When Your Product Becomes Obsolete, Increase its Price

26 Apr ’08

I know that conventional distribution of conventional video content is facing severe challenges. Still, it’s hard for me to be sympathetic to an attitude that looks at revenue from that business as a sinecure rather than an opportunity that must be earned. So how should one think about the idea that the networks should charge more for content that customers want less?

A decade ago, the average audience for a top-rated network show such as ER or Seinfeld was at least twice as big as the number of viewers contemporary prime-time hits like CSI and House now attract. Where have all the couch potatoes gone? To specialty channels and the Internet, which are stealing away viewers from network TV at a rate that is alarming the big broadcasters such as CTV and Global. With industry revenues for network TV in decline – from more than $230-million a few years ago to $113-million last year – they now want to charge fees to cable and satellite companies that carry their signals, just as specialty channels like TSN, Showcase and MuchMusic pay.

{ 3 comments… read them below or add one }

S June 20, 2008 at 09:07

In his book “Influence,” psychology professor Robert Cialdini talks about occasions where charging a higher price for an item can increase demand for that item. This is because people tend to think higher prices = scarcity, and the human brain is conditioned to grab scarce items whenever they can.

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oregonnerd May 19, 2008 at 08:18

The Register has interesting and continuing coverage of this issue, as does TechDirt.
–Glenn

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Brian Hogg May 9, 2008 at 09:21

It seems to make sense – for those still on the “traditional” networks, they’re not likely to switch with a price increase.

They may even find a greater perceived value in the service if some low-cost extras are added. Or at the very least want to get their “money’s worth” and watch more…

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