LOL! Compounded Second Life Fees: Something to Consider

NeoBokrug Elytis

Thread Reaper
Joined
Sep 20, 2018
Messages
80
Location
The Wastelands
SL Rez
2005
Joined SLU
Sept 2007
SLU Posts
2161
This is long, and I'm not sorry. Grab your favorite beverage, a snack, and have a read.

I don't like to criticize Linden Lab much anymore, since I am pretty grateful for Second Life in general. My concern in particular, is the Marketplace commission Changes and it's comparison to other platforms. For the most part, I don't feel like it's a fair comparison.

Linden Lab recently bumped up the marketplace fees from 5% to 10% on December 2nd, 2019. I know the fee increases are long overdue in part because it's been a decade, and we've all known it's coming at some point. LL says that Apple and Google charge 30%, so it should seem like we're getting a good deal here. But I feel like LL is comparing potatoes to apples here. While both things do grow from plants, they are still vastly different.

Apple, Google, and Sketchfab charge a 30% commission. Steam, and Turbosquid offer a variable 20-30% fee depending on sales. Epic offers 12%, but has... issues. Of these places listed, the only one I can find that has published PayPal fees is Sketchfab at 2.4%(us) to 4.4%(int) + a few cents. I don't have experience with these platforms, and I could not find more data about "cash-out fees". Because of that I am going to assume that "cash-out fees" are rolled into their respective commissions as part of the fee, for most platforms.

The *ONLY* scenario where I feel the comparison of the marketplace fee increase might be justified, is if you sell exclusively on the Marketplace. Your minimum fees in total for the content you create would be 14.5%, without product enhancements or a premium account. 10% for the Marketplace, and 5% on the remainder for cash-out. But this scenario is completely unrealistic. To be successful, you're going to want to use listing enhancements, and have a premium account, at least for a basic inworld store.

Before I continue further, I'm not going to discuss taxes -- only just the platform fees. We all pay taxes differently and that's based on where we live, and what quality of life benefits they provides us.

We should address customer exposure. According to gridsurvey.com, SL has about 61 million residents. The problem with that number is most of those accounts are just not active anymore. Let's be OVERLY generous and add the peak (50k) and low (26k) of the busiest day of the week, then multiply that by 30 days of the month. We'll assume the resulting number is the active accounts. That would be about 2.2 million active accounts. 2.2 million accounts is a paltry number compared to the hundreds of millions of active accounts that Google, Apple, and Steam have individually. They can justifiably ask for 20-30% because they're platforms with a large consumer base. SL is very niche, caters to a small market, and it's content is build specifically for it's platform and it's quirks. On those points alone, I don't think it's fair to make the fee comparison. Also these other platforms don't have membership fees, extra land fees, or region fees.

The 10% reduction of listing enhancement fees doesn't offset the increase on commission fees. If anything it entices you to spend more of your money on lowered fee enhancements. You have to consider the fact that an enhanced listing will just be in a pool of other similar enhancements. By it's nature, your enhancements are not guaranteed to show to everyone, and it will have to still compete against other visible listing enhancements. Let's pretend you spend a conservative 4% of your total sales on listing enhancements to keep them steady, assuming the listing enhancements actually work. To me, reading the announcement as it is -- seems to compare the 10% listing fee offset to the 10% commission increase. When in reality the more you spend on enhancements, more money goes to LL. LL is still going to take their 10% cut of your sales no matter what. So it's win-win for LL; not the merchant.

Let's create a scenario and assume that we'll be talking about a higher than average merchant who steadily makes about $500 a month. Sure there are a few merchants and estates who make LOADS more, but the vast majority of people don't even breach $100. Let's also assume their SL membership is Premium Quarterly ($32.97) with an extra $7 a month for some 1024 extra mainland to show off their products inworld. That makes their SL account fees about 3.6% of their sales per month. Let's also assume 2/3rds of their sales are through the Marketplace, meaning they get to keep ~$167 without marketplace fees.

