Linden to increase land supply, drop prices
By Eric Reuters
Linden Lab announced on its blog yesterday it would be increasing the land supply in Second Life for the second quarter of 2008.
Linden has seen average prices for land drift from about L$6.3 per meter in Q1 to around L$11.5 per meter currently. Strong demand for virtual land — essentially dedicated CPU time on Linden Lab’s servers — is a bright spot for Second Life’s in-world economy amidst flagging overall growth.
Second Life land barons — users who buy land, develop, and resell it — were predictably unhappy that their inventories of virtual real estate were about to be devalued.
“Once again they do stuff with no forethought or consideration to the people that pay their bills,” said Jeff Strohman, who trades land as the avatar Stetson Rail. “Mainland dropped from a bottom of 8.5 lindens to 7.5 lindens a meter overnight. That’s a loss of 248 real dollars per sim for people who deal in large amounts.”
Pricing for new islands will drop from US$1675 to US$1000 before the month’s end, easing the entry into Second Life for some larger builds.
Linden’s primary source of income is a monthly charge to landowners called “tier,” and the increase in overall land volume can be expected to boost the company’s bottom line. Inflating the land supply comes at a price though, as new land both lowers the worth of existing customers’ assets and decreases Second Life’s population density, contributing to what some pundits have called the “there’s nobody there” problem.
Thanks for that link to Chris Andersen, Eric, that was hilarious. It’s the best proof I’ve seen so far that the originator of the “long tail” theory of economics can’t and won’t eat his own dog food — that he has been lashed by the very tail he set in motion. His theory applied to VWs and Web 2.0 would say, if I understood correctly, that there will be all these special monetarizable niches along a long tail of builds — amateurs and professionals developing content on their own through social media.
But he himself with his company is merely one more niche in the long tail and couldn’t get it to work, because Wired, as big as it is, with tech companies selling ads to it, probably has a very diminishing readership just like all print media, and that readership may not now be in SL, and even if it is, it won’t want to just hang out in a corporate build.
There’s nobody there, because Chris Anderson fanned the idea of a long tail of opensourcing, and monetarizing the use of an opensource or cheaply available media to make content. But that’s not what holds value.
We can all brainstorm a 100 ideas for how Wired may have been made to work. But as you know full well, they involve staff and walking the beat as you have been doing, and not every company wants to make staff available like that.
Tue Apr 8, 2008 11:04am PDTThere are some wrong quotes in the land prices from LL - the L$6.3/m was quoted when they were including 0 L$ sales and group transactions. The current quote of 11.5 does not take those into account,and as not all group transactions are for low amounts, this number is also unrealistic. Also it is not only the ‘land barons’ who have been negatively impacted by this, but with the minimum bid for mainland regions dropping from 1250 USD to 750 USD, this will impact all landowners. Every landowner basically has seen their investment worth drop 40% overnight. This is not a healthy thing for the Second Life economy, nor good for morale of customers,and while lower prices are certainly a good thing, a shock to the Second Life economy this suddenly will most likely have some very negative consequences.
Tue Apr 8, 2008 12:04pm PDT“Every landowner basically has seen their investment worth drop 40% overnight”
They have? How does that work, did land prices inworld instantly drop 40% in sympathy? Land value is what people are willing to pay for it when trading, not what Linden set as it enters the grid.
I know this will impact land prices, I’m not disputing that, indeed that’s why Linden are doing it - but do we need the drama? It might actually result in more people owning more land, which might be good for everyone eventually.
Now land-barons know how content creators feel. Not nice is it, when Linden screw you over?
Tue Apr 8, 2008 12:04pm PDTWhy does every Linden Labs do have to immediately be criticized? I happened to sell my land about a month ago, now I am thinking about buying a lot more, so for me this happens to be very good news! Does this mean I am some brilliant, Anshe Chung type real estate mogul? No, I was just lucky.
Lindens did not “immediately cut investments by 40%.” You are not actually investing in anything, you are speculating. And buying up a digital commodity that can easily be replicated doesn’t strike me as a very good bet!
And they thought they had banned gambling!
Tue Apr 8, 2008 2:04pm PDT=)
This is actually a smart business move by Linden. By dropping the entry fee of land ownership, they will have more people paying tier. Which, by their admission, is their primary source of revenue. The “land barons” aren’t going to abandon multiple island and thousands (or tens of thousands) of dollars so they’ll just keep paying. They’ve probably recovered the costs of their initial investments anyway, so their complaints are sour grapes. The hobbyists, the people that pay and play, aren’t affected by this or don’t care that much. Yeah, the people who bought islands recently and who aren’t big landowners may have lost money.. but hey, you’re investing/speculating. You win some and you lose some. Look at the RL stock market these days (not WSE).
