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What is wrong about market segmentation? Every product finds it price at the crossing of supply and demand. With incremental costs of delivering digital content

What is wrong about market segmentation? Every product finds it price at the crossing of supply and demand. With incremental costs of delivering digital content approaching zero, supply is almost out of the equation. So naturally on a market with higher purchasing power and higher overall price level (and Australia is a costly place to be), prices will be higher, what's wrong about it?

Nursie 13y ago
Companies operate within a global marketplace, buying resources and employing workers from wherever they want, in the most cost effective way possible for them. Then they try to deny us the same opportunity. It's hypocritical. Your argument is basically like saying it would be fine to charge people different amounts for your product based on what's in their bank account. Maybe you could do this, but people would be just as annoyed about it.
- anovikov 13y ago
  There are many ways people are charged based on what's on the people's bank account. Look at the airlines for instance, they mastered this skill since 1978. I see nothing wrong here. There are high-price markets and low-price ones, to circumvent it, there are smugglers to run the line - you can buy digital content using a proxy in USA or UK and using a one-off (digital) UK credit card which is easy to buy. Same thing goes about say, smartphones in Russia. It is an accepted practice to buy iPhones from smugglers where they are 60-70% of the price in a retail store due to Apple price policy for Russia, i am fine with that. There are different prices for different places based on a lot of factors, trying to fight it will only increase price levels EVERYWHERE because the volume will go down. An ideal-perfect pricing system is where the product is sold to the maximum number of people who want it and can afford to pay at least an equivalent of incremental cost of production and delivery (which is, for digital goods, near zero), yet everyone pays a maximum amount he can afford. One of the criterias for price setting is the country (there must be many others of course, again look at the airlines and learn from them).
  - synchronise 13y ago
    >There are different prices for different places based on a lot of factors, trying to fight it will only increase price levels EVERYWHERE because the volume will go down. Do you have any proof that this will happen exactly as you say?
- inopinatus 13y ago
  Your assumption is askance. It is perfectly fine to charge people different amounts for a product based on their wealth.
  - nknighthb 13y ago
    Then free trade is out and protectionism is in. There is no cause for treating multinationals better than they treat human beings.
    - inopinatus 13y ago
      On the contrary, it's an easy argument by contradiction. If prices should be the same everywhere, then I should pay the same for rice as a rural villager in a developing nation. But I don't, and I don't expect to, because I am relatively far more wealthy. Therefore differential price levels are acceptable in general: because otherwise our villager could not afford to eat. And that is for an essential item. To hear fat, comfortable westerners complaining about the price of Photoshop is just revolting.
      - nknighthb 13y ago
        Given this and your various other fallacious appeals to worse problems, I conclude you are beyond rational discussion. Suffice to say, you are the worst possible kind of hypocrite for arguing with us instead of being out there helping starving children.
      - vacri 13y ago
        If prices should be the same everywhere, then I should pay the same for rice as a rural villager in a developing nation You forgot about transit prices. Getting rice from that village to that village is much cheaper than getting it to you. This is not the same with digital downloads, where there is zero cost difference to the vendor once the network traffic leaves their LAN. To hear fat, comfortable westerners complaining about the price of Photoshop is just revolting. Well, the important thing is that you've found a way to feel superior. I mean, how dare anyone complain if they're not starving? How dare fat, comfortable people A complain that they're being charged more than fat, comfortable people B? After all, it is a strawman you're making, suggesting that Australians are bitching about paying more for software than people in developing nations. They're not, they're complaining about paying more than those who are at a similar level.
Khaine 13y ago
You wouldn't say that if you had to put up with higher prices solely because of where you lived.
- randyrand 13y ago
  If the alternative is price fixing ill take the free market approach any day. Governments should not be meddling with the prices of software.
  - vacri 13y ago
    It's not free market at all - 'parallel imports' are not allowed. Price fixing is what is currently going on, and free-market competition is what the government wants.
    - inopinatus 13y ago
      It's not price fixing; that is a specific term for a conspiracy between sellers. Adobe cannot conspire with themselves. It's just pricing.
      - Khaine 13y ago
        No. When I cannot import your good from another supplier at a lower cost and undercut the price you will supply to me at due to importation, and licensing arrangements you have in place. That is in-essence price fixing.
