It was fun while it lasted. I wonder what economic school the Lindens emulate at times. I have detected a hint of
Neo-Keynsian in their approach, but lately I'm leaning towards revising that assessment in favor of the
Josef Stalin School of Industrial Management. Yes, that might be it.
(
Green font is official Linden Policy statements, and should be attributed to Linden Labs, Inc.)
In a stunning move,
Colossus Linden announced that from now on XStreet, the Linden owned retail arm, will be charging a rather stiff fee for listing Free items. The ubiquitous freebie is now likely to be a part of Xstreet's past. In short, the new policy reads like so:
Monthly Listing Fee for Freebies of L$99:- Listings for free items will now be treated as a marketing/promotional tool and thus will have a price.
- L$99 is the price of our least expensive listing enhancement and so we will start there.
- Depending upon desire for this marketing opportunity and perceived value given such demand, we will adjust the price as necessary to maximize this value and keep the freebie listings from becoming bloated again.
- Expected Delivery: 30 - 60 days
Minimum Commission of L$3 on all items priced L$1 or greater:- We will enact a minimum commission of L$3 on all sales of non-freebie listings.
- Since Freebie listings are now considered marketing and are charged as such, they will not incur this fee.
- A L$3 commission will raise the commission on all listings under L$50. This was a range suggested by residents, but it turns out that this is the price range where there is a very high transaction volume and low commission income which combine to cover the costs of those transactions.
- We may adjust this minimum commission as we see its effects on the marketplace. L$3 does not cover the full cost of a transaction, but the goal here is first to manage freebie growth first.
- Expected Delivery: 30 - 60 days
Monthly Listing Fee of L$10 for all items L$1 or greater: - All non-freebie listings will now be charged L$10 per month to remain listed in the Xstreet SL Marketplace
- Currently, less than 20% of Xstreet SL listings make at least one sale per month. This displays just how much clutter of unsold items exists on Xstreet SL.
- Doing this will provide an incentive for merchants to remove listings which are not selling, while keeping this fee low enough to have a minimal effect on listings which are selling and are desired by shoppers.
- By reducing the overall number of listings on Xstreet SL, the shopping experience will drastically improve which will please our shoppers and be a boon to the business of all of our merchants.
- Expected Delivery: 60 - 90 days
Separate freebies into their own category:- There is already a freebie section on Xstreet SL. This section will become the place to browse for new freebies.
- We will remove free listings from the browsable categories and keyword search results on Xstreet SL.
- Expected Delivery: 60 - 90 days
Timeline:- We will provide at least 2 weeks notice before releasing any of these changes.
- We expect to enact these controls within the time window 30 - 90 days following this roadmap announcement.
Perhaps it is needless for me to say, but I will anyway. I find the timing, the reasoning, and the data associated with this announcement to be highly dubious. Colossus does not hide the discussions that went into the decision to gouge freebie makers. He posts
three commerce office hour sessions that were dedicated to the "freebie problem", as he seems to view things. I urge readers to browse through these. Count how many actual
"Residents" were there, and then look up what they do in SL. How many are merchants? Then count how many
Lindens were present. Take notice of the tone of the conversations-- did they seem as if they were entering into these 'talks' with a foregone conclusion in mind? Don't take my word for it, read it and draw your own conclusions.
Remember, ostensibly, it was the
"Residents" that are complaining about the so called "freebie bloat" on Xstreet. Hmmm... they must not be the same
Residents that responded to
Hamlet Au's recent poll on this subject.
Then we are given a
FAQ to read about why Colossus Linden is doing this. Here are some of the salient points:
Why does Colossus think free listings on Xstreet SL are a problem? He maintains that the "Residents" say: - The items are a large percentage of transactions which have associated costs but no value, which means that cost must be shared by all users.
And why would any
Resident care a fig about the costs involved to maintain XStreet, unless they had to bare the burden of them? We are told there is a cost involved-- presumably some form of labor cost to list it, or to administer a data base online that has a record in it, or some currency conversion fee to process lindens. How much of a cost is this, really? I'm sure a lot of people would love to have the answer to that question. As for myself, I am of the opinion that the per-transaction cost of a freebie is vanishingly small and that this is a very weak argument.
