Will Lab’s Over Half-Off Sale For Large Landowners Continue?

by Pixeleen Mistral on 12/06/10 at 10:22 pm

According to a reliable source, Linden Lab has been heavily – and secretly – discounting the initial “purchase” price of virtual land for the largest landowners – those with holdings of 20 or more regions in Second Life. Under the Atlas program, standalone Second Life islands are sold for approximately $440 USD rather than the advertised list price of $1000 USD for full power regions. Less capable homestead regions are allegedly sold to some large landowners for about $110 USD rather than the advertised purchase price of $375 USD.

According to the Herald’s source – who wishes to remain anonymous to avoid Lab retaliation – the Atlas program promotion began approximately six months ago, and requires landowners to grow their holdings by 5% quarterly.

laggy empty and for sale
land for sale cheap with no buyers – mainland prices depressed by deep discount for large private estate owners

Are the claims credible? When I ran into T Linden during a tombstone inspection before his avatar  departed Second Life forever, we put grave matters aside for a moment to discuss the Atlas land program.

CodeBastard Redgrave: hey Pixeleen
T Linden: hi there pixeleen
Pixeleen Mistral: so I was wondering if Linden Lab does discounts for large land purchases
Pixeleen Mistral: there are rumors that you guys do
Pixeleen Mistral: some program called Atlas
Pixeleen Mistral: that was out early this year for medium and large land barons
Pixeleen Mistral: anything to that?
T Linden: Yes. Atlas owners have 20 or more regions
Pixeleen Mistral: my source said they got sims for around $400
Pixeleen Mistral: instead of 1000 USD
T Linden: but I don’t have the details
T Linden: I don’t think that’s right
Pixeleen Mistral: but there are volume discounts?
CodeBastard Redgrave: Pixeleen, with all due respect, is that really the time or the place to discuss such things in open chat? i’m sure T can answer your questions in private.
Pixeleen Mistral: its going to end up in the Herald soon enough, so why not?
T Linden: Pixeleen you should talk to Nelson Linden

Switching to private chat, T Linden said the Atlas discount program was difficult to get into and directed me to those running the program – Jack and Nelson Linden. As we go to press, neither Jack nor Nelson Linden have responded to Herald inquiries.

T Linden: yeah, there’s all sorts of requirements
T Linden: but I am not the expert on that
T Linden: you should ask Jack or Nelson LInden
T Linden: or Blonding
T Linden: er Blondin
Pixeleen Mistral: you were convenient though :-)
Pixeleen Mistral: seems that some of the land Barons are pretty upset
Pixeleen Mistral: they are very concerned about their investments
T Linden: Like I said, you should get the lowdown from the folks who run the program

While volume discounts are common business practice, the Herald’s source believes the fire sale was an attempt at artificially boosting growth, and told me, “this all started sometime ago when linden lab started going ‘places’ (going under). as far i know, they had this idea to make an artificial growth and see if they could sell it to someone eventually. they approached estate owners sometime beginning this year, end of last – medium / large ones – with the program called atlas”, then went on to say, "to get that pricing / etc you had to have 5% growth quarterly. this is probably why mainland undervalued so much".

cbands wk 0
concurrent player counts have been falling since January 2009 [Tateru Nino SL statistical chart]

Is the anonymous source correct? In light of the almost continuous decline in players concurrently in-world over the last year and a half, it is possible the deep Atlas discounts were an attempt to hype land sales and maintain the illusion of growth, without visible discounting. But with serious price pressure from competitors such as the OpenSim grids, it is equally likely that the Lab was simply trying to hold onto large landowners despite dwindling numbers of players actually spending time in world.

While continuing to grow the Second Life landmass may help Linden Lab’s bottom line in the short term, the user experience of wandering ever-growing deserted landscapes is unlikely to help new player retention rates – and the ongoing devaluation of existing virtual land investments is unlikely to please those with significant holdings.

Retaining players’ interest and investment in the Second Life platform is a problem made worse after this week’s 30% Linden staff cut. A pervasive pessimism among all but the most ardent Linden loyalists is settling over the community and even led Computerworld columnist Mitch Wagner to say “I’m afraid I don’t see much of a future for Second Life” in his coverage of an interview with Linden Lab CEO M Linden this week.

Will big discounts to the Lab’s best customers be enough to keep them in the game? Pressure on the Lab for land purchase and tier price cuts is certain to increase from both large and small landowners as players factor in a risk premium on their investment in the platform, and competitors such as Blue Mars, Unity3D, and the Open Sim grids look increasingly attractive.

