Auction Monopoly and Rising Land Cost

Yes, I can understand the point your trying to make. You want the Linden's to release more land so you can buy more cheaply. Email [email]support@lindenlab.com[/email] if you really think there is a problem and im sure they'll look into it.

Support people generally get cranky if you use support channels to request game features. [email]contact@lindenlab.com[/email] might be more effective.

Dnate, monopoly is the inevitable result of an unregulated free market. We learned that back in the late 19th and early 20th century, when the "robber barons" built their empires on the backs of expendible labor. Today's anti-trust laws reflect the painful lessons of that shameful chapter of our history.

The SL situation is different, but as long as a handful of people can corner nearly all of the supply of new land, they will do everything in their power to squelch competition and keep prices high. That's just good business (for them). It's not necessarily good policy (for the rest of us).

Anti-trust laws are the worst thing to ever come about. It is an abuse of power by the government. Look what has happened to EVERY company that has be broken by the government. The goods that they supplied have gone UP in price every time. Land in SL is nothing close to a monoply anyway. There is not enough of a supply to meet demand, prices will stay high as long as the demand is there. You may not know this, but land prices where much much higher before you got here.

Im not sure what auctions your watching but, in the last few days 17 different people have won there plots. May I also remind you that Phillip Linden himself stated at town hall that it was never Lindens Labs intent to sell direct to the end user that they expected a brokering system to find its way in. I do however agree with you that the cost of land has climbed beyond what it should be. I have also noticed many auction winners selling land at or below cost when you factor in the holding cost of tier. This is a dangerous trend, not sure why they do this maybe the excitment of the auction has got the better of them.

Divide auctions into different parts, what the hell. Are you some bunch of socialists/komunists ?

Seriously, think again about your suggestions, you'll come to the understanding that they're completely pointless and useless. If you want to move the markets, stop buying the land, make people stop buying land (wich would result in the end land barons would stop buying the land), or buy like mad and kick their ass. Adding max purchase rules or dividing into sections as suggested wouldn't do a thing, if it's there and there's more than one bidder it will get bought at the 'correct' price wich is decided by the market(us).

I don't disagree in the point that we all would like to have more spread on frequent land purchases, it's good for the poor, it's good for the rich, it's good for everyone. Problem is just most people are poor and will be poor, only a majority is smart enough to time their purchases on large quantities frequently, while balancing the cost vs resale price.

This is a free market, we love it, we hate it at the same time we agree it's a beautiful thing.

Btw. I'm no phat-land-baron, i simply like the idea of a free market. There is no system that is more fair for everyone than that

I know why, but don't know how to explain without sounding arrogant.

I would oppose caps on land purchases or two markets. That would make an even more artificially strange "market" than we have now.

The way to get more competition and lower prices is to improve classifieds ad sales, allow commercial events that amount to real estate tours on the events list, and send more signals of approval to the land-offering community of wholesalers, retailers, middlemen, first-land buyers, renters, leasers -- to help dispel the small minority that repeatedly comes to the microphone to scream that this is only a rich man's game and an unfair land grab.

You don't have to be RL rich to work the auctions and get land for living or projects. You just have to shop well, pool with friends, watch old sims, watch auctions on days when the prices can be better, buy with Lindens when the GOM is low, sell the land when the GOM is high, etc.

If you are willing to buy snow PG, or wait 30 days to shop, you will get what you need in this game.

Anybody can have a 512. He can find 2 friends, make a land group, link together to a 1536, get 10 percent more additional land, pool to get something bigger, etc. You can even have your socialism, in the form of a land coop?



I'm thinking the answer is that there are a lot of new wannabee land barons. And they tend at first to make the newbies' mistake of forgetting to count the cost of tier as they buy. They think tier will hit in 30 days, and therefore isn't a cost today. But it surely is, because the land might not sell, and you will have to pay it in 30 days for the land you hold regardless of whether you sell it in 5 minutes. So factor it in, as a per day, per meter cost, and you have a more realistic auction bid.

