Sticker Shock
by prokofy on 28/10/06 at 12:14 pm
Prokofy Neva, Dept. of Rumours, Innuendos, and Inside Dope for Inside Dopes
Second Life island dwellers were disturbed from their serene and lucrative virtual existence this morning as rumours began flying that the wholesale price of private islands is about to rise steeply. Lindens apparently put the word out to their special friends on something dubbed “the developers’ list” that islands could rise to $1595 per sim with $295 monthly tier or maintenance fee, or even as high as $1695 per sim with $295 tier. Currently the islands in the Land Store are $1250 with $195 tier.
The sticker shock not only sent waves of apprehension through those making a shaky living on the differential between monthly tier ($195) and what they potentially can rake in from rents ($400); it also indicated the existence once again of an inside track from which even those who count themselves insiders are excluded. One reliable source told the Herald that a letter went out to a few privileged developers indicating price increases; that seemed to mean Lindens were providing tips to buy up cheaper islands now to give these businesses a boost. According to another source, the tip was on an list of metaversal developers much featured in the news.
One island dealer told the Herald that a new buyer was told the price was going up November 1.
The Herald is still checking the rumours but sources say the prices will go into effect either Monday or November 1, and that the notice of only two or four days seemed “unfair”.
Several others who have heard the rumour have been trying to check it with Lindens and getting “we know nothing” from liaisons (as usual) and conflicting reports from those higher up the Linden food chain.
The open question everyone in the land business has is whether the old tier of $195 on previously-purchased islands will be grandfathered, to ensure that long-term dealers like Anshe Chung and Azure Islands will be able to stay in business even if they face competition now from major RL corporations who will find $295 or more a trivial cost for server storage space.
While in RL, creation of a grandfathered scarce commodity could be assumed to make that commodity more valuable, in SL, various forces converging on the scene don’t always ensure scarcer land retains value; the Lindens can always make more of it, and with a huge influx of new subscriptions, there’s always another guy to buy the island at whatever it’s priced at.
The hike in island prices could make mainland more valuable, but the Lindens’ commitment is uncertain to maintaining cheaper, contiguous mainland sims with many individual customers on small plots of 512 m2 or larger. It is easier for LL to have landlords pick up the customer service slack and take care of everything from newbie orientation to troubleshooting and individual billing.
If once single island owners could dream of continents, and mainland owners could dream of upgrading to island territory, it may now be priced out of their reach. Now, small mom-and-pop businesses running 10 or 20 or 30 islands as a part-time job or even RL income after expenses of some $2000 per month could find themselves outgunned by large corporations for whom the purchase of 40-bloc sims will be a low-cost line item, especially if they justify it as a cost-saving measure to reduce conference travel budgets.
A number of customers were feeling shocked and angry at the Lindens’ failure to discuss the price-hike openly at the Concierge Town Hall on October 26, where a number of troubling issues about “silent crashes” and other serious performance issues were aired. The transcript is closed for comments, howver.
Ordinal Malaprop
Oct 28th, 2006
Okay, how reliable is this? I have friends who are purchasing sims in the next few weeks, and hell, if this is going to happen I might just purchase one myself to get in under the grandfather clause (they’d have to have *some* sort of clause or there’d be immense disruption).
It seems very different to LL’s general direction of promoting “user-run communities” at the moment, which does make me sceptical, if you’ll excuse me.
Prokofy Neva
Oct 28th, 2006
Ordinal, it’s reliable. Go and ask Lindens; call up the Land Store (which is now listed as “temporarily closed” which is unsettling) and email the Land Store and Concierge emails like the rest of us are trying to do, trying to get answers.
Be skeptical all you life, Ordinal. There are people who have this information first-hand. Will the Lindens grandfather it? We don’t know. Will they backtrack when they hear the outcry? Possibly. Will they somehow mitigate it or deny they had this plan or made these inside tips? Of course they will if they hear enough outcry. This is really a serious matter, so I’d urge you to join the ranks of people trying to call them to account, rather than impugning me and my sources. I’m not the problem here, and rumours aren’t the problem.
The problem is the Lindens and their failure to be straight with all the concierge customers.
