Discussion Thread - Details on the Q2 2008 Island Price Change

Alternative methods of reducing fees were available, LL chose to piss off a large number of their existing users and go this route. Whichever route they went they'd have pissed someone off but the route they took was to hit estate owners, possibly because estate owners are public enemy number one in the eyes of many.

actually if they had figured out the amount of money they would save and used it to REDUCE TIER PRICES ..

everyone would have been happy.

And they still probably would have gotten more island sales to boot.

It's like when the sharemarket suddenly crashes 40%, wouldn't it be better to say to all share holders, "don't panic, you're just going to lose 10% per day on your shares over the next few days.

Sorry for writing again the same stuff, here but it seems nobody answers my question.
I will post just 1 more time before assuming they understand my point.

-----------------------------------------------------------------------------------
I have 2 questions for the nay-sayers here (who says "dropping price is fine, you should have expected it, you didn't expect that then its your fault!".

1. Do you understand that most of us here agrees and expected, and accept the price drops?

2. Do you understand that the point people (including me) make against your comments are about Linden's way of announcement (only 1 week before the changes take effect, which is "abnormal", and how they treated the customers? (not by dropping the price, its circular!!)

If you don't understand either of it, could you please explain to us why because I just don't get it!
-----------------------------------------------------------------------------------

Please don't try to unjustify the complaints that many estate owners here are making without answering these questions first.

The stock market crashed for a bunch of reasons that created that end result. Meanwhile, people "in charge" (governments, etc.) tried to figure out ways to help people out.

In the case of what happened in SL this week, the crash was a voluntary decision made by those "persons in charge" who, clearly, only thought of themselves and couldn't care less about the impact on you and me. They couldn't even prepare an announcement to explain it properly until a few days later. It was well planned, hey?

THAT is the point of this discussion: Mismanagement. Not the fact that it went down by 40%.

I'll answer question 2. LL is a business and the first goal of a business is to make money, say they gave everyone 3 months notice that islands would drop from $1675 to $1000, how many islands do you think would be bought in that time, take into effect the loss of income from tiers and we're talking a massive income loss for LL. Also how many people would have complained that they also had just bought a island before that 3 month advance announcement and say "hey I wouldn't have bought if I knew, I would have waited 3 months" it's a catch 22 for LL.

So although its not pleasant to find that islands go down in price just after you bought one, someone at sometime is going to feel badly done too, but the whole point is, they're not badly done to, whenever they bought an island for whatever it cost them, it was worth that purchase price at that time, Nowhere does it say that the cost at which they bought at, was it worth that as an investment, nor does it say anywhere that your investment is guarantee to increase.

Also what people are doing is adding an emotional value to their financial investment, and yes sadly it hurts, but its got nothing to do with economics.

And really what LL should have done is give no notice at all, they could have posted a blog saying "From tomorrow all island prices drop…blah, blah, blah… however, all those people with islands on order or who have just had them delivered going back to 'say 2 weeks' will paid the new rate".

That's your personal opinion which might be valid. However, that is not how LL sells and promotes SL. Even their announcement about the price drops referred to in-world economic statistics and even supply/demand for land. Therefore, if you are right, LL is guilty of false and misleading advertising.

Either way, they could have shown a bit of concern for their clients and unfold this announcement in a more professional fashion. Books on managing customer relationships are widely available and inexpensive It could be a valuable 20$ investment for them!

Good point! But, see... They didn't even have a clue about that when they posted!! They made the announcement without having a clue what they were gonna do. Then he posted later to say that he would eventually clarify it "probably today" - and ended up clarifying it much later. Where I work, that is called a mismanaged announcement. In fact, I'd get fired for handling our clients like that because "we" value long-term clients.

The original blog actually said:

"Orders placed before the launch will be at the current USD$1675 pricing. "

I mean come on, how was that going to go down well.

Right... And then what did he say after that in the comments? He would bring clarifications... And then? People can cancel or not or whatever... I mean, "come on"... You think this is an exemple of a professional way of making such a serious announcement?

