Second Life has always been absurd to me, for a number of reasons. Additionally, I've always found interest in it as a marketing platform to be worth a hefty dose of skepticism.
But when I read an announcement posted on the Second Life blog last week, I had to check the date because I thought it might be April 1.
The announcement deals with "Openspaces," which are parcels of virtual land in Second Life that were created for "light use."
Unlike "Private Regions," a dedicated CPU is not allocated to each parcel of Openspace land.
Because Openspaces share processing power, Linden Lab anticipated that the lighter usage permitted would enable it to charge lower fees for Openspaces than its prime real estate.
Thus, Openspaces were sold for $250 up-front with a monthly maintenance fee of $75.
Unfortunately, Linden Lab has found that the usage of Openspaces has been anything but "light."
According to its announcement:
"Based on analysis performed in August and September, Openspaces are being used about twice as much as we expected, in other words being loaded with double the content/avatar load than we’d expect for a region that is supposed to be light use."
In other words, Openspaces have become the virtual equivalent of a three-bedroom apartment that is being shared by a dozen people.
In the real world, this has "put additional strain on some of our network and database infrastructure at a much higher ratio than is reflected in the current pricing."
As such, Linden Lab is increasing the fees associated with Openspaces. Starting January 1, 2009, Openspaces will sell for $350 plus a $125 monthly maintenance fee. Additionally, discounts currently offered to non-profits and educational institutions will be eliminated and these organizations will be forced to pay full price.
While it truly amazes me that anyone would pay such fees for "property" in a virtual world, there are people who do.
Reading between the lines, it seems that all may not be well in Second Life.
As Cyndy Aleo-Carreira of The Industry Standard pointed out in July:
"Paid subscribers (those who pay a monthly fee for the privilege of spending more money on land rights) have been on a steady decline since December 2007, while the total number of hours users spend in-world has been on a steady upswing over the same period."
Reuters reported the same thing in August:
"The sole dark spot for Second Life was the continuing decline in premium accounts. Linden shed an additional 1,410 premiums in July — over 45 a day and the seventh consecutive month premiums declined."
More usage, less subscribers. That's usually a recipe for disaster.
So what's Linden Lab to do? Increasing fees is the quickest way to address what is a serious problem.
But in today's economy where homeowners in countries like the United States and United Kingdom are struggling to pay their first life mortgages, fee increases are only likely to exacerbate Linden Lab's problem.
As Tameka Kee of PaidContent.org asks, "if people are having a hard time paying their rent in the real world, how quickly (and easily) do you think they’d default on their virtual mortgages?"
The comments received on the Second Blog seem to indicate that the fee increases are too much for some subscribers to tolerate. Many commenters indicated that they would not be keeping their Openspaces and lambasted Linden Lab for its decision.
One, for instance, specifically cited the economy as a reason she won't be keeping her Openspace parcel:
"There can be little or no justification on price rises. They can equip and maintain the servers for the prices they quote. This to me smacks of bait and switch, get people to invest in openspace sims for their homes, as I have done, and after a while put up the charges for no other reason that wanting more cash."
"This is unjustifiable especially in the current economic climate. Where can I get a refund of the 250USD I paid for my openspace sim, cause I sure as heck can’t afford another 50 USD a month right now."
While I'm admittedly not intimately familiar with how Second Life's technology, it does strike me as odd that Linden Lab can't develop an effective means to police usage. If Openspaces are being used above and beyond what is permitted, one would hope that Linden Lab has developed its technology in such a way that it can control usage just as hosting companies limit resource consumption.
In any case, Second Life's ongoing battle to offset its decline is not surprising to me. The fact that it ever acquired paid subscribers in the first place was.
While I see the value of a service like Second Life as an entertainment platform, the amounts that can be charged for their use is finite. At some point, the costs exceed the entertainment value.
Linden Lab may have hit the point and as housing crises in first life have left neighborhoods literally abandoned, the specter of thousands of abandoned homes in Second Life looks increasingly probable. Of course, Linden Lab can simply remove them as if they've never existed.
If only it were that easy in first life.
For those who are as concerned about Second Life's real estate crisis as they are about the value of their retirement accounts, know that there are Second Lifers fighting back.
According to a comment left on PaidContent.org, there was a protest held this past Sunday. A protest regatta was sailed in the Santa Barbara, Santa Cruz, Santa Rosa and Santa Catalina Openspaces.
Hopefully Linden Lab management had an internet connection on its real-world regatta and was watching.