Tier Pricing Increases On The Horizon?

Renting

a) lets you participate in a zoned sim
b) lets you get away from all those land buying shenanigans

There is a huge number of people that love not having to worry about changing land prices or finding a buyer for their land if they ever wanted to move, tier up/down. If they wish to move, it's hassle free. Most of the land in prvate estates is also more attractive, and zoned. There are many that would prefer their own small island in a sim that guarantees no clubs, no malls, offers zoning, and low lag policies, and still be able to leave hassle free, than having a landlocked plot in the middle of a sim worrying about the possibility of a club or mall popping up and then the affect it has on the price of that plot when they wish to escape it.

*OK yeh, loaded example I know, but it gets a point acorss *

OK, thanks for the explanation. That leads me onto why would a change in tiers change this renter/landlord relationship then? Costs would change, obviously, but they're going to change inline with other purchased land costs (pretty much) so what breaks to make this relationship not feasible with a tier change, for instance? Simply the whole market depressing possibly?

Sorry if I'm beeing a noob at understanding the rental market but...well...I am

With the current tier structure, land lords can offer a rental rate equivalent to land fees, but have to pay out less due to the higher tier they are on.

e.g

Land lord pays LL US$195 per month for a sim

4 tenants each occupying a 1/4 sim pay US$75, totaling US$300.

As you can see, even with the way the tier is now, and at 100% occupancy, it would take 12.5 months to recoup sim cost before you get anything for all the time running the communities. Reduce it any further and I just can't see people doing it unless they can find tenants willing to pay more.

I don't know how much your average land owner owns. I suspect you are surely right about it being below 4096K. On the other hand the big land owners own a large percentage of the land. Last I heard (admittedly a while ago) there were 500 sims. I count very roughly 180 islands on the map.

Aha, ok, now it makes sense to me. Sorry, I was being a bit thick, wasn't I!

No not at all, not something you would really think about if you're not directly affected by it

The above example was based on 1/4 sims, and of course many will say...yeh but with more smaller plots you can collect more. I remember once seeing someone doing Maths on everyone renting 1024m2 plots lol. Just doesn't happen that way (any skeptics feel free to do their own maths in one of my sims ). I do have some people renting smaller plots, but there are more with larger plots. With 100% occupancy you're looking at collecting US$310. As soon as you factor in land fees, this comes down more.

Remember, this is based on 100% occupancy, which is rare (67-75% after fees etc is about break even). Not only that, there are the fees to pay as you develop and fill up the sim. It's tight enough as it is now. Alter the tier structure and personlly I would find it impossible. I am sure I'm not alone.

A correction on my sim totals I said, last I heard, there were about 500 sims altogether. Well I just clicked on map region and roughly counted them up and there are between 900 and a 1000.

Blaze, I'm not sure what you think this proves at all? Ben's opinion is that it is awesome that people are leveraging the tier system to create larger communities. Ben Linden is not one of the high-level decision makers, as far as I'm aware, and plus that comment was three months ago - which is a long period of time in technology, and especially something as fast-paced as Linden Lab.

And this is pre-supposing that any changes they make to the tier system would stop this. They might make it more difficult, or more costly to setup and costly to participate in, but at the end of the day, Linden Lab has to look at the whole and not just the few. I can see many people may have to re-think their business plans depending on how tier is eventually reorganised, but then the same is true in the real world with changing tax laws, land purchase prices and building charges etc. The current discount scaling on tier is pretty massive isn't it.

Plus, if a tier change in combination with single sim sales at auction, or the increase in private sim charges, means that people stop buying land, stop bidding at auction, stop setting up new private islands, don't you think that Linden Lab would step back, take stock and remedy that situation? It's a balancing act but the biggest balance is making sure that LL's books stack up the right way whilst providing the support they can.

So the Land Barons may meet their demise yet! Go Philip!

If tier prices rise, naturally you can pass on the increase to the consumer. After all, all barons will be affected in the same way.

Well, the customer aint going to pay more than he get on mainland.

