it to be something other than what it is.

I'm assuming nothing, which is why I'm comparing the _gross revenues_ between a private island and a mainland sim sold entirely as First Land. I'm also not assuming what the actual net revenues are as it wasn't pertinent to the comparison. It was a gross revenue comparison. Another person felt the difference in revenues was 2-3 times. I simply showed that the difference was closer to 4-6 times.



Tier fees are paid by Premium account holders. Both Basic accounts and Premium accounts can buy and sell currency on the LindeX (or other third-party exchanges). Only a small fraction of your US$20 _might_ wind up in the hands of Linden Lab as revenue (excluding the US$0.30-cents you paid for the currency transaction [Hooray! The economy is SAVED. Pop the corks on the US$100 bottles of champagne.]). After an enterprise pays its account fee and tier fee its under no obligation to then turn its profit over to Linden Lab. It instead sells the currency back to another player (or players) and takes the proceeds as US$ (this is known as "profit-taking" or possibly reinvests it in the enterprise.

Allow me to reiterate my main point: The growth in the number of "dependant" Basic accounts is happening at a far higher rate than the growth in Premium accounts that pay tier fees (5,500). The rate of growth among Premium accounts that pay tier fees is falling. Approximately 6-months ago 12-percent of the population was composed of tier-fee paying premium accounts. At present, 6.875-percent of the population is paying tier fees. This is a steep decline in the rate of growth among residents willing to take on expanded "ownership" roles. I feel this is problematic to the health and longevity of Second Life as at a certain point the number of Basic accounts will outstrip the revenues generated by Premium accounts.

Other than wanting to see Linden Lab survive, and thus Second Life persist, for whatever reasons you're reading an agenda into my analysis which simply does not exist.

am·or·tize (ăm'ər-tīz', ə-môr'-) pronunciation
tr.v., -tized, -tiz·ing, -tiz·es.

1. To liquidate (a debt, such as a mortgage) by installment payments or payment into a sinking fund.
2. To write off an expenditure for (office equipment, for example) by prorating over a certain period.

Thanks, Pham, I found your posts to be very fun, too.

A "capitalist" or "free market" economy actually allows the market to work out _prices_ with as little government control or interference as possible. Whether or not an economy remains stable depends on any number of things. No one can predict the future.



My favorite economic model is in the science fiction short story, And Then There Were None, by Eric Frank Russell. (http://www.appropriate-economics.org/materials/and_then_there_were_none.html) No currency, just interlinking personal obligations called "obs." And plenty of goods and services.

Residents can either own or rent land. Or have no land at all. I simply see declining growth in the percentage of residents willing to own land beyond 512-sq.m when compared to the Second Life population as a whole. It raised my eyebrow. We all find fun in different ways. Rolling this question around in my mind and pounding away at a calculator gave me lots of fun.



As an "owner" I don't dislike living in a "dependancy economy" either. But I also look at the SL universe as being full of low-hanging fruit. Any resident that wishes to earn enough to afford account fees and tier fees (or even rent) can do so without having to tap currency out of the LindeX.



Explosive growth is wonderful. On the other hand, explosive growth can be unmanageable. I doubt free Basic accounts can be sustained much longer.



Since my join date, the population is now almost 7-times larger. However, over the same period of time, the volume of the economy is now 2.25-times larger. I think the slow growth in the economy when compared to the growth in population is due to the reduction and then elimination of stipend bonuses which was done to keep inflation down. It's another question to roll around in my mind.

No matter what, I certainly agree that Second Life remains intensely interesting.

You're assuming a whole bunch of stuff.

You're assuming the typical mainland sim is sold entirely as First Land, that the mainland sim sells out the first month, that none of the First Land is ever sold, that none of the account holders ever default, that there's no protected land in the sim, and I'm sure there's other assumptions I'm missing.
I'm not even sure revenues are relevant to the comparison at all, because as I said... Linden Labs is unlikely to set the prices so they lose money through either model. Which is also why your "concern" about basic accounts seems suspect: if LL finds themselves losing money through free or cheap basic accounts... they'll change the rules.
Every dollar of my $20 that isn't taken out of the system as net income after tier and account costs has nowhere else to go except to Linden Labs. The US$ that are put into Lindex aren't going into a bank, they're going to another account holder.
I never suggested otherwise.