      - vacri 13y ago
        Well, if you want to ignore all the other suppliers of digital-download software and pretend that this is solely about Adobe and Photoshop, then yes, it's not 'price fixing', but neither is it 'just pricing'. It's 'price gouging'.
  - Khaine 13y ago
    In what way do any of these markets resemble a completely free market? I am not allowed to buy songs from the US iTunes Store, or the US Steam Store. DVD's are region locked, and parallel importation is illegal.
beedogs 13y ago
People really don't make that much more here; it just costs more to live. You're basically arguing in favor of price-fixing.
inopinatus 13y ago
Nothing is wrong with it. There's no basic human entitlement to a cheap copy of Adobe Photoshop, so the ethical dimension here is extremely limited, and I'm disappointed to see you're being downvoted for making a very salient point. I have no sympathy for those of my fellow Australians who think they have some valid complaint that the price of digital assets is "too high". Australians simply do have a higher willingness to pay, and lower price elasticity of demand, for a whole host of economic reasons. Companies charge the price that maximises their returns, and this means price segmentation wherever it is legal. Moreover it is, of course, also impossible to legislate against: the same laws would effectively peg the Australian dollar. This is just political grandstanding; nothing will change.
- justincormack 13y ago
  Judging from Japan a serious recession and growth slowing will stop it and it will be followed by 20 years of deflation. Australia is probably near the end of the 20 year boom, price elasticity will shift at some point. Good time to start businesses based on this perhaps.
- iwwr 13y ago
  There is no entitlement to it, but we're not talking of a free market. Adobe has a legal privilege to punish retailers who may undercut them via "parallel import" and it's a crime to circumvent DRM. Without those legal privileges, a free market would work by bringing prices of like goods in line.
  - inopinatus 13y ago
    Photoshop is neither a commodity nor an essential good; please explain why a free market needs to exist for it.
    - billpg 13y ago
      Please explain why a free market shouldn't exist for Photoshop?
vacri 13y ago
What's wrong with complaining about being forced to pay more and engaging in activities to level the playing field? I've always found this style of argument to be innately humourous, a sort of "oh no, they're fighting back somehow - only businesses should be able to make things more favourable for themselves!"
vacri 13y ago
Also... So naturally on a market with higher purchasing power and higher overall price level Median wage in the US and Australia are equivalent - in the mid- to high- 40k range.
- matt_trentini 13y ago
  Well, the median wage in Australia was A$57,400 [1] and US$50,000 [2], both in 2011. [1] http://mattcowgill.wordpress.com/2013/05/13/what-is-the-typical-australians-income-in-2013/ http://mattcowgill.wordpress.com/2013/05/13/what-is-the-typi... [2] https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...
zmmmmm 13y ago
So a thought experiment ... Is it ok to charge different prices to black people vs white people? For the sake of argument, assume there is a genuine difference in demand between races (I would imagine it is true, but let's not debate that). If it is not OK, why is it OK to charge Australians differently to other people, beyond the genuine differences in actual costs to deliver software here?
- gtCameron 13y ago
  There is not different pricing for Australians, there is different pricing for people who are located in Australia. Big difference. Comparing regional pricing schemes to racial discrimination is quite a leap.
  - treerock 13y ago
    Not a huge leap. Studies suggest that US car dealers regularly practice price discrimination based on race. [1]: http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2539&context=fss_papers http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic...
    - fnordfnordfnord 13y ago
      And mortgages: http://www.reuters.com/article/2012/07/12/us-wells-lending-settlement-idUSBRE86B0V220120712 http://www.reuters.com/article/2012/07/12/us-wells-lending-s... http://articles.washingtonpost.com/2011-12-21/business/35287730_1_subprime-loans-countrywide-home-loans http://articles.washingtonpost.com/2011-12-21/business/35287...
  - chris_wot 13y ago
    People located in Australia vs Australians. No, there is not a big difference. Australians are beginning to get mobilised about being discriminated against, and the Australian government will start doing things to end the ripoffs when the outrage gets too much.
- MarkMc 13y ago
Volpe 13y ago
Nothing wrong with that, just as there is nothing wrong with me taking my copy and distributing it for a lower cost/free. (That's called arbitrage). Or are we talking about using Copyright to be limited to geographic location? (i.e your U.S Licensed Photoshop can't be used in Australia)... Because that would be a serious misuse of laws. (in my opinion)
jacques_chester 13y ago
Nothing's wrong with it. Just as there's nothing wrong with the various Parliaments in Australia legislating to modify consumer laws. If that doesn't suit sellers, they may withdraw their products from sale. (Given that the marginal gross on software is basically infinity ... they won't).

