Innovation, yes, but wrong turn

No, the biggest problem — one that is crucial for LL — is that they’re not capitalising on the existing user base, but dreaming about a user base that doesn’t exist yet. Instead of thinking “what should we offer land managers more, so that they buy extra services from us?” Linden Lab is just thinking “how do we attract more users and make them stay?” Instead of improving the services they offer to paying customers, they want to make the experience for free accounts better. To a degree, that is not completely silly: a free account that is happy with the service is more likely to move to a paid service. But only if it’s worth the extra cost. Let me give you an example: voice morphing. LL launched that service in 2009. I have no idea if it’s popular or not — or if it pays for itself — but I found it very strange that, for example, Premium accounts don’t even get at least a discount. Voice morphing is subscription-based and is the perfect example of an “add-on” that would make sense as an “upselling feature”, but it has to be something that makes sense. Most people don’t need voice morphing anyway, and it’s so much cheaper to buy an external tool. If you have a Mac and GarageBand installed you don’t even need LL’s voice morphing, you can assemble it on your own using Soundflower. So there is really not much interest in that solution, except for residents with little technical experience or causal users.

A better solution would be to have a pack of extra features for special accounts, and allow residents to upgrade if they felt the need for more services. We have a bit of that in Premium accounts. Supposedly we have access to technical support, while regular users don’t. We get — hooray! — 512 m2 of “free” space every month. We get a weekly stipend in L$, which is way less than simply exchanging a few US$ every month. There is this strange feature that allows Premium users to log in to a congested grid will free accounts remain out — to the best of my knowledge, this was only put into practice once. Premium users, because they pay so little — and LL is still after the heavy sim setup fees which made them wealthy during the days of exponential growth — don’t get barely nothing in return.

All this requires serious rethinking. What Linden Lab needs is not more users, which log in one day and disappear forever. Instead, they need to persuade existing accounts to upgrade. But that requires giving them what they need and want. And first of all that means asking them what they wish. It’s obvious that the target is to squeeze land owners dry with the US$295/month. But between that and paying zero is a huge gap. There should be a tiered approach, leading to different price structures depending on the set of features that people actually require. Prokofy Neva has suggested long ago that one possibility was to give rezzing rights just to Premium users; LL somehow captured that idea with meshes, i.e. you need to have bought something from LL first to be allowed to upload meshes. The idea that having “payment info on file” is a class of users should really be taken into account by LL. These are LL’s customers: the ones that pay directly to LL. It doesn’t matter if they’re buying land, L$, or classifieds, or even just shopping through the SL Marketplace. What matters is that these are truly LL’s customers. And, as such, they should be their more valuable assets.

Of course I’m fully aware that some of the best artists and community managers are actually free accounts, and that SL would be so much poorer without them. I fully agree. This requires to be addressed by the next level: encouraging volunteers. So who cares if you’re not spending money in SL and making LL wealthier — but are instead updating wiki pages, answering support questions, filing bugs, or running whole in-world communities? That is crowdsourced labour and very valuable. LL’s task is to capitalise on that as well, because it’s as important as directly getting a revenue from them. Some might say it’s even more important (since it builds a community, and some users, thanks to a solid community, might be willing to upgrade their payment level).

Now I’m not saying that LL — specially in the recent months — is not supporting all these ideas and projects. Surprisingly, and thanks to Rod Humble, they actually are back in supporting community projects and encouraging more volunteers to “officially” contribute their work for the benefit of all (a change of policy). The issue for me is that this is not their main objective, but it should be. They are still dreaming about new users.

Well, let go of that dream. Those “new users” don’t exist, they’re just smoke and mirrors. I’m sure that a few will obviously come if everything is simpler, faster, and easier — and more fun. There are possibly a few more millions around the real world which haven’t yet found Second Life, and, when they find it, will immediately be part of it — so I’m not saying that the efforts to reach out to them are wasted. It’s just that bringing them in to SL requires a lot of effort, a lot of time, and, ultimately costs a lot — for little return, specially because almost all will be free accounts that will hardly upgrade.

