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.