Wednesday, February 21, 2007

The End of First Land

Linden Lab just announced on their Official blog the end of the First Land programme, effective immediately. This means that from now on, new Premium users will not have a "grant" to be able to buy a plot of 512 m2 for L$512. They will have to live like the rest of us: in a world of hyper-inflated land costs, and no way to recover your 'investment' in SL quickly by selling out your (useless) First Land plot to an over-eager land-baron-wannabe.

Why does abolishing First Land make sense from LL's business perspective? Well, we can all grief and complain about "putting it all in the hands of monopolies held by land barons". The truth is that the long-term land barons compete ferociously among themselves — and have done so for several years — and have no choice but to offer added value. You don't just buy/rent/lease a plot from them — you join a planned, organised community, and you get protection from griefers and nasty neighbours. How well each large land baron does their job will reflect their long-term success; it's obvious that many are doing well and will continue to be around.

On the mainland, the tiny landowner is a nightmare to manage — from the point of view of Linden Lab. A whole sim full of First Land plots, where you have to deal with your nasty neighbours every day without having a way to call for help is a nightmare. What happens? People pack and go — very often, to rent/buy/lease land on an organised, planned community. So, although I can understand why people can be furious for not getting their "promised" First Land, let's be honest — you wouldn't be holding on to it for long. As soon as you got an offer, you'd move out (probably with your friends and friendly neighbours) and go to a planned community or a rental business.

First Land, with a few exceptions, are the slums and wastelands of Second Life. People getting them will have fun for a few hours. Then they will face the naked reality of what it means — griefing, "physical" and mostly "visual". You won't be living on a "nice" place, but very soon you'll see that there are lots of nice places around in SL to live in — and all rather cheaper than being a Premium Account and a tiny 512 m2 plot.

So what is LL accomplishing by abolishing the FL programme? Well, let's ignore the deal with the "abuse". It's a comfortable excuse and a side-effect. But the real reason is purely economical, and, surprisingly, an encouragement to make SL look better. Let's assume, for an instant, that from those 60,000 Premium Users, 10,000 abandon their plots, in disgust over LL's new policies. These will be bought up by 'bots, start-up land baron wannabes, and short-term capitalists. But they suddenly see that they won't be able to sell them so easily, since the number of Premium accounts will decrease slightly, as people "tier down" and go to live on private islands.

What will happen next? Well, there is some inertia in the system — they will hold to their land and expect the next wave of freshly-minted Premium accounts to arrive with their pockets full of money. However, these "new" Premium accounts will not expect land to be cheap (ie. no more First Land, so...). They will expect it to look good. And where will they turn to? Very likely, planned communities organised by the long-term, established land barons.

So the quickly-bought-for-a-huge-profit ex-First Land will remain on "wasteland". For a while. To make a profit, land barons who just buy & sell land, without intention of improving it and adding value, will need to do it quickly. But in the mean time — Linden Lab will roll out more land on the next continent. On the auctions, for US$1000 as a base price. Who will buy these? The established land barons again. And they'll get it for a reasonable amount of money, improve the plots, and sell them for a profit … but at a much lower rate than the land baron wannabees are able to set.

This definitely means that the "former wasteland" will slowly need to have its prices dropped. Without encouragement to buy small, cheap 512 m2 plots, and a decrease in new Premium accounts, all that land hold into the hands of the wannabe land barons is pretty much worthless. What will they do with it? Sell it to the rental businesses, very likely. They will still make a rather reasonable profit that way.

So you see "aggregation". Less premium accounts holding more land in larger sizes. For Linden Lab, this means less technical support calls. It also means that the 60,000 paying customers will pay far more than just the bare minimum, since they will hold large tracts of land for their own rental businesses. The number of free accounts will only increase, and buy/lease/rent more and more from the established land barons/rental managers/mall owners. Yes, this means more concentration of power and money in a larger number of people — capitalism at work! — but that's exactly how it works in RL as well, isn't it? :) But for LL, it also means less work — land barons will continue to buy whole sims and plan them, and tier payment will be handled by a small group (well, 60,000-big) of people, who will also manage most of the more common issues in their communities and rental businesses. Providing added value that way.

So, does this mean that I'm for LL's decision? Well, it sounds to me that it would be inevitable. Consider the following: it meant a lot of support calls, way over what people pay for their tier zero Premium accounts. It meant a lot of time planning the landscape for the new sims, from talented LL designers that are always overworked anyway. It meant large areas with griefing of all sorts — physical and visual. It was abused in all possible ways, mostly because people don't know exactly how to set/manage their land (I know I don't). It allowed for hyper-inflation on those areas.

