Change to Mainland Auction Starting ... baited breath ...

Ohhhhh have they finally put the START down so there is some fair competition?

Bounce bounce ...

Looks

Slump

Waddle off dejectedly.

Silly me.

Down? Looks like the price went up from $1000 to $1250 US. Can't for the life of me figure out why, unless new SIMs were going for less than $1250....

I hope this doesn't mean they are planning another massive land dump that would crash the market and they are just making sure that they still make a decent buck. But then again, lack of sleep is giving me some off the wall thoughts.

I can guess why. They may be moving closer to releasing the server code. At which point, mainland may take a dip in sales, but they WILL sell - even if to the same people that usually buy. It probably guarantees them 100% markup.

I've heard of this. I wonder exactly what that will be like and how it will affect things? Does it mean anyone who has their own server can patch into the grid with their own regions? Seems that scenario might make SL *less* stable since how can you control how a third party manages their equipment? Or maybe, the third party would be another company altogether with a different philosphy of land sales and such?

At any rate, the higher starting bid when regions *already* were selling for $2100 and above seem to indicate that LL expects the price of those regions to fall rather dramatically. All these questions about the future make me hesitant to buy land.

Mainland sims are still going for L$2100-2800 : http://secondlife.com/auctions/closed.php

If they're raising the start price to keep margins on sim sales up, they must be expecting a *huge* drop in sales - far more than a 'dip'.

edit: /me starts a new rumor: class 6 servers are coming!

Yes, that is exactly what I mean - far more than a dip. People with extra boxes sitting around may be able to set up their own islands! The only question is, how much is it going to cost you to hook into the grid? My imagination is that it's going to be comparable to island tier pricing.

I can just imagine new parts of the grid filled with holes from poorly maintained servers falling offline.

Isn't that status quo?

maybe they think it'll go higher if the bids start higher. fewer junk bids so it goes higher in the alloted time.

Lol. It could go the other way too, a large third party company with deep pockets with kick-ass technology and maintainace getting a premium for their land. I'm guessing it would be mostly individual hobbyists though.

That is what I think as well, though we could see more rl businesses establish their presence this way.

still don`t see the pont of all these new regions besides money printing by LL

look how much "old" land is on sale across the grid, set the map to "land for sale" and the entire grid lightsup like a christmas tree

Printing money isn't a good enough reason??

I expect LL will keep adding land as long as people keeping sending them money.

I don't think the auction prices are sustainable - the bulk of these are purchased by land barons to sell off.

If you look at the average price per sqm paid in world for land it was L$9 in June and L$8.5 in July. Last time I checked on the in world search (when it worked) - the first page of land for sale was around the 9.2-9.4.

Lets err on the high side, and say you can sell land for around L$9.5 (pricing much higher and you run the risk of sitting on the land and losing profit in LL tier costs) so a full sim can net you L$622,592

The Lindex exchange fluctuated around L$265 - L$277 per US$ lets say you can cash out at the best rate available (and ignoring commision on selling L$) of US$2350 - so that's your net incoming cash from selling off a sim inworld.

In terms of expediture you will have had to pay the Linden tier so that takes you down to US$2155 i.e. if you are spending more that US$2155 on a mainland sim at auction, you either run a very real risk of ending up sitting on unsold land incurring additional tier costs or selling at a loss.

Add in that many land barons are probably already sitting on a lot of unsold mainland and already incurring high tier costs on it - overall mainland margins are pretty slim.

There will be a few buying mainland sims for personal use but this only makes financial sense if you can buy the mainland sim close to US$1400. For every US$100 you spend above US$1400 on a mainland sim the breakeven point before your accumulated costs for the mainlan sim become less than those of a private island is one month. i.e. if you spend US$2100 on a mainland sim it will only work out cheaper than an island after 7 months, US$2800 after 14 months - by which time who knows what prices LL will be charging etc. (and of course you get the greater control with a private island)

So overall, I suspect that the auction prices will crash and probably however around the US$1750 mark.

Matthew

You can't trust the July numbers published, as there were a number of days where the feed was not working.

So why bother changing the starting bid from US$1000 to US$1250?

edit: /me makes up yet another rumor: it was done because of that lawsuit against that dork who got around the auction process and got sims for cheap. By raising the starting bid, they're going to be able to claim more damages.

I agree the margins are slim but L$9.5 per meter is not erring on the high side. Many of the new sims will have waterfront and will go for much higher. And are you factoring in that you can flip several sims in the same month for one tier price?

Because I think the auctions will crash before restablishing around 1700.

