Sunday, February 18, 2007

On Linden Lab's Contingency Measures to Ensure Service as Second Life Grows

Robin Linden, on the Official Linden Blog, announced a new measure to try to deal
with the "peak" concurrency: if circumstances demand it, instead of shutting down the grid to all logins, they will only allow residents in which have given Linden Lab any payment information (basically, this means every Premium account — existing or former — as well as anyone owning a private island or having made an exchange on the LindeX).

Since the number of people with their payment info registered at Linden Lab is actually quite small (for instance, only about 60,000 Premium accounts...) this will allow the paying customers free access to an admittedly cramped full grid, while leaving the freeloaders outside. Obviously, once you're in, if you manage not to crash, you'll be able to stay. If you crash or try to login back again, you will have to wait until the number of online users drops below a certain threshold.

Formerly, Linden Lab had a different approach: they would shutdown new logins for all users, in a very egalitarian way — paying and non-paying customers. This, however, seemed to be unfair. After all, some are paying to be able to log in — the vast majority is not. The first differentiation between paying and non-paying customers was done earlier — access to free telephone support. Now Linden Lab went a step further and added "grid access" as a new privilege for those one who have been faithfully settling their bills with Linden Lab.

To be consistent with my own comments elsewhere, I'd like to applaud Linden Lab's decision, even fully understanding it's a "temporary" measure — they will, indeed, increase the number of concurent users on their grid. They're not crossing their arms and expecting not to grow any more, or abandoning all hope of ever being able to support more simultaneous accounts. Still, it's obvious I have to agree with any sort of measure that benefits paying users — the ones that actually account for Linden Lab's present and future economic viability. Also, Linden Lab is not demanding much — if you transact a single US dollar on the LindeX, you'll be in the same league as Anshe Chung with her hundreds of sims. It's not as if this is overly "discriminating" — in fact, all paying customers will be treated the same way. But they will have access to better service than non-paying customers.

We have to remember that at one point in time, not so long ago, premium accounts were only 1/6th of all accounts. Now they're a far tinier number — just 60,000 accounts out of almost 3 millions. Encouraging people to pay for something they can enjoy for free is rather hard. On the other hand, going in a year from a situation where 2/3 of all users were US-based to just 1/3 shows that SL is moving into an interesting direction — speaking from myself (and as an European) I think that nobody could have predicted that — and all due to dropping the requirements of having a valid credit card. It was a wise move that actually worked quite well. And one of the major reasons is that it allows SL to be "easily accessible".

I remember that I saw the first boxes for World of Warcraft in my country a month ago. How long has WoW been available? Several years. However, only now it has made a very timid entrance where I live — in Portugal, a tiny country which only has 16,000 users in SL or so. But for several years, lots of Portuguese have been in SL (even predating the official opening of Second Life in mid-2003 :) ). SL even has "Portuguese" as a translated language (mostly due to the Brazilians, of course). WoW has no such thing. You have to get a box, pay your account, and get the options you've been given. No questions allowed.

Except for, who also allows free membership, I'm not aware of any commercial virtual world that has almost 3 million unpaid users. SL is truly the exception that makes the difference. Unlike what some people tend to make us believe, "fixing" the support for multiple users is not just "adding a few webservers", like, say, YouTube or MySpace can do pretty easily. Sue gets it right on one of her comments: although thousands of people claim the contrary (ie. that it is very easy to deploy a structure as complex as SL and make it infinitely scalable), there is no proof to that claim. It might be possible, but nobody ever attempted it. Comparing SL to "other games" or "popular Web 2.0 sites" is mostly unfair; SL is a beast of its own, and has to deal with new things that nobody knew how to do in 2003.

So, we have a temporary measure, which is based on a clear and simple assumption: the ones that pay to Linden Lab get better service. It only makes sense. There is a lot of open source software in the world (and we can consider SL as being, partially at least, open source as well). The best open source software comes from companies making a business out of support, consultancy, and training, instead of consultancy fees; good examples are things like MySQL, Alfresco, Zimbra, even Mozilla, but there are thousands more. These are all companies making a profit out of their license-free code. And you'll understand why some people pay for having good support on an otherwise free product: when something goes wrong, you'll definitely be willing to pay to get a quick fix.

LL is just using the same strategy. SL will remain free to use, in any part of the world, without complex verification methods. Just download it and join! But if you're serious about using SL, sometime, at some point, you should also be willing to pay for getting quality support, or better access, or more features not available to the "freebie" users. Having your priority on the login queue being bumped up if you're willing to pay for using SL is just a tiny example of what can be done.

