Is LL Subsidizing Our Exploitation?

After Cristiano's great interview I left wanting to continue to pursue engaging people in complex discussions about SL in the forum. In a previous thread I posted something that I decided should be seen by more people, so I've spawned it as its own thread. It asks, is LL subsidizing our exploitation?


Anshe's purchasing of land has been described as being simple arbitrage, the practice of taking advantage of a state of imbalance between two or more markets. An example of arbitrage is the mall-to-eBay analogy. A person purchases jeans at a discount in a mall and then sells them for a profit on eBay. The fundamental difference between this analogy and our current situation is that large land owners receive a massive discount for holding land, whereas the majority of players do not.

How much of a discount? Let's explore! Did you know that someone who is tiered up to support a full sim in a group can hold over 72,000 m^2 of land for $205 per month? Compare that to 141 individuals not in a group who hold single 512 m^2 plots (about 72,000 m^2) for $10 per month. Their total comes to $1410! The difference is 688%! That is, because of regressive land-tier prices, the top land owners pay about 1/7 what the small land owner does. While this is a great reward for those who enjoy owning large parcels it is a massive subsidy to those who want to buy and sell land.

Note that this excludes the part of the US$3000 that Anshe received for dwell on her land (assuming a linear division between the 45 who received the award, that's about $70 per month). Including it would reduce her RL costs to about 1/10 that of a single player. (Note that I am not criticizing Anshe, whom I think is a terrific person, rather I'm critiquing the system!)

As you can see this is not simple arbitrage. This is the exploitation of a system geared to reward elite players with discounts and bonuses. The cost comes straight out of the common player's RL pocket. I'm happy to pay a little more than the big developer for some great themed areas but should I have to subsidize land barons?

The land barons use this massive discount to create land oligopolies and extract RL money from individual players. What's really insidious about the system is that it charges us twice. First, those with small land tiers subsidize in real US$ the cost of those who own large amounts of land. Second, we pay land barons an overhead which covers their cost and provides them with a profit -- a profit made possible by using RL purchasing power to control the land market. Thus LL's pricing scheme subsidizes our own exploitation!


What are the solutions? Note that because of regressive pricing, a group of small land-owners cannot create a successful cooperative. A single individual must tier up to a full sim to get the maximum benefit of the regressive land-tier. Thus cooperatives can only work by pooling US$ outside of SL -- a difficult task indeed! Those who wish to buy and sell land must have a great deal of RL capital to able to afford several months of US$205 payments while waiting for land to sell.

I recommend an elimination of the regressive land-tier fees. Additionally, because land is a special case, individuals and groups should be taxed progressively on sales which have been marked up. The progressive tax should be set such that 90% of all sellers do not incur cost. Only those who turn over large amounts of contiguous or noncontiguous land in a certain time period will be taxed. In essence it's a land-baron only tax.


What are your thoughts? Did you realize you were paying so much compared to a land baron? What solutions do you have?

Please no personal attacks on Anshe or me.

~Ulrika~

Edited for an error in the cost of a base account. It's $10 not $5.

...What are your thoughts? Did you realize you were paying so much compared to a land baron? What solutions do you have? ...
-----

Yes I realize that.

Solution?

I'm failing to see a problem - can you state the problem in about 25 words? I would find that helpful...

Thanks Ulrika.

Hmmmm. Interesting figures --if one could gather 141 owners of 512m2 property into a landowner's collective -- they could pool their land into an agreed "corporate" holding of 72,000 m2 for $195. a month thereby pocketing a savings of $3.62 US a month. At current GOM prices that's about 5K in Lindens a month I think. Nice little stipend.

A fascinating project might be forming a "gross" (144) of 1st time landowners, the arguable bottom of the rung economically -- and turning them into a collective "Land Baron"!

Members of this collective could choose to either draw salary --or re-invest in the Barony.

Might be an idea for me to implement in my (on the drawingboard) "Viking Village" project.

Okay, being that this is a loaded question, first please define where the exploitation is occuring.

Personally, I agree land barons exploit SL and the players, but I think attributing to simple resale price is silly. That's how retail stores in RL operate - charging a price to make something more readily available. ARGUABLY, land barons can (and sometimes do) provide land-finding services and value-adding (like construction) to land.


