Actual Islands Lost so Far/Economic impact

Well, there is no point in dropping them until the next payment is due, and some may even want to ride out the next couple of months until the changes hit, so there's still a while until we can really judge the impact. Those having disappeared now are only the ones being converted (which doesn't count as a loss for *LL*), or dropped in sheer protest.

So is the sky falling now, how about now, maybe now...? K I am still confused. And this strange list that somebody obviously has far too much free time to dream up means what? That we are plunging into yet another drama filled end of the world, again. Didn't this just happen last year?

Excellent analysis, although I think the opportunity cost of the additional ~40 islands each day that are not now being bought is over estimated.

Thanks.

You cannot tell how many OS sims have been converted to full sims. The drop in sims may not reflect true abandonment. Remember, 4 OSs can be converted to one full sim. What is probably happening is more consolidation of OSs than abandonment.

I think the price of mainland is a key issue here. What this analysis does not take into account is the enormous amounts of money selling mainland generates for LL. This income stopped when mainland prices dropped so low they had to stop making new mainland. The low cost OS sims played a large part in pushing mainland prices down, and I believe played a large part in LL's big OS policy change.

I strongly believe the following:

Back when Nautilus (the original continent) and Corsica were being built, LL was creating and selling mainland sims as fast as they could make them. Something like 10 sims a day if I recall correctly. They were going for nearly $3000 USD each at auction. That is something like $30000 USD per day, plus they were getting tier on all that new land. Lots and lots of money was coming in, and they got used to it.

Then came the gambling ban, the VAT, and other issues that caused land prices to drop. It dropped so far, in fact, that they had to stop making mainland. This represented a HUGE drop in monthly cash flow.

As a short term fix, they came up with the idea of lowering the setup cost of full and open space sims, making the OS sims especially attractive. They knew this would generate a lot of interest and get some cash coming in. Who knows whether or not they knew what the long term consequences would be.

They also knew that creating an area like Bay City would get them some cash coming in. They also started recycling abandoned mainland, some of which had been laying dormant for years. Anything to generate cash was desperately needed.

Back to the present. The cash flow problem has been around for a long enough time now that drastic measures are called for. They hurriedly created the "new" Nautilus, but knew it would not be enough. They can't just startup creating new mainland like the good old days, prices are too low. Concurrency is stuck at around 75K, they know they need to expand the central server and asset server clusters and work on other infrastructure, but there is not enough cash to do it. Raising prices is about the only option left, and if the new OS sim tier won't cover it, then other tier fees are next.

It is either this or go belly up. Going belly up just isn't an option, there is too much good stuff overall to let it all go down the tubes.

This is not personal. LL does care about us, but they are better at creating things like Second Life than they are at handling money. But regardless of anything else you may have read, this is all about MONEY. If a few get trampled under their heavy feet while doing what they have to do to stay afloat then they will trample them.

I do get a sense they are guessing. I doubt they actually had financial specialists go over the numbers, and this is like a stab in the dark. "Let's go from $75 to $125 on OS sims and see what happens".

My personal opinion is the uproar will be so loud that they will come up with a compromise (which they have now done) to make everyone feel a little better about the whole thing. But unless someone who knows how to get a handle on the cash flow crisis steps in, and with RL economy faltering, the worst is certainly possible. I'm afraid all it will take is the bank cutting off their credit line.

can someone(s) confirm that the SL map really is shrinking for the first time?

You cannot trample your clients in search of a few bucks and not lose a whole lot more money down the line, and not that far down the line either. If LL is truly scrambling for money with the desperation you describe, then SL is already doomed because the fallout from this issue goes well beyond the residents who have lost their home or the landlords who lose them as tenants.

Just last night I listened to two dear friends talking about how the issue affects them. One had been on the verge of leaving SL when the appeal of an open space sim drew her back in. She is losing her sim because the friends she shared with are pulling out. None of these people are going back to the mainland; they are leaving SL entirely. The only remaining attraction for them -- enough affordable private land in which to enjoy themselves -- is now gone. Another friend (a resident of Caledon) is also facing a difficult choice; he does not log in often enough to warrant any increase. He loves SL, but he has a rich and demanding RL and the fleeting moments he spends here aren't enough of an anchor. Losing a place he had so much looked forward to owning has also just disheartened him.

