Lindens Speak About Changes on XStreet
Hi, Philip and Pink! I’m writing an article on the recent XStreet SL changes for “Avatar Weekly.” I understand you’re both very busy, so I appreciate your time. If either of you feels that someone else would be more suited to answer my questions, please feel free to pass this on to them. I would also be more than happy to talk live in-world.
Q:
From our readers, we know that there is a lot of speculation and misinformation about the XStreet takeover and new fees. What specific issues to the changes, and why were these issues considered a priority?
A:
About six months ago, we noticed a trend. Freebies as a percentage of the overall total of items–not listings–sold on XStreetSL were growing at 4 times the rate of goods priced at L$1 or greater, to the point where freebie items were a significant majority of the items sold on the site.
In addition, we did some analysis and discovered that items priced at very low amounts are a money-losing proposition for XStreetSL. In the past, XStreetSL and later Linden Lab was able to provide those services at no cost to merchants, as there were enough of the higher priced goods generating revenue to subsidize the cost. As the growth rates accelerated for free and low cost goods, we were no longer able to absorb those costs 100%, and we believe it would be unfair to pass those costs onto merchants who sell higher priced items. In addition, free items crowd out goods that do provide revenue for merchants on XStreetSL, and by extension for Linden Lab. Lastly, we noticed a number of listings that had been active for literally years, and had never sold.
Our attention was brought to this area by our community of merchants, who commented on this issue multiple times over a period of months in forum threads both before and after Linden Lab’s acquisition of XStreetSL. For example, here are a few of the most relevant threads that we considered as we developed hypotheses to test with data.
https://www.xstreetsl.com/modules.php?name=Forums&file=viewtopic&t=117764
https://www.xstreetsl.com/modules.php?name=Forums&file=viewtopic&t=117188
https://www.xstreetsl.com/modules.php?name=Forums&file=viewtopic&t=116998
As for prioritization: We typically work on a number of projects in parallel. As you may have noticed, we did a major hardware migration in early December. While the development teams were on this project, we worked on other projects such as this one, which require little development time. Announcement of a new policy like this is not necessarily an indicator that other items are lower priority in terms of importance to us, or to the community as a whole.
Q:
What changes have you seen on XStreet since the changes were announced?
A:
As we expected and desired, in the short term we have seen some listings removed from XStreetSL. Additionally, we now see a somewhat lower total number of economically active merchants (defined as those who sell >L$1 in a given period).
Sales volume on XstreetSL remains very strong. In fact, we hit a new all time record in total Gross Merchandise Sales Volume on Sunday, December 6th, and we are on track to break more records for the month of December. In addition, sales per economically active merchant have risen 20% since the announcement. Economic Shoppers (those who spend >L$1 in a given period) are also at historic highs, as well as L$ spent per economically active buyer.
While we are disappointed to have seen some merchants leave XStreetSL, overall we have seen no discernible negative impact on the health of the marketplace, and XStreetSL remains the largest web marketplace for Resident-created virtual goods in terms of traffic, items, and sales. We hope that our continued commitment to and improvement of XstreetSL, and the value of the marketplace’s traffic and sales will again attract merchants who may have left and will help XstreetSL continue to grow.
Q:
Were other alternatives considered? If so, what other choices did you consider, and on what was your final decision based?
A:
Yes, we considered a number of alternatives over a period of months. Some of the alternatives we considered included a ban on freebies on XstreetSL, raising commissions, automatically deleting old listings, or implementing a listing fee for freebies lower than L$10. After careful consideration, we ultimately decided on the policy that we felt best balanced the needs of our merchants, the needs of the shoppers that merchants expect us to provide, and the business requirements of running the platform. This is typical for how we make decisions on the commerce team.
Q:
What other changes are you planning for XStreet in the short term (within a year) and beyond? What other issues do you feel should be addressed?
A:
We have a comprehensive roadmap and business plan, are staffing up our team, and will be making some announcements publicly–with dates–on this subject in early 2010.
Q:
On a personal note, the new fees make the merchant side of my personality rather unhappy. However, the shopper in me hopes this will put an end to people buying up freebies and selling them for a few Linden on XStreet, or creating 50 separate listings of the same product in slightly different colors or styles. I promise you that I aim to write an unbiased article concentrating on facts rather than opinions. As a longtime newspaper editor/reporter, I feel confident in my ability to do so.
A:
Then you have an understanding of the issues we face every day as we strive to balance the needs of all of our customers: hobbyists, new merchants, established merchants, and our shoppers. We appreciate your attempt to understand the totality of the subject.Recently Victoria Sabra, Avatar Weekly Reporter, spoke with Pink Linden about the upcoming changes in XStreetSL.
