Land Value in SL- Will it Implode soon?

Why not?

One person pays tier to be a mini-baron. In the meantime, they just release more land, collect the initial sales price, and have another person paying tier. Its not difficult for LL make as much land as is desired by any potential paying customers.

The only thing LL wouldn't want is for there to be lots of sims online (with the associated capital costs for the hardware) that nobody owns.

So long as the land is owned and generating monthly revenue, LL are happy campers.

- Ace

I agree that the unlimited supply of land at base cost via private sims is very bad for the SL economy. For a long long time and long before I ordered my own private sims I already lobbied for putting all land on the auction system and not to exclude one type of land.

To a Mouse, On Turning up Her Nest with a Plough
by Robert Burns (1759 - 1796)

Wee sleekit, cowrin, tim'rous beastie,
O, what a panic's in thy breastie!
Thou need na start awa sae hasty,
Wi' bickering brattle!
I wad be laith to rin an' chase thee,
Wi' murd'ring pattle!

I'm truly sorry man's dominion
Has broken nature's social union,
An' justifies that ill opinion
Which makes thee startle
At me, thy poor earth-born companion,
An' fellow-mortal!

I doubt na, whiles, but thou may thieve;
What then? poor beastie, thou maun live!
A daimen-icker in a thrave
'S a sma' request:
I'll get a blessin' wi' the lave,
And never miss't!

Thy wee bit housie, too, in ruin!
Its silly wa's the win's are strewin':
And naething, now, to big a new ane,
O' foggage green!
An' bleak December's winds ensuin'
Baith snell an' keen!

Thou saw the fields laid bare and waste
An' weary winter comin' fast,
An' cozie here, beneath the blast,
Thou thought to dwell,
Till, crash! the cruel coulter past
Out thro' thy cell.

That wee bit heap o' leaves an' stibble
Has cost thee mony a weary nibble!
Now thou's turn'd out, for a' thy trouble,
But house or hald,
To thole the winter's sleety dribble
An' cranreuch cauld!

But, Mousie, thou art no thy lane
In proving foresight may be vain:
The best laid schemes o' mice an' men
Gang aft a-gley,
An' lea'e us nought but grief an' pain,
For promised joy.

Still thou art blest, compared wi' me!
The present only toucheth thee:
But, oh! I backward cast my e'e
On prospects drear!
An' forward , tho' I canna see,
I guess an' fear!

i had gotten the impression that LL was trying to release land just ahead of the population growth curve, and would think that they would put constraints on how many private-yet-rentable sims they would allow. There is no question that a glut of available land would lower prices. But that may be a good thing from LL's perspective.

One argument says that it is in LL's interest to foster relatively stable land prices -- people might hesitate to purchase more land because they will never see that money back again.

then again, we live in a rental world, not an ownership world (we rent from LL, or, now, someone like Anshe). If land becomes worth pennies, then the total price of owning land will have decreased (upfront purchase + monthly tier) and maybe this will foster more land owners, which would enhance Linden Lab revenue. If land is worth pennies, people also wouldn't care about resale value, so it would be a non-issue. Current owners might be upset about their irretrievable investments, but LL must look forwards not backwards.

interesting discussion

If private land ownership is not dealt with intelligently, land values could definitely implode.

No. Read what I said.

It's not in LL's interest to have only one big baron holding all the tier on a sim that is not selling. It's much more valuable to them (though they may not always realize this) to have more people buying more land, because the tendency of most people is to buy a little land and tier up.

Instead of one baron with all the tier on the sim, they have 10 individuals who buy from the baron and tier up and take over that sim...and the one next to it...and the baron, having sold, moves on, to fill up his tier with a new purchase off the auction.

When people buy and tier up, they feel invested in the game...they stay...they make and sell stuff and consume...that feeds others...they feel vested....they buy more land at least for their store...and their huge private estate to show off their wealth...and so on. That's how it works.

They can't sell as much land if they don't have land affordable for people to buy from barons to multiple the number of people on a server spreading to other servers and enabling barons to move on.

Everyone makes this assumption. Philip and others speak vaguely about how they tie land production to population. But I say, cut the poetry, give me the numbers. These actual numbers are always absent from Philip's economic reports.

How many newbies? And how many buy first land? (I know so many newbs are scared of buying first land -- I myself didn't buy it for some 60 days). And how many of those tier up? And how many oldbies tier up? And where, old or new, private or mainland? We just don't have those numbers such as to make any kind of coherent statement.