How many people sell objects or own land on SL? How many are making a net profit after paying account fees, tier, or store rental, as oposed to just offsetting their payments to LL? Every Linden sold into Lindex by anyone who isn't making a net profit on their activities goes straight to SL.

I believe that the majority of sellers and landowners are not making much more than they pay to LL.

You obviously believe the opposite.
You're comparing two unrelated figures. You might as well compare the number of pirates with the average temperature of the planet and argue that pirates prevent global warming.
I don't care what your "agenda" is. My agenda is simple: using derogatory terms (like "dependant" to describe Basic accounts is counterproductive at best, and your arguments to support this dismissive attitude just don't hold water.

That's only true if people put money into LindeX. And the people who are putting a net amount of money into LindeX are the people who aren't making money WITHIN the Linden aconomy. People like me.

I could build and sell stuff in SL, but unless I can do it for tens of thousands of Lindens an hour I can do more to support SL by spending that hour earning US$ as a contractor and keep the time I *do* have to spend in SL for fun stuff.

YOUR income is "dependant" on MY income, because without a net influx of US$ from people like me there isn't any "Linden Economy".

The math I presented was originally in response to a question posted in another forum:
/108/a5/70902/3.html#post740328

I simply crunched some numbers and answered the question. If you have a problem with the question, take it up with the person who asked it. You might try something like, "Don't ask those questions. People answer them. This upsets me."

Piling on your own assumptions changes nothing. The difference between the gross revenues for Linden Lab when comparing an island sim to a sim of First Land sold to newly minted premium account members is 4 to 6 times.



There actually is a figure on the total number of Premium account members paying tier. We get it by working the total number of Developer Incentive Award winners _backward_, the most recent list being from October.
/3/a4/70933/1.html

Take the total number of winners: 110

Divide it by 2: 55

Multiply it by 100: 5,500

We can now figure out what percentage of the population is comprised of tier-fee paying Premium accounts.

Population: 80,000

We'll use a ratio to do this to determine this percentage:

5,500 * 100 / 80,000 = 6.875-percent

We now know that 6.875-percent of the population owns land above and beyond 512-sq.m, and thus has to pay tier fees.

I measured this approximately 6-months ago and at that time it was around 12-percent.



I simply compared two quantifiable things. Both are of the same "geographic" size, incur fees at the same rate over time, and have fixed dollar amounts associated to them which made it easy to make a comparison.

Allow me to reiterate my main point: The growth in the number of "dependant" Basic accounts is happening at a far higher rate than the growth in Premium accounts that pay tier fees (5,500). The rate of growth among Premium accounts that pay tier fees is falling. Approximately 6-months ago 12-percent of the population was composed of tier-fee paying premium accounts. At present, 6.875-percent of the population is paying tier fees. This is a steep decline in the rate of growth among residents willing to take on expanded "ownership" roles. I feel this is problematic to the health and longevity of Second Life as at a certain point the number of Basic accounts will outstrip the revenues generated by Premium accounts.

Other than wanting to see Linden Lab survive, and thus Second Life persist, for whatever reasons you're _again_ reading an agenda into my analysis which simply does not exist.

Before you can purchase those Linden dollars someone has to put them up for sale. Before you can rent a parcel someone has to own it. Such things are the result of residents taking an ownership role within the Second Life economy.

How you wish to pay for your fun is entirely up to you. It doesn't matter what you _could_ do if you're _not_ doing it.

Even if there were no currency exchanges the Second Life economy's relation to the US$ would still exist: Developer Incentive Awards. In this case, Dwell/Traffic scores can be associated with US$ amounts. However, to earn Dwell/Traffic scoring you must be a Premium account member paying tier fees.

OK, so why's it relevant to a discussion about the "Land Spigot", or even the relative value to Linden labs of actual island and mainland sims? An answer to a different problem might be perfectly correct, but I don't see why it's relevant.
And, again, you're giving a perfectly correct answer to a different question than the one at hand, which was about how many people were actually making a profit on their SL accounts.
That reminds me of the joke about the guy who was looking for his car keys under the street lamp. Someone stopped to help, and after they'd looked for a while asked "are you sure you dropped your keys here?" to which the response was "No, I dropped them down the street there." "So why are you looking here?" "The light's better!"
Yes, you've made that point. Now can you connect that to something that actually matters, like, for example, the relevance to "Is Linden Labs going to turn off the new land spigot"? Or even "the survival of Linden labs"?

