Thoughts on the Quarterly Land Supply and Island Pricing Update: Nobody Says Naughty Word.
Ciaran already covered it, but I feel compelled to provide my two cents to Quarterly Land Supply and Island Pricing Update. I wish I could offer some new insight into it, but Ciaran covered it pretty well.
I just didn't get my say. And with an Island and a recent Open Space sim delivered, I am... perturbed. Angry. Upset. Annoyed. Irked. Aside from all of that, we can get into the happy-clappy-'good for Second Life' Kool Aid. The reality is that if it is good for Second Life®, it is good in a very short term sense - people who buy islands from Linden Lab can now fully expect to get screwed sooner or later. It is only a matter of time.
I'm really glad I'm not someone with a lot of land holdings. Sarah Nerd must be feeling this - and I just know Anshe Chung is. In the grand scheme of land holdings, I am nothing but a pebble in contrast to the movers and shakers.
As a smaller land holder, I feel cheated. I really do. Granted, I really won't lose that much because of the way Sentience was structured as a business model - in fact, I haven't lost a dime on Sentience. The Sentience advisors - the people who bought land based on the $1675 price - are really the ones who got shafted. And I feel bad about that, because I enabled it. I perpetuated the implicit understanding that Linden Lab conveyed.
But the new Open Space sim, Enlightenment? Where I got a space with 1/4 of the prims of a full sim for what was about 1/4 of the price of an Island, I'm getting 1/4 of the prims for... just a little less than half the price? I'm sorry. I have to write this clearly - hide the ladies and small children. I don't normally do this, which should be a hint and a half about how I feel about this:
What the FUCK is this?! I bought that Open Space sim because it appeared to be a good deal. The irony is what I named it - 'Enlightenment'. Indeed. There isn't even a change in tier that balances this.
Don't get me wrong. I don't mind that islands become more available for people. In the grand scheme of things, I think it really is cool. But as someone who has invested in something that I am completely dependent on Linden Lab to provide for, I learned a very valuable thing:
Do not trust Linden Lab when it comes to money. They seem to completely ignore the fact that there is a secondary economy built around the three dimensional web hosting that got them so much PR through Anshe Chung's face plastered across all those business sites and magazines 2 years ago.
'Hi, thanks for supporting us. Bend over. This will hurt a bit, but we know you love us...'
No, actually, I don't. You had a good run through Q1, Linden Lab, but if this is an indication of Q2 - you might want to start hedging your bets on Q3 and Q4. I might not be able to throw 'false advertising' at the teflon coated Terms of Service, but I can write my mind - and behold, the first vulgarity I have written in an entry related to Second Life.
I know you don't care, Linden Lab. Don't expect me to, either. Consider this a bit of a barometer reading - and here's a hint: high pressure pushes to low pressure.
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Opinion of a value less ex land baron/rental scum bag..
Hey Guys, (especially Nobody)
I had already decided 'i am out', before this latest linden lab announcement came out. Admittedly i am not now completely out, the land holdings had not fully sold. Why am I out..
* Competition, land and space become so cheap and empty that other land owners were prepared to sell services at no profit. I know all about building 'a beautiful place/customer service/etc etc' indeed at time of closure great spaces was profitable. But it was heading to decline. I suspect beneath the economic models of a lot of peoples businesses there is a decline. Now before you say 'zal's whining he doesnt know how to run a business, he was scared of competition'. It was a considered exit. I decided that the Return on investment allowing for time/fun/potential gain was now too low.
* Is 'purchase of land an asset'. Does that matter. Which ever way you look at it from a model perspective its a cost. So if you consider it a sunk cost, and your sale out value is now significantly less than your purchase price (devaluation) then you need to consider that cost as part of your operating model. So if you bought before you have probably just received a double hit. Notionally i expect people planned exit of ownership at profit, for many its now significant loss. So this will place the income per prim to go up to make good that model. Assuming you were not on a ridiculous business model, say 3L per prim, per week, 75% occupancy, 30% of prims used as 'sim build/decor'. That would probably make you income of around 360$ per month. So you pay back vs investment on mainland is now 20 months, not 10... still not bad. Not great though if you then say well my time is worth less that $200 a month? how many hours? even at minimum wage... oh yeah its a game.. so its 'free money/spare time'
* Land value is good when its cheap. Thats great, if you are buying in. However, plan that the value of your land will be halfed at any time your costs may double, or half, you may or may not be subject to tax. If you have a large established holding, suddenly you will be facing a whole bunch of people on a new economic model. And an advantaged one at that. Do you put up prices to maintain your recovery of investment.. you can not, do you take the pain... guess so, do you vote with your feet?