And your notion that the wave of the future belongs to “user development” might well be hopelessly out of touch. Pontiac is buying sims. Sony is buying sims. Warner Brothers and Reuters and Twentieth Century Fox are buying sims, and they are user-driven content, too, Ordinal, see?
Prokofy Neva
Oct 28th, 2006
Anshe Chung has just raised all her tier prices on island parcels due to changes coming from the Lindens for new islands:
http://www.anshechung.com/index.php?fct=LAND_TIER
I’m told that the old tier will be grandfathered for islands, but this all needs confirmation. She raised her rates without notice. She’s called a town hall in Central Park in Dreamland for tomorrow.
Urizenus
Oct 28th, 2006
Prok can you get a short interview with anshe about this?
Prokofy Neva
Oct 28th, 2006
Anshe is not online now; she raised her prices immediately, it’s on her website. Her staff is enforcing it and trying to get answers. They are saying while tier is grandfathered on previously-purchased sims, even existing tenants of Ansheland will have to pay the higher prices. Indeed, her chart includes a fee for completing the month at the new, higher price then starting at the higher price, i.s. $30 for 5120 m2 up from $20 (she had lowered her prices awhile ago as competition had increased among islands).
It’s funny to have people sending me angry hate mail: I’m merely reporting the story as I get it from reliable sources. They aren’t speculating or gossiping, they have been informed that this is the case.
I’ve put this story in the Rumours Dept. merely because it isn’t on the Linden website yet. The Land Store is currently *closed*. Nobody has any responde from LL yet.
Nimrod yaffle
Oct 29th, 2006
[21:03] You: can you comment on the rumor of them raising island tier fees?
[21:04] George Linden: Hearsay is hearsay; if there are any billing changes they will be posted on secondlife.com’s blog
Cat Cotton
Oct 29th, 2006
Blinks, then blinks again. No way, they can’t be this fooking stupid. Greed is such an ugly word but if this is true they can pwn it.
Orlie Omegamu
Oct 29th, 2006
I think the way they’d have to do it is to make the new islands better in some way. Something like better performance, larger size, more prims, etc. That way they can justify charging more for the new islands and leaving the old islands at the old price. I’m guessing that there won’t be a clear cut benefit to buying an island just before the change. They could also increase the island transfer fee (currently US$100) so that people who jump in just before the change expecting to sell right away at a profit, would be disappointed.
Prokofy Neva
Oct 29th, 2006
[21:03] You: can you comment on the rumor of them raising island tier fees?
[21:04] George Linden: Hearsay is hearsay; if there are any billing changes they will be posted on secondlife.com’s blog
Um, George Linden is a brand-new Linden who has mere liaison level. He is not an office Linden — he’s not in the land guru or Concierge departments. He is at the same level of all of us mushrooms, i.e. kept in the dark and fed bullshit.
Why is George Linden — God bless him, he’s a great Linden, still not spoiled, still believing — why is he being wheeled out as a source?
I realize it is very hard to accept when a few are given a heads up on something and the rest aren’t. But this has happened before, eh? Remember Adam Zaius and the Void Sims (not a rock group).
Orlie, why would they have to make something better, i.e. to add to its value or labour, just to charge more? They can just charge more. It’s their store.
LL
Oct 29th, 2006
It’s been confirmed by various sources. Prok is correct.
The next to go are liasons & no customer service for non paying members. This was being talked about months ago.
Philip Linden
Oct 29th, 2006
LL, you’re fired!
Orlie Omegamu
Oct 29th, 2006
Certainly they can simply charge more for the same thing, and maybe they will. But it would be a mistake. If existing islands still cost US$195 per month, then the older islands will have an ongoing competitive advantage over the newer islands because it is easier to cover tier. If existing islands have to start paying significantly more tier, then there will be a glut of existing islands for sale as owners decide they can’t afford their land anymore. Given a choice between these scenarios full of inequity, unfairness, and discontent, and the alternative scenario of adding some type of value to the newer more expensive islands, however nominal it may be, I think it is in Linden Lab’s best interest to add some value to the new island offering. I know they’ve opted for the more dubious choices in the past, but with the ever increasing resident population there should be more of an eye towards maintaining stability.
Nimrod Yaffle
Oct 29th, 2006
Orlie, that’s not the case. They now have the class 5 servers… From the Blog: >
# Linnian Sugar Says:
October 16th, 2006 at 11:11 pm
Will this effect the price of SIMs?