Did M Linden consider the possibility of falling prices when he promised to be profitable at the end of the year – and does enough of the community believe him to make a difference?

25 Responses to “Will Lab’s Over Half-Off Sale For Large Landowners Continue?”

  1. hobo kelly

    Jun 12th, 2010

    Wellsum, I reckon that things are worse than anyone knew. I bees bein’ wonderin’ ifn that Crazy Cat Lady has done been gettin’ this cheap land frum them Lindens and is part of this newly breakin’ scam somehow. Still ain’t got me a Crazy Cat Lady Talkin’ Hand Puppet yet neither. One day I will put on that ther puppet show that I have all worked up in my brain. One day…

  2. Little Lost Linden

    Jun 12th, 2010

    “it is possible the deep Atlas discounts were an attempt to hype land sales and maintain the illusion of growth”

    That does not surprise me very much because it is my belief that Linden Lab is doing the exact same thing with the daily concurrency numbers (i.e. maintaining the illusion of growth). The way they could be doing it with the daily concurrency numbers is by not allowing bot and camper violations to be Abuse Reported.

    This way, they can control how many bots and campers are in world by only removing them at their own pace, and not too dramatically, because if they remove the bots and campers too quickly (which would happen if it was an AR offense), the daily concurrency numbers would fall and this would hurt the bottom line.

    This is of course only one theory, but why else are they not allowing bots and campers to be an AR offense? Unless of course it is to keep the concerrency numbers somewhat high. Who knows for certain. Perhaps we will never know, but I would imagine this anonymous source may be on the correct trail.

    Little Lost Linden

  3. Pappy Enoch

    Jun 13th, 2010

    I reckon Atlas done shrugged, like the gal done said that time.

    Hobo Kelly, you an’ me could do us a Crazy Cat Lady road show, I reckon. I done studied wif the masters an’ can shuck n’ jive so hard you’d reckon I were ol’ King Mark hisself (after a couple drinks, anyhow).

    If’n I wore socks, I’d have me a puppet, you bet.

    Little Lost…I sho’ nuff been thinkin’ you was more loco n’ a cow in a patch o’ jimsum weed, but I think you done hit it smack-dab on the head: them Lindens am making a big ol’ pile o’ bots to jack up them numbers, like the feller at the farmer’s market who keep his thumb on the scale all day long.

  4. General Drama

    Jun 13th, 2010

    They had a similar program years ago for estate owners with 100 or more sims, but they were under orders not to admit to anything to anybody unless they actually qualified. Even if you were offering to buy 100 sims from them they wouldn’t tell you what the price you would pay would be.

    This sort of favoritism is one of the things that caused a lot of the very tight margin pricing (generally at the break even level for most regular sim owners) that wrecked the estate sim market.

  5. IntLibber Brautigan

    Jun 13th, 2010

    Lessee, 30% staff cuts, plus 60% price discounts. They are seeking to minimize costs and maximise some temporary revenue prior to a company sale or kicking out an IPO… Pump and dump….

  6. Hmmm

    Jun 13th, 2010

    I think Atlas is for those with more than 20 sims? A lot of those angry at Jack’s last office hour have more than 20 sims, they were angry because Anshe not only got a discount on purchase which they didn’t have access to themselves….But also a tier break. Meaning she can undercut them on land rental prices.

    She’s already well ahead and doing that…

  7. Insider

    Jun 13th, 2010

    I am an insider. The reason for the big flood of sims ordered May 31st was that Linden Lab was ending some discounts for big landlords effective June 1st. Some sims were then dumped into the market for rent below tier cost to capture market share and minimize short term tier losses. It makes business sense to get sims filled first and then use the high natural fluctuation in SL to get them rerented at higher rates when the market has absorbed the additions. This is not a case of tier discounts but a case of people making bold moves and taking business risks.

