China Is Quickly Switching From Pirating To Streaming (cnn.com)

hackingbear shares a report from CNN: Not so long ago, China was an oasis for pirated music and videos. CDs and DVDs were easily copied and sold for cheap at roadside markets. If you had a computer and an internet connection, top selling albums and Hollywood movies were widely available for free online. That's changing fast as new technologies such as the convenient WeChat payment and a long-running crackdown on pirated content mean members of the country's growing, smartphone-wielding middle class are increasingly willing to pay to stream videos and music online. "When you have to spend two-to-three hours digging up pirated content, users are willing to pay a [small] amount of money to get non-pirated content," said Karen Chan, an analyst with research firm Jefferies. Across major Chinese video platforms, the monthly fee is about 20 yuan ($3); streaming music is even cheaper, ranging from 8 to 15 yuan ($1-$2) per month. Compare that with a basic monthly Netflix subscription in the U.S. at $8, or a Spotify one at $10. The rapid spread of digital payment platforms like Tencent's WeChat Pay and Alibaba-affiliated Alipay has also played a role, according to Xue Yu, an analyst with research firm IDC. The platforms created a market of young Chinese consumers comfortable with buying goods and services for a few yuan online, Xue said.

Comments

What is ideal price in the west? Half?

[Camembert]

This was an interesting summary. For music + video, streaming is 4 to 5 times cheaper in China.
On average salaries are lower in China: a quick google showed me $1424 monthly in Beijing compared to the use average of $758/week or monthly $3032 (for age 25-34).
So, approx half.
Hence relative to salary, does it make sense to say that a monthly video streaming fee of $6 and for music of $4 would cause the same behaviour in the west?
I think it would. For $10 per month without wasting time, I think that most would switch to legal streaming.

Re: What is ideal price in the west? Half?

[c6gunner]

Comparing the average salary in Beijing to the average salary in all of the USA is rather misleading. The average salary in China add a whole is about $4,700 per YEAR, which is significantly lower than the figure for Beijing.

Re:What is ideal price in the west? Half?

[Anonymous Coward]

It's worse than that, you are comparing one of the best payed places in China to the US average. The average Chinese person wouldn't be getting the Beijing rate.
Yet they still go the legit route, unlike cheap ass Yanks who just want want want, take take take.

Re: What is ideal price in the west? Half?

[Anonymous Coward]

Racist idiot

Re:What is ideal price in the west? Half?

[Anonymous Coward]

For $10 per month without wasting time, I think that most would switch to legal streaming.

Yeah, Netflix is pretty popular.

Re: What is ideal price in the west? Half?

[Anonymous Coward]

You think the premiere location for piracy is being outshined by the US in piracy? That's some nice rose colored glassses you got there.

Re: What is ideal price in the west? Half?

[Anonymous Coward]

The fake news is strong in this one.

Did you not see the article or summary? Ask Trump for another handout, then maybe you will pay as much as Chinese people do for music and tv.

Re: What is ideal price in the west? Half?

[Anonymous Coward]

Yes they do. Because they aren't brainwashed into buying iphones and their government builds infrastructure. So they actually get Internet, unlike silly Americans.
China has more high speed Internet than your little country has people.

Re: What is ideal price in the west? Half?

[Zocalo]

You can't really do a fair comparison of the national averages either as there probably is some bias between those using the streaming services that must have the disposable income to pay for it (most likely on the relatively higher Beijing average salaries) and those without (most likely on provincial area average salaries), which will also be further offset against the higher costs of living in Beijing vs. in the provinces. That $1424/month in Beijing won't help you pay for streaming services if you're paying out $1400/month on living essentials, but if person on the average $4,700/year salary is only spending $300/month on essentials out in the provinces they're going to have more left over for a streaming service.

I do think OP has a valid point though, regardless of average salary and disposable income levels. The cheaper a given service is, the more individuals' disposable incomes will support the outlay at which point it will start competing against all the other non-essential items that a given individual wants. Sooner or later, that's going to be below the point at which they're prepared to go legit to avoid the hassle of dodgy download sites and risk (relatively slim as it is, if done right) of getting caught. Perhaps the media producers and providers need to consider taking it on the chin by trimming their profits for a few years to help convince more people to go legit, because the chances are probably pretty good they'll keep using them if the prices don't go up too sharply a few years down the road.

Re: What is ideal price in the west? Half?

[Anonymous Coward]

Yes.
Their daughters doesn't stay to take over the farm. They move to the cities to get an education.
By the time they turn 20 they know more about the inner workings of a smartphone than you do and have made sure that their parents actually have a smartphone that is better than yours.

Re: What is ideal price in the west? Half?

[Anonymous Coward]

I thought it was chingchangchong not dingdongding, u grape soda watamellon fried chicken wif biskit raycysit!

Re: What is ideal price in the west? Half?

[Rolgar]

Consider that the US has probably about 80 million households that have cable, and it is being slowly shifted to streaming services. If you only get 5 million customers, and you get $10 / month, that generates 600 million/year to create shows depending on what your distribution cost are.