Accounting for everything we've discussed so far our accounting looks like this (rounding to the nearest dollar):
$167 - Inworld Income​
$18 - Account and Land Fees​
$333 - Marketplace Income​
$33 - Marketplace Fees​
$20 - Marketplace Listing Enhancements​
$431 - Net Income​
$22 - PayPal Fees​
$407 - Final Cash-out​

That's a total of 18.6% in fees on $500 of sales, using conservative numbers, and realistic account holdings. This doesn't account for extra expenses like inworld classifieds, showing up in inworld search, upload costs, etc. That percentage just gets worse for the less sales you have.

Let's switch just a few numbers around. Let's say they're bigger, but pay annual SL account fees ($99), and they rent a homestead from a land baron ($125) instead of mainland. And let's pretend they make $1k a month.
$333 - Inworld Income​
$133 - Account and Homestead Fees​
$666 - Unholy Marketplace Income​
$66 - Marketplace Fees​
$40 - Marketplace Listing Enhancements​
$761 - Net Income​
$38 - PayPal Fees​
$723 Final Cash-out​

That's 28% in fees, even if they're making more per month! Sure they could just retain mainland for cheaper, or have a smaller store to offset that more.

But my whole point is SL (and PayPal) are already taking close to 20-30% in some scenarios. Even in the best case scenario, it's almost 15%. So I am not buying their argument that they have competitive rates compared to other platforms with gigantic markets.

There are creators who sell exclusively inworld in Second Life, and I think they're in the best position to keep their hard earned space-bux. I think use of the marketplace in general will decline. It is not very well managed, it is hard to use, and ripped content is still very rampant. At least other platforms have solved most of these issues, and/or don't need to distribute copies of your game under another publisher.
 

Aribeth Zelin

Faeryfox
Joined
Sep 23, 2018
Messages
1,179
SL Rez
2004
Joined SLU
03-11-2011
SLU Posts
9410
Yeah... I -am- already this close to shutting down my inworld store simply because I just can't afford it, because I don't have the time to make things as fast, and never ever had the fan base, even when I did have more regular releases. To be fair, I don't cash out, there was only one period of time when it would have been viable, and well, I was more active and it was a nice 6 months where I had the income where I didn't have to buy lindens for anything.

I will say, though, that of my sales, more and more seem to be inworld inpulse and much less mp sales.
 

Clara D.

FOR PRESIDENT 2020!
Joined
Dec 24, 2018
Messages
2,133
Location
Phoenix, AZ, USA
SL Rez
2006
Joined SLU
Back in the day.
SLU Posts
100000000
Sadly no, as you did not compute in the stupidity/laziness of SL's userbase. If your product is not on "the market" as some non native speakers dubbed it - it does not exist for those shoppers.
I'd shop more in-world, but IMHO web search is ass for finding things.
 

Sid

Lurking until the next post
VVO Supporter 🍦🎈👾❤
Joined
Sep 20, 2018
Messages
3,042
Location
Limburg,NL
SL Rez
2007
Joined SLU
Yes
You have to know when it is best to fold your cards and stop being a merchant, club owner, land baron or whatever SL dreams you chase.
That moment is for every individual different.
Every one has different perceptions about SL. It goes on a scale from 'it is my RL income so every L$ counts" on one end and "who cares if it costs me some money as long as I have fun" on the other side.
I folded my cards, the moment the workload, the fun and the money factor were no longer in balance for me.
Now I only worry where to put up Christmas decorations in my SL home this year.

If you want to continue being a merchant on the marketplace, than be a merchant.
Raise prices like every RL shop or manufacturer will do when expenses rise. Don't make a fuzz or public announcement over it, just do it.
And if you think a 10 percent raise is to steep, do it in two steps. A few percent right now and the rest next month.
Or leave the things that don't sell at all at the old prices and only raise the prices of the selling items.
People are used to price changes. 99% will not notice if you do it too, as long as you don't do foolish things like double prices and announce that with a lot of drama to your customer base.
 
