Island Fee Increase

One other thing I don't get, LL need more money for god knows what. Presumably they can currently afford to run as they are, so why not:
- Lay off staff that aren't pulling their weight
- Re-introduce charges for basic accounts, get rid of griefers!
- Find other things to provide (I suggested they offer web-hosting, it's easy, and it could fetch a lot of money for a fraction of the running costs of a simulator)
- Find a better way to stabilise the economy (such as a tiny tax-rate), since real-money is tied up in it, creating L$ from nowhere is a cost
- Charge more for simulators.land-owners that use more resources (as per this excellent post)!
- Open tier charges into a straight $X/per square metre system. So people upgrade to larger plots that they could then afford, instead of staying where they are because the next level up is an extra $64 a month! How many people force themselves to cut-down on prims so they can stay on their current plot, just because they can't afford to buy another half sim?

They decide to kill simulator sales instead?

They're currently not profitable.



They need more staff not less to continue developing and improving SL. I doubt anyone isn't pulling their weight.



LL feel the need to grow SL population in order to make it a viable platform for its future development, investment and ultimately, survival beyond the lifespan of a typical MMORPG and free accounts are the means to this end at the moment.



Why bother with SL at all then ? Web hosting is not their business.




These measures amount to micromanaging the SL economy and while important don't really address the larger picture of LL profitability.



Well that's speculation on your part. It will make no difference to corporate sales, though this may be a short lived phenomenon.

It may impact content creators who currently cover their expenses & make a small profit sufficient to make content creation worthwhile for a modest income. Such people won't pay LL to continue doing this.

To individuals simply paying to play, the old cost of a sim was already orders of magnitude over the average expenditure of a MMORPG player per month. It may put some off true, but if you're really prepared to pay $1200 up front and $200/month for your hobby then it's not out of the question that you'd pay more. It's unlikely you're living anywhere close to the breadline if this is what you spend your money on.

I am one of the lucky ones, a friend helped me get an island, but if not I would now never be able to afford one.
The lindens take, take, take. and now they want to take some more.
I know there are ones that will disagree with me and stick up for lindens. well then you have MUCH more money then most of us then.
I work hard to pay for my tier and to have fun in SL.
Now to pay for better servers, those that want an island now have to pay 295.00 a month. OMG. and 1,650 just to get the island. I find this just nuts.
I'm so disappointed in Lindens, no warning of this increase that I every heard of.
What's next lindens, pay for every time we IM a linden or call live help, Or I know how about Pay line, we call you for help and instead of 800 number you change it to a 900 so we have to pay to talk to you. I think Lindens are just getting GREEDY.

Sexy Partridge

I am going to respectfully suggest that is not quite true although I am sure you have posted in good faith.

We have more or less reached the point where it is possible to navigate DIRECTLY between sl and the net. In other words a web page on a prim or close enough that makes no differance. Go pick up a free Reuters terminal to see what I mean......in other words it is not a static texture of a webpage it changes and interacts.

Part of my day job involves sales and marketing and in my view now sl have reached this point that is a whole new ball game because the technology can be linked via web page each way (slr or from inside)

Performance gains if delivered by new servers will only enhance that.

Regards

John

PS a Caveat
-------------------------------------
LOS ANGELES, Oct 30 (Reuters) - Linden Lab, creator of the online virtual reality game 'Second Life," said on Monday John Zdanowski joined the San Francisco company as its chief financial officer.

Zdanowski's last post was CFO of HouseValues Inc. (SOLD.O: Quote, Profile, Research).

'Second Life' was founded in 1999 and is akin to the original city-building game "SimCity."

The site has about 900,000 users, who together spend an average of $350,000 per day on such things as virtual property, furniture and clothing for their online personas, known as avatars. Reuters operates a virtual news bureau in 'Second Life.'

------------------------------------
I have some understanding of markets, when a rl company appoints a new Finance Officer you need to ask questions.

Having said that his previous company, epic code sold, is poetically apt as the share price graph over the last 2 years is a bloody disaster. From $16 per share down to $6 odd I suspect everyone has been either selling it or going short. For those of us who understand TA theory there was a black cross on or around the 26th April 2006......