We assume that population growth makes them roll out new land, but there's another thing that makes them roll out new land: the desire to keep prices down and keep the GOM stable. So they can roll out an entire New Continent and let it sit there and not even sell very well, and have real estate bubble on parts of it that then explodes...and do nothing...because their main objective seems to be to keep prices down and keep barons off balance. I think it's marvelous they get so many barons and wannabee barons to play this game with them LOL.




One of the things the Lindens have to think more about, and we hope their Alan Greenspan thinks more about, is how they can hew to their goals of 1) raking in money from the auction, 2) keeping prices down in-world, 3) keeping barons off-balance (in line with all their conscious or unconscious socialist/utopian/whatsis views but 4) retain investors' suspension of belief in all this virtuality and manipulation and continue to buy, and believe that land is an "investment" and not "a hobby expense" or like a boat (defined even by boating enthusiasts as "a hole in the water into which you pour money".

Linden Land is a hole in the Internet into which you pour money. It's like a boat. You gotta hope it floats.

Now. How can they convince me that land I bought which is rapidly devaluing each time they roll out a new sim...each time they sell a private island...each time they allow rampant hateful anti-commerce sentiment to rule supreme in the game.....how can they convince me of its continued value and merit?

They can convince me by hooking me to the idea that residential communities or even very loosely organized sims are going to have more value precisely because they have some built in deflection of griefing, chaos, and ugliness.

But do you have any idea how hard this is to do? I imagine you don't, because you spend your time satirizing me in artwork and hamming it up with Ham LOL.



Maybe. I'm willing to bet it will go the other way. It will make people flee this game in droves from all the idiocy and griefing produced by free land, and seek another game company that understands how to structure a land market with value -- one is sure to appear.

When land is pennies or free and you can just spread out over it endlessly, we'll see what we see now under socialism where everyone gets $512 512 m2 of land and $500 in their box: we'll see lots more griefing and ugliness LOL. That's what you get when you make land free. You don't get pastoralist utopian visionary architectural and social wonders...or at least not that many (and those that you do are probably fascistic in nature). You get more and more and more griefing and anarchy.



Um, yeah, they'd be a little upset, and you might find some of the bigger ones suing LL.

Why do all your vaunted ideas always come back to removing value from land, a deep form of nihilism, Forseti? Why?

Why would it be "looking forwards" to create great more unlimited opportunities for heedless hedonistic fucktards to infest the grid? That's what free gives you. That's what subsidized gives you. At least when Tringo and sexay avatars infest the grid, they are businesses that create jobs and people have fun and they have some redeeming value.

You honestly don't understand what millions of people have literally shed their RL blood over for centuries: land. Ownership is the basis of freedom. Valuation of that ownership is the basis of civlization.

Your nihilism and your freedom will destroy our civilization as we know it and replace it with something rather horrible to contemplate. We already see its outlines in SL.

I read what you said. I just happen to disagree. And I still disagree.

Why should LL care if one big baron is holding a bunch of land so long as that big baron is paying monthly tier?

There are plenty of smaller plots available for smaller users to own (and pay monthly to LL for the privelege of owning). If there aren't any small plots, the Lindens can just make some.

Nobody can gain a monopoly on land in SL, because the Lindens can always make more land available. And when they do so, they add to their monthly revenue stream.

As I said, the only bad scenario for the Lindens is to have land online that is not owned by anyone.

- Ace

You're still not hearing my reply, which is not about disagreement, but about asking you to then take the consequences of what you say further.

Let's say Anshe Chung owns half of Furness, like she owns now. It isn't selling. It sits there. Nobody buys it. It sits some more. It may sit there for as long as the previous baron owned some of it, before a few people bought a few plots then gave up, because it was too expensive for them.

It sits there with one person paying tier only.

Except that if it sold, then that baron is freed up to go buy more -- they need to keep their tier filled. That takes business elsewhere to another sim, which Lindens have to roll out. The people who buy from Anshe then tier up and pay more tier to the Lindens -- more tier than the Lindens would have if they accepted your notion of what is good for them, which is to just let Anshe hold the tier.

If you let 5 people hold the tier instead of Anshe, Anshe goes to buy something else. Those people tier up and pay more to LL. Often they even acquire more in other sims. Everybody wins. Value is added. More money comes in. It's in Linden's interest to ensure that Anshe can advertise effectively, sell effectively, and that she gets competition (by encouraging investor confidence) so that her prices come down so that Linden Labs can have more people on the tier.




Well here's your fallacy. People don't like to move from their sims. They buy in the same sim or next to it. People are funny that way. Some stampeded out with each new sim the Lindens cook up. Others are homebodies and sit on their old sims.



It's in their interests to encourage more advertising, more sales, more competition, because more people will buy and tier up.



