A not entirely complete thought here. But one I’m working on.
I’ve seen it written many times by residents of Second Life that estates are the land-profit center for Linden Lab, and the loss of estates while mainland is growing is a bad thing for the health of the grid.
I’m not convinced. But I am open to seeing numbers that show me where I am missing the point.
Here is how I see it:
Volume is what is key. Better to have a lot of low paying customers than one higher paying one.
This is both good in raw profit numbers, and stability.
Show me the the money:
How many mainland residents does it take to equal one estate?
If we assume the average mainlander owns 2048+base 512 (probably they own less, but some own vastly more…) for $15/month – and if we assume every one of them paid annually (the lowest rate – $6/month)…
Then a full mainland sim holds 25.6 of them.
(65536m / 2560m)
They pay LLs $(15+6)*25.6 = $537.6 per month.
– For every mainland sim’s worth of land LLs manages to get occupied, that’s what it makes. And unlike estates, this does not have to be contiguous (together) – it can be here and there with mole builds and abandoned lots between (see below for how much unused land they can afford).
An estate pays $295 per month; regardless of its occupancy. So the question is, how empty does mainland need to get to start making only $295/month per sim?
So lets empty the mainland sim a little…
295/21 = 14.05 mainlanders to pay the same in per month as one estate holder, burning up 28774m (44% of a sim). All mainlanders after this are added bonus.
To me, that implies that premium accounts make more money for LLs than estate accounts. Walmart philosophy.
Estate is a courtesy service – a model that assumed premium accounts would be unpopular. It attempts to shift the revenue elsewhere. However estate sales is simply unable to raise as much as you cannot convince someone to pay for an estate what they pay for mainland.
The less land each mainlander has too… the better for Linden Lab this gets.
The difference is small, but it is there. Its the old model for any service like this: the less each customer uses, as long as they keep paying, the better. But in this case… its actually, the less they buy, the better. Its the idea that you can make more money selling a candy bar for 99-cents than you can for selling the same bar for $1.50, because you’re more likely to sell 2 of them.
If all mainlanders owned only 512m of land… paying 6/month. Then 49.2 of them would be one estate account, but they’d only burn up 38% of a sim – all remaining land on that sim would be added bonus.
– Translation: from half to 62% of mainland can be empty, and still equal the money made from an equivalent amount of estate land.
Think about that next time you lament abandoned land and mole builds. Yes, it’d be better to move that abandoned land, but until it hits over 60% of maninland being in Linden hands, its no crisis.
The above factors out the $1000 setup fee, as that’s not a regular cost, and probably largely lost from buying / installing the server.
For mainland, that $1000 is made up in the first month or two of higher revenue than estate – and most mainland was set up years ago…
At the same time, mainlanders can be given minimal support, and all you need to do is keep the power running on their servers. Go use your Live Chat support sometime, and compare it to the support given to an estate holder – yeah, its costs more to support estate land… People paying $295/month expect something more than answers read from a script. People paying $15/month expect it to, but if they don’t get it, who cares? they do, but they (self included) don’t matter as much individually…
Which leads to…
A bed of nails is better than lying on a single spike:
All of the above stated – how much harm occurs when one mainlander quits, moving on to whateverville…
Its all about gaming the odds. Walk into any random Walmart and think about how much business they would lose if you plucked out one customer and sent them next door to Target. Now go to some exclusive shop, like the little golfing antiques store at Pebble Beach where the average item on display costs about $10,000… Take away one of their customers…
Ok… so the obvious response to my points above is that I have just proven that it hurts Linden Labs everytime an estate holder quits.
Yes, it does. That’s why its better off not having these customers in the first place.
You’ll note that way back in the good old days they built up a lot of mainland and sold folks tiny plots here and there. Then new execs come in and tried to Tiffany-up the place and sell us all estates. We bought a lot of them… so other execs came in and said it was time to become exclusive and corporate… We bought some of them…
– Then we got sticker shock and started dropping them.
Those execs got pink-slipped, and they brought in one who came from the business of selling people little video games and CD-Roms full of virtual goods (The Sims – you know you bought that expac with the new designs in 2.5D kitchen tables… cause it was -cheap-).
So they’re back to promoting premium, and have been for about the past year and a half.
Why is this? Not just the numbers above…
But it hurts when you lose one of those estates. It hurts so much, that for the larger ones, Linden Lab is now somewhat hostage to their whims. Imagine if say… Caledon packed up tomorrow and rage quit Second Life.
– Who do you think would drop a dime first? Desmond, or LLs?
OK, maybe that’s borderline. Is Caledon isn’t big enough yet. Play that game with Anshe Chung? She’d probably get a personal visit from Rodvick in a bathrobe, champagne bottle, roses, and a ‘how can we help you?’
But think about why Caledon is a reflex for me for a moment. Becuase I’m a mainlander. To me, as an ant in a hill of ants, Caledon is like Atlas holding up the world. To Anshe Chung… Caledon is like ‘who, oh did I get something on my shoe again?’
So image if little old me cancelled my alt’s premium account.
I know what I’d get – cause I’ve done this before when I switched off my old account. I’d get an automated email… It might not even come to the right address… 😉
It would take 49 of me quitting Premium for them to feel it as hard as it takes a one sim estate owner quitting.
Answer: I can’t hurt them the same way. By intent or not – I’m a less risky investment as a customer.
I’m a hoodrat. Nobody cares about hoodrats. Trust me. They only care when writing their Master’s thesis in social work.
Walmart can lose thousands of customers to all manner of reasons and not even need to keep a record on it. But that golf shop, it loses one; and the owner’s kid doesn’t get to go to college.
That’s why we see the push on premium, and why we shouldn’t care so much when estates seem to be going down in numbers – especially if there’s a like timed rise in mainland.
The more mainland SL gets, the healthier it gets.