PostHeaderIcon Great Virtual Land Rush - WHOA BOY, WHOA!

Anshe Chung has made their buckaroos and done quite well. In fact, it's a model a lot of other people followed along: purchase and run a private estate in Second Life, a.k.a. "sim" or simulator, and rent or sell the land off it to other residents, essentially doing what Linden Lab is doing.

After all, by charging the same amount as Linden Lab for monthly land tier, you can make a healthy profit, and the virtual land on your sim is easier to sell and lease because you are likely to take payment in Linden Dollars (L$) on a weekly basis. This saves all the Euros on VAT taxes and just plain makes it easier for a lot of Second Life users who want land.

The problem with Second Life is that Linden Lab isn't only the government which is able to print-up money whenever they see fit, but they also are God in that they can create virtual land as they see fit. In fact, tier fees for virtual land is Linden Lab's bread-and-butter. They need people to buy land.

However, there's a few problems that have been working their way through the system for quite some time, starting with the United States Congress.

It is illegal to transfer united states currency through the Internet for gaming (gambling) purposes. Allegedly, Linden Lab investigated the possibility that they could be challenged under law and decided it is safer to simply ban gambling outright.

This put a massive dent in the SL economy - and it still hasn't fully recovered. On top of that, the issues in grid stability, usability, first experience and a slew of other things has caused membership to begin stagnating. On top of all that, high oil prices in the real world are causing real life people to pinch real life dollars so they can put real life food on the real life table and keep the real life roof over their real life heads.

So, what happens? Well, for starters, not going to be throwing real dollars after phony ones. Either need to earn L$ or do without. This, in turn means a bit less virtual shopping. Not to mention the user base is falling flat and premium memberships have declined in growth and may actually decline for real.

On top of that, Linden Lab drops the starting price of private virtual estates dramatically while dumping more virtual land into a new continent, all while collecting up old abandoned virtual land and putting it up for auction.

So what we have now is a land-glut.

We have a Second Life Recession. Yes, it may just be the typical summer slow-down, but it still hurts. Hopefully Linden Lab can keep the fine-balancing act going. Or there will be a lot of people who really get really hurt, really.

Arifi Saeed has a great article over at his blog about the Second Life land crisis. If you have or are thinking about virtual land in Second Life, you'd better take a read at what he has to say:

The short term fix has been to lower the setup fee ('purchase price') for full private sims from $1695 to $1000, make it much easier and quicker to buy private sims, make it easier and more flexible to buy openspace sims (with all the 16536m2 territory but less than a quarter of the prims of a full sim), and toss a lot more newly created mainland virtual real estate on the market as well. The result has been the huge expansion in virtual territory celebrated in the recent LL blog -- and to create a major real estate crisis in Second Life by expanding the supply far in excess of real demand.
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But that would mean the total destruction of the illusion that there is any real value in Second Life real estate as an asset and totally bankrupt all current land owners in Second Life. It would eliminate the Anshe Chung model of an owner/reseller of land in Second Life completely. And doing so would, of course, totally alienate a very large proportion of Second Life's longest term and most loyal residents. Unfortunately, that process is now quite well underway.


Source: http://arifisaeed.blogspot.com/

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