Oh, and if you're concerned about accounts that pay Teir fees, why did you use a sim containing only First Land in your example?
So... someone who doesn't have anything but a thousand or so square meters of land with a house on it has an "ownership role", whereas someone who's spent weeks building content for sale but is only using a Basic account doesn't have an "ownership role".
You're comparing "the number of Basic accounts" with "the revenue generated by Premium accounts" again. Can you explain how these two unrelated figures tie together, and why you think the people at Linden Lans are too stupid to change their rates if they DO notice a problem?
I'm still waiting for a coherent explanation of why you think this is something that might hurt Linden Labs' survival, and thus a point to trotting out this analysis which isn't, when you come down to it, actually relevant.
Before you can sell those Linden Dollars someone has to have money to buy them. Before you can rent a parcel someone has to have money to buy it. Before anything in the Linden Economy can have any value that can be used to buy Tier or Premium account fees or even, if you're lucky, make a profit... someone has to be willing to have "an ownership role" in the real world and make money that they can spend in SL.

If you can't see that this is a symmetric relationship, and that you are every bit as "dependant" as a Basic account member who chooses to spend their US$ on something other than directly purchasing land, then you're just deluding yourself.

Devloper's Incentive awards can't drive the economy, because those come directly from Linden Labs and thus can never be more than a fraction of the total ... they have to come after the power bill and salaries for the Lindens.
So the dwell I get from group memberships doesn't count? Why not?

I think Blaze is right. Land is an asset, and it is not an intangible good, so it should not be amortized. It gets confusing, because you do pay a monthly fee that acts like a rent situation. The teir fee is an expense. There is no value gained by paying it. The set up fee is a fee that gives you a "title" to the land. Titles are not intangible assets. No one can have your island unless they pay you and Linden Labs does a transfer of the title from you to them. I'm not completely sure if the value of this "title" is the same as you paid, but it does not depreciate like the value of a copyright. There is no time limit on how long you can own the island as long as you pay your rent. There is an actual fire sale cash value to being the "owner" of the land, and I consider you the owner because you are the one with the right to choose who will have the "title" next and are the one that must sell that "title". There should possibly be some expense immediately after purchase to account for the loss of value if there is a loss in value, but it shouldn't be amortized over time, since there is no time limit to your ownership.

Blaze asks interesting questions all the time and starts, what I consider to be, interesting threads.

I feel the "land spigot" is on to help increase the numbers of Premium accounts and that the "land spigot" won't be turned off for a while.

You didn't ask whether or not residents were making a profit on their SL accounts. You stated that you believed they weren't. I'm under no obligation to buttress your beliefs as you can do your own math.



I don't think you read my entire post...
/130/e9/70407/2.html#post742277
It clearly includes tier fee numbers.



I didn't state that Developer's Incentive Awards drive the economy. Only that if they were removed there was still an element within SL economy that could be measured against US$.

The money for the US$ awards comes from the tier fees paid by Premium accounts. How and in which order Linden Lab wishes to pay their bills is entirely their own affair.

If you belong to a group, Dwell/Traffic monies derived on group land are paid out in the form of a dividend. However, all accumulated Dwell/Traffic scoring goes to the actual _contributors_ of the land contributed to the group, based on parcel size, which is then in turn _possibly_ used for Developer Bonus Incentive (possibly, as only 2-percent of tier fee paying residents will qualify for the award based on traffic). However, if you do not _own_ the land contributed to the group, or your own total parcel size including contributed land does not exceed 512-sq.m, you cannot compete for this award.

You can learn more about Dwell/Traffic at:
/16/ff/23421/1.html

Okay, instead of amortizing the island set-up fee over a 12-month period let's include it as an up-front charge during the first month.

If 128 Basic residents were to upgrade to Premium membership and then each individually purchased First Land and filled an entire sim (which has a max of 128 512-sq.m parcels) then the actual annual gross is:
US$9.95-monthly premium * 128-parcels * 12-months or US$15,283.20

[For those relying on a scarcity model for a rising value of the L$ versus the US$ note that this removes L$65,536 (about US$262) from circulation as in-world monies paid to the Lindens are, for all intents and purposes, destroyed.]