* In my r/l job we have just been doing some analysis of our customers, and guess what a very small amount of customers, contribute a large amount of the economics. These are established customers, not 'new recruits'. So my advice is... if you are as a business betting that during a global economic downturn you will recruit more customers, versus upsetting the status quo of your established paying customers... thats interesting as a business plan. I wouldn't support it at my board.... A bird in the hand and all that.
* Why are businesses not using SL.. Simply, level of service to the end user experience is too low. Its basically shocking. we are running at what, 90% availability, bug laden client, uncertain transactions... i would not recommend it as an experience for my commercial customers, i suspect i am one of very many saying this at board meetings across the world.
* sparseness... 59,000 people on... remove land bots, campers... thats got to be how many? 5,000? versus the number of sims, i think nobody once worked out the population online made an average sim density of 1 or 2 people. Its not much of a community if you never see anyone, its not a social network, if new people can not socialy network. Theres how many empty houses to rent, how many empty mall shops, how many people creating content getting upset over linden not helping with the core offerings?
So in summary, i am out of the business market, still looking to dj, still have a club and some land for now. I might buy an open sim or two, back to back, so i can build a dez-res because i like the excuse to do stuff in photo shop and script... in conclusion
Business in SL is shafted until someone who gives a crap about existing customers, rather than chasing an idealistic coders dream wakes up and smells that they have no user base but camping bots. A good way to start a wake up is... STOP BUYING SIMS AT AUCTION! the biggest indicator will be when sims stop selling...
I am i upset about the land price drop, yes, it hit my pocket, all i can do though is *sigh*. All in all i have not netted a bad profit over my business time in SL. Do i feel sorry for people trying to enrich, add content and make SL a world for people. Damn right i do. What incenses me is that Linden did not EVEN ask people *before*, they just took some random stats which if you look in GAME at prices and amount of land available are just plain Cock and then told us hey we did this smart thing (you daft people who dont know whats happening), and for your own good... here is our answer... Gee Thanks.. W*nkers
Zal Chevalier
(ex-land owner. Http://www.myspace.com/zalchevalier)
Ahh - and remember the discussion we had on Moore's Law?
It seems that land in Second Life does, indeed, factor in Moore's Law.
Second Life Consultant
Hehe. Always good to hear from you, Zal!
You make a lot of valid points in here. A few things I'll bounce back...
Yeah. 'Free money', 'Spare Time'. Clearly Linden Lab has been ignoring their own press as of 2006 onward. Anshe Chung certainly demonstrated 'Free Money' and 'Spare Time' on the cover of BusinessWeek, enough so to get griefed by floating penises on a sim controlled by CNET - an indicator that CNET jumped in but really had no clue, probably partly because of Anshe!
Overall, I'm calming down. If all goes well, this year or early next year I'll have the time and resources to dedicate to my own tinkering. Their mistakes can become our experience. ;-)
Second Life Consultant
Mega land owner ?
I have always wondered if I was a mega land owner or not. What are the qualifications to be a "Mega Land" owner?
Well if I am a "Mega Land" owner. I only have one complaint. If they are going to lower the price, why not keep it where it is, and use that extra money and make the grid stable? I guess that is a question more then a complaint. My question was answered at by Jack Linden at his office hours. Jack Linden: well, grid stability isn't directly tied to revenues, but charging more than is fair so that we can spend more was an option, but didn't seem to the the rightone to us.
We like to call Second Life®, Web 2.0 or the 3D internet. So just like the internet, most rent server space from a hosting provider. And pay "tier" or a monthly charge for that service. Linden Lab® is nothing more then a hosting company that proved server space inside of Second Life®.
See the way I look at it:
You do not "own" anything when you buy a sim. You do not own the server. The money is a set up fee or as I call it activation fee to use that server / sim. Just like if you activate phone service, cable TV or internet service. Then you pay a month fee "tier" for the service.
Bart Heart
Eager to believe you
Heya Bart :-)
I am eager to believe you that we do not really "own" anything. I mean, I have always known this in one sense - I understand that virtual land is not really there at all - and that LL in fact owns everything. It would be nice if i could convince myself that the initial price of an island is a setup fee. But, nevertheless - when you buy an "asset" - even if it is not real, or whether it confers ownership in the strict sense of the word - you still do it with the understanding that you are holding something of value - it's one of the reasons it is worth it to do the land biz - because you make a modest amount on your monthly rentals, and the value of the land is supposed to be somewhat maintained.
It's one of the reasons i never took money out of SL - I figured that at some point, if I wanted to leave, I would have a nice nest egg from selling the islands - in compensation for all the work that has gone into them.
