Piracy is Progressive Taxation, and Other Thoughts on the Evolution of Online Distribution
Subject:   Per-channel?
Date:   2002-12-16 23:21:03
From:   anonymous2
"Another lesson from television is that people prefer subscriptions to pay-per-view, except for very special events. What's more, they prefer subscriptions to larger collections of content, rather than single channels."

That's not always true. It usually is just that it's cheaper to buy in bulk. How many people who have cable or satellite, with their 100+ channels, actually watch even 20 of those channels in any given month? The problem tends to be that you get a channel or two in this package that you actually *want*, but can't get it otherwise. It's a perceived improvement in service, mixed in the reality of a degradation of service. I don't want the evangelical channels, or the MTV crew, or the shopping channels, or... I want this, that, and the other. But I can't have them alone. I have to get all of the others. And if I see another channel or two I would direly like, I have to buy the $10 add-on package of 20 channels, rather than paying $0.50 per channel to choose what I want.

At least, this has been my experience in the US, and the experiences of many others. I am aware of a couple Canadian TV content providers which actually let you choose the channels you want. I'm a white mid-20s male with a technological orientation. I don't want MTV, BET, gardening, jewelry-shopping, Lifetime, etc. I want TechTV, the NASA channel, Discovery Science, TLC, Disc. Wings, Fox, FX... but to get those, I have to purchase at least 4 times as many channels I'll never even consider.

I would rather be able to compile my own CD of 12 songs and have it sent to me by the publisher, paying per-song (or per-CD, even), rather than having to purchase 7 CDs for *just* those 12 songs. A huge waste on everyone's side.

I pay $9.95/mo to access several hundred technical documents and books, only to actually ever look at 2 in any given month. (Of course, this is hypothetical and unfair; I haven't checked out O'Reilly's online alternatives.) Sure, if you're going to read 50 in that month, it's worth it. It's like telephone usage. Certainly, people purchase plans which give them a wide range of usage for a single price - but because they don't know if they're going to use the phone for 5 or 500 minutes this month. In that respect, a flat rate is desirable.

If you had to pay for your television per-hour of viewing, then most likely you'd switch to a flat rate. Though, personally, I could actually budget out a typical month and stay pretty much on track, so if per-hour would be cheaper, there ya go. I pay a flat rate for my cable Internet connection; partially because per-minute would bankrupt me with my usage. Ah, but some months I'm not home very much, and my usage is less than half. Therein lies the possibility of gain, because I wouldn't be paying as much as that flat rate. But on average, I would be paying more, so I choose the flat rate.

And I've started to lose my thread, so I'll just press 'submit' and leave you to it.
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  • Tim O'Reilly photo Per-channel?
    2002-12-21 08:34:46  Tim O'Reilly | O'Reilly AuthorO'Reilly Blogger [View]

    I don't disagree that being able to choose your own assortment of channels would be a good thing. I was just making the observation that in most equivalent markets, it hasn't worked out that way. There's a tendency towards larger aggregations. And yes, it does theoretically impose an extra cost on the consumer, but in practice, the individual songs (or channels, if TV) would be sold at a sufficiently higher price as to even out the difference.
    • Per-channel?
      2003-07-28 15:38:30  anonymous2 [View]

      Isn't the tendancy towards larger aggregations really just the providers way of inflating the value ?
      As you point out, the individual channels would "be sold at a sufficiently higher price as to even out the difference".

      The cable companies purposely separate the popular channels and bundle them with the less popular ones so that you get some "perceived" value out of your cash. It's basic marketing strategy.
      And since at least some of their advertising revenue is based on the number of subscriptions they sell to a particular channel, its a good way of getting money for a service no one is really using.
    • Per-channel?
      2003-02-01 15:38:19  anonymous2 [View]

      i think logistics come into play here :

      it essentially costs nothing for a distributor to give you a plethora of possibilities, and when you then have them in front of you, you may find that actually there is another channel there that you go to look at from time to time... or to browse to a song that perhaps you would'nt have considered it it were'nt so easy ...

      perhapse also the financial managability of the affair may come in - with monthly perscriptions, i immagine that things are much more managable for the distributor - not so many huge swings in cash flow... there is also the convenience of the consumer - you do'nt have to make a financial decision every time you grab a song or (if paying per hour for the TV, for example) watch something...

      for me as a consumer, the quality of service aspect looks much better with a service that is more stress free, that is'nt trying to make me buy as much as possible... me and the distributor have made an agreement, i payed my monthly fee, and he gives me the best service she can manage without having to persuade me to do anything else but feel good!

      i'd be interested to hear what someone doing business thinks about what i've written...

      ps: by the way, the original article is excellent - one of the few things i find on the web that i've made a hard copy of!