I have to disagree with your assesment for the following reasons:
a. There's nothing wrong with giving a bulk-rate discount.
b. There is an overhead in billing for each account. (i.e. credit card fees, bookkeeping, etc)
c. The more you split up the land, the more potential problems you have between residents. The additional moneys arguably helps pay for "dispute resolution".


Okay, this was not clear to me and I've re-read this 3 times. How did a $70 split turn into a $3000 bonus? Even the most popular club-owners I know barely recoup their monetary expenses, dwell-wise.

...

I think the real issues with exploitation are:
(a) the hogging of land auctions by barrons
(b) that all land sales are not yet public knowledge
(c) exploitation of grace periods on tiering up
(d) auctions being re-auctioned from people bidding, winning, and not paying up

Summary:

1. Being a land baron is profitable only if you can recoup your land tier fees and purchase price.
   
2. Large land holders in groups pay as little as 1/6 as much as a 512 m^2 holders do.
   
3. This makes the reselling land profitable for large land holders and prevents small owners forming a collective to do the same thing.
   
4. People who own small pieces of land subsidize in real US$ the cost of owning large pieces of land.
   
5. Thus our US$ subsidize the system which makes land barons profitable.
   

Notes:

1. Regressive land-tier fees were created to reward large developers of content and to encourage upgrade not to enable profitable land baroning.
   
2. Groups were created to encourage collaboration not to enable profitable land baroning.
   

Solutions:

1. Flatten land-tier fees.
   
2. Add a limit to the amount of land that receives a 10% bonus that one person can contribute to a group (say 2048 m^2).
   
3. Add a progressive tax on markups charged by groups or individuals who turn over a large amount of land in a short period of time.
   

~Ulrika~

I have to say I enjoy your enthusiastic and clear way of putting things, Ulrika

Unfortunately I have nothing useful to add to this thread because I have a very little head for figures ...

Onnestly, ll make it's money on land fees. The only way lindon labs could 'make it fair' would be to charge one set rate. And that wouldn't be in our favor, because it would effect every one negatively. I pay 45 a month in land. If they went to generic pricing that would probable cost me 200. People who own a hole sim pay a massive amount of money per month. I haven't herd of any one of them making back their monthly investment into sl.

Now that you relies there is a saving if you buy land in bulk, and pay the land tax in bulk. Perhaps you would be interested in working together. If 4 people who pay 45 a month got to gather. They could cover the monthly cost for a hole sim. And each one of them would have 1/4 of a sim to play with.

Is a hole sim like, the club that buys a sim, doesn't make enough dwell, so they watch their money get sucked into the vacuum of land tier fees? Bwahahaha

It could be much more than that. If 141 owners of 512 m^2 pooled their US$ ahead of time outside of SL and put it into a single user, they would pay $195 instead of $705 per month. This is a savings of US$510 per month or L$127,500 per month!

This is just how stilted the tier system is and is one of the main contributors to the land-baron problem.

~Ulrika~

Do that, and you just killed the Living City project. I'm the only one supporting it, and if you limit it, it's dead as the other people contributing can't donate land.

I misspoke in that bullet. I meant that we would limit how much land donated to a group receives a 10% bonus. For instance, you could donate 32,000 m^2 but only the first 2048 m^2 receives the 10% bonus.

Sorry.

~Ulrika~

Actually in order for each of these 141 people to be able to have the ability to own land seperately I believe they need the 9.95 per month premium account. This plan includes the 512 sq meters. You are using a $5 payment in your equation to come up with $705. The $5 doesn't kick in until you go up to 1024 M^2.

*edit*

Or are you talking about an extra 512 M^2 , extra $5, to put into a group beyond what is included in the premium account? Sorry its been a long day hehe.

Your right, but it's allot easer to collect from 3 people then it is to collect from 124 people.

I have to disagree with both of those. As mentioned in another post, each land owner incurs the same overhead cost to the Lindens for administrative purposes whether they own 512 or 65,536. Many goods cost less in bulk.

Also, there should not be a limit to the amount of land one person can contribute to a group. Groups are used for many things, and some contributors cannot afford to contribute large amounts of land. If I have the RL means to support a $195/mo. tier, while other group contributors cannot, should we give up our project so that we can feel better knowing we've constructed a road block for a few land barons?

I like it! Since no progress can be made on solving the BIG capitalistic evils of the current system (i.e. treating land like a rare collector's item rather than the commodity it is) let's focus on a smaller, more confrontable issue.

