Discussion Thread - Details on the Q2 2008 Island Price Change

YOU SHUTUP! THEY'RE TRYING TO HAVE A SERIOUS DISCUSSION HERE!

For all those who say that virtual land is not to be considered an investment and that LL does not market it as such, check the economic statistics page. There is a blurb on there that says: PMLF (Positive Monthly Linden Flow) looks at the flow of Linden™ dollars into a unique user's account BEFORE Linden Lab Charges are applied to the account. These numbers EXCLUDE payments or receipts related to the sale or acquisition of land (since theoretically these represent investments and not business receipts).

So there you go. Linden Lab is referring *on this very website* to money spent on islands as investments.

Well they would wouldn't they. Do you want some cheap virtual gold too?

Snowflake, I consider my land an investment. I am, however, quite cognizant of the risks that go with it! It doesn't mean that I am entitled to get back what I put in. It doesn't mean that I am entitled to earn a profit on its sale. And I am well aware that other forces will cause LL to force the price to drop. People are seemingly disconnected from the fact that their investment actually has a risk of devaluation.

That's a fine and understandable point of view. I simply added that information because there seem to be some people who believe that no one has a right to be unhappy because virtual land was not supposed to be an investment. So I pointed out where LL refers to it as such.

As far as my own investment I covered myself at the beginning by factoring LL's instability into the equation. I am still sitting pretty from a business perspective, but that does not mean I have to be happy about being treated in a cavalier fashion by the people who pull the strings at LL.

The kids are the ones in these forums arguing a point, which if adhered to, could ultimately result in not just a loss of their $675, but the ultimate demise of SL and the entirety of their SL investments.

Listen, what good will it do to decrease the price gradually over a 6 month, 1 year, or two year period when immediately over the horizon there are a gang of competitors ready to whip into the market offering a similar product for a fraction of the price LL is charging. LL could do this when they were a monopoly, but guess what? That is rapidly becoming no longer the case and LL is hearing footsteps!

I got news for you, and please feel free to copy and paste this unto a little refrigerator magnet thingy and slap it right at eye level on your refrigerator freezer door. You can bank on continued additional sim prices decreases for some time. No one knows how drastic those decreases will be. It will all depend on what the market is, or become. A year from today the going price for a sim, as dictated by the market, may well be $500 per. Two years from now they could well be $250 per. And in the not too distant future they may be going for $19.95 per.

The point is that no one knows what the future will bring when it comes to the advancing state of technology and the competition therein. But most of all don't lose sight of this very important point ...

When making these changes, LL is not only protecting their investment, they are protecting your investment as well. It is not, or at least should not be, an us against them type of relationship. We, all of us in this wonderful world called SL, are in this together. We will succeed and fail together.

The sooner many of "ye of little faith" understand this concept, the better off we will all be.

SL land is a commodity, it has a value regardless whether you can feel the ground beneath you. It's all dictated by supply and demand and therefore attracts prices per unit sq/m.....we saw how Mainland plots were reaching 30 to 40 L per sq/m when supply was limited, we also saw it drop to about 5/6 L per sq/m when LL dumped the 2 East continents onto the grid. On the money markets or futures market or buying unit linked savings plans...., you're not really buying anything tangible that you can place in your RL home.....you trading on prices trying to make a short term or mid-term or long term profit.
If you flip land on mainland, you try to make a short term profit on the price differentials on any given day.....you can also make a profit on virtual land long term by holding onto it and renting it, sooner or later you have recouped your initial investment through monthly profits. .....you can also opt to recover your investment even faster by selling plots on the Sim plus make additional profits on the tiers charged to same clients.

......and Land can appreciate in a way. I have seen grandfathered Tier SIMs ($195 p/mth) being sold up to $2500 or more.....that's an appreciaton of it's original value in my books.

Rene, I'm not saying that it CANNOT appreciate, I am saying that you should not EXPECT it to appreciate, or even hold the same value.

And the sooner you and LL understand that no company has ever survived without proper customer service, the better we will all be in SL.

LL can join the ranks of the numerous companies with brilliant ideas that went bankrupt because of poor implementation... Or they can start behaving more professionally with their clients and ensure their long term success.

Making announcements that significantly impact the clients that spend the most money with you, without having any clue about crucial parts of the announcement demonstrate unprofessional management - in any type of industry - in any management course in any university! Perhaps one day you'll understand that. And, hopefully, LL will understand that before it's too late for them. I still hope they will, so I'll stick around some more to see.

Either way, this technology has a bright futur. The only question is whether or not LL will be part of it in the long run.

I agree with what you say.......IMO LL is falsely feeding into the illusion of Virtual Land ownership. There will be many losers. If they trying to sell land as a valid investment....they should also add a disclaimer at the end of it.

And what would that be? That speculation isn't guaranteed to return positive results?

