With the announcement of a drastic price cut in private islands, many people screamed in pain about the value of their "investment" going down. In a sense I have to agree with them: Linden Lab sells virtual "land" and that is supposed to be something which is an investment. But that's a fib, we know that's a fib, and while LL ought to stop fibbing, people also need to be realistic about what it is we are doing here, and how this all works.
Probably the place to start is realizing that we are not buying "land," and that there are very few ways to improve upon "land" here. This means that people can speculate on set up fees and providing some kind of money to others, but in the end, hardware and software will go down in price.
Now some sims have changed hands for a great deal of money, but very few. Now I am not going to argue about whether the sims that have changed hands for a lot were worth what was paid for them, because that gets into all kinds of questions about value that I don't think work here. If you want money, it doesn't matter whether those sims were worth that much in some abstract kind of aesthetic value way, it matters that people were willing to pay that money for something, and as a money seeking person, your job is to find out what that is. Raw empty sim, not going to make it.
But let me go farther on. The real activity of Second Life is creation, whether that is for personal satisfaction of role playing, or building, or creating centers of energy.
The economy has not been fair about rewarding this work properly, and infact has rewarded speculation, but that's a game that is destined to end. Both with the entry of other companies doing LL compatible sims, and with the advancement of open grids. Sooner or later, land flipping will crush those involved in it.
This is particularly true of mainland. This is because mainland oozes back down into the slime of ad farms and clutter and lag. Yes some places are lucky enough to self zone, but they are always one bad day away from being lagged out. The island market has its own hazards, as I keep hearing from people about estate owners that jerk them around. This is because renting land is basically being a service layer to LL, and LL will eat the profits and leave you making about what someone working a call center would.
Which is to say.... hmmmm. Not much.
So where does that leave us?
Well costs going down is good. Better than initial costs going down would be tier going down. But this move is clearly for the IPO. A finance friend of mine explained it this way, a service company is worth customers times the expected revenue per customer. So LL has every reason to get more customers in the door of paying for land, and more tier bills flowing.
What's bad of course is how LL chooses to communicate. As usual from the business people, a bomb was dropped on people. People trying to get out of LL sudden were stuck with large loses. People who had just made purchase decisions had a big "sucker" branded on their forehead. These things don't make people feel good. Especially when a vague clarification later was given to us. We canceled an order, because the uncertainty made it so that we could not be sure our customers would not simply shift the next day to someone who bought a sim at the much lower price, and could therefore rent at a lower price.
We aren't alone in people who have canceled orders, or delayed purchase decisions. That's one reason why LL is making a spate of new mainland islands now, to make up for the lost revenue of people waiting a month to get the prices on the new land store.
But over all, going forward, lower costs are good news. That LL doesn't communicate well on business issues isn't new.
So how to make money here? The key thing to remember is that LL is among the least honest companies out there. A friend of mine has an old poster it reads "we don't have to care... we're the phone company." And that sums up LL's business model pretty well. LL is populated by VR addicts. Trust their addiction, not the business people, who are drug dealers and know it, and even less the people who run the stability side of the business, because they have a terrible track record. Trust the people inside of LL who are like us: addicted to this place and what it can do.
But whiplash asde, we should as members of the community, smile at this decision, and realize that it doesn't make that much difference. If you are doing something that is a going business here, 600 dollars is a bite, but not that much in the scheme of paying your bills with your work here. And if you were betting on LL's fee structure or land supply, then it wasn't very smart, because they can mint new land or not as they need or want.
Most importantly, it is a signal that the big issues that have slowed the expansion of the grid are ebbing. That has to be good, because more capacity means more demand, and more demand means more chances for all of us.
This is a hopeful moment, and we should seize the day.