Ian Linden: These machines are certainly more expensive for us to buy. There’s alot of math that goes into our pricing decisions and frankly we haven’t figured that out yet.
Prokofy Neva
Oct 29th, 2006
Orlie, it seems to me more likely that they will grandfather the tier (if they’re going to do that, which I don’t think they’ll feel the slightest compunction to do) — at least for some time — precisely because they will feel a bit sorry for overwhelming all those hard-working amateur mom-and-pop businesses that have bought and rented out sims with this huge new stream of corporate customers that can utterly blow them out of the water. For a Sony or Reuters or Sun Systems, do you honestly think that $195 versus $295 makes a bit of difference? For somebody running a carefully-crafted island continent of 6 sims, it’s the difference between making it worthwhile as some extra income created by sweat equity — or going broke. They’re huffing and puffing for micropayments — even if a lot come in the form of US dollars in Paypal for $25 a parcel.
The big companies don’to have any of those concerns, they have a budget for PR, they spend it, or risk losing it in the corporate balance sheet the next year.
I would think the quote from Ian Linden would be all you’d need to know about deciding about buying or selling a sim right now.
Resident
Oct 29th, 2006
How do newer computers cost more? Don’t computers come down in price year after year?
Shouldn’t tier prices be dropping year after year instead of increasing‽
blaze
Oct 29th, 2006
Hehehe “Paying $1500 for private islands” … price: 80000 L$
Gotta love anshe.
blaze
Oct 29th, 2006
(check the classifieds for that, btw)
Orlie Omegamu
Oct 29th, 2006
Well, if Linden Lab does sell out to corporate America and kills individual island ownership, there will certainly be a groundswell of support for an alternative online world to cater to the refugees from SL. I don’t know why they’d act to spur such a movement, when they could easily have different levels of islands for individuals and businesses.
Prokofy Neva
Oct 29th, 2006
Orlie, it already sold out, hello? Even back in June 2005, the Lindens cased selling small plots on the auction as new land. They began selling only full sims. That mean only a handful of businesses in SL could handle the costs. In time, larger entities like universities bought these sims, but most were bought by ordinary people. Islands were raised in price back then to $1250 from their old price of $995 back then.
It’s perfectly logical for them to go on raising the price of something that has grown in value with all the media hype. They replaced all the older servers with I believe class 4 was it? The one that can take sims piled up on it?
The idea that computers should get cheaper as they are innovated with each passing year is an idea that holds true in RL about users of computers. But these are servers replicating land in a virtual world run by a company “not yet profitable” which needs to get profitable in a big hurry. And they just had to go buy all new ones, and that means they’ve had a huge cost they have to make back.
Selene
Oct 29th, 2006
SL asks how they can improve customer service? How about telling in detail whether or not this rumor is true? Or give notice in their blog about putting land store as closed temporarily. Just tell the players whats going on. If the costs go up too much especially with no notice players will get pissed and leave.
Orlie Omegamu
Oct 29th, 2006
LL has plenty of revenue, and so “not profitable” means very little in and of itself. It depends how much of a shortfall there is. Also, if they are pressed to make a profit, suddenly increasing island tier by US$100 per month is a dicey proposition. With the ensuing glut of island sales, it seems likely that many island owners may simply choose to skip paying tier, even though it means losing the island, which cannot be sold quickly enough because of the glut.
Gabriel Pirandello
Oct 29th, 2006
When will you all come to grips with the fact that Linden Labs is a business funded by venture capital. This type of investment is neither long term nor for small profit. The first goal was to show the investors that Philip could get one million subscribers. The next goal is windfall profits so the investors can cash out. I predict SL will be sold to a large corporation like Sony or there’s an outside chance it may even go public.
This is a business .. this is not a game !
GP
Cat Cotton
Oct 29th, 2006
GP when will you come to terms with; “It’s my fooking money and I will use my land as I see fit?” If I want to spend 195.00 a month and play on my island it’s not your business to tell me what I should be doing on it. Marketing and commercialism are for those who are activly interested in it. Don’t push your agenda on the entire world of SL. Some of us are here to simply have some fricken fun, try it.
Donald Trump
Oct 29th, 2006
Philip, You’re Fired!
