Several have asked if this is in some sort of panic move in response to poor sales. This is absolutely not the case, in fact sales of islands have been very consistent through Q1; we sell between 100-110 islands per week plus a fair number of Openspace regions.
Technology and service costs vary over time and we as a business have to respond to that in sensible ways. In addition, we have to continually assess our business model and make changes where we need to. By and large we have worked hard to keep prices static for long periods, and when we have had cause to increase prices in the past, we allowed grandfathered monthly fees to continue because we value the time and energy those people had put in. Nearly 18 months on and that grandfathered pricing is still in place for many island owners.
This was the right time to reduce the setup price of an island. As any business would, we will review the effects of these changes over the next period and make adjustments or leave them unchanged according to how it goes. If we are able to make savings, then we feel that passing those on to our customers is a good thing.
The above is a quote from Jack Linden in a blog post published on 10th April 2008; Details on the Q2 2008 Island Price Change. The headline news was that the setup fee for a private region had been reduced from US$1,675 to US$1,000. This was a controversial move and generated a lot of positive and negative feedback.
Yesterday, more than seven and a half years later, Linden Lab decided the time was right to reduce setup fees further; Decreased Land Set-Up Fees and Changes to Transferring Regions. The new pricing structure is :
- Full Private Island – previously $1000, now $600.
- Developed Full Private Island – previously $1029, now $629.
- Homestead Private Island – previously $375, now $225.
- Developed Homestead Private Island – previously $395, now $250.
- Openspace Private Island – previously $250, now $150.
Along with these new reduced setup fees we’re also seeing the return of Grandfathered status for regions when they are sold on. However this comes with a twist in terms of vastly increased transfer fees if Grandfathered status is required on transfer.
Let’s go back a little further in time, October 2006. Zee Linden had caused quite a rumpus in the Second Life community as he had posted; Price for New Private Islands to Increase. Tier for a private regions was US$195.00 a month, Zee had announced that for new private regions the tier fee would be $295.00 a month :
Due to ongoing investments in developing and maintaining the underlying technology of SecondLife, Linden Lab is increasing prices for new Private Island sales. Please note that this increase does not affect tier fees for Mainland land or existing Private Islands that you currently own.
After we run out of our existing inventory of approximately 150 regions, the cost of Private Island Set up will be US$1675.00 per region and monthly Maintenance fees per region will be US$295.00.
The price increase was delayed for a short period of time, the residents were not happy. However one thing that smoothed the road ahead was Linden Lab not increasing the tier price on existing private regions. Indeed if someone has held on to their region since that date, they will still be paying US$195.00 a month.
For quite a while Grandfathered status was allowed to be carried over when a Grandfathered region was sold on. This meant that Grandfathered regions were of high value on the second hand market, you could not get them from Linden Lab. However in May 2010 this all changed, as Jack Linden blogged; Reminder – Grandfathered Pricing No Longer Transferable From May 1st :
This post is just a short reminder that, as announced back in early February, the grandfathered status of an island will no longer persist if that region is transferred on or after May 1st, 2010.
Personally I felt this was a fair move. Grandfathered status had been introduced to thank those who had purchased private regions in Second Life before the Autumn of 2006. This was a loyalty bonus. Over three and a half years later and people having received significant tier savings, it seemed silly to allow Grandfathered status to continue for new owners of Grandfathered regions.
However Linden Lab have now reversed that move, but as I said, it comes with a twist :
Previously, Private Islands with grandfathered pricing would lose that status and revert to the usual schedule of land maintenance fees when the regions were transferred to a new owner. Today, we are changing that policy to make it easier for these regions to remain on the grid if and when they are sold to new owners.
Effective immediately, both Grandfathered Full Private Island regions ($195/month) and Grandfathered Homestead Private Island regions ($95/month) may be transferred to new owners without losing the discounted pricing. However, the one-time fee for transferring grandfathered regions will be higher than the usual transfer fee, as follows:
Transfer of a Full Island, maintaining grandfathered pricing: $600/each
Transfer of a Homestead Island, maintaining grandfathered pricing: $300/each
I am not a big fan of the way Linden Lab have worded this. I understand what they are trying to do but a transfer is a transfer and there should be no difference in pricing. Offering a protected Grandfathered status fee would sound better to me. I’m being a tad pedantic, I understand that, but it’s a bit off to call it a transfer fee and charge so much.
Unlike in the past, there hasn’t been a big hoo-ha about these changes. I would imagine some people will be miffed. Those who purchased a private region from Linden Lab over 14 days ago will probably be miffed. Those who sell Homesteads on the second hand market, will probably be miffed too, as the bottom has just dropped out of that market with these changes.
However, Linden Lab are trying to do something about region pricing and they should be commended for trying something different. Tier is the real economic factor when it comes to owning a region and by bringing back Grandfathered status on transfer, Linden Lab are doing something about tier, albeit not in a way that many people will be able to easily take advantage of.
Personally I think it’s a shame that Linden Lab can’t do what Amazon do, and advertise other sellers on their land store page. I would expect anything like that to come with a fee, but if private regions were advertised for sale by Linden Lab with a setup fee of US$600.00 with a link to “Used regions from ..“, that might make people aware that there is another market for buying regions. However I would imagine Linden Lab may well be afraid of being involved in some unsavoury situations if the person selling hasn’t informed any tenants that the land is being sold.
The tier remains too damn high, there are no easy solutions but it’s encouraging to see Linden Lab showing some wiggle room here in their pricing structure. I’m sure people would appreciate more wiggle room from Linden Lab on land, the most glaringly obvious being that people would buy Homesteads directly from Linden Lab if they didn’t come with the requirement of a customer needing to own a full region too.
People would also be interested in other land products, such as half a private region or even a means of sharing ownership via an official arrangement. However for now, these reductions in setup fees seem to have been largely greeted in a positive manner, although it’s also fair to say that they don’t seem to be exciting people. Time will tell how well received these changes are, for now, let’s just be grateful that Linden Lab are still looking at the issues of region pricing.