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On December 2nd, 2019, commission rates on Marketplace sales will become 10% of the item price. This will be the first commission increase since the Marketplace debuted a decade ago. This new rate remains significantly lower than most digital content commissions across the industry. Apple and Google charge a 30% commission on sales in their app stores, as do many other popular virtual worlds, VR and gaming platforms, such as Oculus and Sinespace.
Many SL users have grumbled that the 10% figure (which will be double the previous 5%) does not accurately reflect the complete picture of how Linden Lab makes its money. Some have pointed out that comparing the 10% figure against the 30% commission charged by Apple and Google is misleading, given all the other transaction fees LL has implemented.
I did this calculation:
If I buy 2500L$, it cost me $9.73, and with transaction fee of US1.49 the final cost is US$11.22
If I sell an item on the MP for L$2500, I now get L$2250 for it. (10% LL commission as of Dec 2nd 2019)
When I sell the L$2250, I get US$8.13. (3.5% transaction fee to LL)
When I withdraw the balance to my bank, I get US$7.72 (5% Transaction fee to LL)
So if a SL member buys L$2500 and the merchant cashes it in, we are seeing a transformation of US$11.22 to US$7.72, and LL are effectively taking 31.2% for themselves.
LL say in their blog post: ”This new rate remains significantly lower than most digital content commissions across the industry. Apple and Google charge a 30% commission on sales in their app stores, as do many other popular virtual worlds, VR and gaming platforms, such as Oculus and Sinespace.”
They refer just to the 10% MP commission, but we see that LL is actually creaming off over 30% if you follow the money from start to finish.
10% MP commission is one thing, but then all the other charges just add up to something that is somewhat unfair.
I found this explanation very instructive, so I wanted to share it with you. If you want to read the entire thread on the forums, here it is. You might also find this conversational thread interesting.
I think that this is yet another step in a long-term strategy. Linden Lab is continuing a multi-year, concerted effort to shift its main income generation away from charging for land, and more towards charging for services. Once LL successfully launches SL sims “on the cloud”, as opposed to running its own expensive servers, I do expect that the cost of buying (or more accurately, renting) virtual land in Second Life will decrease as a result. But obviously, we aren’t quite there yet.
So, what do you think? Is this a price gouge on the part of Linden Lab, or a necessary cost of doing business? Please feel free to leave a comment below, or even better, join us on the RyanSchultz.com Discord server and tell us what you think there! We’d love to have you.