The fact is that a lot of long-time clients (those in fact who have put the most money in SL so far) "feel" shafted. "Perception" is key in public relations and they didn't manage to get those clients on board with the changes. That's called a failure - IF they care about long-term customer relationship. If they don't care, then... Live goes on anyways! But not caring about that kind of things is not advisable when competition is around the corner. And since I care about SL, I voice it.

Once again... Slash the price by 75% if you want... But hire somebody who knows how to make that kind of announcements, in order to maintain good relations with clients. Somebody who has attended at least the first level of Public Relations 101.

2 parts of marketing are:

Manage the Image

Manage the Message

LL managed to kill 2 birds with one stone and scew up both with the first blog announcement.

The 2nd blog announcement was nothing more than an attempt at damage control.

LL wasn't going to win no matter how much or how much notice they gave. It's VAT all over again.

This time they gave notice, and what happened. People scream.

If they gave no notice, people would still scream.

If they cut the price less, people would still scream.

If they increased the price, people would still scream.

Instead of seeing it as the opportunity to expand for less, they scream.

Instead of realizing that competition is coming and their "investment" was going to lose value anyway, they scream.

So LL may as well do what is in its best interest, so that the doors stay open, screaming be damned.

There is no pleasing everyone.

Say you are a driver with a load of passengers in the back of a flatbed truck. Do you drive carefully and make cautious moves as you journey together? Or do you whip around corners so fast that it causes your passengers to go flying out the back into a ditch?

The price reduction was way too drastic to be implemented all at once. It left a ton of people upside down in a ditch. I think they are allowed to complain a bit.

I am going to propose a better hypothetical way it could have been handled:

The land store will be closing for one month for a revamp on 4/30/08. From 4/30/08 until 6/01/08 no new orders will be taken, however, owner-to owner sales will still be able to occur through concierge level support during this time. When the land store opens again on 6/01/08 there will be several changes coming. The new Land Store will be automated, ensuring instant delivery as well as reducing the amount of manpower required to fulfill sim orders. Since this new method of fulfillment generates a large cost savings for Linden Lab, we have taken this opportunity to pass the savings on to our valued customers and reward our concierge level customers with a one-time special offer.

The new price of a sim will be $1250 and an openspace will be $315, and existing concierge level customers will be able to make a one-time purchase of a sim or a set of 4 openspaces for $1000, or one openspace sim for $250. This offer will be applicable only for existing concierge level customers as of 4/30/08.

Tweak the fine print and the offer as you like. This would have been a much better way to handle it IMO, and make existing customers feel as if they are being rewarded rather than devalued, and those who were concerned about the devaluation could sell their sims to others who want them quickly, during the time the land store was closed. They also may have gotten a bunch of people willing to jump on the concierge bandwagon because of the special offer.

Anyway, thats just my $L2.

When some of your long time best clients (people who have given you tons of money over the years) are screaming, normally a company takes some serious look at what they do. Business 101.

It may be that what you did is wrong. But it may simply be that you just didn't communicate it right. Either way, it's an opportunity for you to learn and adjust for the future.

But even better... There is also a theory used in sales training courses that states that an unhappy customer is, in fact, a great opportunity. If you find a way to properly communicate with him and turn his feeling around (sometimes, by doing things as simple as simply acknowledging his concerns), that customer usually becomes one of your most loyal customer. Sales 101.

But ignoring it, is a sure way to further loose customer loyalty.

Of course... Up to them to run their business the way they want! But as it stands now, even if their prices were dropped to 500$ and the competition was 1000$, I'd take a serious look at the competition! Loyalty & respect is a 2 way street

Very good example. And... If it turns out that you took that curve for whatever reason, and everybody went flying, you can send them a ladder to get back on board with perhaps a glass of fresh water. That kind of behavior that spells "caring"...

It has nothing to do with notice. It is the issue here, not the notice period. LL have pissed off a sizeable number of their existing customers in the search for new customers. If they'd wanted expansion they'd have offered existing customers a better price than new customers and that really wouldn't have been hard to do.



There is no pleasing everyone, you're quite correct, but you piss off some of the people who are the core backbone of your business model at your peril. This was a bad decision.

Come on Ciaran, many people were pissed simply because they had to pay VAT, and the notice issue was secondary. We have already had people in here complaining about notice.