Strange is it not that stock markets may seem to have interesting epic codes in some cases


Therefore John Zdanowski may consider Linden Labs a better bet

Again just a personal view

http://studio.financialcontent.com/Engine?Account=prnewswire&PageName=CHART&Ticker=SOLD

(click 2 year tab on chart)

That is certainly misleading though worrisome. HouseValues Inc. is an RL real estate program. It doesn't do any actual selling, it's a matcher program. How is this guys knowledge going to help SL?

http://www.housevalues.com/AboutUs/AboutHV-Story.aspx

Also, he may find SL a better bet, but is SL matching his salary?

http://swz.salary.com/execcomp/layouthtmls/excl_execreport_122503.html

If so, I'm quite worried that paying someone without a real solid history in this type of game that much, is.... scaring me.

Most of his resume is business to business interests and he left HVI at the end of June, this year.

LL's blurb:
-----------------------------------------------------------------------------------------
John Zdanowski - Chief Financial Officer
John oversees all the financial and accounting activities of Linden Lab including management of the rapidly growing Second Life economy. John has extensive experience building and growing profitable internet companies. Prior to Linden Lab John was CFO at HouseValues where he led finance and accounting as the company profitably quadrupled to over $100 million in revenue in 3 years. John also arranged the company's first institutional financing round of $15 million and its $94 million IPO in 2004. Prior to joining HouseValues, John co-founded Affinity Internet, Inc. raising more than $60 million to build a highly profitable Web hosting and services company serving more than 200,000 small and medium sized business customers. John has worked as an investment banker and a management consultant and began his career as an engineer in GE's highly acclaimed management training programs.

John holds an MBA from Harvard Business School, an MS in Electrical and Computer Engineering from Syracuse University, and a BS in Electrical Engineering from Clarkson University.
-----------------------------------------------------------------------------

Hope all this money they are paying him is going to pay off for us. Those numbers sound GREAT! However, revenue isn't the same as profit. Hope those fundraising skills bring something to SL. I could go on and on and show more sites that those numbers aren't what they appear to be...

Anyways, who knows? Maybe the island price hike is to pay his salary. (Of which, he has avereged close to 1 million a year for the last 5 years.)

I guess only the admin staff of LL will ever know, but seeing that i just paid a year for my two accounts, as of this week, I’ll be able to stick around and see what happens.

Will most likely be landless, or just using the land provided with my premium account, however, I would just like LL to know, I have chosen sides, and it’s against the increase.

AS

This blog post made by a clever bit of research would suggest that they are currently VERY profitable and not by us.



All assurances aside, how can they get $11 million from the govt. as well as taking $$ from all of those companies and then some and say they are not profitable?

They are more than making up for the cost of the new servers in the first month alone. I can't remember where the post was but someone stated that the new class 5 servers are only $1200, divid one server into 4 regions and they are paying for the server 4 times with the start up cost alone! Maintenance at $1200 a month for 4 regions? This is PER server.

Let's not forget the $170,000,000 of $L that LL has sold this month already! That's a lot of $$ not going into resident pockets and a lot of stipends taken away from new members.

Anyway, I doubt that LL is in the red right now...

What's your point ? No one's disputing that companies are profiting from website stores. The ability to link to a website from within SL itself has nothing to do with profiting from SL, nor is browsing the web enhanced by doing so. My point remains that there is currently no technical means or opportunity for aggresive corporate profiting from SL itself as was suggested by the poster I was replying to.

Well correct me if I'm wrong, but I understood that LL had received $11M in VENTURE CAPITAL FUNDING not from the government. This is investment by private companies that is intended eventually to show a return to the investors, so i would suggest the "research" you refer to is incorrect and hardly a reliable basis for argument. Investment is not profit and the fact that a company requires investment of this kind to fund development is further evidence that it is NOT profitable or it would be in a position to cover these costs itself.

I don't see why not. Greatly simplifying things, SL is sort of like a parallel mini-internet where the client is like a browser that makes websites show up in 3D graphics. The internet can always add another website if you have a server for it, and I think the same is true for SL.

yay for Google cache - this was posted on Yahoo and has since expired.

--

HouseValues 2Q Profit Slides 49 Percent

Tuesday July 25, 4:52 pm ET

KIRKLAND, Wash. (AP) -- HouseValues Inc., which provides online subscription service for real estate agents and mortgage bankers, said Tuesday its second-quarter profit fell 49 percent and announced its chief financial officer resigned.

