Second Life Grandfathers

Linden Labs blinked this week, rolling back an unpopular Second Life fee hike -- at least for current virtual landowners.

Second Life is a massive multiplayer online world, akin to Electronic Arts' (ERTS - Cramer's Take - Stockpickr) The Sims. Players explore an endless, sprawling 3-D virtual reality where their Internet avatars interact, buy land, set up shop and even (possibly) make money.

Property is one of few resources controlled by Linden Labs, the creator of Second Life. While businesses are earning revenue by selling fabricated goods or advertising in the virtual world, Linden's main source of income in Second Life comes from the sale of space on their computer servers. The company raised eyebrows last week by proposing to ratchet up the price of this so-called land in Second Life.

Linden said late last month it would raise the annual cost of owning a private island by some 45% for those residents making new land purchases. The one-time purchase cost rose to $1,675 from $1,250, and the monthly maintenance fee soared to $295 from $195. At the time of the original announcement, Linden didn't make it clear whether current land owners would suffer the same fate.

But following a barrage of negative responses to the proposed private island price increase, Linden Lab CEO Philip Rosedale convened a town hall meeting Thursday night within Second Life. He indicated that the company plans to grandfather in current landowners, saying they won't pay the new rates till 2008.