Now, China, which probably never had the time to develop the same cable cartel as the US has a much higher population. Let's say 250 million households. Because you can get a much larger fan base for the same cost of production and distribution, you can lower the cost to generate the same revenue across more people. If 200 million people want to use different streaming services, it would only cost $3/ year to generate the same $600 million to fund programming. Obviously, if you could get a price more like 10 or 20 a year, you would have a lot of money to create programming, and you wouldn't even need to revert to commercials to pay the bills.

Re: What is ideal price in the west? Half?

[Anonymous Coward]

Plus the actors, writers, cameramen, sets, etc are all much cheaper too. So that $600 million will go a lot further too.

Re: What is ideal price in the west? Half?

[MightyYar]

I'm sure that's how you'd like it to work.

Re: What is ideal price in the west? Half?

[Zocalo]

Yep, it's different strokes for different folks, or countries in this case. Within a given market - the US or China, say - you can take some averages to provide a fixed price that can be applied across the board, typically making more from some demographics and potentially even running some at a loss, but trying to do so when you have radically different infrastructure, population densities, salaries, and costs of living just isn't going to work. The EU kind of gets away with it for some things because there's not all that much of a divergence across the EU member states, but trying to charge the same Dollar price for the same product or service in countries as different as the US and China just isn't going to be a viable business model as one will either be far too expensive or will be running at a massive loss.

Re: What is ideal price in the west? Half?

[c6gunner]

The cheaper a given service is, the more individuals' disposable incomes will support the outlay at which point it will start competing against all the other non-essential items that a given individual wants.

That's a valid point if we are talking about why piracy is rampant in third world countries but, I would argue, streaming services in the west have been "cheap enough" for years. Especially if you consider the fact that they are positioned as a replacement for cable television, which is generally far more expensive.

The issue has never been one of cost for us. I have access to two streaming services yet I still often frequent pirate bay. The bigger issues are selection, reliability, and the ability to use media offline.

Since his entire argument was that further lowering the cost of streaming services would cut piracy in the west, I think he's badly misguided. I don't know anyone who pirates because they can't afford Netflix or Amazon Prime; many of them pirate despite having access to at least one of those services.

Who is surprised by this?

[Anonymous Coward]

Make it convenient and reasonable and people will pay.
Of course everyone knew Chinese people were just more honest in general, despite American fake news trying to convince everyone otherwise.

Re:Who is surprised by this?

[Anonymous Coward]

As to consistently getting scammed, or attempted scammed in Beijing years ago, I can verify your statement is nonsense.
Worst country for dishonest attempts to steal, and I've spent significantg time all over the world, often where the people could barely afford clothing, yet were completely honest.
People take package tours to China because the tour guides act as protection for the myriad scams there.

Chinese cinema is censored and not a complete movi

[Anonymous Coward]

Chinese cinema is censored and not a complete movie. They deleted the film's kiss, violence, bloody and so on.

What a shocker

[kbg]

Who would have thought that if you just priced your products fairly you could gain all the market and crack down on pirating easily? It's not like this was something that everybody knew all along.

Re:What a shocker

[Anonymous Brave Guy]

Who would have thought that if you just priced your products fairly you could gain all the market and crack down on pirating easily?

The difficulty is that a lot of people's idea of a "fair" price is wildly out of proportion to average production costs and returns, particularly if you're looking at smaller markets or more niche products and not just the top end Hollywood blockbusters, top-of-charts music, this season's must-have game that are the unicorns in this business.

Read any Slashdot discussion on this subject, and after a few hundred comments you'll find no shortage of people who think that because the marginal cost of online distribution is close to zero, the price should be as well. Go talk to real world customers about your library of original content, and you'll find plenty of people who say they'd buy it if it were a $3 app for the whole thing instead of $10/month. Of course they would like it cheap/free, but that's probably not a fair price unless you have a very large market or very low production costs.

Re:What a shocker

[Anonymous Coward]

They waste millions of dollars on actors pay though.
They could pay actors 200k per year and drop the price.

Re:What a shocker

[Anonymous Brave Guy]

Again, you're only looking at the very top end, the unicorn smash-hits that make a bazillion dollars at the box office. Most creative work just isn't like that. Most professional actors struggle to get by and would be thrilled to land a 200K gig. Most of the production team behind professional creative work probably don't feature in the headline credits or get a high salary at all, even in those few smash hits. And in smaller work, which is most of it, no-one is getting big pay-days.

Re:What a shocker

[Freischutz]

Who would have thought that if you just priced your products fairly you could gain all the market and crack down on pirating easily? It's not like this was something that everybody knew all along.

Yeah, and who would have thought that users would stop pirating your stuff if you just allowed your them to pay a subscription where they could download and watch your content on demand any time they want no matter which country they are in instead of being forced to buy easily scratched, easily broken DVD and BlueRay disks (which into the bargain are grossly over priced as you already pointed out) and where you don't have to deal with malware and all the other crap that goes with pirated content.

