Two days ago, RightAsRain Rimbaud of UK based Rezzable announced something that should have sent shock waves through the SL blogs, but surprisingly has only been picked up by one major blog so far: paid admission to the Black Swan sim.
With immediate effect, you have to buy (and wear) a device for 199 L$ in order to visit Black Swan. The device allows permanent access to the sim - if you don't wear it, sentry drones hovering around Black Swan will eject you. RightAsRain said paid admission in Black Swan is a test run and might be implemented in other Rezzable sims, and in fact the drones hovering above the sims are a familiar sight for visitors of sims like Surfline.
The 199 L$ are not a large sum of money for me, and certainly money well spent to see the truly magnificent creations of Black Swan. For Surfline, on the other hand, while being one of my favorite places, I would not spend the money. And also not for Crimson Shadow which - apart from being a stunning build - is predominantly a shop.
What strikes me as odd - and concerns me to a degree - is that this move on behalf of Rezzable has DESPERATION written all over it.
I still remember the early days of Rezzable. Beautiful sims started to appear, and its creators hid under a veil of secrecy. Residents speculated about the purpose, while enjoying the barely-seen-before wonders. Slowly, the veil got lifted, but still there was no apparent business model recognizable. The most likely explanation was that they were building an impressive showcase in order to acquire corporate clients for custom built sims. Well, maybe I have lived under an SL rock, but no corporate account brought in-world by Rezzable comes to mind. In fact, RightAsRain Rimaud even explicitly named L'Oreal as a corporate account that pulled out from sponsoring Rezzable.
Yes, after a certain time, we saw a little commerce going on on Rezzable sims. Some clothing on Surfline and Crimson Shadow, or the availability to purchase statues and miniatures of exhibits. Certainly nothing to sustain Rezzable as a company. And now the admittance fee to Black Swan. So let's do the math. Rezzable has at least 25 sims. Even after the reduced pricing of late, this will amount to some 7500 US$ on island tier alone. Per month. Throw in staff and office locations in RL, to end up with a very significant monthly cost - and no apparent business model to generate revenue.
Enter the admittance fee. Traffic in SL is an issue on its own, so let's just speculate. I think it is safe to assume that Black Swan attracts 100 visitors a day, which makes 700 per week or 2800 for the month (let's disregard repeat visitors for the moment). Those 2800 visitors multiplied by 199 L$ for the admission fee leaves Rezzable with a comfortable 1500 US$ revenue, enough to pay the tier of 6 sims. But there is a flaw in the calculation. Several flaws indeed. Flaw number one is repeat visitors. I personally was probably 10 times or more on Black Swan, and a lot of my friends visited multiple times as well. For the sake of this example let's assume 10% repeat visitors. Then there is a lot of people who can simply not afford the 199 L$ admittance. Half a year ago, I would have thought it over several times before spending that money. So let's assume 1/3 of people who CAN'T pay the fee. And certainly a number of people who have the standpoint that sims in SL should be free and therefore refuse to pay the cover charge. Let's assume another third of those. That leaves us with 30 paying new visitors a day or 450 US$ a month - which barely covers the tier for 2 sims. If however my assumption of 100 visitors a day was wrong, and it would only be 50, then the admission fee would exactly cover the tier for the Black Swan sim itself. Nothing I would call a sustainable business model.
My personal interpretation of this move is: desperation. Maybe their venture capital has run out, and the corporate contracts they were working on pulled the plug. Yet they have a lot of monthly cost, so some of that needs to get covered no matter what. An admission fee is one option for that, and even though I personally think it is the wrong answer, I wish them luck with it. SL would be less beautiful without the Rezzable sims.
In the end it boils down to the question whether SL can be profitable at all. Yes, we all know about profitable SL enterprises. My own company, Babel Translations, is very profitable - but only within the SL economy itself. Others, like escorts or clothing designers, generate RL profits - but only as 1- or 2-men shows. I personally think that SL can not be profitable if you have a company behind it, with RL wages and other RL costs. I wish Rezzable would prove me wrong, I really do. But I doubt it. So my advice is to go and visit all the Rezzable sims, as long as they are still there. Because the sims will be the first that gets shut down should the money run out.
9 comments:
From the standpoint of someone who has never visited Black Swan before, I would not pay $199L to see it unless I could get some kind of preview to find out what I'm paying for in the first place. Plus, since almost everywhere else is free, I would have to have a compelling reason to want to pay $199L to go to somewhere that is not.
Following your accounting, it would be better if they have placed tip-jars around. People are willing to tip the good work, even more than to pay for an access HUD.
I wouldn't go that far to think they are desperate, though. It's more like they are testing the concept. Yes, they need to find a way to finance their enterprise, but hopefully, they have some more cards in their sleeves to play with.
LL lowered the monthly costs on sims? Nope. hehehe...(laughin and cryin at same time)
must be hundreds of photos and dozens of machinima on the web showcasing black swan http://www.flickr.com/search/?s=rec&w=all&q=black+swan+rezzable&m=text . I would guess it is the single most photo'd place in the virtual world.