Quarterly net income fell to $1.9 million, or 7 cents per share, versus $3.7 million, or 14 cents per share, a year ago. Results included $1 million, or 4 cents per share, in stock compensation expenses. Analysts polled by Thomson Financial, who included stock compensation expense in their estimate, had forecast earnings of 6 cents per share. Operating expenses rose 59 percent during the quarter. Revenue totaled $25.9 million, a 26 percent increase from $20.6 million a year ago, compared to analysts' outlook for $26.6 million. HouseValues said it will stop providing detailed financial guidance for the foreseeable future as a result of an uncertain real estate market, and said it no longer expects to achieve the low end of ranges of previously issued guidance.

The company said that John Zdanowski resigned as CFO and that it named Vice President of Finance Jacqueline L. Davidson as interim CFO until it can find a replacement. HouseValues also announced a stock buyback program where it would repurchase up to two million shares of common stock from time to time on the open market. The company has about 27.3 million shares outstanding. Shares fell 64 cents, or 10.2 percent, to $5.63 in aftermarket trading on the INET electronic stock exchange after losing 25 cents, or 3.8 percent, to close at $6.27 in regular trading on the Nasdaq.

I'm going to try to play devil's advocate because my take on all this is a little different, it seems. I think you need to try to look at it from Linden Labs' point of view. While I understand that's difficult when faced with a 50% price increase I think a little perspective helps.

First, no one likes a price increase, especially such a drastic one, it really sucks, but the venomous replies in the blog kind of shocked me, to be honest.

The ones I especialliy can't fathom are the people who say "well, I can't afford an island now, thank a lot LL! You've screwed me over!". It's not LLs job to help subsidize resident's projects. If you're only making enough (or willing to spend enough) to barely scrape by owning an island at the current price then I would suggest you can't afford one. I've seen a lot of islands come and go. How much extra work do you think it is to have to set them up, only to see them moved or removed 3 months later when the resident who was barely affording it has a car problem and can't pay their bill now? From LLs point of view it's much better to price the islands where you better be serious about owning one, especially with all the corporate interest at the moment. I'll take the LLs at face value when they say they were basically breaking even on island sales up until now, so their profit in not selling one is the same as selling one.

That leads us to the next part, the mainland. It's a mess. There are many reasons for this. Plot sizes on the mainland tend to be small so you have scores of vastly different builds piled right next to each other. This leads to the chaotic feel of it. Most of the best builds are on private islands because the people who own them have the space to keep a cohesive look. With the current pricing of 1000ish for a mainland sim and 1250 for an island, an island wins hands down because you get way more control for the extra 250. The monthly tier is the same. So why would the best builders build on the mainland? Most don't. This leads to more fracturing of the world as the best builders work on islands and the mainland, for the most part, ends up looking horrible. As you can see on the Economy Stats page, the number of new islands each month was growing very rapidly. How many of those do you think were sticking around?

I think LL is partly hoping that many of these talented people, who now probably won't get an island, start moving back to the mainland. You can get a sim for 1000ish and pay 50% less in tier. On the flipside, LL has less work because mainland sims are not custom orders and they don't offer concierge service etc. Plus, if someone buys a sim and then has a car problem and can't afford tier, well, they can always parcle it up and sell it. You can't do that with an island.

Meanwhile, don't fool yourselves, there are plenty of people will deep pockets who will still shell out for islands, and not just coporations.

Anyway, that's my take on it, I could be wrong.

Two words

Asset Server


or as its better known, Asshat Server.

Yeah, right next to some first land sim where someone on the sim edge decides to make a field of 16 m2 ad spaces out of their 512, and blight their 1k investment.

No help from LL.

No wonder why they moved to the islands.

Until LL does more to manage the mainland, SL is still going to have flight to the private islands. It will just go slower and be a little more expensive, with fewer people getting a whole sim, just a smaller parcel from Anshe or some other land baron.

I don't think the corps will pick up the slack in sales that will be left open by the builders, shop owners and various other enthusiasts finding the private sims no longer feasable financially to move to for their projects. I think we are living in interesting times, and I will just sit back and see how things pan out, for better or worse. I don't know what the future holds, but I do have some experience with this pandering to the corporations - and I know it hasn't worked in the past. There's a big hype right now but it's going to pass. Then what?!

My advice would be don't believe everything you read on the web.

