Should LL Flatten Tier?

I think this question, which some have always proposed, which is being discussed more and more here and there, needs to be debated, and not debated from the usual one-sided sectarian perspective that so often dominates the JIRA or forums.

I don't think the issue of flattening or steepening tier can be discussed in isolation from other aspects of the land business, and I refuse to have it separated out as some kind of technical/pricing/economic issue, as it doesn't exist in a vacuum.

The Lindens have to look at this holistically, assess the various factors that go into the success of the land sales and rental businesses, decide if it is truly in their own best interests to kill this sector off, which they've been doing, and adjust their policies. Jack turning off the land spigot is merely an emergency measure due to lots of howling of land dealers, but more to the point, the failure of his own mainland sims offered at auction to move. That tells you, hey, nobody is buying this stuff and what's out there is baking in the sun. It doesn't help the Lindens' bottom line to kill off their number-one purchasers of land in large quantities: land barons. IBM or Cisco or some other big enterprise should be buying enterprise-level accounts to do stuff, but they are not likely to be doing that stuff with 500 sims unless they have some notion of building up some vast single-user customer population in SL, which I don't think they have.

So that's why the Lindens need to look long and hard at the future of their virtual real-estate building and stop succumbing to hippie ideologies prevalent among their extremist coder ranks, stop caving to screeching lobbyists on the forums who hate land and any sort of independent sector establishing any power at all apart from scripting and content creation, and ask themselves what kind of world they really want -- even if their intent is to stop making land at some point, leave it out there for those that bought it to keep if they want, but move to hook-ups to all these supposed emerging independently hosted sims. The day may come when making a sim on your own computer with a World for Windows application as easily as you make a Word for Windows document -- but it's not here yet.

If flattening tier makes for more premium accounts, which I continue to think should be a goal, then perhaps that's ultimately good for the world. I'm not sure how many people are desperate to spend $30 for 5120 instead of $25 for 4096, but the less people feel railroaded into paying $72 when they are paying $40, the better. Is the gain of some few thousands new customers at these new niched tier levels worth destroying existing rental businesses that in fact offer this already to their customers, and for *less* than Linden tier? Maybe not. It needs study.

In other words, this is really some brutal Mainland Math that the Lindens really need to be hugely cognizant of. Let's say they have 10 land barons, each of whom buys 100 sims from them, then re-rents the 4096s for $1500 ($22) instead of $25 a month (with a free house and access to public areas making the equivalent of the extra 512 in a premium account), or if he rerents 4608 for $1700 for $24.80 -- a tier level not even available on the current Linden scheme. And let's say they say, oh, let's get rid of tier steps and flatten it out, so that for paying now $30, a person can get their 4608 m2 (plus free 512), and they'll be willing to pay $5 more than they do an inworld landlord because they'll own it and can do what they want.

And let's say the result is they sign up 99 new people to go with that flat tier, but that puts those 10 people out of business now, and they don't buy or tier 100 sims anymore. See what I mean? See how foolhardy it is to make ideological decisions based on presumed end-user behaviour? See how destructive it is? The two birds in the bush of renewable tier gained are not worth killing the bird in the hand, which pays more tier in the long run. Putting those 10 landlords out of business with the combination of land glutting and flat tier, the Lindens also have now 100 or 1000 or whatever new customers they didn't have before -- end-users banging on them over lag, lost content, orientation help, "your land stealing my furniture" due to autoreturn. Is that a gain, more support time?

So not only does stepped versus flat tier have to be seen in a larger picture of how end users really add more expensive even while adding more revenue; it has to be seen in a whole context.

For example, in real life, companies or government save money by not having full-fledged health insurance for families, or giving them crappy insurance with huge co-payments. Seems like a cost savings, until they then begin to take their babies with sniffles and their kids with splinters not to clinics, but to hospital emergency rooms, where they cost a lot more in the end -- or discourage them from seeking health care, which also winds up costing a lot more for them or society in the end. Everyone knows prenatal care can cost pennies to the millions that neonatal care will cost if it is neglected.

