Let’s Talk Premium

Nothing seems to get people to talk more than changes to the core services offered in Second Life. Linden Lab could be introducing something new, like bento, or introducing a slew of new Linden home options, changes always seem to create lots of discussions.

However, what generates even more discussion is when Linden Lab changes something that affects the money aspect of the service, and that is what happened this week. Linden Lab announced changes to the premium service offering, land prices, and more.

I will let everyone read the changes on their own, but I wanted to provide my thoughts on this subject. I don’t think my opinion will be a popular one, but I hope to give some insight as to why I feel this is a smart move by Linden Lab.

The price for an annual membership is increasing from $72.00 to $99.00.  The increase is likely to be the part that most people look at and say, “WOW! Can I afford that?” As far as I know, the yearly price for premium service has remained unchanged since at least 2010. This cost increase reflects a general rise in the cost of doing business and providing a service more than anything else. Comparing Second Life to a service like Netflix may not be an exact match, but both are entertainment services with a monthly service fee. Netflix has raised prices several times over the past five years and is currently raising rates again ($13 per month). Netflix needs money to expand their offerings, and so does Linden Lab. Netflix doesn’t offer a slew of new features with the price increase, they just use the money to keep on doing what they are doing and improve in the future.

What do we get for the extra money? Well not a lot, but again this is more right-sizing the pricing anyway in my opinion. What we do get is an extra 10 group slots, which can be useful. They also include an additional 30 offline IMs and for those that get capped this can be nice. All other benefits remain the same. Many argue that there is not a lot of value in the service to warrant the increase. I think that they have added some value, but again, the purpose here is to bring the cost of premium more in line with the price of entertainment subscriptions in the industry broadly. Value is such a subjective decision point it is hard to say what is value for each person using a service as broad as Second Life.

I would argue that an annual premium subscription to Second Life is still a fantastic value for the money. Perhaps one of the best prices for an online service you can find. I firmly believe that if you buy any Linden dollars at all, you should be purchasing an annual premium membership as well. Let me explain why.

While you are a premium member, you receive a 300L$ per week stipend. Just looking at this as a base number that 300 L$ per week equates to 15,600 L$ over the 52 weeks of the year. Using the instant buy option for L$, this equates to around $61.91 as of the publishing of this article. Assuming you would have purchased those L$ anyway, this brings the effective cost of an annual membership down to just a hair over $37.

But in actuality, the savings are potentially far more significant. Each L$ transaction has an associated fee. The current transaction fee is $1.49 per transaction. That means the actual value of 300 L$ is $2.69. If you were to buy 300 L$ a week for an entire year, you would spend $139.88. I don’t know how many people do these sorts of microtransactions, and indeed, the more you buy in a single transaction, the less impact those fees have. Still, the fact that the 300 L$ you receive comes to you without any associated transaction fee’s saves you money.

One other change that I think has people scratching their heads is the reduction from 40 to 35 in the number of groups a basic member can have. Many people are asking, “why do you need to reduce basic members even further?” I look at that 35 number myself and have to think from a marketing perspective they can now say premium members get double the group slots. Double is a pretty good selling point on anything. I honestly would not doubt if that reasoning was discussed. Regardless of the reasoning behind the change, I think it portends further changes in the future. Linden Lab wants people to be premium. I would imagine their goal is to get well over 50% of the active community to subscribe to a premium offering. There are only so many things that they can offer premium members. There comes the point at which you look at what you provide to basic members and think, “maybe that’s too much.”  This part was changed after feedback from the community!

I think this is overall a smart move by Linden Lab. It positions them at a price point, which is contemporary with other entertainment subscriptions online. They continue to offer access to the stipend, which has excellent value, especially for those that only buy L$ in small increments. The decision to allow members to renew for an additional year at the current rate will provide Linden Lab with a steady influx of cash now, which will enable them to improve the overall service. The improved service attracts more premium members. We have already seen dozens of groups spring up around Bellisseria, and those groups are filled with people that “went premium” for the first time to live on the new continent.

The time of free to play is coming to an end. Companies need money to build engaging services, and subscriptions are a sure fire way to get that money. Is the increased cost worth it? That is for each to decide. We all have a budget for our entertainment. Many in Second Life treat it as just that and spend a great deal of time in this world. For those of us that do, the extra $30 a year seems a small price to pay to continue to enjoy what Second Life has to offer.

1 comment on “Let’s Talk Premium

  1. Kitten Kaos

    The increase is long overdue and they are adding so much value to SL these days, and they are being much more involved with community feedback. Been a long while since I felt this positive about the direction of SL. (BTW- thanks for the CTS tips, it really is an invaluable tool)

    Reply

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