Do you have any backing for the notion that LL has gotten any money much less $11M from the US government?

Here is some further info about CFO, data source www.advfn.com appears he may has some relavent experiance

SAN FRANCISCO, Oct. 30 /PRNewswire-FirstCall/ -- Linden Lab(R), creator of the rapidly-growing virtual world Second Life(R), today announced that John Zdanowski has joined the company as chief financial officer. Zdanowski brings with him unique experience, having most recently served as CFO of HouseValues (NASDAQOLD), which quadrupled in revenue during his three-year tenure.

"Helping Second Life grow is a demanding challenge that requires a renaissance skill set," said Philip Rosedale, CEO at Linden Lab. "John's engineering, entrepreneurial and operating experience is a perfect fit for us."

As CFO, John will be responsible for leading Linden Lab's finance and accounting activities. "Second Life is an amazing platform combining a number of innovative technologies and trends," Zdanowski said. "I'm excited to join such a brilliant team and investor group to help take the company to the next level."

Zdanowski has extensive experience building and growing profitable Internet companies. Prior to Linden Lab, he was CFO at HouseValues, a leading marketing partner for real estate and mortgage professionals. He arranged the company's first institutional financing round of $15 million and its $94 million IPO in 2004. Prior to that, Zdanowski co-founded Affinity Internet, Inc. raising more than $60 million to build a highly profitable Web hosting company serving more than 200,000 small- and medium-sized businesses. He has also worked as an investment banker and a management consultant and began his career as an engineer in GE's highly-acclaimed management training program.

Zdanowski holds an MBA from Harvard Business School, an MS in Electrical and Computer Engineering from Syracuse University, and a BS in Electrical Engineering from Clarkson University.

Second Life and Linden Lab Second Life is a 3D online world with a rapidly growing population of over 1,000,000 residents from 100 countries around the globe, in which the residents themselves create and build the world which includes homes, vehicles, nightclubs, stores, landscapes, clothing, and games.

Second Life is created by Linden Lab, a company founded in 1999 by Philip Rosedale, to create a revolutionary new form of shared 3D experience. The former COT of Real Networks, Rosedale pioneered the development of many of today's streaming media technologies, including Real Video. In April 2003, noted software pioneer Mitch Kapok, founder of Lotus Development Corporation, was named Chairman. In 2006, Philip Rosedale and Linden Lab received Wire's Rave Award for Innovation in Business. Based in San Francisco, Linden Lab employs a senior team bringing together deep expertise in physics, 3D graphics and networking.

Note to editors: Second Life(R) and Linden Lab(R) are registered trademarks of Linden Research, Inc.

DATASOURCE: Linden Lab



CONTACT: Alex Yenned, of LEWIS PR, +1-415-992-4434, or

, for Linden Lab



Web site: http://www.lindenlab.com/

you do realise you quoted a LL press release and not an actual journalistic article?

Beat me to it!!!!

I was gonna quote this:



While it looks fluffy and pretty, he builds up INTERNET companies, and while he may have some experience prior, he has none in a gaming arena whatsoever, it's been business to business his whole career.

And as I pointed out, those numbers look great if you skim, but it's mostly pandering numbers. I.E. 'Raised' 60 million. So he can swindle some dollars from investors, yay for him. However, this has come to bite him in the butt if you do a thorough search of how some people were unhappy at investing so much and no return.

Shady at best, but the curious thing I'm still wondering is his salary, compared to what was released to the SEC.

yep, I don't see a lick of info about his making "profits". He seems good at raising capital though.

The article I posted from the AP is a real journalistic article, and the picture it paints is not pretty.

If LL can't break even on island sims, they won't break even on a mainland sim owned by a single person. There is simply no difference between the two, other than the fact that the estate tools on mainland sims are not accessible to anyone but LL.
The only difference is that they can add mainland sims at their own leisure.

A non overcrowded isolated island sim should even be cheaper in bandwidth costs compared to a mainland sim because it doesn't have to deal with child agents taxing the sim just for being in proximity of it. As far as I can recall that was the main reason why mainland sims are limited to 40 and why it's a configurable option on islands.

The mainland model works for the same reason residential land on private sims is so lucrative. If a mainland sim is owned by 8 people (who don't own land anywhere else) LL receives 8 x $40 = $320 in tier for it. If 16 people own it that shoots up to $375, etc.
If the entire sim is owned by just a single resident they only get $195.