Prokofy Neva
Oct 29th, 2006
>This is a business .. this is not a game !
Hey, I’m cool with that. Then let them act like a business and not a MMORPG with fanboyz and game gods and wizards. Let them put out an ordinary bulletin to the public, or at least a rationa class of customers like “all island owners” or “all Concierge customers” or “all persons who logged on in 60 days” instead of giving an insider tip only to some of their special friends, or to there very highest flying buyers. They are always claiming to be so egalitarian — let them make good on that claim.
Gwyn will be along any minute to claim that it’s ok to have little insider premium sterling platinum customers that get special treatment. .But even that sort of practice, which isn’t really as common as she imagines and isn’t the norm for big normal companies (as distinguished from overly-feted and precocious California software start-ups) has some kind of “law of nature” for it. That is, if Anshe gets it, why doesn’t X or Y island dealer with 30 or 50 islands? And that’s what is happening evidently.
Hiro Queso
Oct 29th, 2006
It will be interesting to see who has purchased extra islands leading up to the land store closure. I hope that LL break with tradition and do actually shed some light on this very soon (for the rest of us).
Lex Neva
Oct 29th, 2006
Prokofy, I understand that you’re telling us that people have this information first-hand, and that you’d like us to skip the attempts to verify your sources and just go straight to being mad at LL, but I’d like just a little more information. Your sources were notified somehow, maybe by email, right? Anshe seems to have gotten a clue. So can we get a copy of that email posted here? I know that won’t calm any die-hard skeptic, but I’m really curious to see what LL wrote, in their words.
As an island-owner, I don’t understand why I wouldn’t be included in some group that would receive this information from LL. Having to pay an extra $100USD/mo would probably severely hinder my group’s ability to keep our sim. Our tier-day is on the 2nd, so if the rumors are true (and the hope of grandfathering proves untrue), then my group would get slammed with an unexpected $100 charge with barely a warning.
Prokofy Neva
Oct 29th, 2006
Lex,
1. Yes, some are more insider, and more privileged than you, Lex Neva, and yes, they got the word first.
2. Read my article to note that both the Herald, i.e. me and other Herald reporters, are still attempting to check these stories. At this stage, we only have more and more and MORE confirmations from those who have the direct word from LL.
3. I suggest you work your own Linden pipelines Lex, instead of banging on Anshe. Anshe has posted new tier rates that are 30 percent higher than her price’s last week. She is facing new prices. Do the math. Smart business people like Anshe react instantly to price hikes among their suppliers.
4. Yes, Lexa, I as an owner of multiple mainland sims AND island properties in the Concierge group also wonders why I, too, wasn’t given this information at the same time as either the most plugged in developers or the most high-paying land barons. But hey, that’s Second Life. Did you think it would be different than First Life?
5. Yes, there is barely a warning. Yes, that’s the problem. Yes, you need to protest this. Now, will they grandfather people like you with $195 remaining as the tier on sims bought before November 1? Like they grandfathered the $500 stipend on premiums bought before a certain date, like they grandfathered the free 4096s for charter accounts. Let’s hope so!
Let me suggest that if you’d like that to be the case, continuing to bang on the messenger will not help. Go to the ultimate of news sources, our beloved Linden Lab.
Squee
Oct 29th, 2006
To paraphrase: Sources please, or it didn’t happen. :3
Prokofy Neva
Oct 29th, 2006
Yes it did happen : ) And sources are indicated, which are reliable — just not told to YOU to protect those sources.
Walker
Oct 29th, 2006
Prokofy, see here. Existing Dreamland parcel owners are unaffected by the new tier rate unless they upgrade and buy more land. They will then be switched to the new tier rate for all land they own. The last part of that information was gleaned from Dreamland ACS in group chat earlier.
Prokofy Neva
Oct 29th, 2006
Walker, they didn’t have that confirmed before, when I wrote this — and still don’t — and nothing you’re saying is new. In fact, talking extensively to Dreamland staff all day, this wasn’t confirmed — I’ve been on Dreamland group chat for 2 days solid on this.
