5 ms·

That's an interesting perspective, but it kind of looks like a lot of graphs saying "You should pay for stuff you don't want because otherwise it would incentiv

That's an interesting perspective, but it kind of looks like a lot of graphs saying "You should pay for stuff you don't want because otherwise it would incentivize the sellers to price gouge you for the stuff you do want" I'm kind of confused, if it's an adversarial relationship where the seller is going to extract as much money from you as possible in either scenario, wouldn't some consumers prefer to pay specifically to starve out content they'd prefer not to see? Maybe I'm not understanding this page, but it looks like it's "good" for me because instead of paying $9-10 for the History Channel alone I'll be paying $11.70 for History Channel + ESPN (which I will literally never watch)? I'm not a calculus genius but I'd prefer to spend less money and only have what I want. This model assumes that I'd be willing to spend $3 per month on ESPN, but how does the graph look if I were willing to spend $0 per month on it? Or hell, since pricing is arbitrary, I'd like to pay -$3 per month as a courtesy for having to scroll past content I genuinely do not want to consume let alone subsidize?

s17n 6y ago
You aren't going to be able to spend less money though. Since there's zero marginal cost to adding extra channels, you should assume that the price you're getting charged isn't actually based on the number of channels you subscribe to. A better way to think about bundle pricing is that the channels you really want cost $50, and they throw in a whole bunch of other crap for free. Why turn down free stuff?
- lotsofpulp 6y ago
  People don't turn down free stuff. It's just that they no longer value the content provided via TV channels at the price they are asking. The fundamental problem is content that used to be delivered via TV is no longer worth what it once was.
  - s17n 6y ago
    If that's the case, then the prices should go down for bundled content (and this does in fact appear to be what is happening). A la carte makes no sense.
- Ruthalas 6y ago
  The parent comment lists a specific reason why they'd turn directly the 'free' stuff. It requires more effort to then access the content they want to get to when they have to navigate around the cruft. Whether that factors much into your personal value assessment or not, that is a valid downside to having a bunch of extra channels you don't intend to watch.
- newbie789 6y ago
  If those channels are free (and by that reasoning, not actually factored into the price of my package) then why am I unable to get individual channels or create my own bundle? Either I'm subsidizing stuff that I don't want to watch, or I'm not. Is your point that I can't spend less because... they're going to get $50 out of me either way? Except that's impossible because there is no other way so there's literally no way of knowing a theoretical cost so it's safest to assume it's going to be $50 or more?
- baddox 6y ago
  Except this article is about YouTube TV adding more channels and charging everyone more.
  - s17n 6y ago
    They're announcing these things at the same time for obvious reasons, but you can assume the prices would have gone up anyway.
    - baddox 6y ago
      That seems like an awful lot of assuming. Even if it's true that they needed to raise the price of their existing channel offering, and only added new channels to help justify the price increase, that still counts as bundling being used to increase the price.
ridaj 6y ago
The argument is not about your buying preferences as a consumer. Of course if you had a choice between (a) paying X for watching stuff, or (b) paying Y for the ability to watch exactly the same thing, but Y is overall less money because it is somehow dependent of the amount that you consume, that is the better choice. However, the economic equilibrium of a perfectly unbundled system is not that you get to watch the same thing for less money. It is, in the general case, that you either get less content, or pay more, or both. To take your example, realize that it is outlier behavior to be willing to pay $9/mo for History and $0/mo for ESPN. If you took History channel, with the content that it has now, out of the cable bundle and tried to sell it $9/mo, or even $1/mo, there would be way too few interested customers to make such a proposition economically viable. In a perfectly unbundled world, content such as the History channel does not exist. You only have marquee content like ESPN, movies for rental or purchase, or (if lowercase history is your thing) highly produced documentaries, i.e. the kind of content that willingness to pay for is high enough to justify the high customer acquisition cost. You do not have content like History channel because it lies in that tier of things that many people are kind of interested in watching, but only if it comes with something else more valuable that they already paid for. One can debate the societal value of the existence of content such as the History channel to begin with, but that's what the argument is about, not about the consumer's individual preferences in a hypothetical world where it would be possible to watch the same content for cheaper.
- FeepingCreature 6y ago
  > You do not have content like History channel because it lies in that tier of things that many people are kind of interested in watching, but only if it comes with something else more valuable that they already paid for. This seems like you're saying "bundling mis-serves the customer." If the History Channel would not exist if people could pay for it directly, then why should it ought to exist?
  - Jweb_Guru 6y ago
    The idea the article is trying to get at is (I think) that people are willing to pay for the history channel, but as long as they're more willing to pay for some other channels, studios will just jack up the price of the other channels to the point where their funds for discretionary spending on television are exhausted very quickly. This is because it's cheaper for the studios to get people to pay more per show while producing fewer shows, as this increases their profit margins to the maximum they can get away with. The argument that this is bad for consumers is pretty straightforward, but I will point out that these incentives only work so long as consumers have no choice about their cable provider. i.e., the problem is that cable providers are monopolies, not the bundling specifically. Moreover, we've clearly seen over the last two decades that these monopolistic practices have driven huge numbers of people away from television... unfortunately, usually the competition requires the internet, and the same cable companies control internet access, so there's no particular reason for them to change their business model.