Actually, they get that, when nobody bids on an auction piece at all and they have to recycle it. Becaues they've just put out too much land that cannot be absorbed.

Exerting downward pressure on land prices benefits LL and the overwhelming majority of players. Larger lots become more attractive to the average player, increasing the tier fee paid monthly to the developers. Lowering the barrier to entry increases the number of entrants in the market, creating a more dynamic, competitive market (with more realistic profit margins).

A handful of would-be monopolists lose out... but frankly, who gives a flying whatever about what they want or think? The needs of the many outweigh the needs of the few.

More glut! More glut!

First you say that the land goes unsold because Anshe is charging too much, and then you say that land is so worthless, that nobody buys it at auction.

Which is it?

- Ace

Because they are apples and oranges.

Land on the auction is one thing. Land in the world is another.

Land on the auction often comes in huge parcels, like 8192 or 16896 that ordinary people can't bite into -- it's too huge, and the $40 or $75 tier on it is way more than they want to pay for a game.

Parcels of 512-1024-2048 etc are available mainly in world, much less frequently on the auction. That's the point. More and more, there are big parcels offered so that land barons buy them, chop them up, do the parceling and resale work the Lindens don't want to shoulder, and make a profit, more or less.

I'm waiting for Anshe's islands to undermine the prices of Anshe's own land (except around telehubs), and not just my land, and the next guy's land. That day will come.

Take a look at the current auctions, Prok. Nearly 50% of the parcels (not counting the Busy Ben's and Luna Mall rentals) are under 8192.

Iris 003 (120,26) - 1760 m2 L$1,760 9h 34m
Iris 010 (56,82) - 2304 m2 L$2,304 9h 34m
Olopue (23, 167) - 1536m2 US$15.00 9h 49m
Iris 002 (78,14) - 784 m2 L$784 10h 4m
Iris 009 (16,116) - 736 m2 L$736 10h 4m
Iris 001 (34,46) - 3936 m2 L$3,936 10h 34m
Iris 008 (68,114) - 1776 m2 L$1,776 10h 29m
Iris 005 (222,42) - 3568 m2 L$3,568 10h 59m
Iris 004 (144,50) - 2944 m2 L$2,944 11h 14m

- Ace

Take a clue, Ace, what you picked is a completely irregular auction day because it is Iris, telehub land, that the Lindens God bless them, put into small parcels -- a suggestion I had clamoured for in posts, by the way, thinking it might help encourage small business instead of the usual mall thrall at telehubs.

That's just today -- an actual aberration, because normally TH land is never in that small a parcel, but if you saw the site, it contains docks criss-crossing river in spokes around the Moth Temple so it makes sense to have smaller plots.

Now take a look at all the closed auctions of the last 5 days. For extra credit, see the prices they sold for. And imagine each of those plots chopped up, and sold for more in the world:

Item Price Closed
Munro 002 (160,64) - 8192 m2 US$217.00 May-01-05
Munro 001 (192,192) - 16384 m2 US$422.00 May-01-05
Mullett 004 (64,64) - 16384 m2 US$175.00 May-01-05
Munro 003 (64,64) - 16384 m2 L$99,021 May-01-05
Mullett 003 (192,64) - 16384 m2 US$200.00 May-01-05
Mullett 001 (96,192) - 8192 m2 US$97.00 May-01-05
Roxy 003 (192,64) - 16384 m2 US$423.00 Apr-30-05
Mud 004 (64,182) - 13824 m2 US$321.00 Apr-30-05
Mud 003 (192,182) - 13824 m2 US$362.00 Apr-30-05
Mud 002 (130,8 - 13616 m2 US$320.00 Apr-30-05
Mullett 002 (192,192) - 16384 m2 L$60,001 Apr-30-05
Mud 001 (128,52) - 13696 m2 US$360.99 Apr-30-05
Black 003 (32,136) - 12512 m2 US$281.00 Apr-29-05
Kress 004 (96,64) - 8192 m2 US$148.00 Apr-29-05
Kress 003 (192,64) - 16384 m2 US$381.00 Apr-29-05
Clay 004 (192,192) - 16384 m2 L$91,110 Apr-29-05
Kress 002 (192,192) - 16384 m2 US$381.00 Apr-29-05
Kress 001 (64,192) - 16384 m2 US$380.00 Apr-29-05
Black 004 (154,86) - 7408 m2 US$178.00 Apr-28-05
Black 005 (32,14) - 1312 m2 L$27,010 Apr-28-05
Cochran 004 (64,64) - 16384 m2 US$390.00 Apr-28-05
Black 001 (172,76) - 10672 m2 US$256.00 Apr-28-05
Cochran 003 (64,192) - 13264 m2 US$320.00 Apr-28-05
Black 002 (172,182) - 16848 m2 L$117,780 Apr-28-05
Cochran 002 (160,192) - 8192 m2 US$181.00 Apr-28-05
Cochran 001 (192,64) - 16384 m2 US$358.28 Apr-28-05
Desire 003 (94,64) - 10912 m2 US$293.00 Apr-27-05
Desire 004 (166,8 - 17120 m2 US$787.99 Apr-27-05
Desire 002 (74,192) - 13824 m2

Bless you, Prok... Its great to hear that you have such an influence on the Lindens.

