- Joined
- Sep 20, 2018
- Messages
- 105
- 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):
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.
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.
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.
