Why you are paying more than you should

How long will it take for consumers to realize that we are paying for the same thing over and over again? For those of you who have an Ipod or Iphone and use Itunes, you will be able to relate to this pretty well. Picture this, you heard a song that you liked on the radio, then you decide to buy that song and download it from Itunes for $0.99. After enjoying the music which you have paid for, you decide that it would be cool to have that song as a ring tone. But Apple does not allow you to do that (there are ways around this which we will not cover), to have a portion of the same song as a ringtone, you have buy it for $2.49. That’s right, you already paid one buck to own that song, now, to use snippets of that songs as your ringtone, you have to pay another two fifty! What in the world?

Now if you happen to want to use that song as a ringback tone (a song or sound heard by the calling party after dialling your number and prior to you answering) you have to pay another $1.99!!! FOR THE SAME SONG! Which you already legally paid for and own! on top of the $2.49 you paid again for a 30 second snippet as ring tone!

Consider the following table taken from the book Television Disrupted by Shelly Palmer

Download the song on iTunes	$0.99
Download a portion of the same song to use as a ring tone	$2.49
Use a portion of the song as a ringback tone	$1.99
Purchase a download of the video of the song on Itunes	$1.99
Purchase a still image of the artist of the song to use as a wallpaper	$1.49
Purchase the DVD of the movie featuring the song	$14.99
Purchase the CD which includes the song	$19.99
Watch PPV (pay per view) or VOD (video on-demand) of the movie featuring the song	$3.95
Watch the HD version of the VOD oncert featuring the song	$6.95
Total revenue from a SINGLE content source	$54.83!

 How many times can you sell the same ‘master file’? well, it seems like sky’s the limit as long as people don’t realise they are paying for the same thing over and over again.

As Palmer noted, any time a consumer wants to move their files top a new device, the media company wants to charge another fee. For example, when you subscribe to some mobile phone games and you change to a new phone, you have to subscribe again.

You see, piracy and P2P downloading is taking a significant chunk out of the profits of those media companies. So they have to make up for it by repeatedly charging an obscene amount for what is essentially the same product. Problem is, like with everything else, 20% of the people are doing 80% of the illegal downloading. Now that 80/20 figure is just my two cents, but the 80/20 rule tends to hold up pretty well most of the time. Similarly, it can be argued that 20% of consumers are the ones buying and paying for 80% of the stuff on iTunes.

So I guess in a way, it is fair play for the media companies. Capitalism has a way of finding a balance, it is just that the distribution is not always fair. In terms of media consumption, those who should be paying a lot aren’t, and those who shouldn’t be paying that much, are paying a lot.

AMTV says – Unless we consumers ‘wise’ up and demand that we truly own the media that we purchased and insist on the portability of the media we own, some media companies will continue to ‘rip’ us off.

~ by David Wong on November 16, 2009.