  8. Robert Graf

    Jun 13th, 2010

    SL has never had a level playing field business wise. Insiders get special deals on land purchases and tier. This is not a new phenom but has existed for years in SL. LL markets SL to Joe Noob as a great place to start a business to make RL money. Joe Noob starts his business unaware that his competition is getting a minimum 33.3% advantage on Tier Fees. After doing oppo research he is surprised that they are able to price their rentals much lower than his despite similar land and builds. Then he learns the truth the hard way. Joe realizes that even with a better build and better customer service he will never make it business wise because of the manipulated land prices and tier. He shuts down, sells out, and refuses to participate in the SL economy in any form. No rentals, no purchases inworld. Nada. Nothing… And goes on to a better “second life” on OSGrid. LOL How many times has this story been repeated in SL? LL participates in this insider corruption/manipulation thinking that they will benefit from this. Just keep it on the lowdown please…. ; ) Most people are honest, decent, and fair minded. They just want to compete on a level playing field. LL makes sure they never will and that stinks like BP oil on a Louisiana beach at noon. ; )_~~~

  9. The Fartin' Head

    Jun 13th, 2010

    “I reckon Atlas done shrugged, like the gal done said that time.”

    Best line. Ever.


  10. Jane

    Jun 13th, 2010

    I didn’t know that some people get better land and tier pricing and it makes me very sad. Is this even legal? If there’s a volume discount, this should be stated on the website and available for everybody. Anyway, learning this about Linden’s business practices is really depressing, very very sad. :-(

  11. Persephone Bolero

    Jun 13th, 2010

    Wow, the company is offering lower prices for those dealers who work wholesale?

    Yep, pure evil. No business anywhere has ever done that for any financial reason ever. Only evil tyrants do things like offer better pricing to those who do more business with them.

    You know who else offers better pricing for wholesalers?

    Home Depot! And what does Home Depot sell? Lumber. You know what lumber is used for? Building stuff. And what do people do in SL?

    They build stuff man! Don’t you get it??? Get your tin foil on, boys. This is the kind of conspiracy that we nutcases live for!

  12. Gaara Sandalwood

    Jun 13th, 2010

    Well from the looks of it not everyone who got that amount of sims knew about it or were offered it even. I mean, I’m not saying they’re evil or anything, but if I ran an SL business and some competitors who should’ve been paying the same amount I do paid less and thus had more to work with, meaning that they pay less than I do and have a more successful business than I do, why wouldn’t I be pissed?

    And Persy, I prefer to call them corporate assholes, not evil tyrants.

  13. Gaara Sandalwood

    Jun 13th, 2010

    For those who can’t read between the lines: keyword “should’ve” means around teh same land, prim limit, etcetera, as my business, but paying less for it.

  14. Gaara Sandalwood

    Jun 13th, 2010

    On the contrary, because I know Persephone will likely comment on this, I wouldn’t give two shits if I was making money and WAS getting that special deal, because it is a decent business choice to accept such a deal if offered one. THat still doesn’t mean I feel any different about it on a nuetral level of thinking.

  15. Gaara Sandalwood

    Jun 13th, 2010

    Then again, who’s honestly made loads of cash on SL lately?

  16. Persephone Bolero

    Jun 13th, 2010

    “That still doesn’t mean I feel any different about it on a neutral level of thinking.”

    And I can’t say it’s not a stupid business decision for Linden to engage in this kind of behavior, where these special prices are not offered to everyone who deals at the same level. It may very well undermine the sense that there’s a competitive market and discourage massive real estate investment — assuming the allegations are true, which is not certain.

    I used to own several sims. Due to the whole price dive thanks to the new mainland continents back in 2007 and the 2008 open-sim debacle, today I own only one sim that I maintain to support my own land use within the same sim. Anyone that buys a sim from Linden for a for-profit venture is making a bad choice in my opinion.

    Stupid? Perhaps. Evil? No. It’s their company. They can do what they want with it. And it’s my consumer choice. I’ll do what I want with it. Freedom of choice is a wonderful thing.

  17. Gundel Gaukelei

    Jun 14th, 2010

    @Persephone Bolero Yep, pure evil. No business anywhere has ever done that for any financial reason ever. Only evil tyrants do things like offer better pricing to those who do more business with them.

    Playing favorites is likely to raise some questions if you’re the one running the betshop. That said, “evil” is a null term.

  18. IntLibber Brautigan

    Jun 14th, 2010

    The real crime isn’t that they offer cheaper tier rates for larger land holders. The real crime is that their single sim estate tier is 50% higher than mainland tier. Estate owners are essentially resellers, and thus should be getting pricing that is somewhat discounted from the normal mainland retail price for the same land area.

    Second Life is the only market I’ve ever been in in which the wholesalers pay higher prices than the retail customer.

  19. Jane

    Jun 14th, 2010

    > Second Life is the only market I’ve ever
    > been in in which the wholesalers pay higher
    >prices than the retail customer.