Concierge services aren't limited to private islands. Anyone with half a sim or more in tier has access to the concierge, or at least that's what the concierge notecards I have state.

Try the perspective of trying to be competitive with your new sim build, when the existing sims and mainland properties have far lower overhead than your new sim build. If ALL maintenance costs and buy-in costs had gone up equally for existing private sims and for the mainland, and by a smaller percentage, then new sim builders would have a level playing field. But when a new sim builder has to pay hundreds of dollars more to get into the game, and 100 dollars more every month in overhead costs? That cost has to be paid for somewhere, and it's most likely going to mean 35% higher land buy-in prices, and 50% higher 'tier' for purchasers of land on new sims. It takes a tremendous amount of 'value added' in your offering to overcome that kind of price hurdle. Most land buyers/renters won't pay that big a price difference, no matter how beautiful and peaceful your sim is.

And incidentally, the new sim price FAQ has stated that in three months from now, it's anticipated that any transfers of EXISTING private island sims will cause the new owner to have the higher maintenance fee applied to them. So re-working older sims will also soon be at a severe cost disadvantage against the remaining grandfathered sime, and against the mainland.

Therefore, this change will tend to kill a LOT of new development. Not because the buyer can't pony up the cash. I have a customer who can easily drop enough cash to buy several sims at once. The problem is, with this un-level playing field, you can't fill the sim up fast enough with paying customers, or make it self-sustaining financially, without 'selling out' and including a lot of heavy profit-oriented stuff in your build, like casinos or mall space - which induce lots of lag and make your sim far less desirable.

I seriously doubt that many Builders will want to work on the Mainland, at least if they are funding the effort themselves. The mainland is absolute anarchy, from a builder's perspective. No matter how large a parcel you are working with, the parcels on the edges of your build could be absolutely ANYTHING, from a brooding Goth vampire castle to a hundred foot tall phallic symbol, or even a ring of 16M2 parcels filled with view-killing, lag inducing garbage. If it isn't today, it could be tomorrow. And the Lindens won't do SQUAT about what such crap builds do to your enjoyment of the property, or to the value of your property. Compare that to a private sim, where the sim owner can, and usually will, enforce strict zoning to eliminate that sort of land terrorism and value-destroying builds.

Yes, I'll work a mainland job if someone hires me to do it. A job is a job. But I wouldn't invest a single Linden of my own money in such properties, nor could I, in good conscience, advise any client of mine that Mainland property was a good choice for their builds. Not while The Lindens allow anarchy to rule there.

Oh yeah, I forgot about that problem.

...

Come to think of it, shouldn't there be some way to spread out the asset load over multiple servers?

I agree, and I think that's part of the problem. We all know the SL is entirely built by the work of the content creators, both large and small, so I think anything that might help to force at least some of them to have to take a serious look at using the mainland sims for their builds would be a bonus in LLs books. Whether this helps in achieving that we shall have to wait and see. I don't think it was driving force in this decision but I suspect it played a part.

I was sooooooo close to buying my second sim. I was saving my US$ converted from my L$ earnings and not putting in any RL money. I was about another month away from having enough in the bank. I could have dealt with the higher set up fee, it just would have put my plans off a bit longer, but the huge increase in monthly tier is totally prohibitive. As Cerra points out well, how can I rent commercial or residential property and compete with the thousands of sims that are paying 33% less tier than I would, my current sim included? I would be stuck with either an empty sim, or a losing venture because people would just rent on the cheaper sims. I would have to charge 50% more per square metre to acheive the same rate of return, and who the heck is going to pay that when there is no outward advantage to renting on one sim as compared to another. I have no doubt that tier for current sims and mainland will be adjusted within the next 3-6 months to match the new rate. When this happens I think you will see a lot of islands for sale, as the current models people are using to make a profit off of thier sims will go up in smoke. Myslef, I have cashed out the US$ that I was saving for my sim, and will go spend it on somthing for myself. If the tier inequality is eventually evened out and I think that I can make a go of a second sim I may start saving again, but I somehow doubt that.

my solution to solve this inegality, stop buying sims thinking you can make it pay back it's monthly fee.

- Find an alternate funding source.
- Stop considering private sims as "business investment"
- Don't buy it if you can't afford to keep it bare or non commercial