Island Cost Changes and non business people

Anyone doing a reasonable amount of research and investment analysis would have seen that buying islands from LL at almost $1700 and hoping they went up in value was a pipe dream. The OP, btw, didn't necessarily say that, but it's been implied in this thread that you should never sell at a loss. The OP also indicated that he wasn't using the island commercially, so there would have been no added value to the island to increase its price - no established customer base, no commercial build, name recognition, etc. There's no reason why someone wouldn't just buy a new island from LL. The OP would have had to sell for a loss no matter what he did, which makes the island a bad investment.

Further analysis would have shown that LL has a history of poor customer service, the grid is unstable, and it is generally accepted that investment in cutting edge technology is highly risky, which means it demands a much higher profit potential than you would ever get out of an island by merely speculating on increased land value. This was a bad investment from day one.



I wasn't implying that. I agree completely with you. I wish people would learn from their successes and mistakes in RL, too, instead of looking for someone else to blame. When I have failed at something in life (and trust me, it's common for me) I've tried to take some time to really think about what went wrong, how I could have handled things differently, and how I could have recognized the warning signs that something was wrong better. It's painful, because admitting that you screwed up hurts, but if you don't do it, you'll keep screwing up. Analyzing failure lets you move on to bigger and better failures, as opposed to repeating the same tired old failures.

selling at a loss isnt the issue, selling at more than 1/3 loss is.

i dont see myself selling anytime soon anyways i love the island. its just that that option was crushed.

Agreed, I wouldn't have expected more for my island even if I was selling it as a going concern. Estate prices had been pretty stable, unlike mainland which is a higher risk and can yield higher rewards short term, it can also provide higher losses.



Again agreed, people like Desmond Shang I'd imagine could in theory expect an increase in their investment because Desmond does such a wonderful job in creating a community. The vast majority of estates owners are not in that position and to expect positive returns at those prices is foolhardy. However this price cuts were extreme even for a blank canvas, that's what has pissed most of the complaining estate owners off. Most of them have indicated they didn't expect values of 1000-1200 for a second hand island to be viable forever, I think they're just shocked at the level of the cut, not that the cut happened.

You're also right about learning from mistakes, but in a new environment mistakes are often new mistakes. The next lot of estate owners now have a precedent to compare their investment against, long term this is probably good. Short term people are going to be angry.

Yes, I know. Unfortunately, this is why there's so much crap being passed off as clothes, furniture and everything else that's sold.

This is why there are so many failed businesses. Everyone thinks they're businessmen and venture into dealings with no clue on how to manage anything.

While it's set at a lower stage it's still the same thing as in rl. One difference being, in sl you're not held accountable for whatever wrong you do. Hence, people getting beat everyday.

Um, no. The only way it could ever be like that would be if it were limited. The "land" in SL is unlimited -- the only limit is LL's willingness to add more land, and given that their entire business model is based on land sales and land/island use fees, we can fully expect that land will be added more or less constantly. Hence it is completely unlike RL land, which is pretty much fixed in supply (leaving aside such marginal changes as land reclaimed from the sea). It's the reality that land supply in RL is fixed, combined with a growing population, that generally tends to lead to rising prices due to the scenario of demand growing against a fixed supply. In SL, supply is constantly streaming in, so there's a completely different supply/demand dynamic. LL gets to set the baseline pricing for land, but unless LL were to stop new land supply for a time, one can't expect that land prices will shoot up with all the new islands and mainland coming on line.

One thing a lot of people are learning the hard way is that the company that runs the platform they are investing in has no friggin' idea what they are doing.

To all those who say land in SL should not be treated like land, please explain to me why waterfront commands twice the price you can get for granite. Or why Desmond has a waiting list while other sims have to give rentals away to get customers.

In a lot of ways, SL land is like RL land.

Well, but you have to look at SL as a game, in some ways, I think, you really do. The money you spent for that island was the price of admission to having the kind of fun you want in SL. The fact that you don't all of that money back is kind of beside the point -- no other game gives you the opportunity to "cash out" even a portion of the money you have spent on the game if/when you decide to leave it. The fact that you can get 2/3 of that money back at some point (although that may also be hard, unless LL changes the way island sales work) is total gravy --not something you should have been expecting.

The main thing is all the money you are spending on tier, none of which you can get back at the end of the day.

Not in a "lot of ways", no. Like everything else, some plots of SL's virtual land are more desirable than others. Some clothes are more desirable than others, too, as are some scripts and so forth. The more desirable plots (because of view, reputation of landlord, etc.) will have a premium attached to their pricing, because not all plots are created equal -- that's kind of an obvious statement on its face, but it doesn't just apply to SL land, and it doesn't make anything that exists in SL more like anything that exists in RL. And in any case, the fact remains that for the main thrust of the discussion in this thread (which seems to have revolved around resale prices and the differences there between SL land and RL land), the situation is completely different between SL and RL. That doesn't mean that all plots in SL are equally desirable, but it does mean that (unlike in RL), waterfront property (for example) is unlimited as long as SL continues to churn out new mainland sims and new islands. So waterfront will always be more desirable, but because there will always be new supply of it entering the market, even though it may command a premium over other land, it's pretty unlikely that this premium will increase over time.