Tue Apr 8, 2008 7:04pm PDTThe only but I’d see on this is the “nobody’s here” effect, but besides that, its actually good. Owning mainland is (or was?) tagged with a high cost, and if you add up land tier fees, too expensive for anyone wanting over 1024 m2 of land. I ended up selling my land because US$40/month was eating away my savings. Even though I did sell for a profit, if you take land fees into account I actually sold at a loss, and about a 95% loss at that.
Small land owners won’t be affected, new land owners benefit from this; its the land barons who will suffer as the land tiers remain the same, but the land values drop. Ow.
Wed Apr 9, 2008 12:04pm PDTi just got 20k at almost 20lindens sqm
Wed Apr 9, 2008 12:04pm PDTi feel realy fu** by this move no change to compeet renting it out any more I
will sell at a loss and have no land
maybe sony wil do things better.
@3 Hal. wake up and smell the coffee.
“How does that work, did land prices inworld instantly drop 40% in sympathy?”
Yes, they did. People dont want to pay a higher price if they know that next week, new land will be released and become available at a much lower price. As noted above, prices have dropped sharply in response to this.
I have land bought at around 8.8/sqm in the last few weeks. Similar parcels are now selling for around 7.5/sqm, so if I sell now, I either sell at a loss, or put my parcels back on the market at 8.8 and wait a very long time - either way, I lose money, either by selling below cost, or paying tier on land that Im holding while it sits there waiting above the current market price.
I have no idea where Jack magically pulled this 11.5 number from, but your average green 1024 parcel would still sit there a few days even at 9.4/sqm right before the announcement. Larger parcels can reach higher, but in recent weeks, Ive not managed to sell anything priced above 10.8… and those that sold at that price were premium parcels. (flat snow, waterfront etc).
Im not saying it wasnt a smart move by the Lindens, or that I dont like lower prices, but this sudden move to both drop price sharply and release even more new regions has been more like hitting the emergency brake than a slow down.
Theyve miscalculated, and I believe its the unrealistic numbers that they have quoted that have led them to make such a drastic change. They clearly have no idea of the value that residents place on the virtual land which they can create at will, and what probably seemed to them like a good move will now resonate for some time.
If lowering prices and releasing more land was such a good move, I think they would have been praised for it. Clealy, it was not.
Fri Apr 11, 2008 3:04am PDTI generally agree with much of what the Linden’s do, but I believe this is short sighted. there are already zillions and zillions of empty spaces where nobody goes to.
There just isn’t avatars to support the amount of spaces, so you have people spending thousands of Lindens trying to get people to come to their places.
Fri Apr 11, 2008 9:04am PDTI totally agree on you #3, Hal.
Sun Apr 13, 2008 2:04pm PDTI have been trading land for more than a year now. Land is sold mostly on impulse.
The avg. prices published by LL is not what is seen inworld. Where they get those stats from still puzzles me.
So, Linden Lab dropping prices. Big deal !Resellers simply can take a lot more margin… and they will.
I think this will boost land sales greatly !
Back in Dec I bought 4096 for 25K thats 6.1L a Sq m, a good deal. but now I try selling it for the same price and I get people telling me that way to high and get offers of only 10K-15K that less then 4L a sq m, and its not just me a lot of land has been selling for that low or lower all around. Did I miss something or are land prices droping way faster then anyone thinks they are? I mean 4L per sq m or lower for Privte sim land??????? When less then 5 months ago it was 6L or higher.
Mon Apr 14, 2008 10:04pm PDThuh? i was not “predictably unhappy”. some peeps were and were quite vocal about it. if you are that put out, go build your own economy that allows others to generate real money. meanwhile, you are riding on SL’s coat tails and b1tch1ng about how you can’t make as much money . . . they made the opportunity, they shape the opportunity, you take advantage of the opportunity. it’s capitalism, and it involves risks, and involves change. those that do not understand this and think it is their parent’s allowance are the ones complaining
Tue Apr 15, 2008 6:04pm PDTnote: private island costs of $4 per square meter is still profitable, in the long haul. you will likely sell that same land several times over if you are viewing this as a business and not a quick buck. i wish i could sell the same real estate sevearl times over irl.
Tue Apr 15, 2008 6:04pm PDTI’m wondering if this will reduce the amount of the tier.I pay each month??
Sat Apr 19, 2008 7:04pm PDT@14 No it won’t. To everyone else I have been waiting for the tier prices to come back down on the island. They won’t. I will probably try to develop something on the mainland again. Who knows what the future brings, but if this weekend was any indication; the future does not look bright enough. Instead of trying to make headlines they need to try and make their product a lot more stable. I crashed when I clicked on “appearance” I crashed when I clicked on “land owner”. There is something very wrong happening in SL. I am sick to death of hearing about the push for SL to be the next web, not a chance no one visits 404 web pages more than once.
Cat
Sun Apr 27, 2008 11:04pm PDT