People Just Aren't That Into The Internet

A blog about business and economics.
May 11 2012 11:18 AM

People Just Aren't That Into The Internet

1336749479046
Cables!

Wikimedia Commons

Erik Kain kicked off a good round of discussion with a post about how HBO makes widespread Game of Thrones piracy nearly inevitable by refusing to sell anyone a copy of Game of Thrones. Instead, if you want to watch Game of Thrones you need to buy HBO which is a bundle of a whole bunch of shows. And if you want to buy HBO, you need to buy cable television which is a bundle of a whole bunch of channels. So if you want to watch Game of Thrones you have to pay for Game of Thrones and Girls and all of ESPN and CNN which can get quite expensive. Alternatively, you can download it on the Internet for free.

I see this as an example of why the socially optimal level of piracy is higher than zero since both HBO and its corporate parent Time Warner have some valid business model reasons for packaging their content in this way, but clearly the package model creates deadweight loss.

Advertisement

Many, however, are just fundamentally frustrated by the extent to which incumbent firms seem reluctant to take the leap into an inevitable-seeming emerging world where all content is basically streaming on-demand and paid for on an à la carte basis. But I think the frustrated need to spend less time being mad at companies and more time being mad at their fellow Americans. People who write on the Internet for a living can get a bit out of touch about this at times, but the fact of the matter is that home broadband internet is a much less popular product than cable television. Some people—like me—have broadband but no cable, but a much larger group of people have cable but no broadband. But there's more. When new, higher-quality versions of cable are rolled out—digital cable, HDTV—consumers have proven themselves quite eager to pay higher prices for higher quality. But lots of people who could have broadband today aren't buying it, and firms that have invested money in building better broadband have had difficulty selling it at a premium price point to anyone.

Now I find that set of preferences a little baffling, but tastes differ and that's life.

The problem for people who do want to watch all their TV over the internet is that to provide enough video content to everyone for that to be the standard way of doing things, you'd need much more broadband capacity. And we could build much more broadband capacity, but people would have to want to buy it. And at the moment, it seems like people don't really want to. Of course they would want to if cable television stopped existing, but all the infrastructure is alreayd there. Now maybe aggregate population preferences will change over time. There's certainly some evidence that they're shifting a bit. But hard as it is for web junkies to remember, lots of people seem perfectly happy checking Facebook on their phone.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

The Extraordinary Amicus Brief That Attempts to Explain the Wu-Tang Clan to the Supreme Court Justices

Amazon Is Officially a Gadget Company. Here Are Its Six New Devices.

The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Altered State

The Plight of the Pre-Legalization Marijuana Offender

What should happen to weed users and dealers busted before the stuff was legal?

Surprise! The Women Hired to Fix the NFL Think the NFL Is Just Great.

You Shouldn’t Spank Anyone but Your Consensual Sex Partner

Moneybox
Sept. 17 2014 5:10 PM The Most Awkward Scenario in Which a Man Can Hold a Door for a Woman
  News & Politics
Weigel
Sept. 18 2014 8:58 AM Does this Colorado Poll Show Latino Voters Bailing on the 2014 Election?
  Business
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
  Life
Food
Sept. 18 2014 9:34 AM How to Order Chinese Food First, stop thinking of it as “Chinese food.”
  Double X
The XX Factor
Sept. 17 2014 6:14 PM Today in Gender Gaps: Biking
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Television
Sept. 18 2014 8:53 AM The Other Huxtable Effect Thirty years ago, The Cosby Show gave us one of TV’s great feminists.
  Technology
Future Tense
Sept. 17 2014 9:00 PM Amazon Is Now a Gadget Company
  Health & Science
Bad Astronomy
Sept. 18 2014 7:30 AM Red and Green Ghosts Haunt the Stormy Night
  Sports
Sports Nut
Sept. 17 2014 3:51 PM NFL Jerk Watch: Roger Goodell How much should you loathe the pro football commissioner?