All that is now gone. Makes a lot of business sense for LL. And who suffers? Perhaps 10,000 or so Premium users who feel "cheated". Well, 10,000 in 3.8 million accounts is not really a huge number, isn't it? After all, we all know that LL is not making any money from the Premium accounts... just from tier and lease of private islands.


  1. Interesting insight Gwyn.

    My only concern in all this is the way LL go about their announcements. Since there seems to be no consultative period or, indeed, much in the way of reliable links, LL policy changes appear out of the blue. SL Old Hands may be used to this, and consider it the norm. However, as LL are pitching at corporate users they need to be sensitive to corporate expectations - or risk losing them. And one of the most basic of those is advance notification of change in the services offered by LL.

  2. Gwyn, all of this is neat theory that nicely fits into a socialist puzzle in your own mind. It's all fine, except when you come out of the Ivory Tower and look at what's happening outside on the ground.

    There are as many fictions around First Land and what really happened with it as there are ideologies and religions. Some people think everyone was too poor to ever buy anything but the subsidized $512 -- but yet many in fact skipped this step and bought $8000 or $9000 512s when the subsidized Gov stuff was no longer put out. Some people imagine that no one will bother to buy a premium for $9.95 when the first land value and stipend they get out of it is less than what they'd get renting on an island. And yet people went and bought the premiums in droves because they want their own land! REALLY their own land.

    60,000 people who are described as landowners btw are only the *mainland* people. You don't need premium to own and island, and therefore 60,000 isn't the number of ALL landowners, only the number of *mainland* land owners.

    Next up in your concept is the idea that when overpriced 515 or 1024 land chopped up from overpriced sims from the auction is put out, no newbies will buy it, because they are "too poor" or "not finding value" and "the rentals agents will buy it."

    Well...except that isn't happening, and doesn't happening. In fact people pay the higher prices. They aren't poor. They have DSL lines, $2000 computers, and $100 graphic cards and disposable time and skills online. So, they buy *shrugs*.

    Look at the map. Land isn't sitting there for sale. I looked and saw a scarcity of *for sale expensive 512s* again today with only something like 30-50 for sale because *they go quick.*

    I bought two of them today merely to keep holdings in my own sim and prevent clubs from forming and adding to their holdings, because the price had come down.

    The prices aren't down that much, but enough to get people buying. I see people leaving rentals and buying their own. I also see new people coming in and flooding the cheapest rentals I have, mainly foreigners, but they figure out either to a) buy their own land eventually b) move to an island, sometimes a full island they buy themselves or they c) quit because performance has been so poor.

    The new land glut was supposed to break the back of the land barons and lower prices so much that newbies wouldn't even care if land wasn't subsidized anymore. But people, those damnable creatures, don't do what the socialists and social engineers think they should do. They go on valuing land, against all odds. They value it even if it doesn't have the Linden- or SIC-prescribed "value add" but is just some girl's prefab. They value it, because they *gasp* value private property *ungasp*. You can't stop them. They value it furiously, even when all forces try furiously to devalue it on them.

    Land is still $14-16. All the Lindens did was fill up more tier for land barons of oldie or midbie or newbie status. They win, again, as usual. Prokofy Neva

  3. >And one of the most basic of those is advance notification of change in the services offered by LL.

    This isn't the norm for them. And they can afford to ignore it, they have enough attention and customers -- too many, even. If 10,000 premium buyers quit because they were given a bait and switch, the Lindens are now honestly in a position to not care.

    They aren't liable for a bait and switch as the language on their offering says we give you 512 tier, and the $512 land is *subject to availability*. Well, now it's not available. But you still have 512 tier, go out and apply it, happy shopping.

    Corporations don't shop for first land. So they won't care about this. They can only welcome anything that makes SL more exclusive and lag less.

    The main problem with this is that there was no way they could tease it out 30 or 60 days because people would have fantastically gamed it. This happened to them when they were caught trying to hustle the last of the islands out the door. When their feting was uncovered, they had to make good on the offer for 15 days, and boy, did that cost them. They weren't about to have 50,000 people come in the door and demand first land for 30 days, most of them just gaming it to farm among alts and re-sell.

    The main reason they did this is because they couldn't go on selling servers for 120 x L$512 or whatever, they wanted to sell them for USD $1695 or even $3500 off the mainland auction.
    Prokofy Neva