Umm because your boat works better when rezzed in the back yard and has somewhere to go as well unless it's one of thos silly islands with 4m of water to the sim edge

What I mean to say is, in SL, not all server space is created equal.

The analogies between SL land and RL land are far too complicated for a single attribute - in this case, attractiveness - to be the defining characteristic. Why do some jeans command twice the price of others? Why do some actors have agents beating down their doors while others would gladly work free just for the xposure?

What does waterfront commanding twice the price of landlocked land (in SL) have to do with the lack of title searches for SL land, something that's a necessity for RL land?

Jeepers. Title searches?

All I am saying is that anyone who says that if you buy SL land you are just buying server space is simplifying things and is incorrect.

Raymond we are buying entertainment... some people are buying business space... but we can't lose our grip on what exactly it is our money is going toward.

Yes, and I can be very discriminatory as to what I spend my entertainment dollar on. It was always waterfront versus crap land when I was investing money in SL. That time has come and gone... Freezing and crashing and being told not to buy anything by LL has stopped being entertaining.

My Parner and I hade a PI for several years. We enjoyed it as both home and business. We had great fun creating our own version of Venice. And too many good times with the family to count.

So why did we sell it last year?

Because LL double billed us the monthly fees 6 months running incurring all kinds of hassells and over the limit fees etc. Pretty well screwing credit ratings and making our lives miserable. All for the 3 hoour monthly argument that yes they had double billed us and oh we are sorry we will credit you (of course that didnt help the over the limit fees).

Long story short we sold it. When owning it became more of a nightmare than a pleasure it was time. We bought half a sim mainland and are happy as clams.

We got lucky it was a grandfathered sim and we got back exactly what we paid for it. But realistically... to be out from under that nightmare was priceless. We didn't expect to recoup our investment that we did was dumb luck.

You can make withdrawals from Entropia Universe.

If we were all buying the same jeans from the same supplier the only general pricing difference would be if we were buying in bulk or not. If all we were buying was server space, then pricing would be pretty standard all across the grid.

Whereas you're correct in saying that the analogies between SL land and RL land being far too complicated for a single attribute, it's also the same for analogies between server and hosting space analogies being far too complicated for a single attribute. The truth lies somewhere in the middle of the various analogies.

... and then the price will go up accordingly And it'll still be an inferior product.

Ah, well, no disagreement there.

I took your previous post as saying that SL land is [exactly] like RL land, with which I disagree. But I certainly agree that there are some similarities or good analogies between SL and RL land.

That's how life goes. Just like anything such as DVD players, computers, etc. Prices always drop eventually. I want an island to keep as my own, but until tier cost drop accross the board, I'll settle with my 1/2 sim mainland.

Ciaran

Thank you for all your posts, they make a lot of sense. The key message seems to be not to assume anything about the pricing structure in SL for virtual land, over any period of time. Anything could happen, including:

- private sims costing $50, but tier raising to $400 per month
- private sims going up to $4000, with tier dropping to £200 per month
- grand fathered pricing staying the same or being brought into line with "current" tiers
- mainland being sold in auction at a reserve price of $1, or $2000
- mainland tier costs going up by 100 per cent or down by 50 per cent
- any combination of the above

Another key message is to THINK before you buy, and to not buy what you cannot afford to lose. LL will always seek to operate a model that ensures fastest cost recovery for their investors and quickest turn-around of profit, and the market-place and use of SL is constantly evolving, and they have all the data on which to make their decisions.

The one thing I am surprised about is the announcement to provide more mainland, right now. Mainland incurs costs to SL in managing customer service, whereas private island owners effectively "work" for LL by generating $300 per month per sim. If private island owners start earning more than $1000 per sim on average, that is extra cash ($700) that could easily be going to LL, so tier costs will rise if they see this happening.

One good thing is that the ONLY reason why LL would think about dropping tier for private islands is if/when people start abandoning them. For this reason, I would be reasonably confident that the "purchase price" of a sim will never go lower than the monthly maintenance cost. But I would not be sure about this, because even if the private island market reaches saturation (no sign of this yet), abandoned sims can be turned around into mainland pretty quickly.

I personally have a hunch that the $1000 sim price move is in response to people trading sims for about that same price - but now buyers will go straight to LL (another $1000 to LL and more tier for LL) and sellers will grimly try and hold out for another month or two (more tier for LL). I would foresee that sim prices are yet to drop further before private region abandonment becomes a new feature in SL.

The sim "purchase price" is tiny in hardware terms, perhaps as low as $100 per sim - and now that the process is automated, there is even less cost. Does anyone know how many sims per chip there are. and how many chips per rack, and how many racks per tower, and how much a tower costs to buy and maintain? That would be very interesting to know!

The sad thing is that the performance of SL seems to be in decline (it is probably getting better, but the demands on the system out-strip the gains).

WORD OF WARNING
People who are minded to buy sims are probably those *few* that have very good internet connections, PCs and super graphic cards. They run the very serious risk of being lulled into thinking that SL is working fine for everyone. If you are thinking of buying a sim, I would strongly suggest you first buy an average powered PC, with a $150 graphics card and throttle down your connection and then see what other people (95 per cent) are experiencing, and decide for yourself if the experience is enjoyable or sustainable.

~Snowman~

They will get around this issue by not offering any customer service.