Yeah. But, as Kath said, Philip is kinda clueless as to what's actually going on in SL so we should probably take his word with a grain of salt as well.



Heh heh.. wooo! we're on secondlife time, baby! I agree with this - nothing LL says is going to change what has to happen. Lesson learned!



Won't stop, but will put a serious crimp in it.




Agreed.


No, it's not massive. But, yeah, it's definitely one way to raise prices.



It'll hurt, but the point is - you have to decide for yourself what's going to happen. Merely asking LL isn't going to help, just give you a vague idea of what they're understanding of the situation is.

We will need to triple the cost of land on the high end of the tier to bring it in line with the low end. I imagine they'll not want to shock the economy (or public) and will instead seek a fiscal average that keeps the revenue the same while adjusting all the tiers. Given that the lowest tiers are the most occupied and thus bring in the most revenue, this fiscal average will be very close to the lowest tier cost. I predict the price will increase on the highest tier between a factor of two and three. (Someone right that down.)

While I personally am concerned about higher costs for myself, our group should be secure as it's a nonprofit land cooperative and democratic republic that offers many advantages a above and beyond cheap land.

~Ulrika~

I started one many months ago.

/120/43/29427/1.html

~Ulrika~

Do you honestly think that Philip made this decision in isolation? Really? I mean, really?



Wrong way around - nothing you or anybody else says will change what LL has to do.



That's life, so people say

Tier price rises across the board is a totally different matter to suggesting a per m2 fee.

where is this information available?

You have said it over and over in the past, and are the only one I have heard say it.

Last time I asked you this question - you answered "They must not be becuase if they were they would tell us"

I would like to know where the information is that SECOND LIFE as a venture is operating at a loss.

I have no idea whether Linden Labs as a company only does Second Life, so its quite possible as a company on a whole they lose money.

Still something I could actually read from a reputable source on either aspect would be appreciated.

If you merely still insist its true becuase they wont tell people how much money they make you are being irresponisble.

Well, it's been in a couple of articles.

If you desperately want me to cite, tell me you think I'm cool and I'll go fish out the articles for you.

will try to find myself then.

After a few news searches I was unable to find any of these articles you mentioned Blaze.

In fact the only recent article about Linden Lab's Financing is here.

http://freshnews.com/news/fresh-money/article_20126.html?Intel

Check one of my threads. It's in there. But come on, I'll find it for you. Just tell me I'm cool. You know you wannnnna

Okay I found that - so I went to Red Herring. The article about profits is dated Jun 12, 2001.

The server wasnt working - so I wasnt able to read the article after signing up.

I would Have to say any comments about not being cash flow positive made back in 2001 might have changed considerably.

Considering SL was in Alpha test then? if even?

I think a flatter (or even perfectly flat, if it were feasible) tier would be awesome.

Not for a lot of you, but ... sorry.

For the interests of fairness and good economic prosperity for the majority of SL inhabitants, it would be a boon. Why?

Exactly the things many of you are afraid of happening.

1. Putting a crimp in the rental market. As things stand there is an economic push moving people towards rented, zoned sims. I think this is not really a good thing altogether. I think those that wish to live in that sort of planned community should pay a premium for doing so (assuming the community is of a quality worth paying extra for - otherwise, you've added no value...). Everyone else can buy land or group for it.

2. Land would become cheaper, as the large holders sell out, less new sims would roll out till the old cheap land was bought up, re-raising land prices, ... (a few cycles) ... and a stable equilibrium of land would form.
Any economic situation where a constant one way arbitrage opportunity exists is actually a sign of artificial disequilibrium. Profits should never consistently accumulate to the same people over time. If they do, something is wrong with the economy. In a real, constantly equilibriating free market, arbitrage opportunities are unstable and unpredictable. The money earned by entreprenuers(sp?) is the reward for successfully noticing and jumping on such opportunities as they arise, driving the market back towards equilibrium.
For the longest time now, such a movement has not fully existed. The market was in a constant state of predictable disequilibrium.