SLCC: LL Commerce Panel Summary

Speakers

  • Jeff Vogt (Vogt Linden) – Senior Director, Business Product, responsible for strategies, plans, initiatives – economy & platform
  • Brooke Linden – Marketing Team
  • Thor Linden – strategic initiative and “economic aspects of the company”
  • Colossus Linden – Lindex, payment system
  • Delby Linden – Land and partnerships

Session Summary

Sitearm Madonna introduced the session as a discussion of “the visions and practical steps to grow the Second Life economy, enable businesses and service providers to flourish on the Second Life platform.”

  • Vogt Linden: focus for the last six months has been on a progressive approach to “funnel” users through from new joiners to engaged users within the SL community through progressive changes to the new sign-up process, new avatar selections, etc., coupled with usability enhancement (new user experience, improvements to the Viewer, etc.) to get users engaged “early on”
  • Service and performance improvements, for existing users seen as part of the process to encourage user retention to further stimulate the economy, including land acquisitions
  • 2011 Q2 economic figures (released over the conference weekend), describing as showing “some pretty compelling growth statistics in certain areas” which present “A really good story of stability, growth in certain areas and a vibrant in-world economy, if you will.”
    • Sign-ups: upswing in sign-ups following the release of the new sign-up process as a “radical improvement” compared to historical data and re-iterated they are running at an average of 16K per day, and “speaks to the number of new users who are making it all the way through registration, with all the improvements we’ve made, coming in and sampling the service and…based on the usability improvements we’re making…staying.”
    • Averaging monthly users: “An improvement over the last four quarters, with users taken up by a nominal percent, but its directionally a positive trend..that the numbers of users coming in each month are on the uptake.”
    • User hours: “We’re fairly flat to slightly declining by around a percent, a little less than a percent, over the last quarter. This is obviously what we’re trying to solve for us.”; “As we’re making these usability improvement and trying to engage users on the front end, the expectation is that we’re going to start to reverse this trend and folks will stay longer, they’ll interact more and ultimately they’ll transact, and I think that’s what we’re striving for.” 
    • Average monthly economic participants: “Again, this is flat, relative to the last quarter, and this represents all of the L$ that flow between users where they’re either gifting, buying, selling, acquiring, L$…..A flat story; expect that will change as more users come in and participate in the transaction economy.” 
    • Average exchange rate: “I think we’re seen a steady strengthening of the exchange rate over the last year plus, a nominal improvement over the last quarter. This just really speaks to the stability of the Lindex, of the exchange, and the stability of the economy… Its a positive story and we expect this to continue and we’ll continue to report on this quarterly going forward.”
    • L$ supply: “A positive trend over the last five quarters, it grew a little bit over the last three months and it continues to grow in terms of the overall volume of Linden Dollars that are available in the economy and kind-of highlighting the purchasing power of the community.”
    • Lindex volume: “A slight dip from the prior quarter…but that’s more due to seasonality than anything else. If you look back to the second quarter of last year, we’re actually up about 4.4 percent…So generally a good story for year-over-year, with a slight dip for seasonality.” 
    • Web merchandise sales volume: “You see a nice trend over the last year-and-a-half of overall volume of merchandise being sold on the marketplace steadily improving.”
    •  World size: “It’s been relatively flat to slightly down over the past year and that’s just consistent with what we’ve been seeing over the last several quarters.”
  • Brooke Linden: Highlighted that despite issues, there has been market growth:
    • 11% growth in unique economic (i.e. not freebies) sellers
    • 7% growth in unique economic buyers
    • 9% GMV growth overall
  • Linden lab is now “Trying improve some of the things we know are impeding those numbers from growing more quickly.”
  • Direct Delivery: “To streamline the purchase experience for users.” With the goal of making it “A simpler process with a simpler user interface.”
    • Marketplace will support both Magic Boxes and Direct Delivery for a time
    • New, clearer notification interface for users in-world when a delivery occurs & API provided for TPV developers if they wish to use it
    • Capability for “other alerts” will be provided for TPVs that don’t support new interface (toast notifications)
    • Some limitations on merchant’s outbox (e.g. no more than 200 items in a folder)
    •  Marketplace UI being revised to make listing / inventory management easier & provide additional information for merchants
    • “Very close to the end”, but not giving any dates, other than expecting Direct Delivery roll-out to happen in the next 2-3 months; goal is stability first because, “Inventory and money? Those are things we want to be sure we get right!”
  • Thor Linden:
    • Search has moved from a web-based approach to something more tailored to SL (less reliance on page rank / updates, etc., as per traditional GSA approach). Improvements have improved usability; fewer clicks, better results relevancy, etc.
    • Classifieds seen as a tool for everyone in terms of advertising, and keyword capping seen as helping to increase relevancy
    • Advertising Beta discontinued due to limited appeal to niche, large-scale SL businesses and it didn’t provide a real opportunity for people to grow their businesses
    • Premium accounts seen as an important means of getting people into currency transactions, land, etc. LL looking at how Premium Accounts can be attractive from the perspective of both consumers and merchants. Changes to be announced soon
  • Colussus Linden: looking at means to streamline the process by which more people can have access to more money & can purchase things more simply.
    • Reworking the payment system: LL have hit hurdles but still on track to allow more people in countries outside the US to be able to use more local payment methods and allowing people to put money into SL in ways “that are comfortable to them.”
    • Highlighted work being undertaken to simplify the Lindex pages and make them more user-friendly for those not familiar with using them & to ease the process for those just wishing to buy L$
    • Also looking to improve how users can add new payment methods both reducing the number of steps in the process & providing better guidance
    • Viewer the principal means for new users buy L$. LL looking to giver users an experience that “Makes them feel interested, happy, excited, fun about buying L$…We want to make it something where they feel confident they know what they’re getting, how much they need…and really streamline that as well.”
    • Overall goal in streamlining processes in ‘time to L$’, encouraging people to participate in the economy a lot sooner than at present
  • Vogt Linden: summarised:
    • Time spent on front-end improvements in the belief it will drive more people into the economy & increase their participation in the economy
    • Looking towards better enablement – how to bring users to businesses and communities in a more focused and deliberate way
    • Going to be looking at promotional tools, more marketing-type activities, more partnering-type activities
    • Reconsidering some of the core economics of how LL has operated and explore new ways of trying to encourage repeat log-ins not only from the perspective of what people enjoy in SL but also from a commerce perspective
    • As the Marketplace delivery system is cleaned-up, will start to look at in-world transactions