I'm also thinking some people get low on the GOM and think land will sell and they will cash out high on the GOM and beat the side costs. This is a big big risk, never worth undertaking.

I support the appearance of wannabee barons because it helps diversify the market and creates competition especially for first land buys which is to the advantage of the new players.

The thread creator may be talking about desires among casual users of SL to participate in the auction process, and being unable to do so competitively because of the vastly superior time, expertise, and resources of ingame "professionals". Hence the only option is to buy from a business person - a very different gaming experience from the auction.

It has to do with different attitudes about SL among different groups of players. Those who buy and sell real estate have one set of attitudes and values concerning the game. Others may not share those attitudes and values.

Notice I'm not criticizing anyone here, just outlining differences in perception. For a lot of casual users, buying from an ingame professional works fine. However, there are people who don't like being locked into that option.

I wouldn't know how you'd satisfy everyone using the present structure. I know that some have argued it's not necessary to satisfy everyone. On the other hand, while that may be an argument that works well in real life, SL is a commercial product, the intention of which is to satisfy the widest possible consumer base.

Perish the thought...

Note that the monopolists are not to blame for the shortcomings of an unregulated free market. In the proud tradition of game theory, they're simply reacting in a predictable and rational way to maximize their own profit.

But profit for one individual comes at the expense of another. That's an "externality" for the profiteer -- as long as the cost is not debited from his bottom line, it's not his concern.

A major role of regulation is to ensure that the cost of "externalities" are borne by entities that produced them. If you pollute, you pay to clean it up. If you force your drones to work 12 hour days, you pay them overtime. And if you ride roughshod over the competitive landscape with predatory pricing, dumping, industrial espionage, and other underhanded tactics, you're going to get jailed or fined.

In the context of a virtual world, there has been no equivilent of the American labor movement that ended the bloody reign of the robber barons. After all, there's no need to revolt if you can just end your subscription and go play something else. I suspect that's what will finally break the back of land speculators: other virtual worlds will emerge that don't cater to middlemen, and residents of SL will quietly migrate away. Demand for land will slip, the speculators will move on to greener pastures, and one day the remaining residents will get a polite note that the servers will be shutting down for good at the end of the month and thank you for your support. (Unless it really goes to a P2P type of system, in which case it'll muddle along in the shadows as a quaint reminder of bygone days, much like AlphaWorld).

That's a grim prognosis... but hopefully the developers will come to their senses before it happens and start working for the interests of all players, not just the entitled few.

Arcadia, I have a completely different prognosis than you, because I'm not a Marxist, I don't think in terms of exploited labor and robber barons (categories of centuries ago), I'm a liberal and a Democrat but I believe in capitalism as the system that ensure the most for the most people with the most fair conditions.

This idea is one of the central flaws of Marxism:



That's just a belief -- and a religious belief, at that, like, say, the Virgin Birth is a belief.

You believe that to be the case, I realize.

But the facts don't support it.

When one person buys something in SL, and makes a profit off selling it, how can that "come at the expense" of another?

The other person lost nothing. He can go play on the auction too. He can buy land too. Nothing was taken away from.

In a virtual place, it's especially hard to make these old Marxian labour type claims that the worker is alienated from his product or exploited or loses something. He remains a full-fledged member with his 512 and his ability to tier up at will.

What did anyone take away from him? Nothing.

Ummmm, when did this become a religious issue? This has nothing to do with religion, and as for your point that when one person buys something in SL, and makes a profit off selling it, how can that "come at the expense" of another? Easy! The person buying the item, whether it be a new hat, or a plot of land has to pay more for the seller to make that profit. So if the seller makes it so that the buyer can "ONLY" get a certain item from that particular seller, it does hurt, as the seller can now sell the item for whatever price he or she deems worthy. So how again does it not come at the expense of another?