The land is an investment - for people who put businesses on it, expecting to make money from the business and not the land. It is also an investment for those who just want their own space to enjoy SL, and who aren't in it to cash out. But as a commodity... if you don't know that all "investments" contain risk of loss, you shouldn't be investing.

i think linden lab should've used a smaller font on the blog announcement to help reduce the impact. it was irresponsible of jack to use a font of such a dramatic size

If LL charged tier inworld by L$ then there would be no need for anyone to be paying VAT on tier.

If LL sold islands inworld by L$, then there would be no need for anyone to be paying VAT on island purchases.

No as rule, you won't get the value of the sim by selling it...i.e original price paid versus selling price........but there are exceptions. Granfathered sims, premium land on the old Continent, Private sims high developed and are popular e.g Amsterdam SIM or if Lost Gardens of Apollo sim were to be sold.

Fact is virtual land is an investment, like a new work van is an investment, it does it's job, saves you money in the long term then you get a chunk of it back at the end towards the next vehicle.

Unlikely so many would be screaming at a drop like that. That's not even a month's tier. It's the 40% drop, it's the issue of Lindens apparently being surprised that existing estate owners weren't jumping with joy that are the big concerns.

Estate land (unlike mainland) is a more stable market, it's the lower risk investment. Prices are fixed. You don't expect to see a 40% drop overnight, those who don't expect to see a 40% drop over time are deluding themselves.

Mainland, the higher risk investment can go up or down. Long term it will definitely head down and anyone who doesn't realise that is also deluding themselves.

It's bad management to reduce asset values by 40% in one go. LL should have been more creative, the fact that they weren't does ultimately show that LL don't consider land to be an asset in terms of the land itself, but they really should be more clear about this in their literature.

If the New York van depreciated by 40% overnight nobody would consider it much of an investment, you wouldn't have much trade in value on a product like that.

I disagree, Ciaran. What was the relative price increase from VAT? 17.5% in the UK. 19% I think in Germany. As much as 25% in some European countries. A 275 USD price decrease is 16.4% of the initial purchase price. Like hell people wouldn't scream. We'd be hearing the exact same argument. "You just hurt my assets by 17% in one shot!!"

They can't win.

Well there lies the problem, probably a lot of people didn't think of it in that way, hence the outcry on many forums.....especially in the manner LL effected or manipulated the markets overnight.

I'm not one of those that was effected by the LL current policy, i made my money back on all my sims ages ago......but i still don't find LL's treatment correct.

I think restructuring the entire Tier sytem (lowering it) would have been a much better option, for one it would have stimulated growth in land ownerships as it brings more budgets into play. As a sim owner i could have passed on those redcutions onto all my residents whilst still maintaining my own margins.......everyone is a winner!

SL players from those countries who don't have high average earnings might have been able to afford buying (or even renting) small plots on Mainland or from Private estates.
........everyone is a winner

Lower tiers would encourage more people to participate in Land auctions too......more tiers for LL. more buyers for those smaller plots on mainland sims, more premiums for LL.......everyone is a winner!

Of course some people would have screamed Cristalle, but a lot less. I for one wouldn't have complained about a decrease of less than a month's tier. I wouldn't have been jumping with joy but I wouldn't have found it so insulting. However I fully expect prices to drop so maybe that's why I wouldn't have found it so objectionable, I just don't expect asset values to drop so quickly and I'm amazed that LL didn't seem to consider that people would find such a high drop objectionable.

You mean depreciated like you brought one then saw them on sale for 40% less in another dealer? Hmm does the van suddenly overnight get 40% slower or 40% less economical to run, or maybe 40% powerloss? Is it 40% less cargo space and 40% less useful for the task you brought it for, because if the primary reason you brought it wasn't to use it, you should have brought a block of gold buillion and put it in a safe somewhere instead.
In 5 years time lined up against the other used vans is it worth 40% more?

The Van is a means to perform your working duties (other than taxis, buses and other transportation services)....you do not generate income from the use of that work van directly.
If you're a plumber....you're selling plumbing sevices, the van running costs are reflected in your call out charges. If you are selling fresh vegetables out of the back of your van.....you are still selling only vegetables, although your pricing might reflect the costs of running said van.

You changed the way you measured the decrease. If you measure it in tier, it's not so bad is it? But when you put a number to it - 40%, 16% - it hurts a lot more. If you keep the goalpoasts in the same place, you realize that it's the same and hurts just about as much as VAT did. And that the same people would still be screaming just as loudly.

I'm referring to this:



You see if you're looking for a chunk of it back at the end towards the next vehicle, you don't buy one that depreciates 40% in value so quickly, indeed the vehicle wouldn't be on the market for long because it simply wouldn't be a good seller. If you want to run it into the ground and don't give a damn about having a chunk left at the end then fine, but you'd still be advised to buy a product that didn't depreciate in value that fast.



Quite obviously not, if it's asset value is dropping that quickly in 5 years time you'd struggle to sell it at all.