"Land Speculators will Kill Your Game's Growth"

[animats]

Land Speculators will Kill Your Game's Growth - article in Game Developer.

"I can tell you exactly what's going to happen here, because it's what always happens – speculators will buy up all the land and hold it. If there's no cost to holding onto this scarce asset that everybody needs and wants, and this asset will predictably rise in value, speculators will just sit on it and watch the price shoot through the roof and anyone who wants to use land will have to pay out the nose. This will have a negative drag on the game's entire economy, and the speculators will get rich at everyone else's expense. All this talk of emergent and spontaneous user creations built on a beautiful "digital nation" will grind to a halt, crushed by the weight of rent-seeking parasites."

This is worth a read, especially for Lindens. It's a good overview of how various games where you can buy land got in trouble.

 

[Coffee Pancake]

It's like they are just waking up to the hot mess we've been dealing with since day one and it's only been getting worse over time. The land market in SL is nothing like it was even a couple of years ago.

It's not good for the Lab either. Vast swathes of mainland, especially Zindra, are owned by a tiny number of individuals. Any one of them could just vanish at any moment, leaving the lab carrying the can for months before finally turning them over to auction .. or worse, getting creative to try and recoup their losses.

There is no emergent digital nation on mainland anymore, that dream in SL has been dead for years and it shows.

 

[SarahThe Wanderer]

I don't know if this is related, but a few months back when you take a look at the auction list; open or recently closed, you will see many lands with 0 bids on it,

but now every auction has bidders no matter how bad the land is in terms of location, size and shape, no land left with no bid.

[Qie Niangao]

So the point is that tier is too damned low?

[Feorie Frimon]

23 hours ago, Coffee Pancake said:

There is no emergent digital nation on mainland anymore, that dream in SL has been dead for years and it shows.

 

*sobs*

No! Don’t say that!! 😭 Don’t give up! 

[Aethelwine]

On 1/3/2022 at 2:22 AM, Coffee Pancake said:

It's like they are just waking up to the hot mess we've been dealing with since day one and it's only been getting worse over time. The land market in SL is nothing like it was even a couple of years ago.

It's not good for the Lab either. Vast swathes of mainland, especially Zindra, are owned by a tiny number of individuals. Any one of them could just vanish at any moment, leaving the lab carrying the can for months before finally turning them over to auction .. or worse, getting creative to try and recoup their losses.

There is no emergent digital nation on mainland anymore, that dream in SL has been dead for years and it shows.

 

But these large land baron "speculators" are paying tier and for the most part don't seem to put the land up for sale at such exorbitant prices no one would consider buying them, nor is the rent so bad (outside of horizons at least). There is probably some profit made from lower costs at auction, I have never had the patience to get that involved in the land buying process.

I don't see the benefits to the "speculators".... if anything they seem to be doing a service to Linden Lab paying tier on land that would otherwise be unoccupied.

[Coffee Pancake]

 

On 1/3/2022 at 8:54 AM, Qie Niangao said:

So the point is that tier is too damned low?

No, that annual premiums are $20 - $30 too cheap and stacking them is an easy way to go almost to a full region saving substantially over tier (hundreds of US$ cheaper in some scenarios).

But that's not the real problem or the real solution. We're way past fiddling with prices to try and smooth the numbers out.

Land,  land ownership and income need to be rethought, it was fine when they were pumping out new regions and when the only participants were regular users. But that's not the SL we occupy anymore.

Now land is a speculative bubble and with the hype building over the metaverse and virtual land in general, the market distortions we're seeing now are just from the early birds. This doesn't affect private regions because there is no ownership there, everyone is a renter pretending to be a landlord.

Horizons (and other d/prim 'premium' estates) are the tip of the spear. In a few short years prices have more than trebled and show no signs in slowing down. It's owned by a tiny few individuals with at least a third of the land simply held off the market. Prices start at 6 figures for a double prim 1024, that's over $400 US and go right up to half a million L$ .. for a double prim 1024.

Zindra is for all intents and purposes owned by a single entity, and they seem perfectly happy to just sit on over priced land for years and years. Regular mainland is slowly consolidating the same way.

 

[Qie Niangao]

34 minutes ago, Coffee Pancake said:

No, that annual premiums are $20 - $30 too cheap and stacking them is an easy way to go almost to a full region saving substantially over tier (hundreds of US$ cheaper in some scenarios).

But that's not the real problem or the real solution. We're way past fiddling with prices to try and smooth the numbers out.

Land,  land ownership and income need to be rethought, it was fine when they were pumping out new regions and when the only participants were regular users. But that's not the SL we occupy anymore.

