Green Dot Terracotta Armies

Written by River Ely: Nov 23rd, 2008-11-23

(Written in response to http://foo.secondlifeherald.com/slh/2008/11/how-many-bots-i.html )
(based upon a posting on Second Life Forums at http://forums.secondlife.com/showpost.php?p=2230625&postcount=374

I pointed out in February the financial stability of owning small islands in Second Life with the intention of renting out space was declining. I was poo-poo'd It is madness in anyone’s eyes, to continually generate more and more land while the user base has been visibly shrinking, its as though they are printing money to satisfy the cost of hiring employees.

They (Linden Labs) are aware of the issues, but have (in my opinion) no way of altering the decline as the original motivators have either left the company, retired with fat cat pensions or have been fired. The bot population was evident at the beginning of the year and I found an island near one of my own, with a platform at 700 meters, crammed with 40 avatars, all in neat lines, all facing the same way and all in newbie player clothing and dress style. We called them 'Ruths', and could not understand at the time, the logic of so many people standing still for no reason. had they been dancing it might have been a party, but like Chinese terracotta armies, they stood in silent rows facing a nonexistent orator.

With the introduction of a relaxed rule set governing Voids or Open Space Sims, the final decline was initiated. A greedy move to generate more income was exploited and made available open space sims to about anyone at low cost. We had regular renters abandoning sound high prim low cost lots on conventional sims, in favour of the open spaces Sims that were starting to flood the market. For a while, it seemed the only way to retain these customers, was to convert main sims to open spaces and to buy in more and more open spaces. Still, the Europeans like myself, were fighting a losing battle in the early summer, as profit margins dropped, USA players could settle on a ten percent profit line. Sadly, with a European Player being hit with an additional VAT cost, 17.5% to 25%, we become early victims in the price cut wars. We watched our islands empty as the users followed the trail of cheap rentals and lots of space.

The Linden Income Generation factory has now changed the rules with a huge price hike on the cheap plentiful oversold Open Space population. The global economic downturn is not evident it seems in Linden Labs as they raised the cost of an Open Space sim by 66%. With some 15,000 open space sims to be affected, the price hike, if accepted by the users, would generate a massive income boost for the company.

The shifting USD-GBP ratio means that now I pay considerably more for my open Sim than I did in February, so my margins compared with the USD holder are more than depleted, they are trashed. If you are not a United States Player, I feel it is no longer an option to own islands in Second Life, that is if your aim is to generate income to cover your own player costs, plus a small profit. The frequency with which I have been giving islands away, asking Linden Labs Concierge Service to switch off open space sims and letting them expire in order to stem the flow of Money Out compared to Money In is alarming. I am but one player in SL, I had 12 Full Islands and number of open space sims, I am down to one island, with a single open space due to close in a few days time as tier rolls around again.

The summer surplus that has in the past kept me afloat until the autumnal players return like snowbirds flocking in for the perceived winter sunshine has been eroded over the last winter, hammered in the summer and is now all but dried up completely and I can no longer afford to sit on empty sims in the hopes that renters will any moment, flood in and restart the income generation.

The business model I had was sound, as was that of countless hundreds of other sim owners. The failing was the assumption by Linden Labs that everything in the garden was rosy and they failed on three counts.

One, they skewed the traffic stats and believed their results were the truth, regardless of the shouts from people like ourselves, Island owners with more empty sand than was comfortable

Two, generated more and more land for the nonexistent players thus deforming land prices beyond the point of stability.

And three, rather than introducing a package that encouraged land owners to retain and promote their land, they increased the cost of ownership to a point the market no longer would bear. They seem to have been blind to the loss of money spending account holders, and seem to have been treating bots, campers and alts as if they are real players all needing to own their ‘space’, a ludicrous and unsustainable situation to find themselves in. I bet the original creators, having sold second life to the current board, are laughing all the way to the bank.

We have been predicting the failure of Second Life for some time, it is a shame the Linden Labs Board Members could not have done the same.