Older island tier fees increasing in November?

Saw this statement in an article on the Second Life Herald blog today:

http://www.secondlifeherald.com/slh/2007/10/ll-boots-dissid.html

"Tier fees for older islands are $195/month, increasing to $295/month in November."

Is there any truth to this? Anybody heard anything?

LL guaranteed that "grandfathered" island fees would stay at $195 until November.

In November the guarantee will come to and end. LL have not explicitly stated that they will increase the fee at that time, but it's widely believed.

This time last year LL announced that they would continue to grandfather at least through 2007, and that they would give 60 days notice of any price increase. I think some have put those two together and suspect that notice might be given in november for a price increase in 2008, which is a pretty reasonable supicion.

From Jack Linden in Concierge Chat just like 60 minutes ago:

We currently don't plan to increase tiers.

Well Jack is right and as we're more than sixty days away from the end of 2007, then they won't currently intend to increase tiers.

Of course when November hits, it could be a whole different kettle of fish

The Herald always likes to bash mentors/volunteers, those articles tend to less than trustworthy.

If LL were to stop the grandfathering the mention of a surcharge for voice for grandfathered sims on the Voice FAQ wouldn't really make a whole lot of sense, they'd already be at the price level to get it included.

They'll probably continue the grandfathering but makes extra perks such as voice an additional charge until over time everyone catches up.

I believe they are in data collection phase.

Considering that tier charges are a major 'lever' one has to have a cost benefit analysis before one pulls it. Even for the 'grandfathered' sims out there.

Pulling that lever would *certainly* have consequences.

I already have contingencies myself, if a few obvious moves are made (or not made). But let's see what happens.

* * * * *

There are of course, concerns for our service provider regarding some United States law regarding discriminatory pricing. I.e. charging different people different prices for the same product.

Yet when one considers that 'class 4' sims (or worse) were largely coincident with older pricing, I think they aren't in very much trouble regarding the law on this point - different pricing yes, but for noticeably different service.

* * * * *

And in regard to voice - now that the initial exploratory phase is over, I think they are getting real data on the usage of voice on the grid and the cost it incurs.

Honestly, I don't see it as a significant overhead when divided over 16,000 regions (20,000 regions in January?).

Let's say the originally proposed 100 USD/mo increase went through. I don't know exact numbers but let's say there were 3000 private islands upon which such a tier charge might be enacted.

That's 300,000 USD/month theoretically, or 3.6 million USD a year additional. Except of course, that's not happening. People would ditch their sims in droves and hundreds of 'old hardware' class 4's would rot unused in the face of the next server class (as one cannot keep buying class 5's forever - I'd bet that we are overdue for a new server class already).

Or the class 4's would have to be blown out at liquidation prices, putting our service provider in the ridiculously unique position of competing with a cheap-as-dirt competitor: itself.


So what's the answer?

Not to panic, not to spread false rumours, but have clear contingencies in mind should events A, B, or C happen. And act accordingly.

We are a democracy of dollars, not words - perhaps not entirely fair, but reflective enough of overall sentiment.

We have similar laws here in the UK. The increased fees came long before I was here but I have read the blogs and it was mentioned there that the price had nothing to do with the class of the island but was an economic decision. Indeed it suggested that some class 4's might be sold at the new rate.

Does anybody know if that actually happened?

Jack Linden had said this morning in the concierge group that NO they have no current plans for any tier changes at this time ...

We were all told, and I personally went to 2 lindens and asked them for clarification, that the 195$ is guaranteed until the end of 2007. So perhaps Jan 1, 2008 would be the raise.

Jack Linden is decent and I believe him at this time - but one never knows what is around the corner - nobody, none of us.

Our aggregate behaviour will determine the pricing - that's about the only thing that's sure, in the long run.

We can move forward two ways:

1) battened down and hiding in our bunkers in terror of it

2) with plans in place should prices go up, stay the same, or even go down

Yes, down.

Because in the face of long term competition in technology markets that's what happens - either prices go down, or quality of service goes waaaay up.

Incidentally, let me say something as a land baron for a moment - pricing going up supports land barony FAR more than prices falling.

Unless you are a major ISP, there is no market for being a 'web page baron' - simply because it's far too inexpensive a service.

I do believe that there will be an end to land barony someday. Everyone will be able to afford a lot more land than now, or fit into a more global, nationalised schema. Thus rendering metaversal land barony just as much an anachronism as real feudalism. or the manoral system.

A long way off, but inevitable.

Better watch ig Desmond, the AARP will be after you if you get their senior discounts taken away.

There is currently no upgrade option from class 4 to class 5. (Not officially, anyway- some lucky people have had it done.) If they did raise the class 4 price to the same rate they charge for class 5 you can bet people will be clamoring to upgrade their sims. That would be a bit of a problem, I reckon. Imagine the queue times.

(This is transcribed from my recording of yesterday's town hall)
I think the last part of that is really telling. For any normal company growth would be a positive thing, but for LL it seems to simply mean that it becomes more and more expensive for them to run the grid since the majority of residents aren't actually paying for what they're using.

The cost of actually having a server sit in a colocation may be going down (class 5 were chosen because they consumed less electricity and in the future they may cram more than 4 sims onto one server) and the cost per Gb of transfer may be going down as well, but more residents means a continuing heavy investment into backend servers (asset, presence, logon, etc) and an ever increasing bandwidth usage.

Unless LL can entice more people to pay them tier directly (rental sims just don't earn them nearly as much as mainland) I don't see any way for them to lower prices.

If I recall correctly, what happened was that the price increase was initially announced. Then there was a lot of protest on the grounds that people who had been saving up for islands had woken up one morning to suddenly find that the increased recurring price would make the purchase unsustainable for them. So, LL agreed to sell islands at the cheaper price for something like a week. During that time, they sold all their remaining class 4's, and any extra islands that were bought during that week would indeed be class 5 sims at the grandfathered price.

Zee's statement is quite interesting and very revealing. Certainly there is more to the story than could be explained in a town hall.


For instance, there are a number of ways not to run out of cash, other than simply raising prices. A price increase may have exactly the opposite effect long term.

But my personal gut feel is that yes, sims at 195/mo weren't adding much financially, once you fold in engineering development costs.

That's not to say they don't add value. The less expensive private sims *did* have an incredibly prominent role in the growth of the grid, adding soft benefits such as versatility and good press that money simply cannot buy. They still do.

In fact, we wouldn't be *here* if they weren't *there* to set the stage, back in the day when a few hundred private regions were a big deal.

* * * * *

With regard to pricing laws, I tend to agree that there isn't *that* much concern - much like senior discounts for a bowl of soup.

In fact, if there *was* an issue - what of the charter members with their 4096m of tier for life for a one time charge? That would be called into question first, I think.

But yes, at the end of the day, there is such a thing as inappropriately discriminatory pricing. There are limits to it.

Well, I'm not so sure about that, people get charged different prices for the same product all the time. In particular if you rent an apartment in a complex early on, you may get a better (or worse) rate than people who came in later.

Now if you charge everyone who's female more than your male customers, you'll get in trouble. AFAIK discrimination is only an issue for a well defined set of classes, gender, race, religion, age, disabilities, maybe a couple more. Something like the first 100 people in line isn't a problem I don't believe.