[…]

I still don't understand what solution is being proposed, assuming land speculation is a real problem in SL. There are plenty of residents (myself included) who'd prefer that the total cost of Mainland ownership decrease, which would have the side effect of making it easier to speculate. That's true whether or not those owners are willing to carry an army of Premium alts, and I think it unlikely the Lab would want to deter Premium subscribers by raising prices (again), nor by decreasing benefits of subscription.

Now, if there's a secret "Atlas"-like program for Mainland tier, such that there's a big discount after the first 100 regions or whatever, such a business practice might be ill-advised, but if that exists it would be a very well-kept secret, at least from me.

So what are actual, viable options that could matter here? The only thing that comes to mind is a special tax on for-sale land, to encourage pricing for turnover. (At first I thought the tax could be triggered by excessive time on the market, but that would be easily gamed with no tidy enforcement I could devise.)

But I'm not sure reducing the inventory of overpriced for sale real estate is even relevant to a problem of "speculation", per se. Removing prime land from the market only makes it more subject to speculation. Price controls have never worked in the whole history of money, and while I'm pretty far left, even I would be troubled by a (legal) taking of Mainland so it all operated like Linden Homes parcels.

If the best solution is to print more Mainland to make it less appealing to speculators, the cure seems much worse than the disease.

[Coffee Pancake]

The solution needs to be rethinking how land in SL works and is paid for.

The contagious, always on, direct mapping of virtual sqm to server resources is the root cause of scarcity and the single biggest factor limiting SL's overall growth. We peaked years ago and slowly settled down into an equilibrium. Land and the rigid constraints it places on what we can do in SL acts as brake.

Doing more of the same with a different cost structure is insufficient to unlock growth (opensim has neatly proven that assertion to be false)

 

[Quistess Alpha]

3 hours ago, Coffee Pancake said:

annual premiums are $20 - $30 too cheap

Correct me if I'm wrong, but I don't see how that math works out.

Let's presume, for sake of argument, that I want to own a full region's amount of land + 1024m2 (and don't do group bonus shenanigans) for one year for the lowest possible price, and assume that 240 L$ = 1 USD.

1 account = 99 USD - 16600 L$ (there's an extra 1000 bonus 4 weeks in for new accounts) = 29.84 USD / year.

1 account at the 65536 tier level = 29.84 + 175*12 = 2129.84 USD

65 accounts using their 'free' 1024 tier = 29.84*65 = 1939.60 USD

So, that's a savings of about 190 USD per year for doing multiple account holding shenanigans. divide that by 65 though, and it's only a savings of about 3 dollars per account. Also note that the value of L$ plays a big role here, if you go through the same and value L$ at 250 per USD then the savings drops to less than 14 USD per year total, or 21 cents per account.

So, while there is a negligable savings for doing account monkeying, IMHO the real incentive there is fluidity. Notice that I picked a nice 'close to a power of 2' number. if you are buying and selling lots of land and your margins don't match up with the arbitrary tier limits LL sets, then having multiple accounts contribute to a land group allows you to exactly fix how much you pay for land each month rather than having to worry if you go slightly over a tier limit and have to pay extra for land you aren't using. (Don't quote me on that, I haven't done the math on combining annual, quarterly and monthly subscriptions to try and retain fluidity while still eeking out a few USD extra. . .)

TL;DR LL should make yearly premium 102 USD and set a fixed fee per m2 of land held rather than the awkward and confusing Tier system.

 

Edited January 4, 2022 by Quistess Alpha

[Qie Niangao]

1 hour ago, Coffee Pancake said:

The solution needs to be rethinking how land in SL works and is paid for.

The contagious, always on, direct mapping of virtual sqm to server resources is the root cause of scarcity and the single biggest factor limiting SL's overall growth. We peaked years ago and slowly settled down into an equilibrium. Land and the rigid constraints it places on what we can do in SL acts as brake.

Doing more of the same with a different cost structure is insufficient to unlock growth (opensim has neatly proven that assertion to be false)

I agree that a different cost structure would be insufficient. I do not agree that Land is even in the top twenty reasons SL's growth has plateaued.

Also, I'd recommend folks read the article @animatsreferenced (or just skim it—it's painfully redundant) bearing in mind that SL has a vastly more sophisticated array of land products compared to any of the games cited. How much does speculation affect SL Estates for example, where anybody can print more at any time? Or Linden Homes, where there's no speculation because, indeed, there's no buying or selling at all. If Mainland is a little tulip-crazed, I mean, meh.