So, let's look at our little synthetic world:

Inworld sales and rentals have benefited primarily from these five factors:

o arbitrage
o parceling
o mainland group tier benefit
o steep tier levels

If you start removing these things in some abstract, ideological belief that they are "bad" (I know Philip feels this way about arbitrage) or "will be good for end-users" (flattening tier) then you harm this business sector, if that's not really what you wish to do, then you have to think it through and debate it, as follows:

o arbitrage is a normal element of any normal democratic market economy, and removing it is a hippie commune idea -- arbitrage isn't merely land-flippers making a buck, which is usually how it is tendentiously cast, but land-flippers being willing to assume risk that end-users can't by offering them a liquidation for land, or holding land on sims until end users are ready to expand -- these are hugely important factors in land development. Stepping on them kills off creativity, and the flexibility required for creativity, and those with ideological aversion of evil land baron arbitrage need to see the bigger picture playing out in SL

o providing smaller parcels is an advantage for land rentals/sales, but if that's the only advantage and other factors are removed, no one will bother, as it means keeping trading tiers open, holding risk, keeping islands half full without customers, and waiting to make a profit as much as 12-14 months later, due to the brutal Mainland Math of fixed costs and risks.

o group tier benefit means one free sim for every ten, and anyone sticking out under the horrible conditions of the mainland; it's a normal bulk discount that any large purchase order should expect from a company, and any removal of it for ideological reasons would be destructive(to equalize with private islands, which don't have it -- but of course have many other advantages like the ability to reset their sims and reclaim sold land). If there isn't widespread use of the group tier, that's a reason to keep it, not remove it. It's what enables most rentals to keep commons, greens areas, extra prims, buy the view on the next sim, etc. and it destroys their business needlessly at little gain for LL so it should be left intact.

o Everybody talks about flattening tier as a great thing, but the main advantage for the entire land business comes in steep tier, because rentals' main attraction is in being able to offer 5120 or 768 or whatever someone needs, if they want to spend only $30, and not step up to $40, or $72. Linden Lab put it steep tiers because it was to THEIR benefit, forcing customers to pay for and hold more land, sometimes more than they really needed. So the same logic that made THEM wish to put it in pertains to the inworld land business -- if you take it out, you have to be prepared for the consequences -- refusal of people to take on the risk, huge initial investment, and poor returns, especially on mainland, if tier is flattened.

o Linden Lab really should study the customer profiles and determine what percentage of premiums are large land owners, what percentage of the payment-on-file population are large island owners, and what percentage they make up of tier income. And somehow, I think they already did that, and already decided that out of 20,000 sims, the overwhelming majority were in single or corporate hands, and group or inworld business owners are in a minority, especially mainland, and not a constituency worth preserving -- they must have concluded that given how much we have been kicked in the teeth.

Again, I'm not persuaded that flattening tier is an unmitigated disaster, but I want more sides of the issue to be aired, and in a context. Quite frankly, one huge boon of flattened tier will be that many people tier down -- and frankly, I'll be among the first to do so. Flattening tier loses Linden Lab revenue right off the bat, and they have to ask if that goal, suffering pain for a few months, is worth a supposed anticipated boost in end-users taking advantage of the more granulated tier. I don't think the answer is "yes".

Oh -- and this always needs to be said due to the evil vicious fucktard types like the JIRA, my concern about damage to the land industry isn't somehow "concern for my own skin". I really don't think it will matter that much to me, given that I have lots of little parcels, and not a lot of huge parcels, it's a different model. I don't take sim after sim, cut it up to 16 4096s, and hawk 15 of them, as so many do. But I think it needs a fuller and less ideological debate than it will get at Linden Lab.

Comments

[Gigs Taggart]

I was very disappointed when I heard Philip make the comment that he thinks arbitrage is somehow bad. It's a normal, natural, and beneficial part of any economy.

I'd venture to say that a large part of "real" SL businesses (other than selling polygons), is actually arbitrage in some form or another.

I don't think anything will drastically change in Linden land pricing until the open grids start to put a real dent into sales.

Right now opensim/opengrids are kind of a joke. They are fine as a toy sandbox, but they aren't a serious contender. Yet.