Hi, Pink! I’m writing an article on the recent XStreetSL changes for “Avatar Weekly.” I understand you’re both very busy, so I appreciate your time. If either of you feels that someone else would be more suited to answer my questions, please feel free to pass this on to them. I would also be more than happy to talk live in-world.
Q:
From our readers, we know that there is a lot of speculation and misinformation about the XStreet takeover and new fees. What specific issues to the changes, and why were these issues considered a priority?
A:
About six months ago, we noticed a trend. Freebies as a percentage of the overall total of items–not listings–sold on XStreetSL were growing at 4 times the rate of goods priced at L$1 or greater, to the point where freebie items were a significant majority of the items sold on the site.
In addition, we did some analysis and discovered that items priced at very low amounts are a money-losing proposition for XStreetSL. In the past, XStreetSL and later Linden Lab was able to provide those services at no cost to merchants, as there were enough of the higher priced goods generating revenue to subsidize the cost. As the growth rates accelerated for free and low cost goods, we were no longer able to absorb those costs 100%, and we believe it would be unfair to pass those costs onto merchants who sell higher priced items. In addition, free items crowd out goods that do provide revenue for merchants on XStreetSL, and by extension for Linden Lab. Lastly, we noticed a number of listings that had been active for literally years, and had never sold.
Our attention was brought to this area by our community of merchants, who commented on this issue multiple times over a period of months in forum threads both before and after Linden Lab’s acquisition of XStreetSL. For example, here are a few of the most relevant threads that we considered as we developed hypotheses to test with data.
https://www.xstreetsl.com/modules.php?name=Forums&file=viewtopic&t=117764
https://www.xstreetsl.com/modules.php?name=Forums&file=viewtopic&t=117188
https://www.xstreetsl.com/modules.php?name=Forums&file=viewtopic&t=116998
As for prioritization: We typically work on a number of projects in parallel. As you may have noticed, we did a major hardware migration in early December. While the development teams were on this project, we worked on other projects such as this one, which require little development time. Announcement of a new policy like this is not necessarily an indicator that other items are lower priority in terms of importance to us, or to the community as a whole.
Q:
What changes have you seen on XStreet since the changes were announced?
A:
As we expected and desired, in the short term we have seen some listings removed from XStreetSL. Additionally, we now see a somewhat lower total number of economically active merchants (defined as those who sell >L$1 in a given period).
Sales volume on XstreetSL remains very strong. In fact, we hit a new all time record in total Gross Merchandise Sales Volume on Sunday, December 6th, and we are on track to break more records for the month of December. In addition, sales per economically active merchant have risen 20% since the announcement. Economic Shoppers (those who spend >L$1 in a given period) are also at historic highs, as well as L$ spent per economically active buyer.
While we are disappointed to have seen some merchants leave XStreetSL, overall we have seen no discernible negative impact on the health of the marketplace, and XStreetSL remains the largest web marketplace for Resident-created virtual goods in terms of traffic, items, and sales. We hope that our continued commitment to and improvement of XstreetSL, and the value of the marketplace’s traffic and sales will again attract merchants who may have left and will help XstreetSL continue to grow.
Q:
Were other alternatives considered? If so, what other choices did you consider, and on what was your final decision based?
A:
Yes, we considered a number of alternatives over a period of months. Some of the alternatives we considered included a ban on freebies on XstreetSL, raising commissions, automatically deleting old listings, or implementing a listing fee for freebies lower than L$10. After careful consideration, we ultimately decided on the policy that we felt best balanced the needs of our merchants, the needs of the shoppers that merchants expect us to provide, and the business requirements of running the platform. This is typical for how we make decisions on the commerce team.
Q:
What other changes are you planning for XStreet in the short term (within a year) and beyond? What other issues do you feel should be addressed?
A:
We have a comprehensive roadmap and business plan, are staffing up our team, and will be making some announcements publicly–with dates–on this subject in early 2010.
Q:
On a personal note, the new fees make the merchant side of my personality rather unhappy. However, the shopper in me hopes this will put an end to people buying up freebies and selling them for a few Linden on XStreet, or creating 50 separate listings of the same product in slightly different colors or styles. I promise you that I aim to write an unbiased article concentrating on facts rather than opinions. As a longtime newspaper editor/reporter, I feel confident in my ability to do so.
A:
Then you have an understanding of the issues we face every day as we strive to balance the needs of all of our customers: hobbyists, new merchants, established merchants, and our shoppers. We appreciate your attempt to understand the totality of the subject.
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Nice to see them willing to talk to the Second Life websites. Good job Victoria!!!!
They haven’t seen an impact because we are getting our money’s worth until the announcement of the new charges are made. Once that happens we plan to pull our goods!