If it's not about speculation, but rather about how best to simulate a shared presence in continuous virtual geography, that might be an interesting technical discussion, and some alternative architectures might have better economics for Linden Lab. Concrete, implementable proposals could be interesting.

[Qie Niangao]

I meant to comment about the annual Premium subscription: This is not a totally risk-free investment. The same is true of anything SL-related, of course, but putting down US$99 on SL's continued viability for a year is not like buying T-bills. It's not a huge risk on the individual level, but carrying enough subscriptions to use their bonus tier to cover a Mainland empire isn't a business plan I'd be eager to defend to a boardroom of bankers.

[Feorie Frimon]

I’m gonna write up a big response to this later tonight, but I think Qie has a point - the land products play a big factor in what people want.

For example, there is a huge amount of abandoned land in SL mainland. Maybe 50% of it’s abandoned or so? If it was ‘valuable enough to be purchased up by land barons’ then this wouldn’t be the case. 

Only certain types of land ‘products’ on the mainland are desirable: like double prim or roadside or water etc. 

In the case of the mainland, this only becomes an issue when the rest of the abandoned land not near roads or water becomes desirable - and I don’t see that happening without more region infrastructure (roads, lakes, etc). 
 

 

 

[Ardy Lay]

Personally, I don't see how artificial "infrastructure" helps land value, but what do I know?  I like trees and can fly without a vehicle. (Vehicles suck anyway.)  Do not forget that the land use fees for mainland are not linear.  Some you did a study on this in these forums not too long ago and probably remember.  The big eye-opener I experienced when taking on the task of holding a mainland region for a group that was relocating was that the fee I paid to hold their new mainland region while they were packing up from the old were HALF of what I pay for my own mainland region.  I have since deeded the new region to their group and reduced my account setting on the web site.  But this leaves me wondering:  Just what does that discount schedule look like farther up the stack?

(Sorry about that maniacal sentence structure.  I am still half-delirious.)

[Feorie Frimon]

2 hours ago, Ardy Lay said:

Personally, I don't see how artificial "infrastructure" helps land value, but what do I know?

It’s huge. 
 

I’ve been running this experiment with Abandoned Land for almost 6 months and it’s churn. While we know ‘abandoned land’ means no one wants it, I brought it up because if no one wants it then it doesn’t really have value. It’s not worth ‘gobbling up’. 
 

When I claim abandoned land, I try and make it desirable by giving the land something that someone might want or showing something about it that people might think is interesting or unique. I’m not doing anything any other premium account member can’t do - I find it, write a ticket, and then they sell it to me for $1L a sqm. I assume that when I write that ticket and claim the parcel, it’s abandoned because no one wants it (or knows about it TO want it).

Water, roads, and infrastructure add value to the land - just like IRL. People see the parcel when they fly/drive/float/etc by or look at the map, and claim or buy it for themselves if there is something that draws them to that spot - like a view or something to do. Look at Belli! People love the homes, but they really love the landscaping. They love the communities and public spaces and roads and rivers etc.

Without the ability to add this to mainland in the parts of the grid that are literally just region after abandoned region in the center of these continents without infrastructure, I just don’t see desire is going that high. (I’m testing that, too though! I’ll let you know what I discover!  )

[Prokofy Neva]

On 1/2/2022 at 7:51 PM, animats said:

Land Speculators will Kill Your Game's Growth - article in Game Developer.

"I can tell you exactly what's going to happen here, because it's what always happens – speculators will buy up all the land and hold it. If there's no cost to holding onto this scarce asset that everybody needs and wants, and this asset will predictably rise in value, speculators will just sit on it and watch the price shoot through the roof and anyone who wants to use land will have to pay out the nose. This will have a negative drag on the game's entire economy, and the speculators will get rich at everyone else's expense. All this talk of emergent and spontaneous user creations built on a beautiful "digital nation" will grind to a halt, crushed by the weight of rent-seeking parasites."

This is worth a read, especially for Lindens. It's a good overview of how various games where you can buy land got in trouble.

 

No.

They get into trouble because they don't have a liberal democratic government, the rule of law, and independent judiciary, and a free press -- for starters. Or a deed office. Or transparency about who bids and loses or wins on the auction (which we used to have).

It's not about wealthier people buying up the good land and the poor people (i.e. programmers who make 6 figures who like to complain about things like this, or various ideologues) not getting any. It's about not having means of making the land business transparent and accountable. Or things like "Game of Thrones" in Bellisseria.

You can't, for example, indicate the names of barons who deliberately bid on the auction to keep prices high; the thread will be closed or removed.