- They decrease the price that other merchants can charge within a category
Which, in the great tradition of Western Free Market economies, is called
"competition" in the real world. Is this so inimical to a virtual marketplace? Honestly? Didn't the Lindens use to tout the unfettered capitalistic atmosphere of Second Life as a
selling point?
- They hinder the shopping experience because a "sort by price" puts all freebies first
And this is a problem, how? See comments on "competition". Don't the manufacturers that charge for their wares believe in the
quality of their products? Must the marketplace be manipulated in such a blatantly artificial manner? Surely a manufacturer is confident that the blue jeans he or she makes and sells for 100L is somehow superior to the freebie blue jeans at the other end of the spectrum, yes?
- They garner so much attention that Residents are driven toward the freebies instead of quality, fairly priced items.
Those
Residents seem to be a pack of
Oliogopolists in the making. Force out competitive wares that are coming in at a price point they don't wish to support. But that's not ALL! Look at the fine print..
- All non-freebie listings will now be charged L$10 per month to remain listed in the Xstreet SL Marketplace
- Currently, less than 20% of Xstreet SL listings make at least one sale per month. This displays just how much clutter of unsold items exists on Xstreet SL.
- Doing this will provide an incentive for merchants to remove listings which are not selling, while keeping this fee low enough to have a minimal effect on listings which are selling and are desired by shoppers.
- By reducing the overall number of listings on Xstreet SL, the shopping experience will drastically improve which will please our shoppers and be a boon to the business of all of our merchants.
Are you reading between the lines yet? THIS is the main point of the policy change, my friends. To make a substantial revenue boost off of ALL items in XStreet, not just freebies, which are simply going to (
mark my words) vanish without a trace from XStreet in the next three weeks or so. The left hand is dangling the so-called 'freebie issue' while the right hand picks the pockets of all merchants on XStreet, nodding head sympathetically all the while..
"those Freebies certainly are the source of woe, are they not?" A disingenuous tactic at best.
You may take this as you will, but I read it as blatant tinkering with the marketplace, in order to slap on an extra fee and make more Linden$ in the aggregate. What will be hurt by this? Small, niche product lines that appeal to offbeat people looking for something goofy. Sure they don't jump off the shelves, but someone may want them. Or they will become freebies.
Let's talk about the real problem. XStreet is very difficult to navigate. The search engine lacks many simple boolean search options. A potential customer can't even search by manufacturer with any degree of certainty. Time and time again I have known, for certain, that a product has been listed on XStreet, and I can't even find it with a simple name search. This is a known problem. Wouldn't it be wiser to spend some money to fix the search engine than to penalize those hapless creators that don't subscribe to a blatant profit motive?
Who gets hurt by this? Quirky, independent creators that are trying to get items with personality and style out to the populace. Sure, the give out freebies. Why not? It's for a
niche audience. I am not surprised to see people like Ordinal Maliprop, Murakami Steamworks and Punky Pugilist departing Xstreet en masse. Another victory for Linden's version of e-commerce.
What's the future of Xstreet with this policy in place? A thousand listings of the lowest common denominator blue jeans, t-shirts in thirty colors each (as separate items) and impeccable, Ken and Barbie doll clothing going for 100L each, and nobody will buy them. Linden for the win, again.
So I'm personally saying farewell (for now) to XStreet, until they come to their senses. I don't really NEED anything I buy on there.. I'm not a merchant, I'm not a SL shopaholic either. But I don't want to be part of the bland future they've made for the forces of the marketplace in Second Life. Perhaps this
slapt.me site can pick up the burden of freebies and independent creators (and somehow, bear the 'costs' associated with it), perhaps not. Right now, slapt.me is a tad too adult for my liking.. but I'm willing to give it a try. At least it's a bit more market oriented than XStreet.
I made my last XStreet purchases on Tuesday night, just before hearing about the change of policy. Ironically, it was a bunch of
freebies from Punky Pugilist. I thought that was a fitting end to my XStreet experience.
Proposal: In honor of MYSTERY MONTH, I am offering to run a RIPPER party at Steelhead (not sure where yet, my place could hold people but maybe a more central location).
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