Linden plans resident-to-resident land auctions

By Eric Reuters

SECOND LIFE, Sept 14 (Reuters) - Linden Lab plans to use its new land auction software, currently under development, to allow real estate auctions between residents, a spokeswoman said on Thursday.

Jeska Dzwigalski, product manager for Linden Lab, told Reuters the company hopes its use of the FairMarket auction platform, a technology owned by online auction giant eBay, will eventually allow Second Life landowners to auction their parcels to other residents through Second Life’s website.

Currently Linden Lab only supports auctions to introduce new land into Second Life, or occasionally to offload abandoned parcels. Dzwigalski said there was no time line for implementing inter-resident auctions. “The first phase is really an improved version of our current auctions,” she said.

A company called BidSL announced its own Second Life auction service last week.

“When we first started auctioning land on our website, our web team (which consisted of one programmer and one web designer) made a very limited functionality website to handle it,” Dzwigalski said. She stressed “the first phase of our project is really about scalability.”

Carl Metropolitan (real life: Carl Henderson), who teaches residents about land ownership for New Citizens Incorporated, predicted the move to resident-to-resident auctions would have a “major impact” on the high-end of the real estate market. “It’s hard to judge what you should price expensive land,” he said.

While prices for most land are fairly predictable, Henderson said that prices for prime land, for example areas surrounded by Linden protected infrastructure or mainland islands, are highly variable. He predicted auctions would generate higher prices for sellers than the current system, where sellers list a price and wait to see if any buyers accept.

“But for the average seller, it’s probably not worth the extra hassle,” Henderson said.

While the FairMarket auction system is being built, Linden Lab is halting new land introductions into Second Life. The supply of land is set to resume on September 19 when FairMarket goes live, at a rate of “no more than 8 regions per day” through the rest of September, according to a post by Jack Linden.

Linden Lab grows Second Life’s land supply by auctioning newly created regions with a starting bid of US$1250. Since most Second Life landowners occupy parcels of less than an entire region, whose land use, or “tier fee” runs US$195 a month, participation in the auction system is dominated by a class of entrepreneurs known informally in Second Life as “land barons.” The barons buy regions from Linden, develop and divide them into smaller lots, and sell parcels to the landowning public at large.

The temporary cessation on new land creation comes amidst complaints of a glut of land on the market and declining real estate prices. Premium accounts — the only Second Life residents allowed to buy mainland — were down 6 percent in July.

Land barons are largely grateful for the break in supply. “I think they flooded the market and now need to regroup,” said Jeff Strohman (Second Life: Stetson Rail), one of the largest land barons in Second Life. Strohman’s inventory of land fluctuates between 30 to 40 sims.

Barons found themselves trapped by the oversupply, having to take on more and more inventory to keep prices stable. “Look, if we buy a sim in auction for US$2000, we can’t let the next day’s sell for $1500,” Strohman said. “We have to protect our investment.”

“[Linden Lab] should work on increasing premium membership first, instead of blindly trying to maximize tier income,” said Joep Buckler, who manages between 25 and 30 sims with his partner. Buckler, who declined to disclose his real-life identity, will use the break in supply to reduce his holdings and trim his monthly tier expenses.

NCI’s Henderson cautioned against reading too much into the temporary halt in the land supply. “They have always released land in fits and starts for their own internal reasons,” he said. “LL pays less attention to such things than we as residents do.”