Why Second Life Land Prices Crashed

Hi everyone.

In April 2008 the Lindens – the employees of Linden Labs, the company that runs Second Life – announced some major changes in their land pricing. This in turn has led to panic among the people who buy and sell Second Life land. Fortunately the panic was short lived and after a week or two the bottom of the market was reached. However, if you are considering buying land in Second Life, it is important to understand what happened, why it happened, and be aware of the future risks involved.

Many people, myself included, approach Second Life from an entrepreneurial perspective. There are thousands of people who make money in virtual real estate on Second Life, and thousands more who lose money! As noted in my previous articles, there are two main kinds of land in Second Life, Mainland and Estate Land. The Lindens have taken actions which bring down the cost of both. The people who were negatively affected by these changes were those whose business models involve flipping land for a profit.

The cost of Mainland had been holding somewhat steady for months. The low end of retail for Mainland parcels was about 8L/m, and to get a decent piece – one that is flat and green, you could expect to spend 10L/m or more. Nicer parcels such as beachfront, water sims, and sims bordering on protected ocean, would command rates as high as 20L/m or more!

Linden Labs increased the amount of Mainland available, thus driving the costs down. This is simple economics – by increasing the supply of the land, they brought the prices down. They auctioned off 10 Mainland sims every day, for weeks on end. That is a lot of land!

At the same time, they lowered the retail cost of Estate land. Estate sims used to cost $1675 for a full prim sim. Once the Land Store opened, the cost of a new Second Life sim became $1000. This makes the cost of becoming an Estate Owner much more affordable for everyone.

For those of us who have purchased many sims at $1675 or more, or purchased Mainland for 10L/m-20L/m or more, the bad news is there is no way we will ever be able to sell for what we paid.

For those of us who are still new to Second Life, are interested in purchasing sims, or want to buy a lot of Mainland, the good news is that prices are lower than ever!

Enjoy!

J.W.Hagarty

aka

Lizard Howl
author
How to Make Money Online as a Second Life Land Baron
http://virtualbreadwinner.com

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