Commerce Office Hours Summary - Freebies - 2009-10-14

===Setup===
We had received feedback from our users that the volume of free and cheap ($L10 and under) listings in the Xstreet SL Marketplace did not make for an optimal experience for shoppers or merchants. We looked into this issue, crunched the numbers, and then held 3 office hours sessions on the topic where we presented the issues & ideas we had and asked our customers to help us determine the best way to deal with this problem. The following is a summary of those 3 office hours sessions.
===Agenda===
#Issues
#* state issues
#* discuss issues 
# Solutions
#* present some options
#* accept other from crowd options
#* Discuss Options 
===Why Free, Cheap & Old Listings are an issue===
# The items are a large percentage of transactions which have associated costs but no value, which means that that cost must shared by all users. 
# They decrease the price that other merchants can charge within a category
# They hinder the shopping experience because a "sort by price" puts all freebies first
# They garner so much attention that residents are driven toward the freebies instead of quality, fairly priced items. 
====Reactions====
Upon presenting these issues at our office hours sessions, nearly all attendees agreed that these items were a problem and that the issues we presented were accurate. There were a minority of residents who did not believe that free listings provide any value, but the consensus was well summarized by the following resident statements:
* "Freebies have value as promotional tools, but they need to be controlled somehow to stop them flooding the marketplace without that control being too heavy handed and unfair."
* "Don't most digital asset marketplaces - for example, iTunes - charge content creators for the [privilege] of "giving away" content."
* "they're overrunning the site."
* "The freebies do tend to clutter the marketplace and many [commercial] items are lost in the clutter, resulting in potential lost sales and revenue for both Xstreet merchants and also linden Lab."
* "if the Xstreet market is flooded with freebies... one person's freebie is a pebble in the sand - no value" 
The attendees generally agreed that the value of freebies was in their usefulness for marketing one's brand:
* "the perception is that they build brand recognition."
* "for us our freebie is immersing the user to the whole experience of our brand."
* "merchants [typically] use freebies to get their products in general noticed - a [loss] leader..."
* There were also a number of comments on the value of free items used for demo purposes to sell a fairly priced item
====Cheap & Old/Stale Listings====
While our main focus was free goods, the residents quickly guided us to two related problem areas:
* If we put controls on free listings, many of those will be converted to cheap listings which are already causing a similar problem to free listings. Any solution must consider the volume of cheap listings as well.
* In addition to free and cheap listings flooding the marketplace, there are many listings that don't ever sell, but add clutter, hindering any shoppers attempt to find quality goods. We should also consider ways to reduce the clutter caused by old, stale listings
===Potential Solutions===
====Linden Lab Freebie Solutions Presented at Office Hours====
# Limit to free listings or listings under price L$X - Hard limit of 3 per merchant. Perhaps a monthly fee to list those 3 or to have a higher limit
# Time Limit - add an incentive to remove cheap items. No item under L$X can remain listed for more than a month
# Marketing Enhancement. - Freebies and cheapies are used as a marketing tool. Just like listing enhancements they should be priced by the month. Make a monthly fee of L$99-L$2899 to list a freebie (just like listing enhancements)
# Freebie Marketplace - Separate freebies into a separate shopping experience which is designed to better advertise the items which are not free. - create a new advertising opportunity
# Removal - ban all freebies and all items below L$X 
====Resident Presented Solutions====
# Minimum Commission on all Xstreet SL sales - "you need [to have] a minimum commission per [item] sold, regardless of price. [If] a merchant wants to price at 0L, they'll literally be paying for each one sold... otherwise they set their price to 1L or 2L or whatever the cost ends up being"
# Higher commission % on cheaper items - "implement a sliding scale for commission based on the price of the item"
# Listing creation fee - "an initial listing fee would be enough to keep an open market"
# Monthly listing fee on all listings - "a monthly listing fee would be acceptable"
# Earned ability to list freebies - "Would it be feasible to list freebies relative to the amount of listed pay-for items? Like one freebie per 50/75/100... pay-for items listed"
# Remove freebies from search results - "what about making freebies non searchable?" 
===Resident Feedback on Solutions===
While some residents did prefer Linden Lab options 1 & 2 above, most did not and pointed out that these solutions could be easily gamed by creating alts & by slightly modifying and relisting freebies. Some residents explained that they would be perfectly happy with option 5, but many residents would not be and we agree that if we put some controls on the free & cheap goods, they can add value to the marketplace.
The vast majority of residents who attended office hours really latched on to a combination of options 3 & 4 above. There was general agreement that freebies were marketing tools and should be treated and priced as such and that anyone taking advantage of a marketing opportunity should cover the cost of the value they receive. Most preferred a separate freebie category and asked that we remove free items from the search results and other categories in the marketplace.
====Two standout solutions from feedback====
# To help control the flood of cheap listings and insure that they cover the burden they place on the system, our residents got behind the proposal of a minimum commission on all Xstreet SL sales. 
# However, this does not lessen the clutter caused by cheap items or items of any price that are not selling. There was much support to enact a monthly listing fee to reduce the number of stale listings.
For more details please see the office hours sessions transcripts.
To learn the details of how we turned this feedback into a roadmap, please see the roadmap for managing freebies on Xstreet SL blog post and the roadmap FAQ.