SL had, in its past, a certain "community spirit". It was told to every new user that "paying" was not so important, but commitment to a community, and spending time doing positive, creative things. In a sense, who is more worth — the griefer that has a premium account, or the poor Mentor from Ecuador or Kazakhstan, without access to a bank account, who spends hours every day to tirelessly help out new users on their first steps in SL? It's a moral question. It used to be easy to answer.

There is not a "community" in SL any more, and it hasn't been ONE community for well over a year now. There are, instead, several communities, side-by-side, peacefully co-existing. A few of those, for instance, laugh at having volunteers doing the hard work of helping newbies — when they do the same for a fee, and probably much better. But each community has the same right to co-exist in SL. So it's hard to measure what is "better for SL overall". You can easily point out this or that person to be "better" for your own, local community, and praised for that. But what influence does that person have overall, or, for that effect, to Linden Lab? These days, the answer is "not much". Focus on your local community instead where you can be more helpful and more respected.

So any system based on people's personal worth and their work in a community is impossible to measure by a "machine" at LL's co-location facility. We're talking about interpersonal relationships that extend to perhaps thousands of people, but not millions. LL cannot measure a person's worth to the "overall good of SL", because the "overall good of SL" is impossible to define these days. It means different things to different people.

This means that LL has simply to focus on the only "fair" system they can devise automatically: paying customers have a priority over non-paying ones. The rest is an ethical discussion, but not a business decision. It's "fair" in the extent that all users — paying or not paying, griefers or helpful volunteers — consume precious, scarce resources. The ones willing to pay for those resources should, in a business sense, have better access to those. It's very easy, simple, and fair in the usual business sense of the word "fair".

I found it very interesting that so many Europeans have complained about their troubles of being unable to provide valid payment information, to either LL or PayPal. In all European countries — yes, all 27 of them — PayPal is able to tie their account to a valid bank account. I can understand the argument that some people are so deeply buried in debts that they can't even get a "cheapo" credit card — it's definitely possible, although one can only wonder how they are still able to pay for Internet access and electric power. I could also understand that people in Ecuador and Kazakhstan or North Korea would have a very hard time in getting a valid credit card that is accepted by either LL's payment gateway or PayPal. But in Europe...? I don't really buy that argument; if you have a bank account, you can use PayPal, you don't even need a debit card for your bank account.

I'm not saying that PayPal is a good solution. In fact, I have had lots of problems with PayPal in the past year. They're way worse in all things like technical support; and apparently, the more money you transact through PayPal, the more likely you'll have money lost (it happened to me, I lost US$100 when trying to buy L$ from the LindeX for a friend), or your account cancelled without any way to contact their support lines. PayPal is, for me, the worst possible example of "customer support" — the type that actually makes things harder on their better customers (ie. the ones willing to use it for large money transfers, and thus paying a lot of fees to them). But... it's simple to use, and available in over a hundred countries. Obviously, the kind of services you get through PayPal vary a lot from country to country; but at least in Europe you'll be able to use any bank account to tie it to your PayPal account, even if you can't have a Visa card.

There are, as said, reasons for not using PayPal. But there are still a lot of choices for Europeans. Take e-Passporte as an example: they create virtual credit cards tied to your name (even avatar name, if you wish) and can accept payments through a money order to an European bank (in Germany). That card can then be used either for validation with LL or with PayPal (I've tried both). The process is cumbersome and complex, but it worked fine for me. I'm pretty sure that if you do some searches for "virtual credit cards" you'll see a lot of operators allowing that type of service. Sure, they will charge you huge fees for that service — they're not offering it for free :) — but it works, and you can do a money transfer to an European bank.

Obviously, there are more payment gateways that LL could subscribe to. A few months ago, Robin Linden was actively looking into those, and I think she had a rather large list of possibilities. Things, however, are not so easy as people sometimes think they are. Global banking interconnection does exist to an extent, but it's not trivial and not always fully automatic. Unlike credit cards, which work "instantly" and use electronic means to validate payments and can be tied to a back-end system with just a few lines of code, international money transfers depend a lot on several complex transactional methods, some of those still manual (ie. requiring a human being to "approve" them). In many cases, each bank has their own system. Not all European countries have a "national" network where all banks are connected to (again, my country is an exception — there is just one national banking infrastructure, and connecting to that one is enough to be able to send and receive money from any bank operating here, even international ones. Moreover, the same network operator also offers virtual credit cards using a very safe mechanism, as they also handle the connections to Visa, Mastercard, and Eurocard — but other countries have their own networks, and sometimes they don't extend to all banks in the country).