And to make a case for it we'll come up with a hypothetical population. Let's have a huge group that is so amazingly well organized that it has 141 active members, yet the members somehow have been talked into spending the largest amount of money possible in the most inefficient way possible.

Realistically, any group that size would have at the most 3 or 4 major landholders, and many of the rest would be on free accounts or own their own small plots elsewhere. If we were to change the discount system like this, you might take out a few of those nasty land barons, but you'd end up hurting a lot more people who make content and effectively subsidize the second lives of a LOT of free-accounters.

Sweet Jesus! That makes it even worse. Ha ha. Thanks! I'll redo it with the $10.

Did you know that someone who is tiered up to support a full sim in a group can hold over 72,000 m^2 of land for $205 per month? Compare that to 141 individuals not in a group who hold single 512 m^2 plots (about 72,000 m^2) for $10 per month. Their total comes to $1410! The difference is 688%! That is, because of regressive land-tier prices, the top land owners pay about 1/7 what the small land owner does. While this is a great reward for those who enjoy owning large parcels it is a massive subsidy to those who want to buy and sell land. Including Anshe's developer award the cost drops down to 1/10 of our relative cost!

Good lord.

Kendra, that means that if 141 people in the bottom tier pooled their RL US$ outside of SL first to purchase 72,000 m^2, it would save them US$1205 per month or L$300,000 per month!!

I think I'm just now beginning to realize the magnitude of this problem.

~Ulrika~

If I though I could collect rent. I'd set up a private sim right now. But who's going to trust me with their rent.

LL's reasoning for PROGRESSIVE land tiers is to encourage a larger average billing per land owner and to incite a larger overall m2 of land owned. As individual consumers of a product we present about the same amount of customer support time regardless of whether we own 512m2 or 65,000m2. The difference is perhaps the bandwidth and server resources which IMO are overpriced anyway. As consumers we are faced with similar instances daily. You can go buy a candy bar at a convenience store for $1 - go to the grocery store and buy a 5 pack for $3 - run to Costco and buy 500 for $90 - locate the distributor and buy a containor for god knows how cheap. The same opportunites exist for everyone.

The notion of taxing players who sell alot of land seems so anti capitalist it makes my head hurt. Why not apply the same type of tax to people who sell merchandise inworld, everyone who sells over a certain price or over a certain daily amount pays a tax. The money can then be redistributed equally among the makers of that same category of item.

I find it kind of amusing how you and I can look at the same system and see it in such totally different perpective. I can maybe see it your way if I looked at it in a mirror and stood on my head.

re·gres·sive : decreasing in rate as the base increases <a regressive tax>

As the base (amount of land) increases, the rate (cost per land) decreases.

It's by definition regressive.

~Ulrika~

Unforchently I can't buy my years worth of ll candy bars, and use them slowly over a year. :\

I've played around with buying and selling land and all i can say is this topic is blown way out of proportion. It is very hard to make a hefty profit and most land barons really are not cleaning up like many of you think. If you think its that easy, get out your credit card, buy land, and start selling it. It really is a few bucks here and there.

Everyojne complains if a land baron makes a few bucks but I am yet to read a thread started by someone who is mad because a land baron didnt even break even on a parcel. It happens more often than most people choose to believe.

I think it's unethical capitalism and shouldn't be allowed, thus its alleged profitability is moot.

It's not right that we have to spend our hard-earned RL US$ to subsidize a land baron's massive holdings so they can turn around and sell us something for a mark up without actually providing a service. If they want to be land barons they can do it without our RL US$ helping them.

Let's flatten the land tiers or progressively tax large land sales in given period of time.

What are your thoughts?

~Ulrika~

I would guess it's that hole part about having to out bid the person who want to really buy the land.

SL could probable give away the land if they really wanted to. Perhaps with a one year agreement. LL kind of has a conflict of interest. It doesn't cost them a thing to bid on their own land. Not that they do it, just saying it is possible. Even if it isn't plausible.

**sigh**
By definition you are correct.
My bad...I edited my original post so progressive wasn't so large.

I still disagree though!

In a free market, it is often the case that bulk purchasers receive discounts. This is not different.

There is no exploitation occuring. It is simply an example of money making more money. Thats how it works and IMO there is nothing wrong with it.

-AP