All across the board I'm hearing from people who are not just being relocated, they are leaving. This issue has hit them that hard. And it has left me, who has no intention of leaving SL, extremely wary of future expansion. I'm a land hog, I'd love to own as much as I can afford. But if I do, then there will be no buffer if LL does this again, perhaps on mainland or private islands.

LL have broken trust with their customers, and the long-term results will be fewer, warier customers who buy less land, make fewer commitments and who are all that much closer to the door than anyone would have considered before.

How, pray tell, does that shore up LL? How does that help the bottom line?

Sure they stopped selling mainland sims but for every mainland sim they didn't sell they easily made up for it in OS sims. Sure, there have been no new mainland sims in months but we've been gaining hundreds of OS sims per week.

As for Nautilus and Bay City, don't forget they were sold for L$ and not real money so it's not entirely clear that LL makes anything at all out of the sims apart from tier.

99% sure I know who this is, Beebo - and if it's his very small holdings on just part of an openspace, tell him not to worry about a thing. Even at current policy status I won't be changing his rates for a long time (six months?) and even then: only modestly. Rates in Caledon proper - standard regions - won't be changing at all, unless something else comes down the pipe from Linden Research. Reason why is that while my rates aren't the highest, I make enough margin to eat some profit, and still not go 'negative' on his region until the 125 USD/month hits. And even then, I'm only about 10 USD below 'break even' for that region.

I've been terribly busy with all this and more; and feel derelict in my duties socially. Please say hi to everyone for me.

/me claps her hands over her mouth.

I should have been more discreet, but I'm relieved by your reassurance. Thank you.

Desmond for new LL CEO!

Even better I believe the man with the gun just shot himself in the foot....

Have you guys and gals seen Nautilus. Its like low income housing. The houses are so close to each other its unreal. And you get a whooping 400 some odd prim for the low price of $115,000 L or more. LOL

I'm sure there are some people who would like that dense urban feel. I suspect its not a really big fraction of the population. The popularity of the old openspaces and skyboxes for privacy tells me that. But I guess there is nothing wrong with trying something different and see how many people go for it.

I see Linden Labs as slowly stumbling towards having different products to satisfy different interests:

* Original Mainland - minimal planning/average density
* Full sim Islands - more player control and privacy
* Openspaces/Homesteads - Low density
* New Nautilus type areas - planned development/high density

A large virtual world like this is a new thing, so trying to figure out what people want, how much of it they want, and what they are willing to pay for it, is hard. The *next* virtual world to come along, will have the benefit of seeing what happens here, and if they are smart will make different products to match what people want.

I think one way in whicn LL could have indirectly supported those differing populations (not to mention reduce abuse reporting loads) was set particular continents as PG or Mature, rather than individuals sims which create a patchwork of local preferences.

This is one way to guide the development of an area in a consistent direction that suits the needs of that resident base. It would significantly reduce the conflict that now occurs when two very different customers end up on a sim border staring into each others backyards and frowning.

With this increase people are walking away from SL by owning a land . This wasn't the first purpose of SL and i guess the new CEO didn't get that definition. We are here to creat a virtual world not to have worked so hard to build what we have and get an increase because someone know it is saling very well and it is time to get themoneyinside the pocket . Manypeople come to SL to have the chance to achieve something ehy can't in RL and manyof them did find astability between both world . Why you guys are you taking that chance away formoney when
1. you got more openspace order and get an income out of it
2. start to makepeople doubt about SL

Well done

Me too, I cut my estate by one full sim and seven open sims. Most of those sims were parks and romantic public places but approximately 3400 prims on each OS. A total decrease in my estate of approximately 67% of total cost. A spend of $860 US per month lost to LL and back in my pocket. Total impact on renters was eight residents without a home and one Estate Manager without a job.

Have you ever been around real pigeons?

Actually, pigeons are dumb as a box of rocks. Not a lot of room for brains in those little
skulls.

That's why it doesn't take a real shotgun to stampede them, just a lot of noise.