Last edited:

Noodles

Queen of Ramen
Joined
Sep 20, 2018
Messages
669
Location
Illinois
SL Rez
2006
Joined SLU
04-28-2010
SLU Posts
6947
I feel like your average income of $500/month is greatly exaggerated. Even $100/mo is probably greatly exaggerated.

Unless you mean Linden Dollars.

I doubt the vast majority of people selling on the marketplace make even $10/month in real world money.
 

Amity Slade

Active member
Joined
Sep 24, 2018
Messages
66
SL Rez
2007
Joined SLU
Oct 2010
SLU Posts
3965
If the real commission rate includes a +19% in hidden percentage, then the Marketplace commission change is adjusting the real commission from 24% to 29%, thus it is not a dramatic jump.

The commission isn't too high if the Marketplace is providing an adequate service. The problem with Linden Lab comparing the Marketplace to Apple or Google is that the latter offer professional services, whereas Marketplace remains amateurish.

Are they still using a freeware search engine for the Marketplace? I gave up using Marketplace long ago, because the search engine is useless. With every other online shopping site I have ever used- and that spans a couple of decades and includes SLBoutique and XStreetSL- I'm used to typing in a good search query and seeing exactly what I want at the top of the results, either the very first time or on the second time after refining the search query. The SL Marketplace stands out as the absolute worst online shopping site I have ever tried to use, and that is by a wide margin.

10% or 30% commission isn't too much if they were operating a minimally professional operation. However, 1% is too much for that amateur show.

In the short term, the commission increase is probably only enough to discourage a very small percentage of merchants. My concern however is about which merchants get driven out. The creators with real skills who put real time into making their creations are probably the ones who are going to keep asking themselves whether it's worth it. For the merchants with ripped goods, or auto-created goods, or perpetually repackage goods, it doesn't matter if they are netting 95% or 5%, it's still all easy money.
 

NeoBokrug Elytis

Thread Reaper
Joined
Sep 20, 2018
Messages
80
Location
The Wastelands
SL Rez
2005
Joined SLU
Sept 2007
SLU Posts
2161
The problem with Linden Lab comparing the Marketplace to Apple or Google is that the latter offer professional services, whereas Marketplace remains amateurish.
Yes. Exactly this, and more.
The SL Marketplace stands out as the absolute worst online shopping site I have ever tried to use, and that is by a wide margin.
Absolutely, by far!

I know LL wants to get more revenue to improve it, but I feel like they're avoiding the big important steps to get the MP into something people enjoy using. There's a lot of small to moderate problems that make the marketplace as bad as it is. Several solutions may require that LL take bold steps to piss off some merchants to make it better for the consumer.

One of my biggest peeves is wading through all the gacha resales. For instance I think if LL automatically recategorized existing Gacha listings into the marketplace's already existing subsection, and then notified the merchant -- I think that alone would be a big step forward to usability. Also an item in a listing that's Transfer Only permissions for the current owner, should have a popup asking if it's a resale. Then a simple yes/no would take care of categorizing it. Even better would to just make a whole new category "Resale Items", and give it all the same sub-categories of the current marketplace. Then just run a query, and shunt it all over there.

Another peeve is 12 color variants for every object. Why not just do like Amazon, and have color options as part of the listing? One listing, 12 color options in a drop down menu with updating pictures.

And search is still terrible. Fortunately I am wizard enough, and patient enough to make it work for me. It just takes too much effort right now.
 

NeoBokrug Elytis

Thread Reaper
Joined
Sep 20, 2018
Messages
80
Location
The Wastelands
SL Rez
2005
Joined SLU
Sept 2007
SLU Posts
2161
I feel like your average income of $500/month is greatly exaggerated.
Let's create a scenario and assume that we'll be talking about a higher than average merchant
Most people in SL are not merchants, that is just a simple fact. Those are typically the same people who'll "dabble" in the marketplace to sell some things they made.

