Real estate (Second Life)

Virtual real estate on Second Life, an online world owned and operated by Linden Lab since 2003,^[1] is used by residents when they require permanent in-world storage of the content they have created or otherwise own. Both Linden Lab and Second Life's Residents make money from Second Life through the trading and use of virtual real estate.^[2]

Land types

Mainland vs. Private Estate Regions

Land on the Second Life grid can either be on the Mainland or on an Estate. Land can be owned either by an individual avatar or by a group. Estate land can be created whenever a user pays the start-up fee. Mainland comes into existence only when Linden Lab's management decides to create some. Linden Lab tends to be cautious about doing so, in order not to drive the price of existing land down too far.^[3] New mainland is usually auctioned off to dealers who subdivide it and sell it to other avatars, although Linden Lab does hold on to some Mainland for its own use.

The grid is made of identically sized regions (also called "sims"), each 65,536 m² in size. Each standard sim can support up to 15,000 prims. There is a limit to how many avatars can be on a sim, depending on the sim type. Mainland sims can support a maximum of 40 avatars, full regions can support up to 100 avatars, homestead regions can support up to 20 avatars, and openspace regions can support up to 10 avatars. On private estates, estate managers can set the maximum number of allowed avatars to less than the hard maximum.

An estate is an isolated group of one or more (usually contiguous) regions, all controlled by an estate owner who rents land to users. The estate owner pays a monthly "tier" fee to Linden Lab for the use of the space: the standard rate is $295/month for a "Private Region." Sometimes Linden Lab makes regions available for free for special projects. The servers are owned by Linden Lab itself, not by the estate owner (although there is one famous exception to this rule: IBM's many regions are housed on IBM-owned hardware behind IBM's firewall.)^[4]

In 2006, Linden Lab introduced the OpenSpace or void sim, which allows a limited number of objects, and offers a limited amount of underlying CPU power. Each of four void sims is limited to 3,750 prims instead of the usual 15,000, and there are four void sims created by vertically stacking them in the memory space normally taken by one full 15,000 prim server. They are used for lightweight purposes such as open water for sailing, open land for parks, or other 'light uses' where land area is more important than prims or processor power for scripts. These regions are available only on private estates, and they cost one fourth as much as a regular sim. They are not always used as voids: sometimes they are used as parks or even as residences. One real estate dealer who specializes in these sims refers to them as "High-Area regions" while marketing them to avatars who want a lot of empty space around their home.^[5]

Most of the land on the grid is on "The Mainland." This is essentially a giant estate (in several discontiguous pieces) administered by "Governor Linden" (a persona shared by several Linden Lab managers.) The "tier" for an entire mainland sim is $195/month (with no discount for non-profits.)

List of land types

For Mainland fees, the fee determines only the area of land available; the number of prims available is determined by the land itself. Some mainland regions offer more prims in the same land area. For non-mainland fees, the fee sets both the land area and the prim count.

Land ownership

Premium members (users who pay a monthly fee to Linden Labs) have the ability to own land on the mainland. Landowners pay no additional fees to Linden Lab if they own 512 m² or less. An owner of larger areas of land must pay an increasing additional fee (what Linden Lab calls "tier") ranging from US$5 a month up to US$195 a month for an entire 65,536 m² of mainland or US$295 a month for an individual island. The issue of "ownership" now is questionable. Mr. Rosedale recently characterized all "ownership" as leasing time on Linden's servers. The issue of land ownership was at dispute in the Bragg v. Linden lawsuit, which was settled out of court.^[7][8]

Estate owners can "sell" land to anyone they please, even a non-premium member. The estate owners have the power to take land away from their tenants at any time; hence upfront purchase prices tend to be lower on the private estates than on the mainland. On the other hand, the private estates also offer a more controlled environment, hence monthly tier tends to be higher.

Land sales

Linden Lab used to sell land in small 512 m² blocks (16 by 32 meters) through its First Land program, but that program has been discontinued. They still sell entire 16 acre (65,536 m²) regions. SL real estate is limited in terms of primitive count and parcel size for a contiguous parcel of land, the largest being 65,536 m² (a "sim"), which can contain up to 15,000 primitives. There is an "additional" 1,000 prims held in reserve for the attachments worn by avatars, such as clothing and accessories.

A private island sim costs 1,000 USD (formerly 1,675 USD) setup, plus 295 USD per month maintenance.^[9]

OpenSpace regions (sims) are "low prim" sims and allow 3,750 prims per region. The cost is US$250 with US$75 monthly maintenance fees (tier fees). [until October 2008]

Private Region Pricing [as of 13 March 2010]

(Pricing for Educational & Non-profit)

Mainland regions are auctioned off by Linden Lab, and usually sell for a few thousand US$. (There was a market high in 2006 of about US$4000.) Owners also incur a monthly maintenance fee. Linden Lab also auctions smaller parcels when they are abandoned by their owners.^[10]

Residents also buy and sell land to other Residents, often hoping to make a profit by selling the plots of land at a price higher than the original purchase cost. One approach is to develop the land by adding desirable buildings, businesses, or landscaping. A more speculative approach is to buy land in bulk, divide it into parcels, and sell or rent the parcels. Another approach is to join cheap Mainland parcels (lots) together in order to rent or sell quality parcels because the current trend on Mainland is that bigger the parcel is higher the market price/m² will be.^[11]

This free market can be affected by Acts of Linden. For example, in the second quarter of 2008, Linden Lab increased the amount of land it supplied daily, which had the effect of lowering prices "from a bottom of 8.5 lindens to 7.5 lindens a meter overnight."^[12] The company also reduced the starting auction bid for regions by $500 to "keep downward pressure on the Mainland price per meter which [had] been rising."^[13]

Another development is the land bot, an automated mechanism for purchasing land that is for sale based on specific criteria. Some abuses have occurred, with landbots buying land so quickly that a resident who accidentally sets the price of a parcel to L$1 or fails to designate an authorized buyer loses the land to the landbot before he or she can correct the mistake.^[14] However, objects cannot purchase land automatically, due to limitations in the scripting language.