Philip wanted to make all land a fixed $5/m per meter which was a terrible idea. People will make markets and values even when you put them in the worst environments, i.e. the Soviet Union or Venezuela. But they will be distorted by oppression, of course. Land barons are a good thing -- buying land liquidated below the abandoned land price of $1/m, and holding land and paying tier until you are ready to buy it.

There are kinds of issues of accountability. For example, Upland sells parcels that are digital twins of RL parcels without any consent of the RL owners.

[Prokofy Neva]

4 hours ago, Feorie Frimon said:

It’s huge. 
 

I’ve been running this experiment with Abandoned Land for almost 6 months and it’s churn. While we know ‘abandoned land’ means no one wants it, I brought it up because if no one wants it then it doesn’t really have value. It’s not worth ‘gobbling up’. 
 

When I claim abandoned land, I try and make it desirable by giving the land something that someone might want or showing something about it that people might think is interesting or unique. I’m not doing anything any other premium account member can’t do - I find it, write a ticket, and then they sell it to me for $1L a sqm. I assume that when I write that ticket and claim the parcel, it’s abandoned because no one wants it (or knows about it TO want it).

Water, roads, and infrastructure add value to the land - just like IRL. People see the parcel when they fly/drive/float/etc by or look at the map, and claim or buy it for themselves if there is something that draws them to that spot - like a view or something to do. Look at Belli! People love the homes, but they really love the landscaping. They love the communities and public spaces and roads and rivers etc.

Without the ability to add this to mainland in the parts of the grid that are literally just region after abandoned region in the center of these continents without infrastructure, I just don’t see desire is going that high. (I’m testing that, too though! I’ll let you know what I discover!  )

It's not that they don't value it; it's that they can't pay the tier on it for various SL or RL versions. Or they found something better, and it didn't sell in today's market. But yes, ultimately it's a kind of marker of value.

[animats]

3 hours ago, Feorie Frimon said:

Water, roads, and infrastructure add value to the land - just like IRL.

Yes, they do. That's definitely worth trying with abandoned land. Land far from a road or water is very low value.

Somewhat to my surprise, the usual large landlord on Zindra has been doing some major improvements. Go to Aerie or Whitney Trace on the coast road and look around.

[Aethelwine]

2 hours ago, animats said:

Yes, they do. That's definitely worth trying with abandoned land. Land far from a road or water is very low value.

Somewhat to my surprise, the usual large landlord on Zindra has been doing some major improvements. Go to Aerie or Whitney Trace on the coast road and look around.

They have put some road in, in Ironauld too, but it should be no surprise they would. It is in their interest to put in road access to increase the value and likelihood of people renting their parcels. The parcels around there are a short walk or bike ride to Linden rezz areas for boats, or can just explore the "educational" sights of Zama city by road.

Edited January 5, 2022 by Aethelwine

[Prokofy Neva]

9 hours ago, animats said:

Yes, they do. That's definitely worth trying with abandoned land. Land far from a road or water is very low value.

Somewhat to my surprise, the usual large landlord on Zindra has been doing some major improvements. Go to Aerie or Whitney Trace on the coast road and look around.

In fact, there is a market for those who want remote inland, and you see them either buying or getting abandoned. Water/roads is not a plus for everyone because traffic brings blight often.

I find builds put on land for sale supposedly to "help the imagination" of the poor blighters buying it in fact detract from the land. The sharp land buyer takes off volume on the advanced menu anyway before buying so he sees none of that junk on the land. Sometimes terraforming can help land to sale if it was terrible before. Generally, the only thing that helps land to sell is to have people who will buy it.

For that you must have an economy where normal, ordinary people who are not skilled programmers or graphic designers have a way not just to spend their RL money inworld, which they are reluctant to do, especially if they come from the world's poor countries, which are in the majority of countries by contrast with the developed West. For that, you need jobs, sources of income, ways to enter the market as an amateur, ways to sell cheap and low-end content etc. And SL is not good at that, killing off the lazy man's route of camping and money trees, but also making it hard to join a merchant's event (booth fees of $2000 and up are too high for entry), rent at a mall (if a mall has genuine traffic, the rent will be too high a barrier), etc. 

Gatchas were the perfect solution to this problem, but they have been dealt a serious blow. Not to say that even at the height of gatcha resales, the land market was thriving. It has been hurting for quite some time simply because it is an artificial market without the rule of law and transparency. But it was way better than it is now!