I'm a regular user of all sorts of electronic payments over the Internet. Non withstanding the possibility that there must be a million sites accepting all kinds of weird transaction systems, all things I've seen so far neatly fall into two categories: credit cards/PayPal or local, national systems. I have made a few tests on some hosting services. A few are pan-European. When I log in to my country's page for that hosting provider (they have local offices here), I get the option for credit card, national bank transfer, or paying through an ATM connected to the national banking network. If I select the same page for their French operations (where they also have offices), I can select a credit card or a French bank money transfer. So far, so good — but what if I want to buy the service in France and have no French bank account? Simply said — I can't. I have to use a credit card. And the same happens when I visit the page for that particular hosting provider in all countries where they have local offices: you can always pay with a credit card. But if you want to do a bank transfer, you need to be a local resident with a local bank account. I can't simply use my own local bank account to pay for something on another country.

This particular hosting provider has far more paying customers than Linden Lab, so I guess they are not being "irrational" or losing business or whatever. They know how difficult it is to provide cross-country banking information. It's always easy to provide that type of information inside a country, but never across borders. But... for that, you can use a credit card, which will always work.

Now, I think it's unlikely that Linden Lab will set up offices in each and every one of the hundred or so countries where they have customers! This is simply not expectable in the next few years, and they don't generate enough money from just 60,000 paying customers to be able to support so many branch offices. It is unreasonable to demand that they ever do this. I couldn't find any example of middle-sized companies who managed that kind of thing. The only two companies I know that allow tying into your bank account are, respectively, PayPal and Google AdSense — but there are quite a few payment gateways that allow that kind of service as well. I can imagine that when LL is the size of any of those companies, they will be able to do more fancy things in terms of international payments, namely, be able to make a deal with the top-tier payment gateways. But until then, it requires a little more effort on our part to figure out a way to pay LL.

There is an argument here that I don't understand, this dichotomy of "getting a credit card in Europe". I can imagine that back in the 1960s, it would be a bit harder for Europeans to get access to a credit card than an US resident. But these days...? I would imagine that it's as hard or as easy to get a credit card either in the US or in Europe and can't possibly believe it's different. I can understand personal issues, of course, but surely they apply to any side of the Atlantic? I mean, if someone in the US has no way, due to personal issues, to get access to a credit card, I can imagine that the criteria is the same in Europe as well? But... I don't understand the "difficulty" or "impossibility" argument. I actually have a locked bank account which has a nicely working credit card tied to it. :) So long as I "somehow" pay for that card, it will continue to work — the bank is not too fussy about the way it gets some money — and I would claim that it's easier to get a credit card than a debit card (because credit cards are emitted by Visa/Mastercard/AmEx, while debit cards are emitted by the bank), but, obviously, this is a personal issue. Most people will have no problem.

I found it also interesting to watch in this thread that no US resident complained about being unable to pay! Instead, I can only understand that the US residents know their choices better, and either they are "able" to get a credit card/PayPal account, or they fully understand why they can't validate their accounts. Again, the complains only come from the European side, who "demand" more alternative ways of payment. I guess that's a bit unfair — the Europeans get exactly the same methods of payment, no more, and no less, than the US ones. Sure, I'd love to have a direct debit account to pay for LL automatically without worries and without paying any fees; but I'm also fully aware that for it to work, LL would need to have a bank account in my country, and that means they had to open a local branch here. That's unlikely to happen, so I obviously can't comment — it's up to me to find a way to pay to LL, and not make "unreasonable" demand on LL to create a way to accept my money, a way specially tailored for me.

At the end of the day, what I can see is that many of my fellow European residents are simply uninterested to pay for a service that they can otherwise get for free. As long as there was no "differentiated" access to SL, everybody was happy (and buying/selling plots on private islands even discouraged an increasing number of Premium accounts). The paying customers were mostly doing it "for the love of SL" (or because they made a business out of it), but the non-paying users of SL didn't complain — they got the same tools, the same opportunities, the same quality of access. Once LL started to give their first hints that they can't continue to give the free users the same things they give to the paying ones, the complaints started to rise in tone.