If 1 resident purchases a private island (and we _don't_ amortize the island set up fee over a period of 1-year, but instead include it as up-front charge during the first month) it's
US$1,250-island set up fee + ((US$9.95-monthly premium + US$195-monthly tier fee) * 12-months) or the annual gross is US$3,709.40

[Again, for those relying on a scarcity model for a rising value of the L$ versus the US$ note that this removes L$0 from circulation.]

It's a difference of 1 to 4.12 when comparing the gross revenue for Linden Lab of a single private island to the gross revenue of 128-premium members.

Remember that we _didn't_ amortize the cost of the island set up fee over a 12-month period, but instead included it as an up-front charge during the first month. After that first year the annual gross is now: US$2,459.40

It's now a difference of 1 to 6.21 when comparing the gross revenue for LL of a single private island (after having _not_ amortized the island set up fee) to the gross revenue of 128-premium members.

If we consider tier fees (for example, the aforementioned 128 Premium members all purchase 512-sq.m parcels for vacation cottages in another sim) and begin paying tier fees the gross revenue for that "vacation" sim is
US$5 *128 * 12 or U$7,680 (HOWEVER, that's above and beyond the gross revenue generated by their monthly premiums: US$15,283.20)

I agree that as it's land, it shouldn't be amortized. However, it's also server space.

Whether we amortize the island set-up fee or do it as an up-front charge it doesn't change anything with a comparison between the first-year annual gross revenues for Linden Lab generated by a private island to the annual gross revenue of the Premium account fees of a sold out First Land tier. That one might have an asset in the form of an island which can later be sold for a higher, same, or lower value has no relevance in this comparison. It's simply an expense which has to be calculated in.

I think you're fundamentaly missing the point. The whole issue of Island sims came up from the side thread about the supposed loss of revenue that Linden Labs suffers from people renting on Island sims (or even mainland sims... the Tier is the same for a whole sim either way) rather than having an "ownership position" on mainland sims. To talk about that revenue you need to compare the revenue from the people who would actually own land on that mainland sim if they weren't renting on that island sim. Instead, you divided your mainland sim up to absolutely maximise the revenue. Now you're talking about the tier from one mainland sim divided perfectly into 128 separate pieces to absolutely maximize the revenue, just like you divided your original ideal sim into the same 128 pieces.

That's doubly unrealistic. If I was sitting on my 1/128 sim "first land", the last thing I'd do would be to get a "vacation cottage" on another sim. I'd sell my 512 squares to the guy next to me and buy 1024 squares elsewhere.

Realistically, even if your mainland sim has 128 "First Land" parcels to begin with, by the time it's all sold it'll have people buying first land and selling it, people donating land to groups, people buying land for prims, all kinds of things. Over a period of months, during which Linden Labs is sitting on a sim that could have cleared a clean $1250 plus $195 rent a month on an island, you'll end up with a mix of single plots, larger plots, group plots, ... typically you're going to see a curve... say 3 1/8 region pieces, 5 1/16th region pieces, and so on. Since the tier doesn't double each time the land area doubles, you'll end up with a lot less income than your optimal pure sim (and its optimal pure half-sim elsewhere).

A typical island sim may have 10-15 direct renters. Some have fewer, some have more, but the ones I've seen that are subdivided tend to be broken up into chunks about this size. So you're not "losing" the revenue from the 128 First Land owners you're talking about... you're only "losing" the revenue from 10-15 of them.

So, basically, your calculations may be correct, and the correct answer to something someone in another thread asked, but they're just not relevant here.
Now what happens if there's not 128 renters on the island? What if there's 10? What's Linden's revenue from 10 premium members on a sim?
I assumed you meant that if people buying L$ for US$ were not there, the awards would still be available to pump US$ into the economy. If that's not what you meant, why bother bringing them up? If that is what you meant, I can only agree that it would still drive an economy... but it would be vanishingly small compared to the one SL has now.