At the moment the bulk of the land buying is by resellers - with decreasing margins, land glut (especially with casino sites hitting the market), I suspect a number of land resellers will probably stop bidding for a while on the auctions whilst they concentrate on shifting their existing land assets and get their tiers down to increase their overall profit margins or just the weather things out until the economy seems less unstable.

As a result, we'll probably see a few sims fail to sell or go for just over the base price.

Once that's spotted a few private buyers may try to buy mainland sims as a cheaper alternative to an island, and a few resellers may try to get a cheap mainland sim with a decent margin.

I suspect it will then oscillate with sims going for anything from thebase price to low US$2K until settling around US$1700

Matthew

Actually, I'd guess substantially higher. I.e., the ability to interconnect your own server with the grid will command a hefty premium over using LL-hosted hardware. I suspect that a fair number of individuals and companies will be very happy to pay that, too, so I doubt there'll be much pressure to reduce those fees very quickly.

And actually, I'd guess that maintaining the interconnection with a sim may be about as costly for LL as the marginal cost of hosting one sim (which is mighty low). So unless the externally hosted servers substantially reduce other costs to LL, it's not clear the floor can ever be much lower. It might be different if it were practical for external servers to function without access to LL-hosted services (e.g., the asset database, namespaces and search for avatars/groups/sims/etc, authentication/authorization/access-control, currency & balances, ...), but that would take years to even specify, let alone develop.

(All of which is not to say mainland--and island--prices can't plummet for some other reason. Given the amount of land currently held by barons for very long intervals now, it might not take much to tip the balance to full-scale sell-off if it ever becomes clear that minimizing losses is the best a seller can hope for. But I'm not holding my breath for that to happen.)

A good site to see auction pricing trends and how many SL releases to market over time:
http://cosyhome.org/cgi-bin/auc_statistics/auction-stats.html

Actually, 3rd rumor started in this thread, a personal record for me, I bet their colo has (or soon will) jacked up their prices and LL needs to make sure they now get an extra 1000$ per new server they put in. Even that's a crappy rumor, tho.


So what good does raising the start bid do?

Say things tumble down to where the most anybody was willing to bid on a new mainland sim was US$750. What difference does it make what the opening bid is? Either way, it's not going to sell if the market tanks that badly.

whats good for earning $ today might not be what is good for longevity.

Don't forget that all LL needs to do to prevent a crash is to not release sims to auction for a fews days, thus reinvigorating demand. History shows they like seeing the base price for auctioned sims at $2,200 or higher and the base mainland per meter price at L$9.0-$10.0. History also shows that those 40 sim dumps at once are few and far between.

One thing that I will point out that may lower prices is that the number of new baby barons coming in to try their luck with full sims seems to be much lower than it was a few months ago. So maybe it will go down below $2000 at some point.

It could work like the internet itself, the majority of servers and websites are online 24/7, but some are more reliable than others. People buy domain names and lease server space to host them. Perhaps one day SL will mimic that. Of course the main internet doesn't need a central database tracking everyone's inventory =oP so the analogy falls apart there (and a lot of other ways, too).

Does the future Second Life really require ALL locations to appear on a central map? How many people use the inworld map exclusively, as opposed to simply clicking on slurls to TP to a location? The "Old World" could be the main map but I could see people also having land areas that do not appear on the main map and are accessible only by TP/slurls. And sometimes you get a 404 error trying to reach them. Areas that do appear on the central main map would always have more value. Mainland, Private Estates ... and then, REALLY "private estates" not on the map at all, accessible by slurls, and all paying in tier fees.

Some intertesting past world maps:

2002 November :

http://www.slmaps.com/oldmaps/2002-11-21.jpg

2003 October:

http://www.slmaps.com/oldmaps/2003-10-20.jpg

2004 June :

http://www.slmaps.com/dingbat/continent.jpg

An interesting flash animation of land growth 2002-2005:

http://www.slmaps.com/anniversary/chrono.php

2007 August )mainland only, I believe):

http://www.slmaps.com/dategrid2.php?css=grid.css&date=2007-08-01

According to http://neighbours.maxcase.info/ Linden Labs already runs the main world from servers in two different geographic locations, California & Texas. If 2 locations, why not 5? Or 50? Or 5000?

I don't see "land values" as being critical to Linden Labs, they have stated that purchase price of an island covers the cost of setting it up, building the island and establishing the server. The initial setup. They may not care WHO does that.

It's ongoing tier fees that fund operational costs, not the cost-per-m2 of the land.