Well, then again, perhaps the notion that you influence the Lindens is actually a rather frightening prospect.

Look Prok... If the Lindens want to have middlemen chop up parcels so that they don't have to deal with so many auction transactions, then so be it.

I still fail to see how this is leading us to some imminent economic chaos.

- Ace

P.S. And this will be the end of the discussion on my end. I'm joining the majority of the FIC and putting you on ignore. Its too incredibly frustrating to have a discussion with someone so myopic.

It's hard to be proven, wrong, isnt' it Ace? You said the Lindens put out small parcels. I said no, they don't that was one day, and printed the whole previous 5 days where any one could see you were wrong, because it was all 8192, 13k 16k etc.

A little bit of humility might be in order, like "Oh, I didn't see that, I guess you're right."



I have absolutely no influence on the Lindens. They ignore me. My statement said "God bless them for doing the thing I suggested" because it made me happy they did what seemed like the right thing (instead of caving into the few screaming to have no telehub there). I believe they must have thought up the idea of smaller parcels long before I said anything. If you look at the site, instead of just babbling on the forums, you can see that it is cut up in such a way to make smaller parceling just more reasonable due to all the spokes and criss-crosses.

They were probably planning this all along. But at one point it seemed there was such a hooting and hollering from the community that they paused and didn't open a telehub and there were no auctions and people began to wonder what's up.



Yeah, I think so too. No one person, or one interest group, should influence the Lindens. That's why I'm glad to see from my straw poll that whatever lapses they have, they generally do a credible job of not being whipsawed -- that's what the poll says. If you feel otherwise, click the right answer on the poll to reflect that choice.



Um, did I argue with that? I said that. But the middle men chop up parcels and then they sit there. One of the reasons why they sit there, and can't be bought, and can't become more liquid, and can't be part of helping sims survive, is that the Lindens just keep endlessly rollling out land. They role out too much, so that the remainder on the old sims doesn't sell. You think they don't care because their tier is getting paid. But they should care because if it sold, they would have not a land baron holding the land in a group in a discount, they'd have 10 individuals paying more. And likely to tier up even further. That's just the SL norm.





I tend to agree. I pulled up yesterday's auction numbers and proved your point about small parcels. You need to look around you a little more.

I find that when people put me on ignore, they self-select into their ghettoes and that frees me -- and others -- to continue to have more high-grade and rewarding conversations without emotional outburts, pictures of asses, etc.

What you can resell it for is actually the very definition of the "value".

YES of course. This is the logic that you would use to justify buying land for more than its market value.

As a useful definition of the word, I don't think that value = what you are willing to pay. In a liquid market, "value" usually means what the market as a whole judges the property to be worth. Some people won't buy it unless they can get it below what it is actually worth, other poeple are willing to pay more than it is worth because they want it badly enough that its "worth it to them".

(If you equate the word "value" to what you are willing to pay, what word do you use for what the property is worth on the market?)

Buster

That day has come and it hurts. Been slashing prices already

Actualy "value" is a fluid word. I might find great value in a certain peice of land while you on the other hand might find it pert near worthless. Regardless of the price itself value is more intuned with how you regard the property.

I had a relative that just refused to give up some land that has belonged to the family for generations dating back to the.... hhhmm 1800's I believe... mid 1800's. She just flattly refuse to give it up no matter how much they were wiling to pay for it. She say the land "value" higher then any $$.

ace, i don't totally agree with your post about maximizing utilization of land in SL... it's a question of balance -- while I agree that LL does not want a ton of servers floating around without any renting customers both for the capital costs and the perception of stagnation, it definitely makes sense for them to maintain a "frontier" and to keep the amount of new available land ahead of the growth of the population.


What do people think? if land was free or nearly-free in terms of up-front purchase, and the tier pricing structure remained constant with its current structure, would this lead to more land owners or less?

there would still be some people in the land business, for there is a useful "distributor" service there in the form of terraforming and chopping big blocks into smaller/customized land blocks, but the margins on that business would be pretty tight (not unlike RL, where distribution businesses have VERY thin margins).