Why should LL offer preferential treatment with regard to land pricing? They treat us all the same. The fact is that our "investment" IS going to lose value because competition is coming. And propping up the value just to satisfy a few while letting others run away with the growing customer base is wise? No.

Yes, it is about getting new people. Even if LL had made the cut less severe and offered a special break to existing customers to buy for 1k for a brief period of time, the people that cannot afford more would be pissed because the value of their investment would be going down. It doesn't matter, really, how much the price dropped.

People see red because they won't be close to getting back what they put in. Even if the number was 20%, we would see the same thing. It doesn't matter. If LL had done it incrementally (since this IS likely the first increment), we would get folks who see the bigger picture of activity and decide that LL is some evil monolith for devaluing their investment by x%.

There is no way for them to win. Look at Sean. He'd pay 2x the price because of this perceived insult, when he doesn't realize that the change was done to benefit him.

Do what you have to, LL, to keep the doors open.

Initially, and they could still get round the issue, but it was the lack of notice that they were guilty of. I was pissed right away at finding out about it before they'd told me.



Because it makes sense to look after your existing customers, and it's tier that is the issue long term. Do you really think that $1000 land is going to bring in droves of new customers? People simply don't pay that sort of money. It's still big money. LL just needed to be creative with the discounts and then they could have avoided this whole mess but it seems to have been a hastily arranged policy.

March 7th, change to the open spaces model, an increase in tier, get that. However much improved open spaces, how many complaints did you see about that? Of course open spaces are only available to existing estate owners, which is why offering existing estate owners a better deal than new estate owners would have worked on new estate pricing and once those new estate owners had their island, they benefit from the discounts too. Prices for islands would still have fell, but it would have appeared to be market led, perception counts for a lot.

As it is you have even big estate owners, some who have posted here or on the blog, pissed off about this.

April 9th and the open space model changed again, now however people who had purchased the new improved open spaces are starting to feel a little bit annoyed, as is anyone whose recently purchased an island. Then the people who'd purchased islands before had complaints.

So let's see what the effect of LL's policy is, a lot of people pissed off at what should have been a good and positive move to reflect the way the market is going cost wise, but its been so badly implemented that people have lost a bit of confidence in LL and all because they were not creative enough in passing on the discounts.

Seriously, a lot less people would have been complaining at a 10% decrease.

No they can't win, you're quite correct, but this sorry state of affairs has been an own goal.

If that includes fixing the Grid, I agree with you for once.

How can they expect anyone to plop down real money with the instability everyone is experiencing since the update?

Well that's another issue, at Jack's meeting the other day a prominent land owner asked:

"Why lower the price when the money raised for the set up cost could be used to make the grid stable"

and the reply was:

"well, grid stability isn't directly tied to revenues, but charging more than is fair so that we can spend more was an option, but didn't seem to tbe the right one to us"

*theoretical, opinion-neutral post*


I won't speculate in detail upon the precise mechanism, but say at some future date the Company had a surplus of servers.

Say, a couple thousand of them.

Such a thing might come about by the introduction of a serious competitor, or outpacing demand during a high season (winter) only to see demand fall, or perhaps the collapse of a few major land baronies.

What would land go for in this scenario?

It seems we are all quite subject to land being economically managed, tightly coupled to consumer demand which is not fully under anyone's control.

Right now, the model seems to be 'land printing' much in the same way that the LindeX is stabilised by '$L printing' of a sort.

Hence my deep concerns about the ultra-liquidity of the new Land Store, which may deliver land very, very quickly at wherever the current market rate is set.

It may not fully become a "land LindeX" in all ways, but I can see far more efficient land arbitrage on the near horizon.

And if the land market becomes that liquid that quickly... yes, I could see periods of contraction where there are idle servers ready to go. Idle racks of servers whose offline value is essentially zero - maybe even negative - compared to online servers making X tier per month.

What value of land, then?

Watching carefully. I still don't have a fully formed opinion on all this yet.

When you rent webhosting on the 2D web, do you pay for the server you are hosted on?

Or do you typically only pay a monthly rental type plan?