{"id":218276,"date":"2010-01-22T16:48:16","date_gmt":"2010-01-22T21:48:16","guid":{"rendered":"http:\/\/knowledgeproblem.com\/?p=6288"},"modified":"2010-01-22T16:48:16","modified_gmt":"2010-01-22T21:48:16","slug":"some-economics-of-cable-content-bundling","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/218276","title":{"rendered":"Some economics of cable content bundling"},"content":{"rendered":"
<\/p>\n

Lynne Kiesling<\/em><\/p>\n

Jim Surowiecki has a New Yorker column on cable bundling<\/a> that does a good job of explaining some of the reasons why bundling benefits all interested parties in the transaction — the cable provider, the content provider, and the consumer. His analysis provides several examples of comparing a policy with the most likely counterfactual, as in this discussion of a la carte pricing:<\/p>\n

\n

So consumer advocates have been pushing for a system of so-called \u201c\u00e0 la carte\u201d programming, expecting that this would drive down prices for consumers.<\/p>\n

In fact, it probably wouldn\u2019t. The simple argument for unbundling is: \u201cIf I pay sixty dollars for a hundred channels, I\u2019d pay a fraction of that for sixteen channels.\u201d But that\u2019s not how \u00e0-la-carte pricing would work. Instead, the prices for individual channels would soar, and the providers, who wouldn\u2019t be facing any more competition than before, would tweak prices, perhaps on a customer-by-customer basis, to maintain their revenue.<\/p>\n<\/blockquote>\n

He then points out two consumer-focused reasons why the demand for a la carte options has never been sufficient to bring them to market. First, it’s very common for people to prefer bundles because they reduce transactions costs and search costs; second, bundles create option value for consumers (I don’t care about watching that channel right now, but I might in the future, so there’s a value to having it).<\/p>\n

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The appeal of bundling is partly that it reduces transaction costs: instead of having to figure out how much each part of a package is worth to you, you can make a blanket judgment. Bundling eliminates the problem of fretting about small expenditures, which may be one reason that flat-rate pricing is very common in the vacation industry (cruise ships, all-inclusive travel packages, and so on). It also offers what economists call option value: you may never watch those sixty other channels, but the fact that you could if you wanted to is worth something. Many consumers also perceive bundles as bargains; getting a bunch of things for one price feels like a deal, even when it\u2019s not.<\/p>\n<\/blockquote>\n

But in this era of disintermediation and ease of streaming TV and video, isn’t that likely to push consumers to want more a la carte options? Sure, and that’s why he argues that it is in the interest of cable providers and content providers to avoid the short-term profit-motivated bickering over fees (such as that between Scripps\/HGTV-Feed Network and Cablevision) so they can maintain the long-term benefit of consumers who are interested in bundled goods.<\/p>\n

\"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/div>\n","protected":false},"excerpt":{"rendered":"

Lynne Kiesling Jim Surowiecki has a New Yorker column on cable bundling that does a good job of explaining some of the reasons why bundling benefits all interested parties in the transaction — the cable provider, the content provider, and the consumer. His analysis provides several examples of comparing a policy with the most likely […]<\/p>\n","protected":false},"author":4110,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,14],"tags":[],"class_list":["post-218276","post","type-post","status-publish","format-standard","hentry","category-news","category-telecom"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/218276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4110"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=218276"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/218276\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=218276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=218276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=218276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}