    Resellers can buy mainland at mainland prices and tier if they want to, private estates are not the same product as mainland.

    The problem here is not the discounts but that they are not published and available to everybody. Knowing about their existence is very important to make sound business and investment decisions. If you know that your competition with 20+ sims is paying significantly less than you having just one sim, you realize that you can’t compete and you will not invest in SL. If you don’t know about the discounts, you invest in SL thinking that working hard will give you a chance of success on a level playing field.

  20. Ravi Galuptra

    Jun 14th, 2010

    The entire economic model of SL is, in its current format, doomed. The issue here is of tiers and rental costs which are just way too high to encourage returning players.

    Where is the social housing that can be rented for L$5 a week? Where are the free houses that new players can rent for L$0 a week for their first ‘x’ months in SL? Limit the number of prims in each, but create that space where players can call it ‘home’.

    Given that ‘blank canvas’ LL encourage returning players to log in and play with their virtual home. Create a whole new range of conservatories, garages, barbecue areas that can be purchased to add-on to the starter home (just as it works in RL). This encourages investment in SL’s myriad of creations.

    Actually encourage money trees, camping, surveys, whatever so that people can be inworld and ‘earning’ their L$5 a week. ‘I must log into SL and camp because my rent’s due’ isn’t so far from ‘I hate my RL job but my rent’s due’.

    Stop thinking of the housing issue as ‘private islands’. Where are SL’s projects, its tower blocks with cheap rent? Let’s face it, many players are occasional, but the chance to live in SL makes the prospect of play in your own space makes login a more regular occurrence.

    Theme the social housing for dwellings that reflects the user’s RL location. The French in Parisian ‘banlieues’, Americans and Russians in ‘projects’ or ‘projekts’, respectively. The Brits in tower blocks. Simply assign an apartment to them, as might happen in RL, and they move in beside their new neighbour, who is both a constant presence and speaks the same language too, thereby creating micro-communities.

    Let the associated shopping experience reflect the cultural make up of the resident community (i.e if I want arabic clothes, I go to the virtual Cairo, or wherever) which encourages further sense of ‘local’ community, and maybe, just maybe, encourages micro-communities to pool resources and build their SL experience together.

    Allow residents of a particular community to purchase clothes at discount from other SL users, thereby supporting their micro community.

    The problem LL has right now is its basis on Anglo-American economic and societal models. I’m guessing mostly an American model, which may be American users concept of it, but the SL world isn’t purely American. L$500 a week rent may be chump change to an American user, palpably it is not to someone whose country has a much lower GDP, and whose concept of money is not based on the US dollar or British pound or European Euro.

  21. IntLibber Brautigan

    Jun 14th, 2010

    Jane says,
    “Resellers can buy mainland at mainland prices and tier if they want to, private estates are not the same product as mainland.”

    Thats right. Private estates put the burden of customer support on the estate owner, so not only does the sim owner have to pay LL 50% more, but he has to pay for his own staff to support his customers. The mainland sim owner pays 2/3 of the estate tier but gets the same concierge service as the estate owner. You still haven’t shown how that is either fair, or consistent with business practice in any other industry.

  22. Robert Graf

    Jun 14th, 2010

    LL needs to end reduced pricing for land and tier. Put everyone on an equal footing and end the nonsense. LL should stop catering to the 1% of landowners that benefit from this rigged system and start looking after the 99% of landowners that don’t. Almost 4 years have passed since grandfathered tier was brought in. End it. The wants of the 1% have dominated LL’s policies for years. The strategy worked as long as loads of noobs were coming in, SL was the only game in town, and knowledge of reduced land costs for competitors was not widely known. The “dirty little secret” is out, LL and the 1% need to accept the new reality ; )_~~~

  23. Persephone Bolero

    Jun 14th, 2010

    @IntLibber “You still haven’t shown how that is either fair, or consistent with business practice in any other industry.”

    A private estate owner can set covenants, reclaim land, and use World/Estate tools, which provides a host of controls you can’t get on the mainland. Hence the difference in pricing. It’s not placing the burden of customer service on the owner. It’s allowing for greater freedom in designing land use rules. That’s why I pay more for a private estate, and I’m quite happy doing so. It allows me to create a very specialized neighborhood for my tenants.

  24. It's Unfixable

    Jun 15th, 2010

    One way or the other, I’m astonished. Pixeleen actually reporting the news instead of inventing it. Quick, Pappy, fetch the smelling salts – I think Imma gonna faint!

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