Houses For Premium Members

I received emails for several of my alternative accounts stating that Linden Labs is going to be offering free homes in Second Life for premium accounts. On the surface, this seems to be a good idea. Yet, I can't help but wonder if LL has thought it through. It is a good idea because it addresses several problems with premium accounts in Second Life. First, there is little incentive for people to become premium account holders. Very few people are seduced by the lure of being able to buy land. Basic account holders who want land can rent if they really want a place to call home. So, the 'right' to buy land, especially given the softness in the virtual real estate market, is little incentive. From this perspective, the premium membership is little more than just an added tax on those who want to buy land anyway. Second, showing up in Second Life without knowing anyone is a lot like showing up in New York City without knowing any one. It can be a cold and lonely place. Having homes in communities can provide a sense of belonging that current does not exist.

There was a program several years ago refereed to as 'First Land' where premium residents could buy a 512 square meter piece of land for L$512 and put a home on it. However, it failed and was terminated. The main reason for its failure is that many, if not most, people who bought their first land for L$512 turned right around and sold it for L$9000 feeding the speculative bubble in virtual real estate. The speculators got what they deserved, however, as land prices crashed and are still about half of what they were at the time. And Linden Labs got what they deserved for not having thought this through a little more carefully.

First, consider the math. L$512 is roughly $2 US. L$9000 is roughly $36 yielding a profit of $34. A one month premium member ship cost around $10. So one could spend $10 and make $34. While this is not a huge profit, it is a profit. And when you consider the hype at the time along with the fantasy elements of Second Life, a lot of people felt good (in their fantasies) about making money in virtual real estate. So, the idea that most people would simply buy and sell was entirely predictable. Further, the notion that this buying and selling would create a real estate bubble was also predictable. And the consequence of the bubble bursting at some point was also predictable. So, the First Land initiative turned out to be an unqualified disaster. But, money was not the only reason why it failed.

There were at least three other reasons why this initiative was doomed to failure. First, most new residents do not know enough about building to build a home on their first land. So, nearly everybody put up one of the freebie homes. This was fun for the 45 seconds it took to rezz the freebie home but not much fun after that. Second, 512 square meters with 117 prims is not enough to do anything with. This is like selling somebody a bite of a prime steak for $2 and telling them the second bite (and every bite after that) is $36. Finally, without any kind of a development plan, the hodgepodge of First Land plots gave Second Life the feel of a trailer park without any zoning restrictions.

Hopefully, this new initiative will be thought through a little more careful although I am not optimistic about that prospect. Nonetheless, I will look into some of the key issues next time.