We actually are not desperate--we are not happy. We don't have any VC money on this, so not gonna get are nuts ripped out like ESC after CSI flop. In fact we are very committed to the virtual world and are working on some amazing new ideas--which may or may not go into SL.
Issue is about SL engaged users--and it is about 380,000 avatars which is something like 300,000 human real people--guess what, that isn't a big enough economy. LL is in the bunker now and we have no ideas on the future of the platform--but we remain committed to the future of the virtual world.
If people in SL only want to buy stuff at malls--then SL will be like an empty grid full only of campers and bots...
This is a very interesting analysis Peter. I cannot help to think that the people behind the Rezzable SIMs estimated a drop in the number of visitors when they implemented the admittance fee. As a RL business major, it is my experience that artists tend to overlook the business side of things, so I hope that – if they are loosing money - a business mind is helping them figure out how to turn the company around and generate some profits.
As a SL photographer, RL gamer and admired of digital art, I would gladly pay the fee to visit Black Swam and all the other Rezzable SIMS. I too hope they do not disappear.
Peter, thank you for this post, I’m not a big fan of blogs, so I tend to miss out on important things.
Quaintly, “there is not such a thing as a free lunch,” at some point you have to pay for something that you want, and maybe Black Swam is not that.
Dandellion, I agree with you “desperate” is an extreme word, and testing the concept is more like it. I wish them good luck.
RAR, glad to know you are committed. You have my support.
My post started an interesting discussion over at SL Universe, which I would point your attention to.
Good catch, Peter, and good article. Good Lord, I didn't realize when reading the Rezzable blog lately and strenuously debating RaR about his "business model" that he had started charging. That dog won't hunt.
People are so conditioned by the freebie atmosphere in SL that they simply won't pay. And tip jars are great, but they simply cannot cover everything. I have had thousands of people tip constantly at the SL Public Land Preserve, for example, but many think $1 is fine to leave for a parcel that costs $20 US a month to run, and only a few leave $1000. So I can get 15 percent of the tier covered with tips -- not a business model, but a non-profit model.
Anyone could have told RaR who has actually been running sims with themes for years that you cannot make ends meet if you rely only on tips or content sales. That's why people always find ways to rent out part of sims or have paid vendors -- even paid ads do not work. There's a reason people keep falling back on the "real estate" model which RaR hates so much: it works, and it is all that works unless you count on getting grant from RL to do this work.
RaRs constant refrain lately is that the Lindens are to blame for the flat concurrency and they need to increase memberships. But any model that depends on kicking the Lindens' ass for success will also fail when they do.
A venue that relies on constantly having to have a fresh flow of brand-new newbies because other people have burned through the content, in a world like this, is doomed. The venues that keep people coming back have devised either live music acts regularly, or contests, or socializing of variouis sorts, that keeps a crowd of "regulars". Rezzable probably has its regulars, but that isn't the conscious plan.
I'm reminded of the Russian proverb, "A bad male ballet dancer says his balls get in the way."
Yes, I agree it spells "desperation" -- but then I certainly wouldn't kick anyone down now with desperation as frankly, we are all in the same boat. No one benefits when any big project in SL fails even with a flawed business model that enables many to say smugly, "I told you so". It wouldn't be so tempting to say "I told you so" to RaR if he hadn't been so arrogant and even threatening to critics, and if he wasn't so disparaging of those in the land business who at least have gotten *some* model to work here.
RaR knew -- or should have, had he studied the statistics page -- that the "engaged" (spend more than a dollar month) community in SL was 300,000 soaking wet. It has not gotten bigger. It was that size whe he came; it's up now, but possibly only due to alts and bots.
I think that the SL "community" needs to be conditioned to paying admission, even though culturally it has never taken hold, because people do need to get paid for their work. But going an gawking at a pretty build just isn't enough to sustain a viable community that will keep on spending.
RightAsRain has been a complete idiot long before he got started with Rezzable and LanguageLab.
Not any "idiot" complexity... just extreme idiot whenever there's money involved.
So I am late to this discussion... but will just say I will gladly pay to go to the Rezzable sims. And if it means they are a little less crowded with the 'give me free or give me death' crowd.. GREAT!
People who say there is only one way to do things based on the past are doomed to only do as well as the past, not succeed. People like RaR who try new things are the ones who will find new markets. That RaR has not yet.. doesn't mean he won't. For all of us I hope he does. Rezzable has THE highest quality. Period. It's a sad sad comment if they have to close.
As a long time visitor, and one time SL employee of Rezzable, I don't think these guys have ever had a business model, apart from the Field of Dreams 'build it and they will come'.
One of the top staff (who has just left by the way) actually told me they were profitable. I nearly choked to death on my coffee.
These moves (Greenies has just added fee paid entry too) show they've just woken up to the realities. They have never said where the funding has come from, but it's clearly running out, fast.
I love Rezzable sims, but I'm going to make the most of them over the next few months, I don't expect them to be here come the new year.
(PS Greenies was empty today.)
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