Wednesday, December 29, 2010

Freebie-izm and the Reality of Monetizing a Thriving Metaverse

There has been a lot of debate over the perceived 'entitlement' mentality out there when it comes to how to pay the bills for the Metaverse. At SpotON3D, most of our users understand and appreciate the need for the $2.99/mth premium membership, as evidenced by approximately 50% of our users opting to upgrade. But, every once in a while someone voices their feeling that its unfair to ask someone to pay to own land or build on a grid, since they've been given that option for years in SL for free. I'd argue that, that is exactly why Second Life(r) isn't OUR GRID any longer. It forced them to reach out to more investors for help to fund the programming and better hosting that the users are calling. This may have been the reason for the shift in focus from community to the bottom line at Linden Lab(r), because by most estimates only 10% of SL users actually pay anything to LL. This is not a sustainable monetization model and any grid built upon it will most likely end up doing the same as SL- turning to big advertising agencies and deep pocket investors to pay the bills. In the end this strips US, the user base, of our voice.

The reality is that it takes real money to pay programmers, bills for co-locations, marketing and promotion to make our Metaverse a reality. If we are not part of the monetization of that, then the focus once again will stray from the us and the community to investors & advertisers, so in my eyes, paying in is like voting. It gives us a voice - a real say in how things are done and how our favorite grids grow.

Having said this, there are many other very good reasons SpotON3D, in particular, has its $2.99/month fee. It helps address security, permission and stablity issues that have long plagued the Metaverse. When we created SpotON3D we took a look at the historical top five problems people expressed about their virtual world experiences, besides the usual learning curve complaints and tried to remedy them as reasonably as possible.

1. Lag & Instability
2. Griefing, Money Laundering & Fraudulent CC Charges
3. Kids in inappropriate places
4. Personal Drama
5. Scams, Disputes & Copybots

As any oldie of to the Metaverse will attest, anytime you open up to unregulated freebie accounts you get a flood of kids, griefers, and other users that don't want their real world ID's attached to their avatars via a traceable payment, along with a lot of great community. Problem is that the first bunch quickly flood the server systems, overtaxing them to the point of negatively affecting everyone's experience, and many grief just for the "lulz." This is exactly what happened in the summer of 2006, when LL changed from paid to freebie for all accounts. Even with $28m in investment funding, LL was unable to handle the massive wave of new users coming at their doors. Many of these free accounts weren't contributing to the bottom line, so revenues could not keep up with the demand for servers and co-location costs. As a result you saw many people fearing Second Life was on the brink of a melt down. In came IBM to the rescue, loading up LL with a ton of blade servers. It is assumed IBM was compensated for their help with company assets and influence and might have ultimately led to the exit of Corey, and eventually Phillip's initial stepping down, due to the shift in ownership as a result.

While large investors like IBM and Mitch Kapor can definitely be important in any company's long term goals, the shift in focus from community to purely profits was a misstep by most people's accounting. Linden Lab grew a staff of individuals who were not even involved with the grid life, and ignored the needs of their core user base -- the paying members -- not something we want to have happen with SpotON3D.

You make the users the investors, keep an open dialogue with them, and ensure that the monetization model is transparent and rational to most reasonable-minded users. This gives us many reasons to keep YOU as our primary focus and concern, be it a role playing group, educator, business owner, or creator. It's simple mathematics. It takes a lot of money to run a grid and while this small $2.99 a month fee certainly doesn't come close to covering all our expenses, it does make a difference.

By tying our Premium Memberships to PayPal payments, we dramatically reduce the risk of griefing, because a verified or confirmed PayPal account is required to upgrade. This means that, if needed, a user can be held accountable for their actions in real-world terms, which cuts out about 95% of the risks of not only griefing, but money laundering and fraudulent credit card charges. If we accepted credit cards for payment, the potential for fraudulent CC charges would have required us to raise our prices by at least 30% to accommodate the additional costs - not something we felt was worth the risk and we hope you agree. SpotON3D doesn't think it's fair to accept the risk and make the user base responsible for the additional costs fraudulent charges raise, but ultimately the only way to avoid those costs is to make sure everyone paying is who they say they are. The fact is that our system does work. We've yet to have a report of griefing or fraud. We think our users agree that $2.99 a month is a small price to pay for the peace of mind it affords them, along with the other benefits below.