Nursie 13y ago

Companies operate within a global marketplace, buying resources and employing workers from wherever they want, in the most cost effective way possible for them. Then they try to deny us the same opportunity. It's hypocritical. Your argument is basically like saying it would be fine to charge people different amounts for your product based on what's in their bank account. Maybe you could do this, but people would be just as annoyed about it.

anovikov 13y ago
There are many ways people are charged based on what's on the people's bank account. Look at the airlines for instance, they mastered this skill since 1978. I see nothing wrong here. There are high-price markets and low-price ones, to circumvent it, there are smugglers to run the line - you can buy digital content using a proxy in USA or UK and using a one-off (digital) UK credit card which is easy to buy. Same thing goes about say, smartphones in Russia. It is an accepted practice to buy iPhones from smugglers where they are 60-70% of the price in a retail store due to Apple price policy for Russia, i am fine with that. There are different prices for different places based on a lot of factors, trying to fight it will only increase price levels EVERYWHERE because the volume will go down. An ideal-perfect pricing system is where the product is sold to the maximum number of people who want it and can afford to pay at least an equivalent of incremental cost of production and delivery (which is, for digital goods, near zero), yet everyone pays a maximum amount he can afford. One of the criterias for price setting is the country (there must be many others of course, again look at the airlines and learn from them).
- synchronise 13y ago
  >There are different prices for different places based on a lot of factors, trying to fight it will only increase price levels EVERYWHERE because the volume will go down. Do you have any proof that this will happen exactly as you say?
inopinatus 13y ago
Your assumption is askance. It is perfectly fine to charge people different amounts for a product based on their wealth.
- nknighthb 13y ago
  Then free trade is out and protectionism is in. There is no cause for treating multinationals better than they treat human beings.
  - inopinatus 13y ago
    On the contrary, it's an easy argument by contradiction. If prices should be the same everywhere, then I should pay the same for rice as a rural villager in a developing nation. But I don't, and I don't expect to, because I am relatively far more wealthy. Therefore differential price levels are acceptable in general: because otherwise our villager could not afford to eat. And that is for an essential item. To hear fat, comfortable westerners complaining about the price of Photoshop is just revolting.
    - nknighthb 13y ago
      Given this and your various other fallacious appeals to worse problems, I conclude you are beyond rational discussion. Suffice to say, you are the worst possible kind of hypocrite for arguing with us instead of being out there helping starving children.
    - vacri 13y ago
      If prices should be the same everywhere, then I should pay the same for rice as a rural villager in a developing nation You forgot about transit prices. Getting rice from that village to that village is much cheaper than getting it to you. This is not the same with digital downloads, where there is zero cost difference to the vendor once the network traffic leaves their LAN. To hear fat, comfortable westerners complaining about the price of Photoshop is just revolting. Well, the important thing is that you've found a way to feel superior. I mean, how dare anyone complain if they're not starving? How dare fat, comfortable people A complain that they're being charged more than fat, comfortable people B? After all, it is a strawman you're making, suggesting that Australians are bitching about paying more for software than people in developing nations. They're not, they're complaining about paying more than those who are at a similar level.

Khaine 13y ago

You wouldn't say that if you had to put up with higher prices solely because of where you lived.

randyrand 13y ago
If the alternative is price fixing ill take the free market approach any day. Governments should not be meddling with the prices of software.
- vacri 13y ago
  It's not free market at all - 'parallel imports' are not allowed. Price fixing is what is currently going on, and free-market competition is what the government wants.
  - inopinatus 13y ago
    It's not price fixing; that is a specific term for a conspiracy between sellers. Adobe cannot conspire with themselves. It's just pricing.
    - Khaine 13y ago
      No. When I cannot import your good from another supplier at a lower cost and undercut the price you will supply to me at due to importation, and licensing arrangements you have in place. That is in-essence price fixing.
    - vacri 13y ago
      Well, if you want to ignore all the other suppliers of digital-download software and pretend that this is solely about Adobe and Photoshop, then yes, it's not 'price fixing', but neither is it 'just pricing'. It's 'price gouging'.
- Khaine 13y ago
  In what way do any of these markets resemble a completely free market? I am not allowed to buy songs from the US iTunes Store, or the US Steam Store. DVD's are region locked, and parallel importation is illegal.

