Export Perm: How Much Should It Cost?

[Danko Whitfield]

What is the "right" price for something you can buy in one virtual world and take to others?

My blog post on this timely topic…

http://journeymetaverse.wordpress.com/2 ... d-it-cost/

[Ozwell Wayfarer]

Great post on a tricky subject. I know I have spent a lot of time heart aching over price. It's a tricky question but I seem to have come to the same conclusion as you, that anything more than double for export is unfair. While not advocating any particular approach, let me give you some thinking from a merchant on this subject…..

Each merchant sets a different “value” upon their work and has different ideas (right or wrong) about what will happen to their work once its "out there" and this is the sticking point.

For instance, if you buy some of my mesh products, import them into your world and then use firestorm to create a DAE file (as the world you imported them to will list you as the creator), you can then import the files back into a 3DS program and from there, you could use the pieces pretty much anywhere, not just virtual worlds. You also have them for a lifetime, no matter what. You might just be in 3 worlds right now, but if you move around (which OS people seem to like to do) you could be in dozens of worlds over your entire virtual lifetime.

Then there is prim limits. You will likely get much more use from an item purchased in OS than in SL as land is cheaper and more abundant.

There is also the issue of MP fees. As Kitely charges a higher commission than Sl, the merchant is left with the choice of absorbing that cost or passing it on to consumers.

Then there is also the issue that things are horribly undervalued in SL, and is one of the major reasons most “serious” creators and artists avoid it. They might spout about it being “creepy” or “waste of time”, but if the price was worth-while those issues would quickly evaporate. If other marketplaces want to attract good designers, the available money needs to be worth their while. This has certainly given SL a reputation amongst 3D designers as a place for designers who are simply "not that good" as there are plenty of other places a person with talent can make far more money far easier. If I had no vested interest (i.e I love the virtual world concept) then it would make little financial sense.

EDIT - A thought I just had is that, in SL, Merchants really loose out to high land prices. Doubly so if you do landscaping, because then you are only selling to the people who can afford to own land. Those people have higher budgets than most maybe, but the land relentlessly eats that up month after month with nothing to show for it except....well, you still have the land. This is also a key factor in many SL regions looking like crud high land price turns everyone into an ultra-bargain hunter.

[Sherrie Melody]

Agree Great topic. Creator-merchants have my compassion. There are the costs of doing business that must go into the price of the product. Making a high-quality product can take from days to weeks to months to complete. It takes very real talent and can take many, many very real hours to accomplish. The price should reflect that too. There are items on our marketplace (and even on SL's), that I would have loved to buy that were honestly priced much lower than what I think the true value of the product is, guessing at the effort and skill that went into making it. I couldn't and can't buy them because no matter how wonderful they are, I just can't justify the expense on a virtual item, exportable or not. Knowing the price is more than fair, I simply can't afford the expense. If I were richer, I'd snap them up!

I commented on the post. For me, only exportable items have value, so the non-exportable price has no meaning to me. The price of the exportable item is all that matters to me, not whether it is double, triple, etc. the cost of the non-export versions. If the price fits in my limited entertainment budget and the item meets my needs, then the price is right.

[Dundridge Dreadlow]

How do you charge for months or more of work when you are in a world that is used to mass market products at seriously low prices, or even worse still stuff for free which only pays when you have millions of customers.

To licence virtual goods, like 3D modelling or similar work outside Kitely or similar environments costs a heck of a lot more - for some reason customers here are tagged as end users with super low low prices.

I wish there was a fair way to charge for every product. Either way, it's hard to compete. Especially if you have for example 6 customers instead of 6 million, and those 6 expect the same price, and it takes the same time..

[Deuce Halsey]

I agree, this is an interesting and timely topic.

This conversation has forced me to rethink my pricing policy and I just realized that it may be flawed. I currently charge the same prices for Kitely-only items in-world in my stores, and on the Kitely Market. I charge a 50% premium in the Kitely Market for Exportable versions of my products.

I just realized that this makes no sense, economically. I have to pay the Kitely Market sales commission (10-20%) on all sales through the Market, whether or not the product is Exportable. So the way I have my pricing set up now, my Exportable item customers are paying the Market commissions for all my sales, even the Kitely-only sales. This isn't terribly fair, even though part of the price difference is to cover added value of the Export perm.

I will think about this for a day or two before making any changes. What I'm considering right now is changing my Market listings to offer Exportable versions only. In the cases where the same item is available at my in-world stories in a Kitely-only form for a lower price, I will mention this in the Market listing. This will give Kitely residents the option of visiting my in-world stores for the better deal on the local version. Meanwhile I will be offering only one price in the Kitely Market - for the Exportable version of each item.

[Danko Whitfield]

I think it is easy for a merchant to over-value the Export perm. It’s understandable. You are enabling the buyer to do a lot more with the product than they could have before. On the surface, that sounds like it is worth a lot.

But in practical terms, that right has a different value to different buyers. The key being not “how much use am I allowed to get out of this item?” but “how much use will I actually get out of this item.”

