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Honored Resident
Kerri Gaelyth
Posts: 15

Why is land so expensive?

I'm afraid I'm going to be bashed for this question, but I'm asking anyway, because I really want to know.

I really think that SL would greatly expand if it was more accessible. After you have made an avatar, buying a home is the next logical step. It seems strange that I can create an avatar for free, find tons of clothing, objects, and even pre-fab houses for free, yet land iself is so expensive.

$2000L - $3000L a week for a measly 1/8 region (with an 1875 prim limit) seems ridiculous. I guess that comes out to about $50 in RL dollars per month. I understand servers cost money, but even an entire region in terms of hard drive space could easily fit on even the cheapest flash drives for only about $10 (and that's just a one-time expense). Of course, there might be more expenses than that, which is why I'm asking. Why is land so expensive, and prim limits on them so low? This is 2011, and hard drive space should be getting less and less expensive, yet that's not happening here.

New Resident
NinjaKitty Darkfold
Posts: 1

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

very good question. id like to know that too but i guess its one of LL's dirty little secrets were not suposed to know about... kinda like the government

Posts: 1,604
Registered: ‎06-08-2009

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

Hi, Kerri,

It is not so much the storage space (which is the cheapest part of any computer system) but processing power and the vast amount of communiction going on in the background between the thousands of servers that make up the grid.

But ... even then I am in full agreement.  The value is not worth the cost for me to own land.  Irent a small place to change clothes and hang a few pictures but to build what I want to consider a home is about twice the cost of what it is worth to me.

All things to excess; moderation is for monks.
Honored Resident
North Loxingly
Posts: 31

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

First up, I agree that it's really expensive. After a year and a half in SL, I just rented my first land at over $30 US a month and I don't know how long I will be able to keep it. That said...

Part of the answer for expensive land is embedded in your question -- virtually everything else is free, and so LL runs almost the entire company off of land fees. If we did pay, for example, a $10 monthly fee for an account, or vendors has to buy "permits", or LL took 1% of all L$ transfers.... or something, then land fees could go down. Instead, LL has taken the current model. Get tons of people (hopefully) to join by giving largely free access and then fund all by charging out the wazoo for server space. Perhaps the fact that LL *does* get money out of Marketplace will change things a bit.

Member
Elisheva Sopwith
Posts: 271

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

My guess is that since it's free to join, and since it's very easy to find high-quality skins, hairs, clothes and toys without charge, and since it's free to build, and almost free to upload textures etc, and since most sims don't require a fee to enter, land is pretty much where LL makes most of its money. I couldn't say whether most people in SL own land or not, but I would be very surprised if a majority do. I never have, most of my friends never have, and with x million avatars in existence, it seems unlikely to me, even bearing in mind that many avs are alts or inactive.

It seems to me that only the most dedicated/immersed users would be prepared to pay for land, so these are the people who would be prepared to shell out the most for it.

Qie Niangao
Posts: 5,005
Registered: ‎02-25-2009

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

Probably the most important thing to understand is that land doesn't just cover hosting costs; rather, it pays almost all of Linden Lab's bills (as North mentioned, while I was typing this).  There's a tiny (tiny) amount of revenue from Marketplace commissions and exchange rate padding, and an even tinier amount generated in LindeX fees, which depend on demand from L$ sinks (e.g., upload fees) and growth in L$ supply.  But basically, every Linden's salary, benefits, office space, marketing, cost of money, schwag coffee mugs -- the whole balance sheet -- depends on land revenue.

(Yes, there's a double-bind there: the cheaper land is to own/rent/use, the more of it there will be, and therefore the more customers over which to spread the costs.  But the cheaper it is, the less of those costs it is bearing per sq.m.  That's why pricing is such a black art in marketing.)

And then, storage is only a teeny-tiny slice of the already tiny slice of Land pricing represented by hosting.  LL has huge bandwidth costs to stream all that user generated content out over the Internet, and its own fibre optic network for internal datacenter-to-datacenter communications among servers.  Also, because of the fundamental design of the sim software, it has to actually run the sims all the time, whether there's anybody using them at the time or not, so every expense associated with hosting a server is borne by the land it supports, including the hardware cost itself (another almost negligible slice of the pie), power, air-conditioning, etc.

Honored Resident
brinda Allen
Posts: 26

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

I suppose perhaps I'm a fool. My yearly tier for one full island plus two homesteads runs 5820USD.... now my residents cover a lot of that, but my share typically runs around 100USD a month. For me the experience is worth it. As was stated...it's not just server storage, or the  "support" that is often less than optimal. What goes on behind the scenes is amazing.... some time ago (couple years} I had heard that the total amount of data on SL servers exceeded the volume, data wise, of the United states library of congress. When I stand across the sim line and watch a region restart I'm blown away.

For me it's the people. I have good friends from 5 continents... and I often sit and realise that my chances of ever meeting those people without this platform are around 6 billion to 1.   I came during those halcyon days of early 2007... and I still believe, "Your world  ..your imagination"

Deltango Vale
Posts: 1,345
Topics: 39
Registered: ‎02-25-2009

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

Land is cheaper now than at any time in the past 5 years. Tier, on the other hand, remains brutally expensive.

Kylie Jaxxon
Posts: 2,839
Registered: ‎09-09-2009

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

Kerri Gaelyth wrote:

I'm afraid I'm going to be bashed for this question, but I'm asking anyway, because I really want to know.

I really think that SL would greatly expand if it was more accessible. After you have made an avatar, buying a home is the next logical step. It seems strange that I can create an avatar for free, find tons of clothing, objects, and even pre-fab houses for free, yet land iself is so expensive.

$2000L - $3000L a week for a measly 1/8 region (with an 1875 prim limit) seems ridiculous. I guess that comes out to about $50 in RL dollars per month. I understand servers cost money, but even an entire region in terms of hard drive space could easily fit on even the cheapest flash drives for only about $10 (and that's just a one-time expense). Of course, there might be more expenses than that, which is why I'm asking. Why is land so expensive, and prim limits on them so low? This is 2011, and hard drive space should be getting less and less expensive, yet that's not happening here.

You're talking more about tier prices...they are ridiculous.  Land purchasing isn't bad compared to what it was a couple of years ago.

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Theia Magic
Posts: 1,629
Registered: ‎09-14-2009

Re: Why is land so expensive?

Reply to Kerri Gaelyth - view message

You know, it's expensive in some ways yet cheaper than ever in others.

Rent, it seems, is creeping higher.  For the longest time it was a lot cheaper than buying land.  Now, because of all the empty sims, that's changing and fast.  Rent is increasing to make up for a loss of tenants.

If you rent 1/8 sim for say 1 year, you'd pay $691.60 total

If you bought 1/8 sim mainland

  • $72.00 for membership
  • +$480.00 in tier
  • -$62.00 given back in stiends
  • =$490.00 for 1 year on 1/8 sim mainland

That's a savings of $201.60 a year (approximately)

For the last 3 years, I had downgraded my account to basic and paid rent.  Then, I saw how cheap mainland was selling for.  I did the math and compared to the increasing rent, decided to go premium again and just buy land.

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