I have thought about this a lot the last couple of days, and in the end - I am not as pissed off as I was yesterday. The fact is that island owners in many ways have been protected because islands are not subject to having the market determine prices. They are fixed - and with the massive influx of land in the last year, but with no massive influx of residents (that actually come back i mean) - I think that if the market was determining island prices - they would be a lot lower than they are now. But, since there is a limitless supply, and a fixed price - I guess we have felt (apparently inappropriately) secure that out holdings would maintain their value.
But yeah - my new mantra. "set up feeeee. set up feeeeee."
And I don't know what a mega land owner is. I was called a land baron on the SLX Forums, and I protested! I am no land baron! I have > 25 sims and to be honest, I have really no idea where that puts me in relation to anyone else. I suppose it is a significant number, but I have no idea if it qualifies as "mega". lmfao. not something I have really thought about before...
dd
Setup fee indeed
Yup, forget any ideas of the land being an asset, accept it's a setup fee. I took a similar view to you before these latest moves, I too felt that the land was a bit of a nest egg, I didn't expect it to grow and felt that over time it would diminish but it would be there just in case of emergency.
Cold light of day however points to this not being the case, LL don't seem to want to recognise the concept of land as an asset, hence why they are surprised we're not all jumping with joy and I now recognise that land isn't an asset in that sense either, I hope new people to the world realise this faster than I did because when the next price drop happens, I wouldn't like to see the same complaints.
Wait for Jack
An update is due from Jack, he said "For those that have purchased an island recently, we will of course be providing some options and I will explain how that will work in my next blog post."
Oh, I'm calm.
But I don't like it - and if they had thought about it, they would have realized that this would irk people and would have explained it better beforehand.
Let's be frank. People about to buy their first island are not going to write about this as much as people who already own islands.
Dumb,
Dumb Dumb Dumb,
Corn.
Second Life Consultant
You think?
When I arrived at Robin's office hour yesterday someone there was talking about how the Lindens were genuinely surprised at the reaction and that they themselves had been thanked by a couple of Lindens for supporting the move in the blog.
Later when Robin arrived and the conversation finally got around to this subject she said "I would have thought you'd be happy to see prices come down."
So I'm not convinced they did think it would irk people, or maybe they hoped more people would embrace it to drown out the noise of those who are irked about it.
That's because the loud
That's because the loud people, the people doing all the complaining, are the old guard, the megaland owners, they were onto a good thing and don't like it when things get shaken up. The hundreds of thousands of real people playing SL are going to be glad that prices are going down and will benefit greatly. They're just not posting in blogs and writing in forums about it. Probably most of them don't even know.
Of course I lost a ton of money when Sarah and her buddies wet their collective pants and dumped a bunch of land on the market causing a massive crash but I don't blame LL for that. I blame the massive overreaction of a bunch of skittish land flippers. C'est la vie. That's the market we're in. Every 4 months there's some catastrophe or another and the wheat gets separated from the chaffe. All those people who thought Second Life was like some sort of bank or 401k except it paid 50% interest every 3 months are hopefully learning a little something about risk management now.
Cheaper prices are great for everyone. There'll be a little more competition in the market a few people with some exciting new ideas will finally be able to afford to get started. More people will come into SL and they'll buy more things and we'll all be better for it.
Lastly, all you idiots complaining that LL didn't give you any forewarning... what do you call the blog? This isn't going to take effect for 2 weeks, that's 2 weeks forewarning right there. How exactly are they supposed to release information? Maybe they could play the same stupid games as the fed and hint that a few weeks from now they might do something and then strongly suggest it's possible they'll do something and then forewarn you that they'll be doing something in a few more weeks and then do it? No, be clear and precise, state what you are going to do, give plenty of notice and then go ahead and do it. These quarterly land updates have been an absolute godsend and a fantastic innovation by SL. They're the perfect way to announce land policies.
Elan
Sorry, what exactly is your
Sorry, what exactly is your point... that prices wouldn't have down except for skittish land flippers or that LL was right to do this so prices go down which is great for everyone? Prices always have gone down when land is dumped like this. Look at last summer or the winter before last. When the opposite occurs, when the supply of new land is restricted, prices go up. See last autumn. It's simple supply and demand, not "skitishness" or "greedy landbarons".
Land Shepherd
I'm saying both.
Lower prices are good for everyone and that the mainland crash was entirely due to skittish land flippers. I honestly thought that these regular land policy updates would lead to a more stable land market and for a while it worked perfectly. I saw you leading the charge a couple of days ago and dumping land as fast as you could and I certainly don't accuse you of being greedy. That's not the word I would use for someone who sells tons of land for less than they paid for it. I still say three or four of you massively overreacted. But of course it's a self fulfilling prophecy. If a couple of people start sweating and dumping land in a panic then the market will follow.