Games,

Interesting that you are attacking the pro-commercial element of SL, while your moniker is "World Dictator". Kind of hypocritical in thinking, isn't it?

First off, the market determines the price of land in SL. If there is a tight supply of inworld land, the price goes up. If you are smart and take the time to look around, you can find some great deals. I know I have. You just have to patient and look for the best deals for you.

Yes, the auctions are great place to grab large swaths of land for a fraction of the inworld price. But guess what, auctions are just that, auctions. They go to the person who had the best bid and who felt their bid was reasonable. They took in all of the factors, weighed all of the risks and determined that what they bid for that land was appropriate.

To try and put quotas and caps on a very free market ideal smells a lot like communism to me. Does Christie's auction house put a cap on how much someone can purchase at one of their auctions? Do car wholesalers? I didn't think so, so why should the Lindens?

The Lindens, from conversations with some very good mentors, have, in the past, tried to level the price of land on the resell market by releasing more land into the auctions. From my understanding, this had an effect, though a short term one.

To go blasting land barons, and I am not sure if I am one or not, for your woes is highly irresponsible and foolish. You only have yourself to blame for not looking for the best deals, both inworld and in the auctions.



There a lot of "landless" people in SL. They are the lifetime subscription members and those who chose not to partake in owning land and those who are waiting for that prime opportunity, that "steal". If they are looking for a home *warning: shameless plug ahead*, then they should contact me about renting one of my condominiums at Night Mountain.

In short, take responsibility for yourself and stop trying to blame those who are actually playing the game to the fullest extent of the rules for your woes.

Games,

The barons are here to stay. They are as much a part of SL as anyone and have every right afforded to them to do buy and sell as they choose.

Like the real world, there will be manufacturers, wholesalers and retailers. Are you suggesting , we should ban car lots and buy a vehicle directly from the GM plant in Detroit?

Regulating a market has nothing to do with Marxism and everything to do with avoiding repeating some of the grimmest moments of our own history. Even a casual study of the late 19th and early 20th century reveals that in the absence of any serious regulation, a handful of cartels siezed control of all significant infrastructure and resources. Their exploitation of such was hugely profitable and utterly ruthless. These tyrants used threats, bribery, extortion and murder to maintain their positions. If not for the courage of union organizers and other reformers fighting back against both the robber barons and their corrupt allies in the government, we'd still be sending our children to the coal mines to eek out enough script for meager rations at the company store.

There's nothing quite so ugly in store for the virtual world, but as wealth concentrates in the hands of a few, the discontent of the masses will grow. Lacking the means to undertake a social revolution, they will instead opt out and seek a virtual world that is more fair and balanced for everybody. It happens all the time in MMORPGs, where players who feel they can never catch up with the "big leaguers" drop out, causing a characteristic plateau in subscription growth. As more companies attempt to open up revenue streams by allowing players to buy their way to better characters or equipment, more and more players shut out of such systems by economic necessity gravitate towards games that don't allow this.

SL is, if anything, more vulnerable than most virtual worlds to this dynamic. Barring a major paradigm change, it is doomed to the same sort of stagnation currently facing many MMORPGs.

Random, in his/her many guises, often mistakes the "mixed economies" of real life liberal capitalist democracies with "Marxism" or religion. Or maybe it's just rhetoric.

In any event, there's nothing "mixed" about the SL economy, and it's the stated intention of LL to make the system as "free" as possible. Arcadia's description of what happens in MMORPG's has interesting similarities to what happens in capitalist economies without regulation - such as the United States before 1900, Germany before 1914, or in present-day Mexico. Mixed economies are more stable, create more opportunity, and generate more wealth than unregulated economies.

there will always be a middle man! that isnt an option so expect it.