s17n 6y ago

You aren't going to be able to spend less money though. Since there's zero marginal cost to adding extra channels, you should assume that the price you're getting charged isn't actually based on the number of channels you subscribe to. A better way to think about bundle pricing is that the channels you really want cost $50, and they throw in a whole bunch of other crap for free. Why turn down free stuff?

lotsofpulp 6y ago
People don't turn down free stuff. It's just that they no longer value the content provided via TV channels at the price they are asking. The fundamental problem is content that used to be delivered via TV is no longer worth what it once was.
- s17n 6y ago
  If that's the case, then the prices should go down for bundled content (and this does in fact appear to be what is happening). A la carte makes no sense.
Ruthalas 6y ago
The parent comment lists a specific reason why they'd turn directly the 'free' stuff. It requires more effort to then access the content they want to get to when they have to navigate around the cruft. Whether that factors much into your personal value assessment or not, that is a valid downside to having a bunch of extra channels you don't intend to watch.
newbie789 6y ago
If those channels are free (and by that reasoning, not actually factored into the price of my package) then why am I unable to get individual channels or create my own bundle? Either I'm subsidizing stuff that I don't want to watch, or I'm not. Is your point that I can't spend less because... they're going to get $50 out of me either way? Except that's impossible because there is no other way so there's literally no way of knowing a theoretical cost so it's safest to assume it's going to be $50 or more?
baddox 6y ago
Except this article is about YouTube TV adding more channels and charging everyone more.
- s17n 6y ago
  They're announcing these things at the same time for obvious reasons, but you can assume the prices would have gone up anyway.
  - baddox 6y ago
    That seems like an awful lot of assuming. Even if it's true that they needed to raise the price of their existing channel offering, and only added new channels to help justify the price increase, that still counts as bundling being used to increase the price.

ridaj 6y ago

The argument is not about your buying preferences as a consumer. Of course if you had a choice between (a) paying X for watching stuff, or (b) paying Y for the ability to watch exactly the same thing, but Y is overall less money because it is somehow dependent of the amount that you consume, that is the better choice. However, the economic equilibrium of a perfectly unbundled system is not that you get to watch the same thing for less money. It is, in the general case, that you either get less content, or pay more, or both. To take your example, realize that it is outlier behavior to be willing to pay $9/mo for History and $0/mo for ESPN. If you took History channel, with the content that it has now, out of the cable bundle and tried to sell it $9/mo, or even $1/mo, there would be way too few interested customers to make such a proposition economically viable. In a perfectly unbundled world, content such as the History channel does not exist. You only have marquee content like ESPN, movies for rental or purchase, or (if lowercase history is your thing) highly produced documentaries, i.e. the kind of content that willingness to pay for is high enough to justify the high customer acquisition cost. You do not have content like History channel because it lies in that tier of things that many people are kind of interested in watching, but only if it comes with something else more valuable that they already paid for. One can debate the societal value of the existence of content such as the History channel to begin with, but that's what the argument is about, not about the consumer's individual preferences in a hypothetical world where it would be possible to watch the same content for cheaper.

FeepingCreature 6y ago
> You do not have content like History channel because it lies in that tier of things that many people are kind of interested in watching, but only if it comes with something else more valuable that they already paid for. This seems like you're saying "bundling mis-serves the customer." If the History Channel would not exist if people could pay for it directly, then why should it ought to exist?
- Jweb_Guru 6y ago
  The idea the article is trying to get at is (I think) that people are willing to pay for the history channel, but as long as they're more willing to pay for some other channels, studios will just jack up the price of the other channels to the point where their funds for discretionary spending on television are exhausted very quickly. This is because it's cheaper for the studios to get people to pay more per show while producing fewer shows, as this increases their profit margins to the maximum they can get away with. The argument that this is bad for consumers is pretty straightforward, but I will point out that these incentives only work so long as consumers have no choice about their cable provider. i.e., the problem is that cable providers are monopolies, not the bundling specifically. Moreover, we've clearly seen over the last two decades that these monopolistic practices have driven huge numbers of people away from television... unfortunately, usually the competition requires the internet, and the same cable companies control internet access, so there's no particular reason for them to change their business model.