Linden Lab announced on its blog yesterday it would be increasing the land supply in Second Life for the second quarter of 2008.

Linden has seen average prices for land drift from about L$6.3 per meter in Q1 to around L$11.5 per meter currently. Strong demand for virtual land — essentially dedicated CPU time on Linden Lab’s servers — is a bright spot for Second Life’s in-world economy amidst flagging overall growth.

Second Life land barons — users who buy land, develop, and resell it — were predictably unhappy that their inventories of virtual real estate were about to be devalued.

“Once again they do stuff with no forethought or consideration to the people that pay their bills,” said Jeff Strohman, who trades land as the avatar Stetson Rail. “Mainland dropped from a bottom of 8.5 lindens to 7.5 lindens a meter overnight. That’s a loss of 248 real dollars per sim for people who deal in large amounts.”

Pricing for new islands will drop from US$1675 to US$1000 before the month’s end, easing the entry into Second Life for some larger builds.

Linden’s primary source of income is a monthly charge to landowners called “tier,” and the increase in overall land volume can be expected to boost the company’s bottom line. Inflating the land supply comes at a price though, as new land both lowers the worth of existing customers’ assets and decreases Second Life’s population density, contributing to what some pundits have called the “there’s nobody there” problem.

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