It's funny that you would talk about "simple supply and demand" when as of right now neither supply nor demand have changed one iota. Talk to me in three weeks or a month when actual supply starts to increase and then the market will start to reach an equilibrium. Until then everything you're looking at now is totally based on emotion not economics.
There have been two land
There have been two land updates that I know of. Both have been off the mark. The one in December reported stable prices, when in fact prices had been rising since September and were up a couple of points at least. Did you agree with Jack's assessment in the December report that prices were stable (not rising) and the average price was at L$6.3/sq.m.?
http://blog.secondlife.com/2007/12/07/land-supply-and-pricing-for-late-2...
This latest report is saying prices are rising when I've seen the opposite the last few months. Others like Chaos have the same understanding of the market. Prices have been stable lately. I don't see this trend to higher prices that Jack is reporting.
You think reporting that they are going to increase new land "to at least 10 regions per day" and they have a new continent in the wings would lead to stable prices??? That they are cutting island prices by 40%?? It's not emotional for people to lower prices under these circumstances, its a pretty sound decision. Let me ask you this: had they said they'd increase regions to 20 per day and cut island prices 80%, do you still think people lowering prices would be a bad move?
As for me leading the charge, that's not true. I've heard from a few people who dumped lots of land to you right away - good for them. I've purchased 90K sq.m. since the crash happened, probably second only to NinjaLand. :P I got around 18 parcels listed that you assume are dumps when they are in fact parcels I got for lower prices. You don't really know what you're talking about really.
Well
I can assure you that I'm neither old guard or a megaland owner. I value my land as an asset, but you're correct, lesson very much learnt, LL simply don't consider my valuation of assets to be worthwhile.
that's a fair comment.
It really is. My real point is that if they do it once, they can do it again. In fact, Bayesian probability would indicate that they are more likely to do it again.
So, yes. The older guard are making the noise (and frankly, I'm not THAT old of a guard). But here's the thing: That $415 I just spent has a value to me, and that value is probably on par with larger scale land owners - let's say $4150 to them is about $415 to me.
They made the open space sims available and didn't mention that island prices would drop so much. Heck, I could have waited and gotten another island instead of an open space sim. But, you know, they got me.
And in the future, when this is forgotten and the elder guard are swept away - the process will repeat itself.
That's the point.
Second Life Consultant
I somehow expected that.
The planning of the PR department seems to be based on the 'happy-clappy-Linden-Lab-does-no-wrong' crowd's interpretation. Frankly, people who do not like what Linden Lab does are unlikely to bother going to meetings because they get blown off - I know I have been in the past.
Also, given that the open source alternative for the server gets more and more realistic - and that is probably scaring the bejesus out of them. It should.
But, you see, while people claim that Corey was wrong about the open source server model... the entire Linden Lab business plan seems eerily like many failed open source models:
Verily, as I commented on your entry here, they're tearing themselves apart in many ways. This could be a chance for growth, but you have to know the limits. Collectively speaking, I think that Linden Lab has lost it's secret sauce.
We all know it's thousand island. ;-)
And the pun really was unintentional. But my subconscious is a little more free to play nowadays... :-D
Second Life Consultant
Oh... they told you it was a
Oh... they told you it was a barometer? They told me it was a thermometer. *shrugs* Either way.... long way to go for a weather report, hey?
Ayah
A long way indeed. :-)
Second Life Consultant
density
I'm talking about avatars per square metre, not the cranial state this pricing decision results from. The wave of corporate retreats from Sl was driven because the extraordinarily low population densities in SL meant there was little return on investment for corporate islands. The Lindens just moved from a suburban model of land development to an exurban one. Really, it's remarkable that just as oil prices make the exurb uneconomic in the real world, LL decide it build it into the virtual world.
The exurb is fine if you want to sit alone on your beautiful verandah admiring your beautiful vista. The exurb is not so fine if you want something happening in that beautiful vista. The exurb is not so fine if you want to meet someone at random, go to a pub, or listen to live music. I'd argue that the Lindens should be focusing on the other end of the problem, and finding a way to build crowd sims, probably only for short term rent, that would bust open the existing population and enable real crowds. It's painfully obvious this decision just represents more of the same, endless almost empty islands stretching to the virtual horizon with their tiny populations keeping to themselves because going elsewhere is both too laggy and too uninteresting.
What's needed is better coding that stabilises the grid and enables urban levels of density where interesting things can happen. The pricing decision is desperately sad for people who will suffer the falling land prices. It's much sadder for everyone because it means that LL is committed to more of the same forever. What's the guess someone will come along with another virtual world that allows user content and can maintain grid stability and higher densities? Sl will then look empty indeed.