Ahh, well just playing semantics. You aren't buying server space, you are buying ownership rights. Linden Labs owns the server. A server itself is not intangiable. The server space bought by others is. The problem comes in figuring out when you buy the server space. The teir fee is when you buy the server space. Whether you own land or not, you have the right to a certain amount of space based off of how much you paid. The set up fee gives you "ownership" rights similar to a title. The ownership is not of a physical good, but I was taught that a title that gives you the right to transfer ownership to another person is always considered to not be an intangible good, no matter what it is you own unless there is a time limit such as on a copyright. Just semantics.

Now that aside, there are two other issues here:
1. Linden Labs wants a stable economy to attract businesses.
2. Linden Labs wants to attract new potential teir payers.

Now they may be able to make more in the short term by focusing purely on what makes them more money, but in the long term their success is dependant on growth and retention of their customer base. They purposely choose to do things in a way that makes them less money for the purpose of balancing the economy. They could make more money if they charge US$ fees for everything including picture uploads. They also have the first land acting as a hook. If you give someone a sample product for free or cheap, then they may enjoy it enough to buy more. First land is not given out on an unlimited basis like the auction land tends to be. This is why there are shortages of it for periods of time, where there are never shortages anymore on land for auction. It is all a part of marketing. They are giving up the short term profit, in hopes that later it will help them retain or gain more profit. There is nothing wrong with this tactic.

Let me add the point that no teir is paid by first land owners.

Actually a basic account does generate revenue for Linden Labs, but not directly. A basic account holder is a consumer. A consumer comes in and purchases things made by the content creators in world, as those basic accounts increase the revenue for content creators increases. As that revenue increases content creators buy more land, up tier fees, and purchase simulators to accomodate this growth. I am not as versed in economics as most of the people talking in this thread, but I see the consumer level player being a massive revenue source for Linden Labs. We have just purchased a sim and have sever others planned as a restult of the increased demand for consumer products.

At no point did I make any statements regarding lost revenue between a completely sold First Land sim and a private island sim. Only that the annual gross revenues generated by a completely owned First Land sim are 4 to 6 times greater than the annual gross revenues generated by a private island sim.

The annual revenues for a mainland sim sold entirely as First Land is: US$15,283.20

If this is solely tier fees of 512-sq.m parcels: U$7,680 (HOWEVER, that's above and beyond the gross revenue generated by their monthly premiums: US$15,283.20)

If this is an island sim the annual gross revenues are US$3,709.40

I see three different numbers when comparing three pieces of land of the same geographic size paid for under different and varying fee structures.



Again, I didn't say there was any lost revenue in this comparison. Only that based on comparison a completely First Land sim generates more in gross revenues than a private island.



Whether I feel this is relevant to this thread is entirely my own decision. If we're having a discussion about the presently increasing quantity of First Land it certainly doesn't hurt to examine the revenues of First Land when compared to another type of sim. Maybe LL is trying to increase account conversion. Maybe LL is trying to drive down land prices. Maybe LL is trying to expand a specific side of the mainland or the new continent. As I said before, Blaze asks interesting questions and starts interesting threads.

Developer Incentive Awards were brought up in response to a section of your previous post: /130/e9/70407/3.html#post742652



Putting your incorrect assumption(s) aside, I'm simply showing that US$ can be injected into the hands of players without including yourself in the equation. That land owners aren't necessarily dependant on your income and how you spend it. Note, again, that _competing_ for the Developer Incentive Award is only available to _owners_ (Premium accounts with more than 512-sq.m of land) and that it's not available to _dependants_ (Basic accounts) within the SL economy.

Correct, it's indirect, not direct. Yes, ultimately, the L$ still have to leave the hands of consumers on Basic accounts and wind up in the hands of residents on the ownership side of the economy before it filters into the hands of Linden Lab as Premium account fees and tier fees. And, yes, it's entirely an owner's decision if, after they pay their account fee and tier fee (if any) they wish to take their profits and sell them or re-invest them in expanding their tier.

However, the ownership side of the population (Premium accounts paying tier) is growing far less rapidly than the burgeoning dependant side of the economy (free Basic accounts paying no account fee). [We're all consumers.] My worry is that at a certain point the expenses of the dependant side of the economy (bandwidth, support, etc.) _might_ outstrip the revenues generated for Linden Lab by the ownership side of the economy which would cause the framework the economy exists within to fail (unlikely to happen, but anythings possible).

