SLENTRE.COM

By Sigmund Leominster, News Editor

A recent blog post by Jack Linden announcing price changes for the owners of Openspace sims is causing anger and outrage among some Second Life™ residents. According to him, the reason for needing to raise prices is because “…based on analysis performed in August and September, Openspaces are being used about twice as much as we expected, in other words being loaded with double the content/avatar load than we’d expect for a region that is supposed to be light use.”

To address this, from January 1^st, 2009, the upfront fee for an Openspace sim will go from $250 to $375, and the monthly maintenance fee will move from $75 to $125. Unlike previous changes, there will be no grandfathering; which means both current and new owners will be subject to the new fee schedule.

As well as seeing inworld demonstrations from European residents, the Second Life forums are awash with postings from residents, almost all of whom are almost explosively angry at this action. Many of these owners took advantage of buying their sims as a result of Linden Labs’ decision to sell Openspaces at a competitive low price only a few months back in March 2008. In fact, one of the strongest collective criticisms is that having taken advantage of the Linden Lab offer, owners now feel they are being taken advantage off by having to pay a premium.

Another criticism is that this action penalizes both abusers and non-abusers identically. Although some sims have been exploited to create businesses and rental properties, many posters to the Second Life Openspace thread maintain that they use their sim to create a small personal property surrounded by open waters, fields, and other environmentally friendly structures – the very features Openspace sims were supposed to encourage. In the minds of most owners, they are being charged an extra $50 per month and receiving nothing in return.

Resident Eurydice Barzane offers a typical response to the changes:

“I bought my Openspace sim less than four months ago because it was more practical, economical and ‘private’ than renting a large parcel on an estate or paying a fortune to buy a large waterfront parcel on the (frankly) hideous mainland. A 66% tier increase so soon after LL was proudly trumpeting the new pricing and availability of these sims is completely insulting and a blatant money grab. Very few OS owners will be able to afford this outrageous tier increase and will have no choice but to abandon their sims within weeks or months of paying the $250 USD setup fee. This is an appalling way for a company to treat its customers!”

Some commentators have suggested that this is a move toward the removal of the Openspace sim so as to have regular Full sims with a single pricing structure. This suggestion is not without merit. If Openspace sims are abandoned by owners unable to make the extra payments, those sims can resold as full price regular sims, thus removing the pricing inconsistency between the two types of land. Rather than use some form of “eminent domain/compulsory purchase” to buy back the Openspaces, raising the price will either increase the profitability of the land or encourage owners to leave.

Companies typically raise prices to handle a number of possible situations. The first is if the cost of production of the product increases, which is, in effect, the argument Linden Lab is using. According to Jack Linden, “The overuse of Openspaces has also put additional strain on some of our network and database infrastructure at a much higher ratio than is reflected in the current pricing. So higher traffic to and from the servers along with heavier demands on the asset server, both of which impact the overall experience people have inworld.” The cost to service this extra demand equates to a higher cost of goods.

Another reason to change the price is if the supply of the land is decreasing. As less land is available, raising the price depresses demand. This primarily only affects new land purchases but abandonment of current properties would increase the supply. However, it would make more sense for Linden Lab to convert abandoned Openspace into regular Full sims that command a higher price.

Pressure from investors could also contribute to a price rise. Dangerous as it is to do this because it can obviously result in a lot of bad feeling; it provides a short term increase in revenue that inflates the value of the company. If, as SLentrepreneur has argued in the past, Linden Lab is moving towards an IPO, the higher the demonstrable value of the company, the better the opening price for the company will be.

Whatever the reason for the increase, the fallout is likely to be significant. Since the initial posting of the change, there has been no response in the blogs from Linden personnel, although Jack Linden had stated that he would respond after considering the feedback of residents.

As of writing this article (1:00 am, October 28^th) he has 114 pages of “feedback” and 1680 individual posts. One of the last from Windy Noyes seems to set the general tone for the vast majority of posts:

“I am quite sad. Linden Labs will destroy all confidence in the SL economy. Oh sure, they know, as do I, that it will recover, and life will go on. They are counting on it. I won’t be investing in LL via SL. I wish others would do the same. The only way LL will listen is if their profits fall dramatically – otherwise they will continue saying to us, ‘go f#$% yourself.’”