Same thing applies here.

I would simply like to point out the apparent discrepancy between what is happening now, and the author of the following article, who has blogged many of the same points so many users have enumerated here.

http://www.clickz.com/showPage.html?page=3623393

Someone knows how it should be done. Why is this not taking place here and now?

He wasn't the only one saying things in 2006 that are contrary to what has happened here. Must have been a good year for common sense 2006, goodness knows what has happened to common sense in the last week or so.

That's because the bottom line is something else we can't see. We all know it's money, basically. But the devil is in the details.

Updated with today's figures. Total islands lost so far = 493, or 1.85% of peak island count of 26,665 on Oct 29th. Rate of loss = 4.6% per month based on losses so far. At this rate 37% of islands will have been lost by Jul 1, 2009, when the final price increase takes effect.

DRNC4, you might find Tyche Shepherd's thread on new SL sims interesting. She uses bots and other techniques to track grid growth (and now, decline).

http://www.sluniverse.com/php/vb/business-land-economy/8523-new-second-life-sims-past.html

I think she's doing daily updates now.

I'd expect the loss rate to accelerate for the next month or so - there is little pressure for end-owners to consolidate or abandon until we get within one billing cycle of the price increase and when no-fee consolidation goes away. Furthermore, LL has left a bunch of critical questions unanswered - the people who have bailed out so far have largely done because they're risk averse and/or disgusted by the situation. The people who *have* to abandon haven't started because they're hoping that LL will wake up before it is too late. I predict that if there are no further announcements, we'll hit that 4500 figure mid-January and double that before the final July price change.

The real disaster for LL, though, is that this fiasco demonstrates that SL land, in spite of the marketing, has no intrinsic value and so makes no sense as an investment: supply is unlimited, monthly fees quickly dwarf the initial charge, and resale value always drops (OS repricing notwithstanding). ATM, the current going resale rate represents a US$200 loss on investment, and you cannot even recoup anything on sim content because of the new restrictions.

If LL is going to stick with this plan, they might as well go all the way and drop estate purchase prices to near-zero in favor of monthly charges with minimum contract length and capped service charge increases.

Another unknown, but important issue is the L$ economy and how this will affect it. For example, reduced L$ sales due to people not buying content.

Contrary to popular belief, LL does not just make money off of the Lindex fees. They make much more by being able to print money out of thin air in a growing economy and then sell it. LL's goal is a stable, fixed L$/USD exchange ratio somewhere near L$255/$1 USD. If the economy grows and the money supply stays the same, demand for L$ increases, deflating the L$ (and thus increasing the purchasing value of L$, or reducing the ratio of L$ to USD). This allows them to print new L$ (Supply Linden sales) to arbitrate the difference and stabilize the ratio back to L$255/$1 USD. When this happens, the Supply Linden sales is ENTIRELY PROFIT. So, net economic L$ growth is a huge profit generator.

What we have seen in October and November is that there has been no Supply Linden sales whatsoever. The L$/USD ratio has held stable, which indicates zero economic growth. At the same time, the auctioning of the Nautilus sims effectively has created a new L$ sink worth tens of millions of Lindens (hundreds of thousands of USD.)

If we see net negative growth in the L$ economy because of this policy (which is a baseline standard of health of SL's economy) it will be reflected by inflation in the L$, represented by an increase in the L$/USD ratio. It is still unseen how the new openspace policy will affect the L$ economy, as we are still more than a month away from the initial implimentation of the policy.

As an interesting note, it seems impossible to find historical data for total L$ supply and supply Linden sales in the Linden Lab website. This makes analysis incredibly difficult, and whether it is an intentional lack of transparency to hide lack of growth or just a lack of having the foresight to post relevant figures is unknown. Graphs of L$ _volume_ and user-to-user transactions are given, but these are not indicators of growth whatsoever.

In a related topic, the $10,000 USD Linden Price is not "free" for LL. Because it is given in L$, it will increase the money supply, but that new supply could have otherwise been filled by a profitable Supply Linden sale. The benefit it does have is that there are no taxation or regulatory issues whatsoever because it isn't given directly in USD.