beedogs 13y ago

People really don't make that much more here; it just costs more to live. You're basically arguing in favor of price-fixing.

inopinatus 13y ago

Nothing is wrong with it. There's no basic human entitlement to a cheap copy of Adobe Photoshop, so the ethical dimension here is extremely limited, and I'm disappointed to see you're being downvoted for making a very salient point. I have no sympathy for those of my fellow Australians who think they have some valid complaint that the price of digital assets is "too high". Australians simply do have a higher willingness to pay, and lower price elasticity of demand, for a whole host of economic reasons. Companies charge the price that maximises their returns, and this means price segmentation wherever it is legal. Moreover it is, of course, also impossible to legislate against: the same laws would effectively peg the Australian dollar. This is just political grandstanding; nothing will change.

justincormack 13y ago
Judging from Japan a serious recession and growth slowing will stop it and it will be followed by 20 years of deflation. Australia is probably near the end of the 20 year boom, price elasticity will shift at some point. Good time to start businesses based on this perhaps.
iwwr 13y ago
There is no entitlement to it, but we're not talking of a free market. Adobe has a legal privilege to punish retailers who may undercut them via "parallel import" and it's a crime to circumvent DRM. Without those legal privileges, a free market would work by bringing prices of like goods in line.
- inopinatus 13y ago
  Photoshop is neither a commodity nor an essential good; please explain why a free market needs to exist for it.
  - billpg 13y ago
    Please explain why a free market shouldn't exist for Photoshop?

vacri 13y ago

What's wrong with complaining about being forced to pay more and engaging in activities to level the playing field? I've always found this style of argument to be innately humourous, a sort of "oh no, they're fighting back somehow - only businesses should be able to make things more favourable for themselves!"

vacri 13y ago

Also... So naturally on a market with higher purchasing power and higher overall price level Median wage in the US and Australia are equivalent - in the mid- to high- 40k range.

matt_trentini 13y ago
Well, the median wage in Australia was A$57,400 [1] and US$50,000 [2], both in 2011. [1] http://mattcowgill.wordpress.com/2013/05/13/what-is-the-typical-australians-income-in-2013/ http://mattcowgill.wordpress.com/2013/05/13/what-is-the-typi... [2] https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...

zmmmmm 13y ago

So a thought experiment ... Is it ok to charge different prices to black people vs white people? For the sake of argument, assume there is a genuine difference in demand between races (I would imagine it is true, but let's not debate that). If it is not OK, why is it OK to charge Australians differently to other people, beyond the genuine differences in actual costs to deliver software here?

gtCameron 13y ago
There is not different pricing for Australians, there is different pricing for people who are located in Australia. Big difference. Comparing regional pricing schemes to racial discrimination is quite a leap.
- treerock 13y ago
  Not a huge leap. Studies suggest that US car dealers regularly practice price discrimination based on race. [1]: http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2539&context=fss_papers http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic...
  - fnordfnordfnord 13y ago
    And mortgages: http://www.reuters.com/article/2012/07/12/us-wells-lending-settlement-idUSBRE86B0V220120712 http://www.reuters.com/article/2012/07/12/us-wells-lending-s... http://articles.washingtonpost.com/2011-12-21/business/35287730_1_subprime-loans-countrywide-home-loans http://articles.washingtonpost.com/2011-12-21/business/35287...
- chris_wot 13y ago
  People located in Australia vs Australians. No, there is not a big difference. Australians are beginning to get mobilised about being discriminated against, and the Australian government will start doing things to end the ripoffs when the outrage gets too much.
MarkMc 13y ago

Volpe 13y ago

Nothing wrong with that, just as there is nothing wrong with me taking my copy and distributing it for a lower cost/free. (That's called arbitrage). Or are we talking about using Copyright to be limited to geographic location? (i.e your U.S Licensed Photoshop can't be used in Australia)... Because that would be a serious misuse of laws. (in my opinion)

jacques_chester 13y ago

Nothing's wrong with it. Just as there's nothing wrong with the various Parliaments in Australia legislating to modify consumer laws. If that doesn't suit sellers, they may withdraw their products from sale. (Given that the marginal gross on software is basically infinity ... they won't).