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Because it's obvious. Business model 2 involves significant capital expenditure. Business model 1 involves the same profit without the risk; all they have to

Because it's obvious. Business model 2 involves significant capital expenditure. Business model 1 involves the same profit without the risk; all they have to do is cut deals and act as rent-seekers on their existing infrastructure. They'd have to be fools to go for model 2.

splintercell 9y ago
You're not thinking it clearly. As long as you assume them to be profit seeking individuals and not some inconsistent model, then their choice leans far too heavily towards investing in their own infrastructure (even if you assume a bully who is ripping people's lunch money to invest some of that lunch money into a gym membership). If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify. The capital expenditure is still there. On the top of that, they will have to gain expertise in a new field. On the other hand, investing in their own infrastructure makes sense because this is their own domain and this is how they got into this position at the first place.
- grzm 9y ago
  > You're not thinking it clearly. Your useful comment reads just as well without this. While you may think they're not thinking clearly, stating so is unlikely to convince them of your argument.
- callalex 9y ago
  >If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify. Not really, they could just charge an additional $10/mo for users to access Spotify and people will start to choose Verizon Music since it is half the price, even though it is worse, which then bleeds Spotify dry.
- westernmostcoy 9y ago
  > If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify. This is the problem though. What happens when they build Verizon Music and then charge people to use (or otherwise harm access to) Spotify?
- kevin_b_er 9y ago
  They do not have a build a service as good as spotify. They just have to force spotify to be more expensive by rent seeking. They make money either way.
- outsidetheparty 9y ago
  > As long as you assume them to be profit seeking individuals and not some inconsistent model, then their choice leans far too heavily towards investing in their own infrastructure How so? How does eliminating net neutrality give them incentive to improve their network? You've provided no support for this at all. (In which you have much in common with Pai!) if it were as simple as "more infrastructure equals more profit" then they'd already be building more infrastructure, neutrality rules or no. > If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify But that's the point: they wouldn't have to make a better service. All they'd have to do is throttle Spotify's traffic down to the point that their own service seems preferable. Or (more likely) just extract a toll from Spotify in exchange for not doing that.

splintercell 9y ago

You're not thinking it clearly. As long as you assume them to be profit seeking individuals and not some inconsistent model, then their choice leans far too heavily towards investing in their own infrastructure (even if you assume a bully who is ripping people's lunch money to invest some of that lunch money into a gym membership). If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify. The capital expenditure is still there. On the top of that, they will have to gain expertise in a new field. On the other hand, investing in their own infrastructure makes sense because this is their own domain and this is how they got into this position at the first place.

grzm 9y ago
> You're not thinking it clearly. Your useful comment reads just as well without this. While you may think they're not thinking clearly, stating so is unlikely to convince them of your argument.
callalex 9y ago
>If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify. Not really, they could just charge an additional $10/mo for users to access Spotify and people will start to choose Verizon Music since it is half the price, even though it is worse, which then bleeds Spotify dry.
westernmostcoy 9y ago
> If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify. This is the problem though. What happens when they build Verizon Music and then charge people to use (or otherwise harm access to) Spotify?
kevin_b_er 9y ago
They do not have a build a service as good as spotify. They just have to force spotify to be more expensive by rent seeking. They make money either way.
outsidetheparty 9y ago
> As long as you assume them to be profit seeking individuals and not some inconsistent model, then their choice leans far too heavily towards investing in their own infrastructure How so? How does eliminating net neutrality give them incentive to improve their network? You've provided no support for this at all. (In which you have much in common with Pai!) if it were as simple as "more infrastructure equals more profit" then they'd already be building more infrastructure, neutrality rules or no. > If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify But that's the point: they wouldn't have to make a better service. All they'd have to do is throttle Spotify's traffic down to the point that their own service seems preferable. Or (more likely) just extract a toll from Spotify in exchange for not doing that.