It's purely an academic question.

Sincere congratulations on the growth and expansion of your enterprise.

I agree. I actually pounded my head for about ten-minutes on whether or not I should state that I was amortizing the island set up fee. At the time I was thinking about the monthly nut a resident would have to crack to cover their expenses and reach their break even point and including it as an upfront charge created a staggering break even point for the first month.



It's a perfectly acceptable tactic, unless account conversion continues to grow at a slower rate or stalls completely. From my perspective, the amount of First Land being put up for sale and the number of sims being put up for auction is indicative that Linden Lab is trying to get the conversion rate up. Unless we're both a couple of crabby oligarchs I think we both want to see the percentage of residents owning more than 512-sq.m of land rise higher than 6.875-percent when the November Developer Incentive Award list is announced in December.



Right, right. But part of the problem with doing that comparison earlier was the original person asking the question was making a general statement about tier fees generating gross revenues at a rate 2 to 3 times higher than a private island. On the surface I felt it was much higher. Premium accounts with 512-sq.m of land (or less) generate much higher gross revenues. Focusing solely on an equivalent number of tier fees cut that almost in half, but then I still had to consider the revenues generated by the Premium account fees as you have to pay that before moving up into tier fees.

Anyway, it'll be interesting to see how this all pans out.

Look, you responded to a comment about the revenues from an island sim and a mainland sim with that analysis. Not specifically between a First Land sim and an island sim (let alone your hypothetical perfectly allocated First Land sim that's never going to have any land sales on it), but between sims with comparable numbers of residents.

If you didn't intend that analysis to be relevant to the question, then you shouldn't have made it. If you were just making an irrelevant comment, say so. If you really think your analysis was relevant to the question, then for the love of god please explain where this relevance is.
So you're not going to explain why. I guess I just have to assume you don't know why you did it yourself.

Well one thing you miss is that the premium account comes with two main feature:
1. You can own 512 meter2 of land
2. You get 2000$L/month.

The 2000$L/month does cost Linden Labs money, because as I mentioned before they fail to charge US$ for other services to balance out the economy. For every 2000$L they give out, they try to balance things out by not collecting money in land sold for $L in auctions, upload fees, first land prices, public land prices, etc.. In another thread I've shown that the value of what you recieve is greater than what you pay in US$ when you get a premium account. You get more valuable assets than you pay for. They are in fact losing money from premium accounts that do not pay for teir when compared to what they could earn if they changed some of their $L services into US$ services. Premium accounts are not a direct loss of profit, but they do bring in less profit then what Linden Labs could be getting if they did not have to fail to collect money to keep the economy balanced. If they do balance the economy then they have to provide some service for the sole purpose of destroying $L that will not provide US$ income. If the premium accounts give you things worth more in US$ then they cost, then these services you provide to destroy $L will have the potential of making more US$ than the premium account provides. They are paying you to have a premium account in the end. Premium accounts are not the best way for Linden Labs to make money, because other things that could bring in more income than the premium account are being charged in $L instead to keep the high value of the premium accounts from sending the whole economy into a crash.

Of course this is assuming you make use of the ability to buy first land. Those that buy the premium account for the stipend only can actually be getting less than they paid for if they pay the monthly fee of US$9.95 per month, because they do not take advantage of the assets offered to them.

If you have a box of cereal, and you can't get the box open, do you assume the cereal inside must be bad?

Elex, nobody is questioning your numbers. The only thing some participants in this discussion like to question is your interpretation. Some principles of macro economics are very hard to grasp in RL. And - despite some Nobel awards handed out - some principles are still rather badly understood. The economy of SL is very simple in comparison to a RL national economy. Still it is complicated enough to leave lots of room for interpretation and different models.

My personal interpretation of the current statistical data:

1. SL is growing fast
   
2. Basic accounts are growing at a faster rate than Premium Accounts
   
3. Premium accounts are still growing fast, too
   
4. The inworld economy is growing fast, too
   
5. The structure of the "population" of SL is changing
   
6. The demand side of the economy is growing fast
   
7. This is good for inworld business (see Neil's post; I argued along that line, too)
   
8. This is good for LL
   

... even though some aspects of LLs business model might change in a way that might look less profitable in the short run.