Session Q&A

  • Vogt Linden on land sales: “We know that the land-buying experience is in need of re-visiting. It’s not good…..We’re going back and trying to fix some of the foundational flows so that we can make payment easier and people can purchase land and they can put a payment method on file; all sort-of infrastructure-style improvements that ultimately impact usability. We’re also going to be doing a lot to see if we can re-investigate things that we can do to raise the visibility of certain opportunities, like land sales, like marketplace sales, like our premium offering….so it’s not lost on us that we need some foundational improvement to be made.”
  • Vogt Linden clarifying ‘economic participation’: how many users acquire and spend L$ by putting them in context: why should new users acquire L$, what can be done with them, etc.
  • Colossus Linden of freebies and policy: LL are monitoring through Marketplace search (could not speak for in-world activities around freebies), but the issue is difficult to rule on; there are positives and negatives to the matter, and the commerce community should perhaps consider forming groups to discuss.
  • Vogt Linden on providing detailed data & analytics for developers: aware of the opportunity to package data around usage (incl. at the parcel / sim levels) as a value-add; but becomes an issue of focus. As usability issues are addressed, issues including data-gathering and partnering opportunities will be looked at going forward
  • Vogt Linden on what has been the impact of Linden Homes on user retention & the economy: has been good for retention, but the product has grown stale after initial rush & is being re-visited; would not be drawn on specifics, as still being defined.

 

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4 thoughts on “SLCC: LL Commerce Panel Summary

    1. Inara Pey Post author

      Sitearm,

      Again, many thanks to you, all the other volunteers, Avacon and all those that gave up time to attend the convention and help out or present papers. Really was a worthwhile weekend, even if I was sitting up half the night at my end of things! :)

      Reply
  1. Gwyneth Llewelyn

    Sounds good… I just have a few of points to comment:

    1) For some strange reason, people are buying more content. This was actually something I heard last Tuesday on a (non-Linden) in-world meeting. As a matter of fact, my meagre sales had increased quite a lot in the past two months, at around 2006/7 levels, if not higher; astonishing, when taking into account that my content is also from 2006/7. I put it down to seasonality, but it seems that it’s a bit more than that: people are logging in less but shopping way more! Weird, but apparently that’s what the data says…

    2) Linden Lab seems to be still relying on “more users, more sales, more revenue”. This means that in spite of contrary evidence, they still believe that SL has the potential of becoming mainstream. I have sadly to disagree, and my disagreement is based on opinions of close RL friends who tried out SL for a time and just gave up. I asked them why, and they listed tons of reasons — and most were not connected to technology or the sign-up process. Of course this is not a valid study: my sample was too small, and “friends of Gwyn” are not necessarily a good metric to estimate why 5-7 million users register per year and leave.