Whether it is Instagram (which heavily discourages sales through its interface and has no easy path to do so like Etsy or Ebay); whether Facebook; whether Amazon, or our little world, the jealous overlords of Silicon Valley do not like their customers making money from their platforms, and want all the money for themselves or their very tiny select set of skilled app engineers. But until these platforms can let ordinary people make money by making content and uploading it on demand, re-selling content, selling services, they cannot thrive and make the Metaverse. People need to live, and not just be rubes at the county fair spending their paycheck.

Edited January 5, 2022 by Prokofy Neva

[Prokofy Neva]

6 hours ago, Aethelwine said:

They have put some road in, in Ironauld too, but it should be no surprise they would. It is in their interest to put in road access to increase the value and likelihood of people renting their parcels. The parcels around there are a short walk or bike ride to Linden rezz areas for boats, or can just explore the "educational" sights of Zama city by road.

The mystery to me is why the Lindens did not put roads and bodies of water on the later continents, and left entire sims with absolutely no road or water access. So today you see many inland sims with a huge blank of abandoned land, or maybe some loan outpost. I suppose it was too much work, and meant paying contractors. It meant more Linden protected land, which means no tier for them. I suppose it was a cost-cutting measure but also money-making measure to bake those pancakes and flip them on their then-auctions with no amenities. Maybe they thought IBM or big store chains would buy them? They didn't. They were abandoned for the most part more than a decade ago in Nautilus, Corsica etc and only now are the Lindens trying to bundle up and auction them, sometimes with no takers.

Why? They didn't save that much money in the end and only ensured themselves the payment of many servers with dead land on them that for the sake of the contiguous world they have to spin up every day. A little attention to roads and landscaping, plus creating protected water instead of conflict vectors in their sold water as they did in Heterocera, would have ultimately paid off more.

The Lindens don't study governance as they once did. 

[Qie Niangao]

18 hours ago, Ardy Lay said:

The big eye-opener I experienced when taking on the task of holding a mainland region for a group that was relocating was that the fee I paid to hold their new mainland region while they were packing up from the old were HALF of what I pay for my own mainland region.  I have since deeded the new region to their group and reduced my account setting on the web site.  But this leaves me wondering:  Just what does that discount schedule look like farther up the stack?

I had thought each subsequent half-region would be charged about the same per square meter as the first full region, so holding a second region would cost pretty much exactly the same as the first. I swear there used to be price information to that effect on the Land Use Fees dashboard but I don't see it now, and (for me) the linked Land Pricing table doesn't go beyond a full region (which is what I currently pay). If I tease the dashboard estimator with a region-and-a-half, it responds with a modal dialog warning:
Do not taunt Happy Fun Ball!

So as you said: "Just what does that discount schedule look like farther up the stack?"

If there's a big price break now that wasn't there before, some folks just might buy-in if they knew about it. Or maybe Marketing is smart to keep it on the down-low. (I remember negotiating discounts with the cable company. Good times.) I'm pretty sure something has changed here fairly recently.

[Sylvia Tamalyn]

Qie, is this the info you were looking for?

Quote

Any tier beyond the first full region is assigned in quarter-region increments at a rate of US$44.00 per quarter region. A higher level appears in your land use fees when you upgrade beyond a full region on the mainland. If you sell the land and move back to a tier of one full region or below, the system automatically tiers you down.

 

[Qie Niangao]

54 minutes ago, Sylvia Tamalyn said:

Qie, is this the info you were looking for?

Thanks Sylvia; that's very interesting. Looking into it, I found a version from the Wayback Machine, dated September 19, 2020, which had this wording:

Quote

Any tier beyond the first full region is assigned in half-region increments at a rate of US$97.50 per half region. A higher level appears in your land use fees when you upgrade beyond a full region on the mainland. If you sell the land and move back to a tier of one full region or below, the system automatically tiers you down.

and the part I bolded corresponds to the half-region terms I recall, but at the older full-region rate of US$195/month. It appears that the change to quarter-region increments was made sometime between then and January 27, 2021. Probably there was a blog announcement somewhere in there, but I'm not finding it. The full region change from $195 to $175 seems to have happened way back in 2018, so the chronology here is a little puzzling. (Somewhat tangentially, the hike in annual Premium subscription from $72 to $99 started taking effect June 24, 2019 although it was possible to lock-in the earlier rate for an extra year—or something like that.)

In any case, I'm back to wondering how @Ardy Laygot such savings on temporarily holding that second region.

[animats]

One problem is that user -owned roads are not permanent. We just saw this at ERIA, where roads and a major suspension bridge disappeared, leaving roads ending in midair at parcel boundaries.

You can't grant an easement to Linden Lab and make a right of way permanent, which is what you do in real life.