the only thing about the auctions is the fact that some people are more well to due and they set the minimum price by bidding on EVERY auction. this garuntees they will have the best price and nobody can undercut them on new auction land. the idea of this sucks but is unavoidable, there isnt an easy solution. the people responcible are acting within TOS and just so happen to be able to afford it. you as a player get the easyest side of the delimma, think about it. if you want land on auction you simply outbid the land dealers (who have to figure in a profit margin) so they are easily beat (if you plan to use the land)
the people who have it the hardest are the new land dealers, who have to compete with the invintory momentum and buying power of any established dealer. these people have less margins for profit, and less discount for size. the end user has non of that to worry about, just if they WANT the land or not. if they want it the land is easily aquired at a price still below "market"

Well, yes and no. If you want a huge plot of land, you've got just as good a shot at it as anybody else. The system works fine for you.

But if you want a medium size plot, say 2048 or so, you'll find these plots very rare on the auctions -- and when they do come up, they often provoke a frenzy of bidding by the disenfranchised. Unless you get lucky (and it is possible - a friend of mine got a 2048 parcel for $40 USD... but then again, that was six months ago), you either buy through a reseller at a steep markup (usually with no value added beyond the minimal effort of carving a big plot into chunks) or you bid a huge sum on a bigger plot and hope to dispose of the excess before the tier fees eat you alive.

It's not a good situation for somebody who's just a player and not a playa.

Some of the more recent auction closing prices on smaller plots of land:

Eldora 001 (134,1 - 1200 m2 L$4,810
Behrii 003 (32,20) - 1344 m2 US$25.00 May-16-05
Ganymede 001 (24,4 - 1536 m2 L$6,010 May-16-05
Eldora 002 (220,22) - 2560 m2 L$6,010 May-16-05
Inari 001 (194,140) - 4080 m2 L$16,910 May-16-05
Behrii 004 (154,13 - 2944 m2 US$65.00 May-16-05
Kojin 002 (114,202) - 560 m2 L$2,010 May-17-05
Kojin 001 (106,234) - 1808 m2 L$4,010 May-17-05
Jiminy 001 (240,32) - 2048 m2 L$7,510 May-17-05
Refugio 001 (112,176) - 1024 m2 L$4,320 May-17-05
Moen 001 (124,15 - 1024 m2 L$2,010 May-17-05
Manua 001 (106,16) - 1024 m2 L$4,220 May-17-05
Ku 001 (40,204) - 1024 m2 L$2,620 May-17-05
Nepessing 001 (192,34) - 1024 m2 L$4,120 May-17-05
Bonga 003 (24,236) - 1552 m2 US$19.00 May-18-05

Seems like reasonable prices to me.

Sigh.... I guess I will say it again. Regulation is the worst thing that can happen to a free market. The free market it what makes SL what SL is. The entire economic model of SL is based on an unregulated free market. If you were to upset this idea, then you would see the entire economy collapse. If the SL economy has a meltdown, then so would SL. If you don't believe me, study economics and human behavior. It all boils down to supply and demand. As long as you have people that want land, and you have people willing to pay for that land, you will have people buying land just to sell at a profit.

(defensinator)

SL has formed markets. these markets have values. these values fluxuate bases on other forces in the market. (not trying to sound condesending) there is not a steep markup in land or there would be more dealers. the overhead, financial risk on virtual land is tremendous VS the profit potential. the market wont bear a steep markup. on each plot owned the dealer has to pay tier which is a factor in his / her profit. if you own a sim of tier you owe 195$ a month- good sales or bad. you have to sell enough land to make your origional investment, PLUS 200$ profit- JUST to break even. anything else is true profit. that final sliver is but a fraction of the entire equasion. (land sales is more then chopping land, if it were only that easy!). if your larger, scale that and you have to make more just to keep from loosing money. give it a try and tell me how you do

(/defensinator)

I will agree that the smaller plots CAN be a bit more expensive, but its not always the case. as you mentioned. and as Schwanson Schlegel's post demonstraights.