Instead, all the time spent in pursuing those inexistent users should be invested in making the current users more willing to spend money with LL. And that means increasing the quality of the service and offer more services that residents are truly willing to pay for them.

Alas, at this stage, even sim owners think that the service is overpriced (and so do Premium users!). Even before Linden Lab starts to explore other avenues of income, they will have to “catch up” to make the current services worth the money we spend on them.

So my wish is that Rod Humble quickly gives up on the focus on new users and starts really thinking about his existing customers instead. Let’s give the “new user experience” a try for, say, six months. That’s good enough for some serious evaluation. In the mean time, content creators will have a lot of fun with meshes, and programmers might do amazing things with the forthcoming API for SL Marketplace and the social streaming feature on profiles. And in 2012, hopefully Rod finally realises that he already has all the customers he needs, and it’s very unlikely that he will be able to get much more. Instead, he should focus on increasing LL’s revenues with the existing user base.

After all, we have been around for eight years or so, and will not leave so soon. Few companies can boast of having customers waiting for almost a decade until some of their needs are actually fulfilled 🙂 We’re all very, very patient,

Specially because in a niche market there is nowhere else to go.

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  • Kathy Waverider

    Wow that was put so much better than I could have written… I’ve always wondered why LL doesn’t appreciate their paying customers more… Looking at the bright side, apparently we have at last been upgraded from “scum that must be eliminated” to “ehh…”, so I guess there is hope.

  • Kathy Waverider

    Wow that was put so much better than I could have written… I’ve always wondered why LL doesn’t appreciate their paying customers more… Looking at the bright side, apparently we have at last been upgraded from “scum that must be eliminated” to “ehh…”, so I guess there is hope.

  • Kathy Waverider

    Wow that was put so much better than I could have written… I’ve always wondered why LL doesn’t appreciate their paying customers more… Looking at the bright side, apparently we have at last been upgraded from “scum that must be eliminated” to “ehh…”, so I guess there is hope.

  • My god!  If I were a straight guy, I’d declare to you my undying love.  For *years* I have been trying to figure out why certain other SL observers/bloggers/media-folks are obsessed with this idea that SL needs to be mainstreamed to even survive, much less thrive.  It’s trivial to point out successful players — sometimes very successful players — focused on niche markets, as you have done here.  I have no idea why this is so difficult to understand.

  • Bartholomew Gallacher

    I do disagree deeply. Linden Lab needs new users and the reason is simple to see: for most of the residents Second Life is nothing more but some kind of game, They discover it, live it, shape their avatar whatever and after a while they grow bored. Make that perhaps 1 to 1 1/2 years. That’s then the time when they are leaving Second Life for good, because they’ve outgrown it, such kind of fluctuation is normal, looking for new shores to discover, most never returning again.

    This means even if Linden Lab only wants to enable some kind of healthy status quo for over a long time, some kind of stagnation, that Second Life needs a certain amount of real new users on a regular base. Otherwise it would lead sooner or later first to stagnation and after that to a massive shrinkage of the whole platform..

    So while playing the niché game might be quite interesting, this is simply not enough, because the company also needs to focus on new users for its own good dearly. It’s how it works, nothing more, nothing less, the company needs a constant influx of new users for its own survival.

  • Aliasi Stonebender

    Pretty much what I’ve been saying all along m’self, gwyn.  There’s nothing wrong with being ‘niche’ – Photoshop is ‘niche’, yet it’s widely considered the only serious graphic manipulation program out there. Sure, you have opensource diehards who use the GIMP and people who don’t have money and don’t wish to pirate who use Paint Shop Pro, but the industry? Photoshop. It brings in goodly money, I am sure.

    Make Second Life the industry standard for creative collaboration, play up the “Second Life isn’t a game, it’s a thing you can make games WITH” angle that used to be there, whatever. It’s a sounder bet than expecting the Facebook hordes to have a sudden burning urge to make stuff.

