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Monday, June 15, 2015

Linden Lab Announces End of Third Party $L Resellers

Well, dear readers, our friends at the Lab have done it again -- shafted the residents and merchants that support Second Life, and shot themselves in the foot into the bargain.

Today, LL announced that the Linden Dollar Authorized Reseller Program would close as of August 1.  The link to its SL Wiki page already has been deleted, and only an announcement that the program is closed remains.  Read LL's blog post here: https://community.secondlife.com/t5/Featured-News/Concluding-the-Authorized-L-Reseller-Pilot-Program/ba-p/2941442

The reason given is that LL has, over the past two years, provided more ways for residents of Second Life to buy $L, especially non-US residents who do not have access to PayPal, so the third party resellers are no longer necessary.

The changes made to the Terms of Service two years ago, when LL closed two-way third party $L exchanges, impacted a lot of residents.  Many believe that new US regulations on virtual currencies, or at least the Treasury's interpretation of the laws, was the driving factor behind this move.  The $L Authorized Reseller Program was put in place as at least a partial solution to those difficulties.

Most of the largest third party dealers went along with this.  Even though they could no longer buy back $L from residents, creating a two way exchange, they remained in the business of selling $L.  Over time, the program gained additional approved resellers, until there were about 29 choices in addition to the official Linden Lab exchange.

Now LL has decided, once again, to intervene in their virtual economy.  In my opinion, the move is not, as the previous one probably was, in response to a changing Real World legal environment, but yet another attempt on the part of LL to appropriate a Second Life revenue stream developed by the residents for themselves.  (In their blog post, LL even states this is a "business decision.")  I am also bemused by the fact that LL is now calling it a "pilot" program, a term that was never used to describe it before.  I suspect they did this to try to make it look like they are canceling a small, unproductive, or even failed effort -- when in fact the Reseller program was large, active, and growing.

This sort of behavior on the part of the Lab is not new.  They increased the costs of private estate ownership to give a greater competitive edge to their own Mainland regions and keep more of the income from estates for themselves.  They introduced themed areas like Nautilus and Bay City to try and get a share of the themed estate market.  They decided to charge fees for people making skill games and running skill gaming regions, skimming off a goodly percentage of that income.  Linden Homes took a huge share of the "first home owner" market away from resident landlords and estate owners.

Second Life is a business.  I understand that, we all do.  Unless Linden Lab earns a profit on Second Life, our beloved virtual world will vanish.  That's a fact of life, and no one with three working brain cells would assert that LL should provide us with our world simply out of the goodness of their hearts.  But when clever residents come up with ways to make money in SL, it smacks of bullying for LL to usurp those income streams by fiat.  Moreover, moves like this lead to uncertainty on the part of entrepreneurs.  No one is going to invest a lot of time, effort, and money to build up a virtual business if they think that as soon as it's a success, LL will come and take it for themselves.

The right way to profit from a virtual economy is to set the rules and then LEAVE THEM ALONE, for pity's sake.  If the economy is stable, it's more likely to grow...and so will LL's cut.  Trying to grab a bigger slice of a smaller pie is self-destructive over the long run.




14 comments:

  1. I feel that while LL is trying to make all of us aware that Sl2 is coming and Sl will end sooner, many are starting to wonder why to be here still and not to move to Open sim grids.

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  2. You are wrong about LL never calling it a pilot program. When first announced in May 2013 they used the word 'pilot'. I had to go look because I forgot.

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  3. Lindal expressed what all, but LL funboy/girl bloggers, are feeling.


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  4. I did cover the errors in this post at some length when this article appeared, but my comments didn't appear to have passed moderation, so I'll try again:

    “I am also bemused by the fact that LL is now calling it a "pilot" program, a term that was never used to describe it before”

    This is incorrect. For the blog post originally announcing the programme (see: https://community.secondlife.com/t5/Featured-News/More-Options-for-Buying-Linden-Dollars/ba-p/2011355 May, 2013):

    “Now, to give users more options and make it easier to purchase L$, we’re launching a pilot program of Authorized Resellers of L$.” [my emphasis]

    “They increased the costs of private estate ownership to give a greater competitive edge to their own Mainland regions and keep more of the income from estates for themselves.”

    Again, this is materially incorrect. While there has been a tier increase in the past, there was also a decrease in the overall fees payable for full private regions. When originally launched, the set-up fee for such regions was $1600; it was later reduced to $1,000. The tier increase was in line with inflation at the time, and since then private region tier has remained unchanged.

