Friday, December 4, 2009

Competition Equals Lower Prices

Let me repeat my title: competition equals lower prices.

The music industry was making bank by forcing customers to pay for entire $12+ album even though they only wanted to own the one popular song. The internet has created an alternative distribution method in which it is equally efficient to sell one popular single or all the songs from "an album." Big content was abusing the album model, but now that their ability to abuse it is falling fast, they should accept the reality that their distribution monopoly is fading and innovate, but instead they are trying to sue everyone and their dog.

Now the movie industry to is beginning to follow the same path. Services like Netflix and Redbox are providing cheaper alternatives to the buying or (traditional) renting of DVDs. The theory says that the prices of DVDs should decrease due to this increased competition. Just like the music industry however, the movie industry is refusing to accept the reality that their distribution monopoly is fading. Instead of innovating, they are "playing hardball" with Netflix and Redbox.

Will they ever learn?
(I knew about most of this information, but much of the content cam from this ars technica article.)

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