I have just been reading the Reuters article in which Philip Linden talked about the reasons behind the price increase.
Rosedale noted that island owners could turn a profit solely by exploiting the difference between the monthly cost of an island and the amount of money to be earned by renting it out. “It’s not a healthy economy if people can just arbitrage without adding value,” he said.
My impression had always been that island owners were economically able to do this for two reasons: a) their own building and landscaping efforts on the sim; and b) they were insulating LL from the risks of the sim being only partially tiered and not recouping its costs.
But my real question on reading this was: if this arbitage is considered objectionable, does this means that the tier discount progression is under consideration, or liable to be placed under consideration, for alteration or removal in the future?
“There is a benefit to the commons of having people stay in the same space — a cool place on the mainland is a public good for the overall society,” Rosedale added. “It’s fine to have an island … but from a rational perspective you should probably pay a little more, because the community loses a little bit when you do that.”
The extra cost seems to not be the issue when compared to the actual powerful disincentives for developing on the mainland at the moment, which are:
a) loss of access to certain tools - I sell scripted items, so it's important that I'm able to work out how much lag they cause. In the current version I can only do that on an island. There seems to be no clear technical reason why this should be the case.
b) variable pricing - buying on the mainland requires participating in an auction. This makes it very hard to budget for, or to arrange to split the cost with friends, because until the sim is sold there is no indication of what the eventual price will be. It also involves "swimming with the sharks" - that is, participating in an auction against professional land resellers, some of whom have so much power in the market they actually define the value of land, thus render an auction pretty much pointless.
c) inability to budget for expansion - if you want to build something that's more than one sim big, then when the mainland sim next to yours comes onto the block, you have to win the auction, or you can never expand contiguously from that sim. Of course, the people bidding against you in the auction know this too! It seems very harsh that people owning more than one sim should not be charged the cost of 3 sims for 2 simple in order to be able to realistically ensure that their sims adjoin.
c) the "could be anything just over the edge" issue; this is well documented, I'm sure.
Will there be any change to any of these in the future? I think part of the reason for the furore over the price increase is that seems a bit like raising the cost of car tax in real life - it's a captive payment, since it isn't realistically possible for most people to give up their cars.
I'd also like to ask for clarification on which is seen as being lost by the community when islands are used - in part, so that the residents of Second Life can work on ways in which it may be possible to retain these community properties in spite of being located on private islands. It is my experience that, with P2P teleporting, there is little difference between visiting a location on the mainland and one on an island, but of course you have access to far more data than I.