But your getting caught up on an ideal I like to call "the Jonses" your looking at what the seller is making. (mind you your tier is paid to LL who is also the one selling the land first.)you are getting frustrated that you didint get the land that much cheaper. but you need to be aware that your land has now been assesed at the value you are paying, and given the market stays stable, you can resell you land at the same price, or potentially more (if any of the surrounding owners need more land)
also the main cost in land ownership isnt typically the aquisition, its the maintenance. you pay way more in tier charges then your land (in the long run) so your always paying
also if you own land your done,.. as long as you dont move you could stay there forever, who cares about the market? if divide that land cost over your entire ownership its quite cheap!

just because someone (besides LL) profits dosent mean your loosing anything, we can all be winners! I know you are!

just some more views of the topic

Even ardent capitalists understand that some level of regulation is necessary for markets to be “orderly”.

Buying up a significant percentage of trading volume in a market is called “cornering the market”. Read this:

http://www.investopedia.com/terms/c/corneramarket.asp

In any given market, if too high a percentage of all market value is owned by one person, then that person can intentionally or unintentionally disrupt or manipulate the market. It is a legitimate role of regulators to minimize the risk that this might happen by imposing limits and carefully monitoring market statistics in order to detect this when it happens.

The problem with limits alone is that they are very easy to circumvent. Historically, many market corners have been done by cartels, even “loose” cartels. Limits alone don’t always work – but they can help.

Whether any SL players are cornering the SL land market depends on an assessment of what percentage of trading volume, or what total percentage of all market value, is owned by one player or cartel. (Personally, I don’t see a problem. Anshe buys and owns a lot of land, but she’s far from cornering the market in my opinion – the market is very, very competitive.)

As I’ve said many times, if action is taken that cuts property values (and thus auction prices), you reduce LL’s revenue, and they will have to make that up – for example by raising tier prices.

Buster

Those are all very reasonable prices and well within market value. Hell, the Bonga 003 land was a steal at less than L$3500 for the entire plot.

I do. That's how I know that you're misinformed. The question is not "to regulate or not regulate". The question is "what kind and how much regulation?" While the SL economy isn't mixed, it's definitely not a free market, either. LL regulates the economy by controlling certain powerful characteristics. Certain individuals within the SL economy have some control, and that's the issue that was raised in this thread.

As for meltdowns and other alarmist predictions, I'd only note that when the United States transformed itself into a mixed economy in 1902-06, and again in 1933-1945, there followed two of the three longest sustained periods of stable economic growth in national history. Transformations to a mixed economy in other countries have yielded similar results. So much for regulation=collapse.

There are differenting views on both human behavior, and economics inn general. I must admit, I believe in a very laize-a-fair economy. There are differencing views on both human behavior and economics in general. I must admit, I believe in a “hands off” economy. I am at heart mostly a Liberian, at least when it comes to economics. I believe, based on my readings, that regulations are a bad thing. I have yet to be convinced that there are good regulations. On flaw with my theory when applied to Second Life, it the resource that helps drive the economy, is not a limited resource. LL does have complete control over this part of the economy. I understand the reasons for LL control of the land market. It helps keep the economy stable.

With that said, I still believe that control is not a good thing. I believe that any sort of price controls in the long run do hurt long term growth. If there is a part of the market that is controlled, then there are no incentives to improve that product. In regards to corning the market, has a market ever been corned legally for any length of time? If an item is corned, and someone tries to put an artificially high price for said item, then the market will find a way around it. There are always new things that are invented that can act as a substitute. Sometimes the only reason that they are not used is the high start up costs. Once the item that it could replace becomes too expensive, the substitute will become cost effective to use. Monopolies are the same way. If the industry is corned, someone will invent a better product that will cause monopolies to lose the power that they hold. I agree that sometimes there will be short term hardships with this method, but the end result is much better for the consumer.


PS How can you convert a economy into a mixed economy twice? It seems to me that you are trying to say we went from a mixed economy to a mixed economy???