If I am going to use it in numerous places over the course of my virtual life – that has a lot of value. But if I’m not, the fact that I can has no value.

On a thread in another forum, I said that if our virtual world economy is successful, I can see the day when merchants will promote, “No Export Fees! One Price = All Worlds” because with competition, the buyer can look at two similar items and say, “I can buy it from the other grid’s market and pay the export fee or I can ‘buy local’ at the store on my home grid and save 75%.” At that point, it won’t make any business sense to add on the high tariff. So this new thing, export fees, will then be a thing of the past.

In fact, some merchants might see that as a competitive advantage even now. Or maybe sooner rather than later if their category of product has more sellers/more competition.

[Ozwell Wayfarer]

I can see the day when merchants will promote, “No Export Fees! One Price = All Worlds” because with competition, the buyer can look at two similar items and say, “I can buy it from the other grid’s market and pay the export fee or I can ‘buy local’ at the store on my home grid and save 75%.” At that point, it won’t make any business sense to add on the high tariff. So this new thing, export fees, will then be a thing of the past.

Maybe in the future you will be correct, but I dont picture that any time soon. Many creators will never jump over their own shadow and come to OS as it is, and the extra money to be made is one of the only significant incentives to do so at present. I have been called all sorts of things (mostly in jest, I must stress) from a looney to a communist.

Also merchants have to work with assumptions in regard to what the average user will do and price accordingly. I would not expect a discount on a fast car just because I knew I never planned to drive it on a German autobahn. Or a discount on a CD because I hate tracks 5 and 7 and will never listen to them.

I think a key issue here is infrastructure, or lack thereof. If there was a system where I could define which grid a person used my items on I would be all for that. But how would you even get something like that to work?

Also I still stand by the fact that the price of items overall needs to go up rather than down in comparison to SL. This is key to encouraging artists and designers to come here and is essential for the future of the platform. The best way to drive price down naturally is through more competition. For more competition, we need more creators and consumers......which leads us neatly back to the beginning of my post

EDIT - for the record, I am not arguing per se - just expressing some of the obstacles in the way of reaching the situation you envisages. The present market dynamic would have to drastically shift. Maybe by 2016-2018, and who knows what we will all be doing by then?

[Ozwell Wayfarer]

How do you charge for months or more of work when you are in a world that is used to mass market products at seriously low prices, or even worse still stuff for free which only pays when you have millions of customers.

You have hit upon the quandary of the digital age. Musicians are in a similar situation. People think of Mp3s as almost a non-thing. They can be replicated to infinity with no basline cost for the replication. Problem is, the band whos album you just downloaded for free probably spent 6 months of their lives and money making that record happen. It is their blood, sweat and tears in a very real sense.

However, one also has to remember that the recording industry has only existed for the last 80-90 years, and musicians found ways to live prior to that.

Nobody knows how to solve this problem. Many have tried and thusfar nearly all have failed, unless (as you rightly point out) you are already a massive entity able to leverage existing capital into new revenue streams, and even then its a struggle.

People like to blame consumers, but they forget the relentless price pressure customers are under. We are all just humans trying to get by and have a little fun on this little blue-green ball when all is said and done. We all face the same pressures and financial issues. I blame the fraudulent economy, choked by debt, built by and for the rich to the detriment of the rest of us.......... But thats a whole other rant

[Danko Whitfield]

Ozwell said:
Maybe in the future you will be correct, but I dont picture that any time soon.

EDIT - for the record, I am not arguing per se - just expressing some of the obstacles in the way of reaching the situation you envisages. The present market dynamic would have to drastically shift. Maybe by 2016-2018, and who knows what we will all be doing by then?

-----------------

I understand completely, Ozwell.

Obviously my statement is about the future. There are many things that would have to change first. And note that I didn't make reference to OpenSim specifically. I said: "...if our virtual world economy is successful…" I have no idea if OpenSim will last long enough to see what I put forward as a possibility. We may all be onto other, better platforms by then.

Sometimes it is interesting to look at an element completely separate from the current discussion and context. It can give new perspective to the big picture.

So all I'm saying is - if we get to a successful, full-blown economy a la Second Life - export fees could become a hindrance to business and a deal-breaker for a customer. Now, they appear to make sense. The bottom line point here is: the export fee and its acceptance by the customer, is not written in stone.

[Ozwell Wayfarer]

oh...ok...well.....carry on then!

I think I got hung up on your use of the term "export perm" which is quite exclusive to our situation right now. If we are disregarding current conditions all together and focusing on if user created virtual worlds in general became mainstream or just a significant market, then I can envisage a situation where a marketplace or even individual merchant websites will exist where one can purchase "location perms" just as one purchases "C/M/T/E" perms today. This would allow merchants to be much more granular when it came to pricing, and certainly making the concept of and "export perm" obsolete.

I guess that also strongly depends how the virtual world landscape develops. If there are multiple popular worlds or grids then it will likely happen, but if a new giant comes along and squashes the competition then I guess it wont matter enough.

Looking at the next few years right here, if the HG market proves to be a sustained success, then competition could heat up and price wars will likely follow.