Land markets

Linden Lab provides a land listing and search feature integrated with the Second Life client. In addition, buyers and sellers of land frequently use Web based land markets. According to Alexa and Google traffic ranking the most popular land market websites in fall 2012 are AnsheX Land Search^[15] by Anshe Chung and the Second Life Marketplace^[16] by Linden Lab.

First Land

The First Land program was used to reserve small blocks of land for first time land buyers, intending Residents to purchase their first parcel of land below the current market value.^[17] This program also served as an incentive for new Residents with free accounts to upgrade to premium accounts. A Resident paid a fixed fee of L$1 per 1 m² for a 512 m² plot.^[17] They paid no monthly "tier fees" on this land.

Typically, First Land plots were located on newly added sims, although isolated parcels on old sims were sometimes resold as First Land after the previous owners abandoned them. According to Linden Labs these First Land plots were frequently consolidated into larger plots when the original owners sold them to other residents.

The First Land program was discontinued on February 20, 2007.^[18] However, Residents with premium accounts who own no more than 512 m² are still exempt from tier charges.

Issues and criticisms

Inter-resident disputes

There are sometimes issues in SL which would be resolved in the real world through the application of local zoning laws and regulations, such as limiting how close a building can be to the edge of a property.

With minor exceptions, Linden Lab does not place any zoning or content restrictions on what land owners can place on their property. This has resulted in a wide variety of architectural variations and buildings of different purposes being fitted into nearby spaces, sometimes resulting in conflict between neighbors. Also, some residents attempt to use all their available space, leading to buildings being placed right up against each other with no intervening access or spacing.

In extreme cases, "land griefing", "vandalism", or "graffiti" has occurred. Residents deliberately place obstructive or offensive content near to others. This has been leveraged on occasion as a low-level form of extortion, destroying the quality of the local view in an attempt to force neighbors to buy the offending parcel of land at greatly overpriced value.

While Linden Lab shies away from direct involvement in these disputes, both residents and Linden Labs have put numerous measures in place in an attempt to curb these issues. For example, the continent of Dreamland controlled by resident Anshe Chung imposes strict zoning restrictions upon its residents, dictating not only the distance between buildings but even the thematic style of architecture in some regions.^[19] Failure to comply results in a loss of land, or even exile in extreme cases. Conservative estimates current as of 2006 suggest that Dreamland constitutes 10% of the land mass and 10% of the active residents in Second Life.^[20]

Some residents have attempted to create courts or mediation services,^[21] however, without enforcement powers their effectiveness is limited.

In 2007, Linden Labs introduced the concept of “covenants”. A covenant allows an estate owner to specify additional rules and standards that a buyer must adhere to beyond those covered by the Second Life ToS. Most covenants allow the estate owner to repossess the land without compensation in the event that the buyer breaches the land ownership terms; giving estate owners some ability to enforce local zoning restrictions.^[22]

Budgeting of server resources

The amount of land a resident owns in a region determines how many objects they may place in the region and within what area they may be placed. However, other resources of the region server, such as CPU time and network bandwidth, are not budgeted in this way, creating problematic situations. A typical example is that a person may buy a large area of land in a particular region and build an area, only to have someone else buy a smaller area in the same region and use it to build a nightclub or other public venue. The popular area consumes all the region servers' CPU time and network connections, leading to the large landowner suffering greatly reduced performance on their land or even being unable to access it at all because all available connections to the region are taken up by patrons of the club.

In addition to other measures, estates may limit the amount of script lag in a sim allowed per square meter. Some land owners for example, may specify in a covenant no more than 1 millisecond of script lag per 4000 square meters of land. Estate Managers may lag audit offending parcels and return lagging objects or else give the land holder a list and the option of choosing what to remove to come into compliance. These measures can prevent busy sims from becoming "lagged up" by over use without expressly prohibiting public venues or businesses.

Land hosting restrictions

Due to the way the Second Life world is currently designed, with a central secure asset server controlling all of the objects in Second Life, and the way the simulators and the asset server interact, hosting your own simulator is impossible unless a major redesign of the "grid" is implemented. Linden Lab has previously suggested that such a redesign leading to an open source version of the grid is a long-term goal.^[23]

See also

• Economy of Second Life

References

External links

• secondlife.com
• wiki.secondlife.com
• Second Life Virtual Real Estate – A four-part series about the Second Life virtual real estate market presented by Mortgage News Daily.
• AnsheX Land Search – Third party Second Life land market operated by resident businesses.
• Second Life Marketplace – Real estate section of the market website operated by Linden Lab.