Second Life is in a economic depression now, and has been for two months now.
LMH, Liquid Matrix Holding Company but it very right on their announcement at WSE, http://wselive.com/research/announcement_detail/1923
(well ok, their land minimum price calculation is wrong, it neglects Lindex Fee of 3.5% !)
”
Linden Increases Taxes – Reduces Multiplier
Submitted by: Liquid Matrix Holding Company (LMH)
Date: July 21, 2007
By printing endless amounts of land land Linden Labs has the same economic effect on the second life economy as raising taxes with such reckless disregard would have caused a recession in the real life economy.
Statistics complied by Melina Loonie suggest that new simulators are closing in the $2700 range a ridiculously high price considering the retail price for land prints below 10 a meter.
(USD Price of Auction x Exchange rate)/meters > Lowest Retail Price In Search Engine
Many a sim has not been resold! The real price or cost of the unsold sims has been $2895 or even $3090. This sum will never be recouped in game. Not a single USD input into the game can multiply in the economy. The multiplier would benefit Linden in that they charge multiple levels of tier when land gets resold within the economy. For now Linden has been sucking the life out of the economy. This slowing has been reflected within a highly depressed internal economy.
In response to the land glut, the strategy or many a land seller has been to mark up based on the features. If you buy at 10 a meter, pay tier, and flip for 13.5 you can capture a meager profit. I see so much coastal land for sale this strategy has run stale. On trend, this strategy has or will fail given that the new continent named Corsica. All the land marked at 13 or greater has little or no value.
Increased taxes and a reduced multiplier within the economy has placed the economy into recession. This recession can be seen everywhere, even in Linden retention statistics. But not every company is in recession, some companies are recession proof! The stocks of said companies are significantly undervalued, but little cash exists to purse opportunities.
Sooner or later Linden will see the error of their ways and adjust. If you place your money with LMH we know where to put it to major advantage.
The timing is now, the company is LMH”
Continuing along this route, i talked with a concierge, and she told me that there is still significant demand, and they will continue to flood the market as long as there is significant demand … Their significant demand is: 2000USD or more per auctioned sim.
They don’t realize that the market is really saturated, they still get sold the sims, but there really isn’t any demand left, 25km2 of land for sale, out of roughly 170km2 total mainland. And that’s not all, they are messing with the concept of “Quality Land”, they are flooding with waterfronts so much, no one will know anymore soon what is quality and what is not. Mainland is ruined.
After telling to an fellow realtor about my talk with the concierge, he replied to me:
“Or Even this concierge was wrong or LL guys are stupid. They allready flood the market on a certain way. That is why i pay more than 2000 only for quality land. The problem is they are destroying also the idea of quality, if they release 400 waterfront sims, they will do so. Nobody will know what is quality any more. But for sure, market is already flooded. I think this LL guys are not so good business men as i had thot.”
He’s exactly right, so many is abandoning SL already due to the fact that they are unable to make money there, only the most wisest and savviest are still able to profit stably and enough.
Now, some mathematics too, land costs roughly 10L$/sqm right now, and tier at CHEAPEST costs 0.81L$/sqm/month, their land tax. 10/0.81 = 12.34months, meaning that every year you hold mainland, it’s cost gets multiplied. After 12.34months, that same land has costed you now total of 20L$/sqm. That is INSANE, compared to the few percentages on RL you have as land tax. That tax is COMPLETELY UTTERLY INSANE HIGH.
Doing some rough mathematics, a Dual CPU server with Dual Core opterons costs around 3,000USD-3,500USD by estimates. 1 region per CPU CORE, that means 4 regions per server. over 8,000USD immediate revenue, and ATLEAST 780USD per month there on. Initial sale price covers the hardware over two fold, and monthly revenue is atleast 4 times as much as the costs for them. It is DAMN GOOD business for them, that’s a dream profit margin.
But what happens when this continues on?
No one buys new sims from auctions, land looses total value. Many individuals have taken a lot of losses, but that’s nothing compared to the losses of 3rd party companies.
These 3rd party companies, and invidivuals working as realtors will stop buying from auctions, prices significantly drop. These same people leave SL, some of them still having some profit, some not.
These same people are the Big Spenders in SL, contracting work, stimulating economy, buying tools and utilities, running malls, residential rentals, and in my case also a bank, advertising network, multiple products etc. They WILL leave.
You probably guessed it already what happens after that?
Total economic disaster, not the depression what’s going on currently, but even worse. Money doesn’t simply move, market velocity slows down, whole economy grinds to halt, and markets are again flooded with land by those who want to cut their losses and leave SL.
And in effect as they are gone, and money doesn’t flow at the regular rate, the low spenders, don’t have such sources of income avail to them like they are used to. Thus, they don’t spend as much, or at all, and leave SL more easily. This causes a butterfly effect.. this time caused by a tsunami however.. causing the whole economy grind to total halt.
In the end, Second Life dies due to that, or if not dies, economy will not probably ever recover.
Linden Lab, Do Not Underestimate Us, we DO KNOW what you are doing, and this WILL NOT BE TOLERATED much longer anymore. We, the Guys With Money, just might unite, and make a better alternative, with Real Understanding Of Economy, and Economies of Scale.
That Said, Thank You Linden Lab, you made My Dream Come True.
