6 ms·

I know it's a cliché to blame all the world's problems on wealth inequality, and that a lot of accusations of wealth-inequality-problems can be reasonably blame

I know it's a cliché to blame all the world's problems on wealth inequality, and that a lot of accusations of wealth-inequality-problems can be reasonably blamed on other things... But this one is definitely wealth inequality. They're probably making over half their revenue on "whales" that make up only 10% of their audience, but they don't want to ignore the rest of their audience because (1) they need to continuously convert casuals into whales or their audience will eventually just die off (2) word-of-mouth marketing is the most effective form of marketing, and there just aren't enough whales out there to keep something like MLB going all on their own.

jon_richards 4y ago
I always get an uneasy feeling when I think about this. It’s like I know we’ll point to this later as the clear-cut sign that something was going wrong. The most profitable business model is no longer “sell to consumers who can afford it.” Sure, freemium is great for the people who can’t afford it, but it reminds me of a feel-good news story about a kid that sold lemonade to raise money for their own cancer treatment. Immediate consequences are good. Actual implications are horrifying.
- zbyte64 4y ago
  Indeed. We've been told that the current economic system is providing better access for all, but when we point out specific cases when that is not the case we're then told it's providing better quality to fewer people as if that's what we were originally promised.
marcosdumay 4y ago
> They're probably making over half their revenue on "whales" that make up only 10% of their audience, but they don't want to ignore the rest of their audience That's probably not true for revenue, but "half" may even underestimate the ratio for profit. The world is full of those business where nearly everybody is a net positive, but the business itself is only viable because a few people make them much more massive. Anyway, they still want to serve all the rest 90% of the people because they make for 20% to 50% of their profits. That is a very relevant amount of profits, that one just don't give up for no reason.
- greedo 4y ago
  Even McDonalds had "whales" (yes I know that sounds horrible in context). In the 80's, they were very aware of customers who frequented the restaurants 2-3x a week. Of course, they didn't call them whales, instead using "Super Heavy Users," as if that's less offensive.
ROTMetro 4y ago
I disagree with your random choice of causes. I would argue it's that there are more people now. While before X number of people were so into the limited number of Y, you are now competing for Y with 2X people, it Y is more valuable to them than to you. If we had twice the number of Disneylands/Pro-sports teams/Y's, prices would definitely go down.
- mywittyname 4y ago
  It's this + wealth inequality. The increased population growth means that an event that had to be affordable for a median income, now needs only be affordable for a 75th percentile income. Since median household income is around $68k and 75th percentile is 122k. A 75th percentile family can spend $50k on season tickets for a sports team, and still live an otherwise median income lifestyle. If wealth inequality wasn't so extreme, then such large price caps wouldn't be economically viable.
czhu12 4y ago
The Disneyland example can't be blamed on wealth inequality right? Disneyland can only host some number of people at the same time, if we were all billionaires, it still wouldn't expand the capacity of Disneyland.
- bombcar 4y ago
  If Disneyland today can fit 100 guests (example numbers) and there are 50 willing to pay $100 for a ticket and everyone else will pay $10, the optimal pricing will be somewhere below $100 to fill the park. If there are 500 willing to pay $1k for tickets, they should charge $1k or more. The others are now priced out.
xracy 4y ago
I feel like so many businesses are just focusing on the whales without realizing that part of what made them successful before was that everyone could've been a "Whale". Like, it seems so much more enviable to have 1000 regular "fish" that all pay a moderate amount than to try and squeeze every dollar out of 1 whale. But instead our economy is so terribly skewed that we try and give a cheap option to the "minnows" while trying to make a "luxury experience" for a handful of "whales". It doesn't serve anyone really, but we're so stuck in this trickle-down mindset that it becomes a self-fulfilling prophecy.

jon_richards 4y ago

I always get an uneasy feeling when I think about this. It’s like I know we’ll point to this later as the clear-cut sign that something was going wrong. The most profitable business model is no longer “sell to consumers who can afford it.” Sure, freemium is great for the people who can’t afford it, but it reminds me of a feel-good news story about a kid that sold lemonade to raise money for their own cancer treatment. Immediate consequences are good. Actual implications are horrifying.

zbyte64 4y ago
Indeed. We've been told that the current economic system is providing better access for all, but when we point out specific cases when that is not the case we're then told it's providing better quality to fewer people as if that's what we were originally promised.

marcosdumay 4y ago

> They're probably making over half their revenue on "whales" that make up only 10% of their audience, but they don't want to ignore the rest of their audience That's probably not true for revenue, but "half" may even underestimate the ratio for profit. The world is full of those business where nearly everybody is a net positive, but the business itself is only viable because a few people make them much more massive. Anyway, they still want to serve all the rest 90% of the people because they make for 20% to 50% of their profits. That is a very relevant amount of profits, that one just don't give up for no reason.

greedo 4y ago
Even McDonalds had "whales" (yes I know that sounds horrible in context). In the 80's, they were very aware of customers who frequented the restaurants 2-3x a week. Of course, they didn't call them whales, instead using "Super Heavy Users," as if that's less offensive.

ROTMetro 4y ago

I disagree with your random choice of causes. I would argue it's that there are more people now. While before X number of people were so into the limited number of Y, you are now competing for Y with 2X people, it Y is more valuable to them than to you. If we had twice the number of Disneylands/Pro-sports teams/Y's, prices would definitely go down.

mywittyname 4y ago
It's this + wealth inequality. The increased population growth means that an event that had to be affordable for a median income, now needs only be affordable for a 75th percentile income. Since median household income is around $68k and 75th percentile is 122k. A 75th percentile family can spend $50k on season tickets for a sports team, and still live an otherwise median income lifestyle. If wealth inequality wasn't so extreme, then such large price caps wouldn't be economically viable.

czhu12 4y ago

The Disneyland example can't be blamed on wealth inequality right? Disneyland can only host some number of people at the same time, if we were all billionaires, it still wouldn't expand the capacity of Disneyland.

bombcar 4y ago
If Disneyland today can fit 100 guests (example numbers) and there are 50 willing to pay $100 for a ticket and everyone else will pay $10, the optimal pricing will be somewhere below $100 to fill the park. If there are 500 willing to pay $1k for tickets, they should charge $1k or more. The others are now priced out.

xracy 4y ago

I feel like so many businesses are just focusing on the whales without realizing that part of what made them successful before was that everyone could've been a "Whale". Like, it seems so much more enviable to have 1000 regular "fish" that all pay a moderate amount than to try and squeeze every dollar out of 1 whale. But instead our economy is so terribly skewed that we try and give a cheap option to the "minnows" while trying to make a "luxury experience" for a handful of "whales". It doesn't serve anyone really, but we're so stuck in this trickle-down mindset that it becomes a self-fulfilling prophecy.