This one is near and dear to me AS A MOTHER of a 16-year-old and as an adult who occasionally enjoys grown-up pursuits in virtual environs. Discussions and mature activities that kids would roll their eyes at and groan loudly and basically do everything they could to disrupt if they were around, or role play and sexy dress-up that I'm just not comfortable doing around kids. It's also a fact that KIDS can do things that drive me nutso, like play the same currently popular song ... over ... and over ... and over again! *sigh* Or crash things over and over again, just for fun. Or break sims with their antics. *ugh* Yes, we adults do deserve and need a place online to be adults and not have our whole lives dummied down for our kids. They have gobs more to do online, on console games, and on TV. A virtual environment meant for adults is one of the places we can relax and enjoy the company of other adults.

Now, how do you go about making that happen in a reasonable manner? We could ask invasive questions, like your Social Security or driver's license number, but lets be real. Kids can swipe that info anytime they want on the sly and register/upgrade their account to get into grownup areas. We wanted to be more responsible about this issue by using PayPal again as our gate keeper. The reality is that parents regularly give kids their CC's to run to the store or mall, but most would be loath to give out their PayPal password to their kids, because it is directly linked to their banking info.

When kids DO come on our grid, it is required that they do so using an avatar from an adult's Key Account. We welcome and encourage our users to share and loan out one of their 5 included avatar accounts to family and friends that they trust. We feel a parent or an educational institution's representative should be there to guide minors in their virtual pursuits and we think it also keeps the adults from sometimes behaving like brats with each other. :P

While there will always be drama of a personal nature wherever there are humans, we have seen that people on our grid just behave more civilly around each other when they know they are not completely anonymous. Its amazing the effect our grid has on people, even when they are visiting as a FREE4EVER user. I've seen people, who in SL groups and/or on online forums are bonafide trolls, participate in discussions like human beings again. While we want our users to identify themselves to us, this does not mean we ever share anyone's personal information with other users in any way. We take privacy of our users very seriously. But, if you're very very tired of all the drama you see on other grids, then maybe this is something you'd consider as a positive.

For all the same reasons stated above, our premium memberships limit these risks, too. People feel compelled to keep it real and above-board, while playing, working and socializing. We want to be the promoters of responsible adult interactions and minimize any need to be the investigators of negative activities.

The real point here though is, even with a small army of volunteer mentors and paid employees no grid can effectively handle the griefing that occurs when a freebie state of play is enacted on a grid. SpotON3D made a conscious decision to make the users our primary source of funding, so that when investors do come around, we can earmark that funding for innovative solutions and collaboration with others rather than have it decide who is steering the boat. Yes, as a result of this decision we are growing at a slower rate than others, and that's ok. We're in this for the long haul. This only happens when you have a truly dedicated community, which we most definitely have the beginnings of.

If any of you out there disagree with our vision, we can appreciate that. We don't expect to be everyone's cup of tea, but if you're looking for a technically advanced grid that works hard to ensure your experience is as trouble-free as possible then maybe you'll see the value in that little $2.99 a month ... under $36/yr for access to ALL our public grids. That's less than half of what a year's worth of SL memberships costs. AND REMEMBER - there are other benefits for paid accounts on our grid, such as NO UPLOAD FEES, NO LISTING FEES, AND FREE MICRO-STORES while supplies last and access to our FREE SANDBOXES.

We are also considering opening up a free-4-all sandbox that would not require an upgrade membership so that any Doubting Thomases can give our grid a test. Should be an interesting experiment. Will the civility be maintained, or will the griefers run amok? Time will tell. Stay tuned to this blog to hear more about this experiment.

As always, we welcome your constructive feedback.

Co-Founder & COO of SpotON3D - Tessa Kinney-Johnson

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