I frankly can't understand this attitude. Or perhaps I can — it's a new generation that "thinks" that the world — RL or SL — "owes" them something. This is the "I'm important, so you should pay to have me around, and not the other way" egotistical attitude which is getting more and more common these days.

We all are prim-a-donnas. But real life companies can't pay salaries based on egos; they need cash for that. And so the ones willing to pay for a better service are slowly getting it. Speaking strictly for myself, Linden Lab charges me too little for my Premium account :)


  1. It is not quite correct that you can tie your bank account to a Paypal account in all European countries. Not in a way that is useful in relation to SL, at least.
    In mine, for example, it's possible to transfer money from Paypal to your bank account, but not the other way around, which means that your Paypal account will not be verified and so cannot be used to verify/pay for your SL account, nor to buy L$ at LindeX or SLExchange.

  2. I have always believed (as a professional cynic) that LL opened up the free accounts to fuel growth and get better visibility in the market place - just consider the number of SL accounts in Jan 2006, compared to 12 months later. In this regard, the strategy has worked - and SL has become the de facto 3D world for commercial, educational and not-for-profit organisations. In terms of market visibility, SL is noe head and shoulders above its rivals.

    I think the strategy has proved far more successful than LL dared expect... Hence the current view that, in time of stress, they need to tweak the access rights. Of course, this too is a strategy. The number of premium accounts has grown by a tiny amount, and for their revenue stream, upping this number must be their next priority.

    Finally, I think if you provide something for nothing, you set expectations, and the withdrawal of this "something" will lead to criticism - and even backlash.

  3. It's definitely harder in Europe to get tied in to payment systems, including PayPal and credit cards, that US companies are comfortable with. It's harder in Europe than here to do all kinds of things we take for granted: get a phone line installed, get a credit card, get utilities hooked up. fwiw.

  4. This comment has been removed by a blog administrator.

  5. Actually, similar, you're right; in my case, PayPal doesn't allow me to transfer money from my bank to my PayPal account as well. However, there are workarounds to get yourself identified and validated by PayPal. It is, indeed, way more complex, and doesn't work all the time, but it works.

    The biggest hurdle with PayPal is to make them accept that not everybody does have all the documentation they require in their name, like Mark so well puts it. A good example: my roomie cannot validate her account, since she has no phone line, no bills to pay, and no driver's license in her name — she just shares the address where we live.

    Not to mention all the cases where you might be a student living on a campus; or an 18-year-old living at your parent's home; in all those cases, it will be tremendously hard to prove your identity either to PayPal, or, indeed, to Linden Lab.

    Note that I say "hard" and not "impossible". There are lots of ways to provide proper identification; they're just not so easy to do.

  6. Gwyneth,

    I had no idea there even were other ways to get your Paypal account validated. They must hide that info pretty well; I only get presented with the "Add a credit card" stuff when I try to get mine validated.

    I'll look into that. Very annoying to be able to verify my SL account.

  7. Slight update on the Paypal verification thing. I've wasted far too much time on this, as the conclusion very much appears to be that without a credit card, there's no way to get my Paypal account verified. Which means that, short of getting a credit card, there's no way I can get my SL account verified.

    With the unreliable way SL currently works, I'm not convinced there's enough incentive to go to the trouble and expenses that getting a credit card will require. And a Premium account is certainly out of the question at this time.

    I guess that's another thing the original post missed; new users see something which may potentially be highly fascinating, but it's marred by too many technical problems. The inabilities to login, the crashes, lag, packet loss (60+% at times... Never seen that before, anywhere), sims going down, etc.
    It really doesn't make for a first impression that you want to risk spending money on (at least not when you aren't exactly well off).
    Remember that you (Gwyneth and probably most of the people who read this blog) already know what SL can be, you've seen the many sides to it, but that's not the case for new users. With the problems of learning the basics of SL that many people apparently have and a good number seem to get turned off by, the unreliable state of the technical parts, and even the problems of getting your account verified (which, BTW, seems to also mean that you're locked out of the official forums and so can't even ask for help there. That did not impress me) and soforth, those 60,000 Premium accounts of 3 million the original post mentions aren't overly surprising (but I don't really think such numbers say much about anything with respect to SL; it's too different from games and there are too many reasons people don't become regular users).

    So much about that...

  8. Perhaps I have missed something? I have been using SecondLife for about 5 months now and I finally decided that, yes, I would like to own some land, and yes, I would like to buy Linden $$ so I want to upgrade to a Premium account.

