Thursday, November 19, 2009

The sky is falling! (again)

After reading dozens of posts across the web regarding Linden Labs' announcement of major changes to the XStreet shopping portal, I couldn't decide whether I wanted to broach the subject here.

Initially I was gobstopped; the idea of being charge 10L per month, per listing, on top of the commission LL collects on sales, seemed heavy handed. Charging 99L a month for listing freebie items was even more stunning.

The outcry has been considerable, and in protest many merchants have been removing their entire inventories from XStreet, even though the policy is not set to go into effect until 30-90 from now (leave it to LL to offer a vague time line for implementation... though they "promise" they'll give 2 weeks notice before they begin charging merchants).

Already this policy is having an effect on the shopping experience, both good and bad. As a shopper, I certainly would like to be able to wade through the junk and find quality items more easily. But of much greater priority to me would be having a search function that actually worked -- both in XStreet AND SL itself.

As a merchant, I have more than 200 items on XStreet at the moment, and I don't relish the idea of slicing an additional 2000L a month from my profit margin at a time when my RL household budget needs every penny of the supplemental income I make on SL. I am in the process of examining my inventory to determine which items have become "stale" and need to go... but this is actually something I have already been doing in world.

So far I've managed to deactivate about 1/3 of the more than 200 items I have in inventory. I haven't outright deleted them -- I'm still trying to decide what kind of sales record actually qualifies an item as "stale," considering I am a merchant in a "niche" market.

I guess I took for granted the idea that XStreet could serve a complete catalogue of my merchandise -- my philosophy was that if everything gets a sale sooner or later, slower selling items could be parked there indefinitely. Every sale counts, right, even if some items only sell about every other month?

I'm not sure if that was an unreasonable expectation, since LL was getting commission on every sale... my expectation now is that I should regard XStreet as a marketing tool, and fine tune my listings and descriptions to drive customers to the in world store.

When I made my first freebie about a year and a half ago, the SL marketplace was a much different place, At that time I could track that the majority of people who took my freebie clothing item also purchased clothing from me.

That has changed dramatically in the last several months.

Most of the shoppers who "buy" my freebies now? Never buy anything else from me.

There is a sense of entitlement that has become prevalent among newer residents that they shouldn't have to "pay to play" -- which is why I think we've also seen a sharp rise in content theft. This entitlement attitude baffles me, because there are few other places, both in online worlds and in RL, where you can "live" without spending a dime.

I'm not sure which came first, but the SL marketplace has experienced a drastic drop in prices in the time I've been a merchant. The economic recession has also added to this downward spiral. But many merchants are pricing quality items for ridiculously low prices both in SL and on XStreet, when many, many of them could charge more for their work.

It distresses me when I hear people say they don't care about making money on their work. I wish they would understand that if you make a quality item, you are selling yourself short by not selling it for market value. You are essentially devaluing the work you do. A consequence of that is that you also devalue the work of other community members. If we are all here in SL to live in a community, that means supporting each other and valuing the contributions of other members.

The distressing part of this new policy is that it puts "niche" merchants such as myself in a difficult position. My items serve a specific (Victorian/Steampunk/Western/historical) audience, even if that audience is not a large one. Because of that I'll likely never be a high volume seller, unless I consider diversifying my business.

So as I review my sale inventory in XStreet, how exactly do I gauge if an item is "stale"? An item that I would regard as "popular" in my niche might likely be viewed as a slow mover in a mainstream market. At some point will LL decide that niche items like mine don't meet their criteria for inclusion in the SL economy anymore?

This also raises another issue: How will niche communities maintain a presence in SL if the content creators for them can't afford to, or are no longer allowed to, sell their items? Or are specialized, thematic sims also on the endangered list too?

Finally, however, the biggest lesson in these changes is that, as in RL, the SL marketplace is also in a state of constant flux. You cannot rest on your laurels. You have to be constantly reinventing your "brand" -- even if you are just a "hobbyist" merchant.

That doesn't mean that all the joy is going to be sucked out of your experience, it merely means you need to think on your feet and adapt when market conditions change. While I'm not thrilled about the direction LL has decided to take XStreet, and where SL itself looks like it's going, I see it as a chance to challenge myself both as a content creator and a business person.

If indeed the landscape of SL is changing, and an influx of new corporate residents (presumably) with deeper pockets is on the horizon, perhaps this is the opportunity for many of us smaller merchants to start thinking bigger.

As they say, life gives you lemons, make lemonade.

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