Price Increase for Islands...Poor Timing?

I think the people who are claiming that existing island owners have 'lost nothing' are missing a very basic point here. People are getting hung up on the $1675 vs $1000 value of the 'brand new' sim. No, that's not where existing owners have lost money.

I never figured my islands were worth their existing price. I know that, just like a car, it loses a huge chunk of value as soon as I took it off the lot.

Try to understand this bit of basic math, however. If a used, second hand sim was worth approximately $1000 yesterday, and it is now only worth approximately $500 today, then has the value of existing private islands gone up, or has it gone down?

Yeah that's right. It's gone down.

No, not by $675. We're not comparing the brand-new prices. But the resale value has dropped, and it has dropped significantly.

And while the lower purchase-price might make it attractive to buy more islands (3 for the price of 2?) the sudden radical policy changes will make the cautious business people more hesitant. Others have already pointed out the conspicuous references or lack thereof to Q3. Maybe tier goes up across the board? Maybe it goes down? Maybe they drop the price again? Maybe they raise it again? Maybe they do some other boneheaded move that nobody can predict, that rattles the economy even more.

Personally, I don't know if I'm angry or just concerned. I'm here for the long haul, but one of the factors in my island purchases has been knowing that should I sell them, I could get around $1000 back. Now I have to reconsider both current situations, and future expansions.

So back to my point. The value of our existing islands has gone down. Twist it or play with the semantics all you want but at the end of the day, the resale value is significantly lower than it was yesterday, and not due to market forces, but due to a stroke of the pen by the game gods.

-Atashi

p.s. maybe the q3 surprise will be, they change policy so private islands can no longer be sold or transfered. What'll that do to the resale value, do you think?

I've lost value on the investment, not on the deal. Land gets resold around here, it's not a commodity that depreciates with age like a computer.



My tier pays for that.



The fact that LL allows resale is part of the economy here. Land and tier keep this place afloat. If LL want to sell land as a service only then they should be the only landlords here.

Imagine that there is only one home builder in the world, and that all homes cost $200,000. Some bought long ago, some are paid for, some just being built etc.

Now imagine that builder drops the price of homes to $100,000.

Sure, if nobody ever planned on selling there would be less of an issue, but either way the value of what you have purchased has just dropped and at some point it means a loss of some kind.

This all feels like the housing market in the US currently.

Its not an investment, its a service charge that allows you to use and transfer that service. My payments to my cell phone company help keep it afloat too - I do not have an investment with them.

And everyone who had an island on order should immediately been switched to the $1000 plan .. I mean thats just common sense.

And everyone who had an island on order should immediately been switched to the $1000 plan .. I mean thats just common sense.

Its not an investment, its a service charge that allows you to use and transfer that service. My payments to my cell phone company help keep it afloat too - I do not have an investment with them.

Those Island buyers were willing to show faith....

…awaits rest of story, now i want to know who this faith is and what island owners want to show her?

this ignores the fact that LL has actively encouraged people seeing Land as an investment in Second Life.

They have raised the prices on islands twice from 995 to 1295 to 1695

They have facilitated covenant land, etc.


Still .. everyone knew the prices would have to come down eventually on private islands .. this is just very sudden.

And everyone who had an island on order should immediately been switched to the $1000 plan .. I mean thats just common sense.

Land here is sold as being able to be resold. It's a huge point of the whole economy here, you're constantly missing this point. When Philip Rosedale was asked about this on channel 4 news he said people absolutely own the land and that proof of that was their ability to resell.

Now we can get into the semantics of it not being true ownership at all, but the point is, it's not sold as a service, that's what your tier charge is.

Ergo with a land market that fluctuates then it is very much an investment and knowing that should the time come you can resell, then saying it's merely a service with no investment value is absolute balderdash.

The only true investment in SL™ is yourself, your time, your effort, your imagination. The only people who truly benefit from that investment is LL™

I am not missing any point - yes you have been told it is land, that you can resell it but you show me the contract that says you are an investor - there is none, there is only terms of service. Your tier charge is the ongoing charge for the service.

Comparing the purchase of a private island with having a service contract with a telephone company is a flawed argument. The phone companies do not actively facilitate, let alone encourage, the resale of their service contracts. Linden Lab does encourage and now has a system in place to facilitate the transfer of islands from person to person.

Whether private islands are 'real' or 'tangible' is less of a factor, the bottom line is that there is (or was) a resale value / ongoing value to them, they were/are an asset to whomever held them. I will agree they are not an asset that appreciates in value, they are not an investment nor are they real estate. More like a depreciating asset, such as a vehicle or other equipment.

If you went and bought a car intending to use it for a year or two, and knowing you could sell it used and recover 2/3 of your initial purchase price, you'd be unhappy if the car company later announced that all new cars would be sold at 2/3 of what you paid for it. Not only would you be unhappy for having paid the higher rate, but now the resale value of your care is substantially less - noone will by your used car for what you thought it was worth, when they can buy a new one for the same price. Although the car represents high ongoing recurring expenses - petrol, insurance, maintenance, et cetera, these factors are irrelevant - new and old cars are both going to have to pay for these things. The bottom line is the value of your asset has been diminished.

