There’s a very interesting thought experiment over at Kuroshin, What’s a Downloaded Episode Worth?, which seeks to discover how much people would be prepared to pay for a single 60 minute episode of a TV show downloaded off the Net:
“Over the last few days I’ve been collecting information about what people would shell out for a pay-per-episode (not pay-per-view) series. Compared to four years ago when I last pondered this question, people seem much more willing to spend a little to get good entertainment, which in itself is a massive shift of opinion. But in the process of gathering this data, I think I may have discovered that you can only ever charge $1 for anything online, no matter how much it costs to make…”
Go and read it, it makes some really interesting points. But I think the really interesting point about pay-per-view is not “how much does it cost” but “how much am I aware that a financial transaction has taken place?”. Why is it that people are prepared to pay 25p for 160 characters of SMS alert or several quid for a ringtone, but balk at paying 60p for a newspaper of three quid for a CD single?
Two reasons: convenience, and what I shall call “masked commerce.” Convenience is obvious, masked commerce less so. The fact is that when I purchase something via my mobile I’m effectively unaware that money has changed hands. I don’t really become aware of it until my mobile bill arrives. This is dramatically different to a normal Web e-commerce transaction, where I have to get out my credit card, tap in all the details, confirm what I want, receive an email confirmation, etc. etc. I’m massively aware of the financial transaction and thus become highly price sensitive.
iTunes gets this. Once I’ve put my credit card in the system, it’s just too damn easy for me to buy a song or an album – the system even coyly asks me if I really want to be reminded every time I buy something, wouldn’t life just be easier if it didn’t pester me with these alerts? Because without the alerts, I could blissfully buy buy buy and it would all be, right now and in the present, free. Of course, until the credit card arrives. But then it’s too late, isn’t it?
Never underestimate the power of human self-deception in commercial matters.