The word is spreading quickly at the moment. Merchants will be charged for XStreet SL listings/sales, especially for offering freebies: See LL’s Blogs
Well, I don’t care much really, because I’m not a merchant. But I do understand to a certain extent that some merchants are upset and considering to pull their listings. However, from a customer point of view I do appreciate this change (yeah, shoot me folks). When I am on XStreet SL (rarely), I clearly want to find something which is relevant to my search terms. But that’s currently not the case. I can’t be bothered to browse through hundreds of items, most of them crap or free. So I usually don’t go to XStreet SL, unless I know the exact name of an item (because then the search still works reasonably well).
I’m pretty sure that I’m not the only one. Seriously, why would I search on XStreet SL, if it produced results as irrelevant as the in-game search? There’s no benefit. Hence, none of the merchants on XStreet SL will earn my or anybody else’s money.
But if the XStreet SL search became more relevant again, and people weren’t forced to crawl through tons of crap, then XStreet SL would gain more visitors, and more turnover for the merchants. It’s simple maths.
Anyway, pulling all listings right now will be a temporary solution for most merchants. A short boykot. Most will come back anyway, because alternative sale channels just don’t gain the same customer traffic.
At the end of the day it’s still better to pay a few fees and make money than not selling anything at all. (Despite the in-game sales, but they will probably not be affected at all.)
Sure, LL found a new way to gain profit. But hey, they are a business in the first place, not charity. And so far, even way more significant price increases have happened (does Homestead ring a bell?). People protested and yelled at LL. Did it change anything? SL is still there, and presumably most of the protesters as well. 
I can’t stress often enough that running a SL-only business is pretty much suicide. You put your life into LL’s hands (the real one, not the virtual one), if you rely on a predictable SL income stream. (And for those who haven’t done any RL business before: Laws, taxes, regulations and all that stuff change all the time. You either plan for unexpected surprises in advance, or don’t call yourself business.)
Just a quick point… If second life’s in-world search is a bunch of irrelevant crap – what makes you think that LL will be able to clean it up enough so that it becomes relevant on SLX. Sure, we might not have freebie items any more – but there are a lot of merchants who rely solely on slx or use slx to test the waters that are probably going to pull out too for the free alternatives.
As the crap vanishes, so does the good stuff. And you can still make people browse tons of irrelevant items by adding key words to the description. Case and point: put the word “slave” or “collar” or “sex” or some commonly searched term in the description and increase your chances of coming up. You’ll still look for leather jackets and come up with gags, bondage, chaps, chains, chairs, houses, and who knows what else.
LL is just doing a whole lot to make alternatives popular and emerge.