I said $500 was higher than average from experience. I was not accounting for people who "dabble". I don't sell many things myself, mostly because I lack the skills for creating visual assets. I do however work with a lot of merchants as a hired gun to create/stress-test/debug/fix their scripted products and systems. For some of creators, SL is their full time job. A lot of these same creators make thousands of dollars per month. While others are less invested and only make hundreds. Those that treat SL like a 9-5 job, and put in the effort are surely going to be pulling down 3-5K or more per month. It typically shows in the quality of their work, and how often they make new releases and updates.

Personally, if I started creating visual assets (on my todo list), and scripted them all up and sold them... I would sell inworld almost exclusively for the first year. Then after a year I would list the item on the marketplace but only as a way to people find my brand. I'd get trickle income, and people would show up to my locale for new releases. Then they'd have an easy way to find stuff over a year old -- well past the majority of when it made it's best sales.
 

Aribeth Zelin

Faeryfox
Joined
Sep 23, 2018
Messages
1,179
SL Rez
2004
Joined SLU
03-11-2011
SLU Posts
9410
I'd argue that treating it like a 9-5 job and putting out quality work makes money, but I think I'm also a really fringe case [and I've moved to RL products; not as infinate, but they seem to sell at least a little better]. But I am about to just move my old stuff to MP and close my shop because well.... I don't even make enough now for rent.

Again, I know I'm a fringe case.
 

Clara D.

FOR PRESIDENT 2020!
Joined
Dec 24, 2018
Messages
2,133
Location
Phoenix, AZ, USA
SL Rez
2006
Joined SLU
Back in the day.
SLU Posts
100000000
Yes. Exactly this, and more.

Absolutely, by far!

I know LL wants to get more revenue to improve it, but I feel like they're avoiding the big important steps to get the MP into something people enjoy using. There's a lot of small to moderate problems that make the marketplace as bad as it is. Several solutions may require that LL take bold steps to piss off some merchants to make it better for the consumer.

One of my biggest peeves is wading through all the gacha resales. For instance I think if LL automatically recategorized existing Gacha listings into the marketplace's already existing subsection, and then notified the merchant -- I think that alone would be a big step forward to usability. Also an item in a listing that's Transfer Only permissions for the current owner, should have a popup asking if it's a resale. Then a simple yes/no would take care of categorizing it. Even better would to just make a whole new category "Resale Items", and give it all the same sub-categories of the current marketplace. Then just run a query, and shunt it all over there.

Another peeve is 12 color variants for every object. Why not just do like Amazon, and have color options as part of the listing? One listing, 12 color options in a drop down menu with updating pictures.

And search is still terrible. Fortunately I am wizard enough, and patient enough to make it work for me. It just takes too much effort right now.
They really need to get search to ignore non alphanumerics. I can filter demo, but I still see all the *DEMO* _demo_ (demo) d.e.m.o >_< I really want to slap merchants that do that *AND* list their demos as mod-copy.
 
Joined
Oct 4, 2018
Messages
111
There are so many SL merchants that probably don't take time to actually calculate their costs for SL. I suspect many will hang on simply because the costs are coming out from different directions in SL and they haven't sat down to work them out together.

I haven't been keeping a breakdown of my costs this last couple of years, I know AIlsa pays all her SL costs and is making a modest profit, the goals are there to build on that, but I have a RL business that needs a lot of time this year so it's had most of my attention. I still have regular releases etc, I just want to be more active and get into some events and work it better.

My reaction to the LL changes this year has been dropping premium, selling my mainland parcel and moving onto a much larger rented parcel that I can grow into. Cashed out my premium money, it'll go towards art supplies instead of SL. Doubled prices on new releases to hopefully buffer myself better against higher LL costs and because I was starting to feel they were cheap which is never a good sign! I'm now toying with the idea of dropping links to my RL site/shop/socials into my SL profile and making it easier for folk to just find me elsewhere without asking me for links. I probably should have done that before, but the more I feel LL pinching bits of my income, the more necessary it seems. I need to do another spreadsheet and be sure I'm covering myself better with fees etc, but I'm sure I'll need to tweak more in the next few months with upcoming changes too.