And hey, be like everybody else? See what the Lindens say? Because they did NOT confirm the price hikes and the grandfathering policy yet, in writing, on the website. We do have individual Lindens in chat and on the phone reported from reliable sources; we don’t have the LL website yet. Let’s hope it’s the case that they are going to grandfather old sims at the old tier rate — let’s hope — there are indications they will.
But let me emphasize this: even if they grandfather all old sims, and only charge this new rate for new sims, it doesn’t change the dire consequences of this move for many people owning private islands, including ACS: they can no longer grow except by paying for land and tier at a much higher rate. It means they now have a cap on growth. It means that they can’t expand, because many of them can’t possibly add the value that would compel people to pay a whole lot more.
It means a really huge blow to the island rentals business, and by extention eventually, for various, the mainland businesses.
As I already explained in the story, rentals of islands depend on the differential between $195 of tier and the $400 they can reasonable expect to take in from rent. If people can pay mainland tier for $25 tier a month, they can’t justify paying a lot more than that for island rental land. And if the cost is then $30, that means many fewer customers — and add to that the significantly greater island purchase cost of $1595 versus $1250.
It’s clear what’s going on — the Lindens want to get rid of the rentals business and want large corporations to take over this function, and make content (entertainment, clubs, housing, whatever) that will be compelling to draw many more customers.
They want to professionalize content in the future, and that means commercializing it.
They want to get rid of the people they view as amateurs. Only those willing to spend a lot more — just like those willing to spend a lot more after dwell was removed, and after the last island price hike — will be able to stay in business. It’s very calculated and callous. Uri has gotten it absolutely right in his column for Strumpette.
Prokofy Neva
Oct 29th, 2006
And Walker, please have the courtesy to note that the news and link you pasted here to Anshe’s site on October 29 at 7:34 p.m. is *the same link* I *already* pasted above you in these same comments as follows on Oct. 28 at 9:34 pm, let me repeat it:
“Anshe Chung has just raised all her tier prices on island parcels due to changes coming from the Lindens for new islands:
http://www.anshechung.com/index.php?fct=LAND_TIER
I’m told that the old tier will be grandfathered for islands, but this all needs confirmation. She raised her rates without notice. She’s called a town hall in Central Park in Dreamland for tomorrow.”
Intolerable Ginsburg
Oct 29th, 2006
So, no mention yet that the Linden blog now confirms the price increase… $1675.00 and $275/monthly…
Nimrod Yaffle
Oct 29th, 2006
http://blog.secondlife.com/2006/10/29/price-for-new-private-islands-to-increase/
Walker
Oct 29th, 2006
“And Walker, please have the courtesy to note that the news and link you pasted here to Anshe’s site on October 29 at 7:34 p.m. is *the same link* I *already* pasted….”
My link:
http://www.anshechung.com/index.php?fct=LAND_TIER_OLD
Your link:
http://www.anshechung.com/index.php?fct=LAND_TIER
I was just passing on information I got from a discussion earlier after taking an interest in your story. I didn’t intend to cause offence. Sorry. ):
Gwyneth Llewelyn
Oct 29th, 2006
Gwyn is actually not going to say anything of the sort except that it’s now official and not a rumour: http://blog.secondlife.com/2006/10/29/price-for-new-private-islands-to-increase/
Prokofy Neva
Oct 29th, 2006
Hi, Walker, thanks for the note, I thought you were the OTHER Walker! lol anyway, I’m glad it’s sorted out.
And yes, Gwyn, please don’t defend that pernicious practice of giving inside tips to special selected groups, it’s wrong.
Lynn Evelyn
Oct 30th, 2006
thank you LL for solving my problems!
I was trying to work out how to bring my money to you guys (get payment info fixed) and become a premium, but the last few days, all I see you guys doing is screwing up.
So yeah, no need for me anymore to get some cash your way, you don’t deserve it.
marilyn mainline
Oct 30th, 2006
Its offical Halaburton , Exxon, and Walmart has just purchased all land, and all future land in 2L. And yes Dick Cheany has raised the rent,and land. But wait he says it only cause oil prices are down. He will lower land prices a soon as he can create oil shortage so oil price goes back up. Then everybody happy again. Way to sell out guys.!! Kinda new to sL and probably will not get much older in here. i think Martha had to spend a little prison time for her little insider scandle,so take a look at ur self in mirror and turn your self in. The start of the end for 2L has begun.
The little guy
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