  • Aliasi Stonebender

    You seem to be confusing “know your product” with “NO NEW USERS, EVER”. The first is wisdom, the second is silly. To again use the Photoshop example, lots of college students use academic copies or pirate it… and then wind up buying it for reals when they get real jobs.
    What Adobe isn’t trying is trying to go to people with no artistic talent and no need to enhance photographs and saying “Hey, you should try out this art-making photograph-enhancing software!”… which is, sadly, exactly what Linden Lab HAS been doing. Selling to a market that doesn’t give a damn.

  • I have to concur with Aliasi 🙂 Bartholomew, one thing is replacing attrition (the churn rate), i.e. as residents leave for whatever reason (even old age and death!), we definitely ought to get new residents to replace them, or face emptying Second Life completely. The current rate of new residents is enough for that, and even provides linear growth at single-digit figures over the years. That’s excellent for any market. Some economists, for example, believe that a tiny bit of inflation is good for real economies — around 1-2% yearly is acceptable. More than that is too much; less is dangerous. Overall growth of Linden Lab’s revenue stream of around 10-15% yearly is more than adequate for the investors; much less than that, and they’re better off by investing in financial funds (even in today’s rotten economy).

    That’s the point of my article: this kind of linear, continuous growth is good in a niche market. It’s good for dealing with the infrastructure; it’s good to make LL a healthy company; it’s good for their investors; and for the less greedy content creators, it means a slightly growing market where they mostly get a return for innovation (new products get plenty of sales if they have adequate quality, but constant innovation is the way to grow sales). So, to recap: of course SL requires a constant flux of new residents to maintain the status quo — because some residents will inevitably leave. Most people in this age get tired of things after 2-3 years (it’s a psychological thing tied to the ever-growing pace of change; most people cannot remain attracted to anything much longer than that), so naturally there have to be new users to replace those that have left.

    But more than that is a serious waste of effort. There are simply no more users out there, and it has little to do with LL’s ability to retain them. Those 18,000 new users that sign in every day are just facing something they dislike and will never find attractive to their own tastes, no matter how excellent the first-hour experience is, or how easy it is to use the SL client, or how eventual improvements bring lag down to acceptable levels (which means these days constantly having 50 FPS 🙂 — because that’s the kind of experience people get on similar, but not equivalent, 3D platforms).

    Second Life is simply not for everybody.

  • I believe the obsession mostly comes from the way the media dealt with the (first) dot-com bubble. We still measure the success of anything based on how steep the exponential curve of growth in new users is. But some products are simply not adequate for the mainstream, and this means that not all kinds of business will have that growth.

    We all (and I include myself in this group!) worked for many years under the delusion that Second Life was that kind of product, but it simply isn’t. Waking up and facing SL for what it is, and not for what the media or others would like it to be, will just make us all (and now that includes Linden Lab and their constant frustration at not being able to capture more users) more content — and ultimately happy — about the kind of environment we have.

  • I agree! In fact, after so many years of laughing at SL’s early claim of being “a platform to create games”, I think we’re way closer to that than ever before. Perhaps Rod Humble can bring his own personal expertise in dealing with “borderline” types of games to see how he can promote SL that way. There is a market for an easy-prototyping kind of platform for 3D games. SL is almost — not yet, but almost — able to successfully deal with the requirements of those games. We might not be able to do very fast-paced MMORPGs with hundreds of users shooting arrows at each other in real time and without lag — but it’s getting there.

    On the other hand, SL is still excellent for purely creative uses. A few friends of mine who are RL artists are still fascinated by what can be done in SL, and have only explored the tiniest slice of the tip of the iceberg.

    And then we have all the other sorts of people who just see SL as their own “adult” type of Lego (that’s certainly my case!!). I loved Lego when I was a kid 🙂 Now I have the equivalent thing which is appropriate for an adult. And it’s so cool because I can play around and pretend to be creative and talk to a lot of people in-world about it at the same time. It’s so much more refreshing than using, say, SketchUp and do some things with it on my own, without interacting with anyone…

    But, alas, I’m quite sure that we all are oddities — millions of oddities, sure, but nevertheless exceptions to the rule. Most people don’t want Legos and don’t want to interact with the Ultimate Lego Sandbox…

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