So, the Lindens took down the prices for islands by 40%. A frustrating move for those who purchased islands recently at "full price" but great news for wannabe land owners who feel that ordering will be cheap from now on.
I congratulate you on your future purchase if you are part of the latter group. The only issue is that falling land prices never are good, in any economy.
The situation of Second Life can not be directly compared with RL economies. The level of development is not the same. But it has something in common with RL: when prices fall down, it indicates that owners are getting poorer and demand is weaker. When prices go up, land owners get richer with the perspective of reselling assets that are worth more.
There is a broader way to look at the situation, too. When a company has the ability to raise prices without meeting a hostile reaction, we call that "pricing power". If Linden Lab had the ability to raise prices for its islands, it would mean that demand would be so strong that they could afford it. Under normal circumstances, pricing power is a great indicator of a healthy market.
It actually sounds like Linden Lab is rather under "pricing pressure". It doesn't matter much whether they think that businesses are shying away from Second Life and looking for competitors. Or that a 40% price drop will create instant demand. Stable or rising prices are better news, as long as they are not on a bubble.
At least, SL generally escape the realities of RL. In RL, people who borrowed to buy a house can face foreclosure if the value of their home is worth less than the amount they owe. In SL, once you have mainland, you have it!
Yet, add the 40% price drop to an unstable grid and concerns over Second Life's long-term perspective... and one starts to think twice about investing.
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