    3) SL Marketplace is a problem. The more LL encourages people to buy from the Web (which is not necessarily bad by itself), the less shops will be in-world, because even the most well-off shop owners will slowly think why they are spending US$300/month on a sim instead of placing more classifieds for the same amount, or even ads on Web pages pointing to SL Marketplace. While on one hand a more Web-based shopping experience will raise awareness of SL on the Web (as more sites will point to it, more content gets indexed by search engines, shop owners will use Twitter, Plurk and Facebook to call attention to their products by sending direct links, and so forth), which might be what LL intends as a result, it has the sad consequence to encourage shop owners to leave their in-world presence, as the cost will be less and less justified as more and more residents will simply forfeit in-world shopping. Now that hurts LL’s business directly: any incentive to avoid buying land hurts LL’s core business directly. While obviously LL gets some revenue from other sources (namely, LindeX, classifieds, and “sales tax” from SL Marketplace), their core business is and will continue to be region hosting for a relatively high fee.

    So… in-world sales are up and continue to rise, but user concurrency and retention is lower and seems to be falling; the landmass is also slightly shrinking. What this means is that LL’s income for their core business — land lease — is shrinking as well. So it’s understandable that they try to “fight” this by introducing some measures. What they seem to think is that “more users mean more revenues”, but that’s not linear: more users means always more running costs to support them, and not everybody will buy land (or become a content creator, which generates more income for LL indirectly). If those “new users” — assuming that LL gets them at all — are encouraged to use more and more Web-based facilities instead of in-world ones, landmass shrinkage will continue (it might reach a “tipping point” where suddenly all shop owners give up on their land altogether, and how big a percentage is that? 30% of the whole? Don’t think about the big content creators, think of the hundred thousand small ones who basically might own scattered plots here and there to have their tiny shops, but which will simply forfeit them). As shops start leave, communities will also stop encouraging land sales for shops and also reduce in size. At some point, this means that LL will hopelessly need to raise land prices to compensate for the loss of income — or start firing staff again, meaning a longer period of bug fixing and innovation…

    My analysis is obviously based on limited data. I hope that Rod and his team has much more data available to them that tells them what makes more sense in the long term. However, from an external point of view, all I can see is that LL is ignoring the existing, paying customers — who are tired of paying such high tier fees — by introducing new measures that will encourage the existing customers to abandon their land (or, worse, that will force LL in the long term to raise land prices even more) — and placing all their bets in the “future” users which “surely will come if the registration experience is more fulfilling, more gamified, more easy to follow”. I disagree with the latter part of the analysis, based solely on my own very limited set of data, but would certainly love to hear from the Lindens what they figured out on their own from their own set of data.

    Reply
    1. Inara Pey Post author

      I’ve actually seen something of a similar upswing in sales through my own modest offerings of late – although around 90% of the increase in sales have been through SLM, rather than in-world (which has seen a slight rise in the last 10 or so days).

      From watching the presentations, I get the impression that LL is actually trying to respond to user demands for action over what has been seen as a a combination of a flat economy, flat revenues and a need to stimulate the market and growth, possibly linked to the fact that he experiments they have initiated haven’t really wortked out that well (advertising beta, etc.) – so they are lookingto work more closely with content creators to better channel users to the market(s) – and this could be a positive shift in emphasis over time.

      As far as making SL more “mainstream” , I think LL have recognised they have a host of issues they need to address – and that not all of them are technical (something I’ve long been going on about myself). The focus up until now (where Rod Humble’s tenure is concerned) has been on the technical side of things, as this is clearly where they can achieve visible results; but it was heartening to hear talk around the wider issues and for there to be a recognition within LL that the most valuable promotional tool they have in their possession is the user base itself. Obviously, what comes out of this recognition, alongside the issue of overall user engagement and retention as a whole, will bt eh key to the next 6-12 months.

      I really agree with you on the Marketplace; I’ve raised similar concerns myself when it comes to the success of the Marketplace compared to the cost of land tier in-world. It does present something of a tiger’s tail for LL. Hopefully, if the what was mentioned in the commerce panel is followed through, then we may well look at this blance being redressed in the future, as LL look to work more with content creators to develop ways and means of encouraging more people to participate directly in in-world commerce.

      It’s interesting that during several of the presentations at SLCC, concerns were raised over LL’s perceived focus on things web-based, be they commerce through SLM or the push to get people to socialise outside of SL (the social profiles, etc.), etc., and LL were keen to give assurance that similar emphasis will be placed on in-world elements as well. “Engagement” and “retention” were certainly two key words that came out of the majority of the Lab-fronted presentations, and there did seem to be more through behind the use of both than the – dare I say – “If we build it, they will come” approach that marked a lot of initiatives seen last year and earlier.

      I still have concerns in a number of areas – as you do – and when it comes to presenting metrics, it would be nice, nay, beneficial, for LL to move back somewhat towards releasing figures that are less massaged and perhaps more indicative of things on a broader front than we see today.

      Reply

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