Updated to include a quote from Ebbe Altberg
On Wednesday, June 20th, while speaking at the Meet the Lindens event, Linden Lab, and a a part of the SL15B celebrations, CEO Ebbe Altberg made a major announcement concerning private region maintenance fees (aka tier).
I’ve been saying for quite a while now that I think the balance between what it cost to have land versus what it costs to transact or buy and sell in the economy is a little off-kilter. Land is quite expensive but selling things in the world is quite cheap, comparatively speaking. So I a basically fell we have fairly high real estate taes but very low consumption tax. so we’re trying to adjust this so that it’s better. That was part of the Mainland price reduction, and today I can also announce we’re going to lower the cost of private estates!
Ebbe Altberg, Linden Lab CEO speaking at SL15B during his Meet The Lindens session.
As from July 2nd, 2018, private region tier will be reduced by 15% for full and Homestead regions. In addition, the one-time set-up fee applicable to Full and Homestead regions is being reduced.
This means that after July 2nd, 2018, private region set-up fees and monthly tier rate will be as follows:
There are some caveats to this restructuring:
- Skill Gaming regions are not included in this restructuring.
- This reduction does not include grandfathered / “bought down” regions as they are already priced well below these new rates.
- From July 2nd, the OpenSpace (“water”) class of region will no longer be offered as a product – however, existing OpenSpace regions already in use on the grid will continue to be supported, and will be subject to the tier discount.
- Education/Nonprofit (EDU/NP) discounted full islands will be re-priced to maintain their 50% discount off the regularly priced full islands, with the new tier rate of US $124.50 applying at the start of that island’s next invoiced billing term.
Linden Dollar Purchase Fee Increase
As noted above, Ebbe has previously indicated (see here for example), Linden Lab is attempting to re-balance how the company generates revenue through the Second Life platform to help reduce region tier pricing. This is being done by increases in fees charged elsewhere within the service.
Thus to help offset the revenue loss resulting from this reduction in private region fees, Ebbe also announced that the cost to buy Linden Dollars will be increasing to US $1.49 per transaction (compared to the current rate of US $0.99 cents per transaction).
Over the last few years we’ve seen genuine efforts on the Lab’s part to try to ease the burden of tier for region holders.
- In 2016, there was the region buy-down offer, which allowed private region holders to grandfather their regions for a one-time fee. This reduced the monthly cost of Full regions to US $195, and Homestead region to US $95.
- As noted above, these regions are excluded from the 15% tier-rate reduction.
- In March of 2018, the Lab reduced monthly mainland fees by 10%, while also doubling the amount of tier-free land available to Premium members (from 512 sq metres to 1024 sq metres).
- (Note I’m excluding the 2011 Land Sale from this list, as it was a long time ago, and something of a different strategy compared to trying to lower tier costs.)
Both of these moves were very positively received by users, and given that requests to reduce tier have long been made, I’ve little doubt this announcement will be equally well-received.
One thing it should do is confirm the Lab is committed to trying to improve Second Life for users – not only in technical terms, but also in making the platform’s revenue generation something that is more evenly spread among all users.
Even so, this is a bold move, and one that can only be taken to mean that recent moves to pivot some of the revenue generation away from land (e.g. through the transaction fee increases (March 2016, June 2017 and November 2017), possibly coupled with more recent uptake of premium user subscriptions, has given the Lab confidence that they can reasonably offset revenue loss from the tier reduction through other channels.
Certainly, it shows how far things have come since 2013, when it was hard to see any tier reduction not hurting the Lab’s bottom unless alternative revenue sources could be reliably built-up.
With Tyche Shepherd of Grid Survey fame reporting that the rate of decline in private regions continues to ease, it will be interesting to see how this announcement affects the overall interest among those wishing to acquire land of their own, either directly through the Lab or through any of the major land realtor operations in Second Life.
In the meantime, you can read the full text of the Lab’s announcement here.
My thanks to Xiola and Brett Linden for their assistance with this article.