I see people complaining that they've "lost" $675 and I've seen people arguing that there is no loss. I think both sides are wrong. Regardless of how either 'side' wants to spin it, the fact is that the value of an asset that a number of people held, has gone down significantly. Sucks if it affects you, doesn't suck if it doesn't affect you.

I feel that when the dust settles, the biggest impact will still be in terms of confidence in LL. Between the ongoing stability issues, the way most of them have their eyes closed and fingers in their ears when it comes to listening to their customers, and sudden large changes in policy and pricing, SL (imho) becomes less and less attractive as a place to spend money or a place to try and make money.

-Atashi

The TOS is the contract, investments are made by different people in different ways. If LL announced tomorrow that the whole philosophy of the economy was changing and that the L$ no longer had a financial value with the US dollar then you'd see a lot of "investors" complaining.

I was going with that due to a previous poster making the comparison.

My point is only that most people have not lost the original $1695 they paid. It has been repaid at the the point they broke even. What they have lost is the ability to realise as much profit as yesterday.

Now it is very late for me and I have to sleep, I shall leave the discussion at this point. Be well all.

Comparing the purchase of a private island with having a service contract with a telephone company is a flawed argument. The phone companies do not actively facilitate, let alone encourage, the resale of their service contracts. Linden Lab does encourage and now has a system in place to facilitate the transfer of islands from person to person.

Whether private islands are 'real' or 'tangible' is less of a factor, the bottom line is that there is (or was) a resale value / ongoing value to them, they were/are an asset to whomever held them. I will agree they are not an asset that appreciates in value, they are not an investment nor are they real estate. More like a depreciating asset, such as a vehicle or other equipment.

If you went and bought a car intending to use it for a year or two, and knowing you could sell it used and recover 2/3 of your initial purchase price, you'd be unhappy if the car company later announced that all new cars would be sold at 2/3 of what you paid for it. Not only would you be unhappy for having paid the higher rate, but now the resale value of your care is substantially less - noone will by your used car for what you thought it was worth, when they can buy a new one for the same price. Although the car represents high ongoing recurring expenses - petrol, insurance, maintenance, et cetera, these factors are irrelevant - new and old cars are both going to have to pay for these things. The bottom line is the value of your asset has been diminished.

I see people complaining that they've "lost" $675 and I've seen people arguing that there is no loss. I think both sides are wrong. Regardless of how either 'side' wants to spin it, the fact is that the value of an asset that a number of people held, has gone down significantly. Sucks if it affects you, doesn't suck if it doesn't affect you.

I feel that when the dust settles, the biggest impact will still be in terms of confidence in LL. Between the ongoing stability issues, the way most of them have their eyes closed and fingers in their ears when it comes to listening to their customers, and sudden large changes in policy and pricing, SL (imho) becomes less and less attractive as a place to spend money or a place to try and make money.

-Atashi

Thanks to all of those that have commented. As I said in the post, of course this will raise questions and we will answer those in a further post, probably today. We just felt it important that with the new Land Store on the way soon, we should give as much advanced notice as we could.

In addition we will add an FAQ to the Knowledge Base shortly.

A few points in response to the comments on this post..

As Gwyneth in post 136 rightly points out, technology and service costs vary over time and we as a business have to respond to that in sensible ways. In addition, we have to continually assess our business model and make changes where we need to. By and large we have worked hard to keep prices static for long periods, and when we have had cause to increase prices in the past, we allowed grandfathered monthly fees to continue because we value the time and energy those people had put in. Nearly 18 months on and that grandfathered pricing is still in place for many island owners.

This was the right time to reduce the setup price of an island. As any business would, we will review the effects of these changes over the next period and make adjustments or leave them unchanged according to how it goes. If we are able to make savings, then we feel that passing those on to our customers is a good thing.

For those that have purchased an island recently, we will of course be providing some options and I will explain how that will work in my next blog post.

Some pretty good points throughout this thread. I do think landowners think of themselves as investing in SL when they buy, but to LL, selling land is probably much the same as WalMart selling bags of dogfood. (Granted, there are some landbuyers who back up the truck to the loading dock and take pallets full of the stuff. Maybe WalMart hands them a gimme-hat; LL throws a Concierge Party.)

I also agree that folks are deceived a bit by the "land" analogy. It does kinda *feel* like real estate. I mean, you can walk around on it, dig it up, build stuff on it, etc. But there's a potentially infinite supply of it. And we know damned well that the prices are never going to skyrocket--it would be disastrous for LL if they did. Once in a while, LL raises the floor, either through supply management or unintentionally through glitches in the supply chain, but as a market, it's just *nothing* like RL real estate. Being deceived by the false similarities is the fault of both the buyer and seller, I think.

I'm again drawn (as in another thread) to the "SL land as pork bellies" analogy. They're a necessary expense if one makes bacon. And it can be profitable and exciting to speculate on them--or you can lose your shirt. But as an investment? Dead pigs, really. Best not to have more on inventory than the amount for which one has immediate plans.