On 2013-05-18, at 02:12 +0200, Mark Watson <watsonm@netflix.com> wrote: > It's useful to do that because a limited right - to view the content for a period of time, for example, or only whilst remaining a subscriber - can be sold at a lower price than "ownership" rights that fewer people will purchase only once. Lower price means more people can afford it, which, yes, also means more revenue. Further, in the case of video, it aligns more closely with what people actually want. Most people want to watch a film or TV episode once. Few people want to own it forever. And those who want to watch it once generally prefer a model where they do not have to pay the "forever" price. Let me translate that a bit: "Limited rights" create another opportunity for price differentiation. That means that you (a) can offer the "forever" version at a premium (more profitable), but (b) can also offer the restricted version at a price that might be lower than feasible in an undifferentiated environment. All that matters here is that you have two price levels that you can target at two distinct (and distinctly-paying) markets with a high degree of reliability. Of course, there are plenty of other ways to price differentiate, both offline and online... Odlyzko's 2003 paper is still a good read: http://www.dtc.umn.edu/~odlyzko/doc/privacy.economics.pdf
Received on Sunday, 19 May 2013 07:52:20 UTC