    “They introduced themed areas like Nautilus and Bay City to try and get a share of the themed estate market.”

    Again, not entirely correct, I’m afraid. Nautilus and Bay City ( the latter in particular, as it has been far better curated) were introduced in response to requests from users that mainland regions be better zoned and managed "like" private estates.

    Also, the comment tends to overlook the fact that $295 / $125 a month of all tier paid by users to private estates in fact goes to Linden Lab. As such, the Lab doesn’t have to “get a share” of the market - they already have one.

    “Linden Homes took a huge share of the "first home owner" market away from resident landlords and estate owners.”

    This is an oft-stated but purely suppositional statement.

    Consider: Linden Homes are only available to Premium members, who account for some 18-20% of potential land holders. Of these, many do not take the option because Linden homes are considered “laggy”, “ugly”, “not worth it”, etc. Of those who do opt for the Linden Home, there are a fair number who also rent private land as well. I’m one of them, and so are most of my Premium member friends.

    “But when clever residents come up with ways to make money in SL, it smacks of bullying for LL to usurp those income streams by fiat.”

    I’m sorry, but this again suggests a fundamental misunderstanding of Second Life’s economy. The latter is the driving force for the Lab’s revenue; as such, the Lab cannot afford to extensively meddle in things without the potential to hurt themselves.

    Further, by-and-large they don’t need to, given they benefit from almost every economic transaction that takes place, either directly (tier) or indirectly (commission on L$ purchases / cash-out and SLMP sales, for example).

    Where the Lab has erred, has been in matters such at the OpenSpace / Homestead fiasco of 2008/9 - but that was very much a one-off situation. Similarly, the degree to which they are charging fees in relation to Skill Gaming (which you point to) is questionable. But again, this is the exception rather than the rule.

    As changes come along, we’re always quick to point the finger and make predictions of doom. Yet, 12 years on, SL remains relatively vibrant, and the economy as a whole remains strong - as the US $60 million users were able to cash-out as income last year alone tends to demonstrate.

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  5. I think you've chosen to take exception to some of my statements solely for the sake of argument, Inara. We do not actually disagree on all that many points. Yes, LL DOES get a big share of private region income. Which makes it even harder to understand why they've done so much to shaft the owners of private regions.

    And you're making my point for me: "...the Lab cannot afford to extensively meddle in things without the potential to hurt themselves." Absolutely correct! And yet they keep doing so.

    My post was not a "prediction of doom." I'm as optimistic as anyone about the future of SL. And yet, as many of your own posts point out, LL could surely do better.

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    1. No, I've chosen to reply because your article is materially incorrect in a number of statements, as indicated in my reply.

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  6. it's tough to put so much into something and not get the pass. But you have the right makeup to finish the job and go get that number. I have a ton of respect for you.

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  7. Um...yeah. I have NO idea what you're talking about, Sim!

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  8. Lindal the difference is that your are a landlord with experience on the issues, while Inara never was. If she had to manage a region like yours, on one of the most lovely spots of LL waters near blake sea i bet she would not try to justify so much LL on this subject.

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    1. Thanks for your support, ZZ. I have the greatest respect for Inara...she knows far more about many things in Second Life than I do, and she publishes a heck of a lot more on her blog than I can find time for here. Also, I have no idea what's up with comments here...Inara says her initial one never appeared, although I approved it...and a couple of mine appeared twice!

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    2. ZZ, you really shouldn't make assumptions.

      Have I been a land-owner? Yes: a full region (including a modest rental business on it) and a Homestead. Am I currently in possession of a region of my own - no.

      However, one doesn't need to be a landowner in order to separate fact from assumption, and unfortunately, Lindal's article is marked with a number of assumptions - and it was those assumptions that prompted my reply, not any desire to "justify" the Lab's decision.

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  9. I'm not denying Inara's knowledge but if someone over the Years teach me some about land managing was Your's blog.

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  10. I think everyone's had their say at this point, and I don't want the Replies section to turn into a flame war! I won't accept further comments on this post for publication. Thank you all for reading and providing feedback!

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  11. I think everyone's had their say at this point, and I don't want the Replies section to turn into a flame war! I won't accept further comments on this post for publication. Thank you all for reading and providing feedback!

    ReplyDelete