    So, I thought hey, no problem. I went to PayPal, signed up for an account. After getting set up, I added my bank account information. After a few days of waiting, I got my bank account confirmed and proceeded to put $100.00 in to my PayPal account. Adding $100.00 to my PayPal account from my bank took a full 8 business days to complete, a week and a half. Okay, fine, that's the rules.

    We are now about 2 full weeks after I decided to upgrade my SecondLife account to be a paying customer.

    Now I am poised to buy land. So, I log in to SecondLife and look around for a couple of days to see what land looks good, to think of a good location to buy, and to talk to a few people about learning what I need to build and such.

    So, I'm ready. I log in to the SecondLife website and click to upgrade. I give it my PayPal account info, and -- am DENIED because my PayPal account is "not verified". Okay, that's easy right...

    I log in to PayPal and look around for how to verify. Sure, enter your credit card information. No problem, right? Wrong. I do not have a credit card. I don't want a credit card. When I buy something I pay for it. I don't put it on credit and pay later, I pay NOW. That's why I put $100.00 in to my PayPal account in the first place. It's in there, ready to pay for something. It's not credit. I had to wait a week and a half to get the money in there, only to be DENIED using it.

    Fine, I look around for a non-credit-card way to verify. Hmm, I must be looking in the wrong place. I look some more, and it's getting late so I decide, I'll look tomorrow.

    Tomorrow comes around and real life requires my attention, it will have to wait one more day.

    I am not about 2.5 weeks in to my decision to buy land and here I sit. I come across this post, and on here you talk about ways to verify without a credit card and that it's possible, but it's hard - but not impossible -- and then give no clues as to HOW to do it, except that it's possible.

    After 2.5 weeks of patient waiting, wondering what it would be like to have my own SecondLife land to call home, and getting beat over the head with "give us your credit card" time and time again, do you think, please, could you at least list the steps of what to do to get PayPal verified WITHOUT a credit card.

    As I see it (and it appears as if I'm a small fish in a big ugly pond) I have already GIVEN MY MONEY to PayPal, to make a purchase and SecondLife REFUSES to let me buy some land because, oh no you HAVE to be verified; we couldn't just let you buy something with real money that's already been sent to a trusted partner. No, we have to be SURE that if we needed to, we can bill you for credit. What?!

    So yes, I'm a little bitter. It's disheartening to be refused to pay cash for something and treated like this. But it's even more disheartening to hear "oh yes it's possible" without at least some BASIC LISTED STEPS on how to get the job done.

    So "hooray" for SecondLife - you've just told me that a simple honest person paying cash can NOT pay for an account. --so it seems from this end of the wire.

  9. I am now a premium user of SL...

    is that except for in the US & maybe the UK, Paypal does not recognise many international banks, this includes major banks here in Australia.

    Paypal uses electronic verification & not ppl. power and does not upgrade their database to recognise non-international banks, thus heavily relies on CREDIT CARDS. Paypal for a large majority of SL users is not an alternative to providing a credit card.

    1. List on your official website international payment facilities that can take money orders, such as the one you mentioned in your article.
    2. Conduct an in-world survey to assess how many consumers would upgrade if they could provide a money order/cheque directly to LL.

    This will allow you to compare the cost of processing such a facility against the projected income from the number of paid memberships.

    3. Free access should be given on a trial basis (maybe 2months?) After this time ppl. have option to retain basic a/c but pay a small regular access fee/ be a demonstrated significant in-world contributor to SL/ or they can go premium.

    "66,000 paying consumers (MAJORITY IN USA)from 3million ppl."

  10. Just a slight comment, on the latest statistics, with Second Life having 5.6 million accounts and 75,000 Premium users, the number of US residents are now down at 26% of the overall population, with Europe well above 50%.

    We can only speculate how those percentages are for Premium users, of course. I wouldn't be too much surprised, however, if they would be pretty similar, which would make the whole issue irrelevant. If not, LL will have a problem, if they want to tap all those non-US residents to convert them into Premium users.

  11. I have given up entirely on being able to buy currency in Second Life. I have a credit card and 2 debit cards, all valid in the US with notes on the account that I live outside of the US. But none of that matters - an additional problem with many credit and debit card companies is that they have a block on all gaming organizations, and when I called the companies of my 3 cards, all said that they consider Second Life to be gaming, therefore they would not accept a payment to LL. I wish this were not true, obviously, but my card companies said that there is nothing they can do. Sigh!