Virtual Economy Research Network

Linden Lab announced a week ago that official land prices in the virtual world Second Life will receive a boost. Currently Linden Lab is renting out 16-acre small private islands to users for a one-time set-up fee of 1250 USD plus a monthly maintenance fee of 195 USD. After the change is implemented, the set-up fee for newly rented small islands will be 1675 USD (a 34% increase) and maintenance fee 295 USD (a 51% increase).

In an interview by CNET News.com, Linden Lab's new CFO John Zdanowski states that the purpose of the price hike is to make renting out land profitable to the company. According to Zdanowski, seven-year-old Linden Lab has yet to turn in a profit. But due to negative feedback from users, the hike is now delayed until November 15th.

Zdanowski points out that for companies like Sun, Toyota and Coca-Cola that have recently appeared in Second Life, the prices remain negligible even after the increase. "They're spending hundreds of thousands of dollars to set up an in-world presence, and they're paying almost nothing for the land," CNET News.com quotes Zdanowski.

Second Life's success to date has been built on user-created content, something that commentators warn may be hurt by the hikes. According to Zdanowski, Linden Lab has until now subsidised the growth of the world by keeping prices down.

Due to the impeding price hike, Second Life users and speculators are rushing to claim islands before the November 15th deadline. Existing island owners will not suffer an increase in maintenance fees until February by earliest.