I'm amused

For a definition of "value", from the economist's point of view, see my Value, Money, and Markets article.

- Ace

I don't refer to it at all because I don't care. The only people who define the "value" of land by its market price are those trying to profit from it. I have nothing against that really, but it's not something LL should encourage. It raises the overall price of land. The more expensive land becomes the higher the barrier of entry and the lower the number of people willing to switch from basic to tiered accounts. I continue to believe that commodifying land was short sighted and a mistake, but if people want to play the shell game that's their business. Personally I buy land because I want to actually use it. YMMV. I honestly have nothing against land barons, but they're playing a risky game and I think LL needs to look out for end users rather than resellers.

But there aren't any servers like that. There are a few servers with Governor Linden/Linden-related land (like offices in Ambleside). But all other land, except for the Governor Linden parkland/roadload, is either for sale, owned by somebody, or going up on the auction. They don't keep whole servers just spinning in the dark with nothing happening.



Why? All that does is devalue land on the mainland further, because they merely create a leach (coupled with their inaction on griefing) to siphon people off to new, and usually more expensive, lands.

This is why I have turned to Lindens in meetings and asked them pointedly: do you not like it when the green dots space out but group on sims in residential communities? Do you only like green dots when they pile up like chips in a casino or club? Are they easier to care for that way? Do you not wish to see green dots on your servers in a more rational and organized fashion?

Because the feeling I get, as I look at the map every night, that Lindens love it when the green dots fan out and move into new lands with lots of space in between, owned by no-show newbies, or land barons holding tons of land they don't sell.

They don't seem to like green dots collected on one server but in houses scattered around, but concentrated on that grid.

They don't mind the big poker-chip stacks of newbies and others in clubs and malls.

The patient answer I got from a Linden (as if I was some pigheaded idiot) was that *of course* the Lindens like green dots and that actually residential sims don't make as much work for them as clubs.

Oh? I wonder. Clubs tend to run only a few hours a day. They take care of themselves, all they have to do is keep the server running faster to accommodate the lag. Clubs usually have managers who take care of business and keep the green dots entertained.

The problem for the Lindens -- and why I am not an idiot to keep raising this issue -- is that the green dots on a residential sim are just plain more whiney. They have problems with neighbours. They have problems with ugly builds. They have problems with sims crashing just when they were decorating. They have problems with stuff autoreturning off Linden land or their own land. They have problems understanding why the land is "eating their house" (i.e. bouncing off world when they drag it on a sim seam which is something they haven't understood). Believe me, I know what Lindens go through with green dots because I deal with with these same green dots myself.

NOW do you get it? It's in the interest of Lindens to have green dots go to clubs, go to malls, where something rivets their attentions and keeps them away from filing any trouble ticket but the occasional AR over a shooting griefer, and it is in their interest to have the green dots constantly head out to the new lands and fan out rather than making tigher communities, because all their issues when they collect in a community *don't get solved by live help, don't get solved by AR, just plain don't get solved period* so they *solve them themselves* by engaging in the illusion -- which sometimes comes true for some -- that if they just *move* and go to a brand new sim, ugliness, low FPS, lag, bad neighbours will *poof* disappear!

NOW do you get it?




It would lead to a lot more griefing, ugliness, and experimental builds that people find distasteful and would kill the "play house" market. "Play house" people want value, and value in their investment, and they won't pay for something they can't resell.



The margin is already very tight when it's not like that. So you won't find people willing to buy these big chunks on the auction and attempt to wrestle them if it gets any worse.

Chip, the cheapest way to play this game is to rent. But it is part of the immersion, the feeling and the suspension of disbelief that people want to own. That feeling for itself has value to many.

I strongly believe that limiting land supply and giving it value was one of the most genious things Linden Lab could do. Compare Second Life with Active Worlds.

Now the test wether this land ownership was simply one illusion and suspension of disbelief or virtually real rests on Linden Lab. Will in 2 years time people who "bought" land in Second Life wake up and feel fooled into investing in something that has become worthless? Or will they still hold value, own one desirable (and not infinitely depreciated) part of virtual space?

My personal opinion is that those who invest in this virtual space early on and helped it grow should be rewarded. I think Linden Lab mentioned that after 4 years they plan to swap the oldest hardware for new servers. So... I think might be good idea instead of making land cheaper make it better and upgrade those servers sooner

Oh, btw, I have experimented with land value and sales volume: below 5 L$ per sqm it is all about tier fee, not the purchase price.