Re:What a shocker

[fuzznutz]

Read any Slashdot discussion on this subject, and after a few hundred comments you'll find no shortage of people who think that because the marginal cost of online distribution is close to zero, the price should be as well.

Most customers understand the difference between fixed and variable costs, but many believe that when the marginal costs are near zero, the product should be priced lower than when the same product has marginal costs that are much higher. Suppliers of course believe that pricing should reflect what the market can bear. Therein lies the dilemma.

If demand can be increased by reducing price such that more profit can be made, suppliers would be better off. Unfortunately many suppliers are afraid of upsetting existing markets by changing strategies. And of course some take the alternative tactic and increase price (and profit) per unit [cough] Apple [cough] while reducing overall demand for a product. This, however, makes very little sense in a market with near zero marginal cost unless you have totally inelastic demand.

Re:What a shocker

[Anonymous Coward]

Your argument seems to be that their costs are lower, not so high, which is undercutting your premise.

But I think you're overlooking all the squirreliness in Hollywood Accounting in general, they can't even be trusted to give their own numbers for cost correctly, or even pay salaries properly.

That they're also often taking advantage of people, or having odd discrepancies show up (unless called out, as say that recent re-shot movie was), is a well known problem in the industry.

It's a much more complicated picture than just the consumers having unrealistic expectations. Maybe the industry is unrealistic in how it portrays itself.

Re:What a shocker

[MeNeXT]

That is one point of view the other is that most copyright owners can't decide if it's a license or a product. The determination of the price was initially due to the costs associated with production and distribution of a good like an LP or cassette. As technology improved and the cost of distribution and production nearly disappeared the thirst for profit grew. So in this instance we want to consider it a product unless it was defective. There was no option to return the product if it was defective such as Sony CD DRM and Walt Disney DRM. Where a perfectly good player would no longer play new content.

Now in other instances they want it to be considered as a license such as when it is played at a venue such as a wedding or a business. It doesn't matter that you bought the CD/DVD. Now it's considered a license and you don't have the right to play it. While radio stations can play without paying any fees they want business to pay when a radio station with all the ads is on in a store.

And now back to the full circle, when that same CD/DVD gets scratched and we can't play the licensed material it's a product again.

The other issue I have is that copyright was created in order to promote and distribute content. Content producers retain/withhold content and also retain their copyright creating an artificial price for their product/license.

Now some want to limit it per device. As if it's the device that purchased the right to listen to it. Netflix has shown that people will purchase subscriptions and some copyright holders are never satisfied. Withholding the product so the can continue monetizing it generations after it was paid in full from the initial cinema distribution. Not to mention the original copyright, which expired and was extended. I guess there is greed on both sides.

 

Re:What a shocker

[fluffernutter]

So.. the American movie industry needs to control costs just like any other company in the private sector? Oh noes!

Re:What a shocker

[Anonymous Coward]

Most customers don't _care_ about fixed and variable costs. That's if they even know the difference.

Most customers care about the price they're asked vs the value they get out of it.

The media market is actually similar to the water market.

In most developed countries water is safe and really cheap. In some it's even free for individuals. In some you can walk into a bar and ask for a glass of water, which they're legally obliged to give you, for free. Yet shops and bottlers are making a lot of money selling little bottles of water! And few people actually refill them at home. Why? Because even though most customers, when asked, would actually agree they're a rip-off, it's at a price point they don't mind paying for the value they're getting.

Same thing with the media market. You can get it for free. People will readily buy the wares for the "right" price.

The key difference is in the perspective of the producers. Water? They knew from the get go they were competing against free, so they had to get the right product for the right price. "right" being what maximises benefits. Media? They were coming from a monopoly situation where the "right" price was whatever they decided, , and it was all a matter of outgunning the competition in marketing to get the money coming your way. Then suddenly they had to deal with what the customer actually thought their stuff was worth... Resulting in a lot of whining.

Re:What a shocker

[fuzznutz]

Most customers don't _care_ about fixed and variable costs. That's if they even know the difference.

Sure... That's why nobody complains when ebooks cost more than their hard bound counterparts.

The media market is actually similar to the water market.

Wrong again. The "water" market is way different because water is a necessary component for life. SOME amount is necessary to survive and beyond the required amount to fulfill all your needs and, nobody would pay for more at any price. You would pay everything you have for a cup of water if you were dying of thirst, but you wouldn't pay $1.00 for a million gallons extra beyond what your needs are.

But I assume you meant the bottled water market. You assumptions are wrong again. The bottled water market is a convenience market. Most customers buy because it is easier to pick up a bottle at the local gas station or quickie mart than locate a water fountain or carry their own containers from home. You can carry it with you and it's disposable. And once again, unlike media, we require water during our daily lives. We PAY for the convenience, not the product itself. Personally, I am a customer because I am on a well and I have children at home. If I were on treated city water, I would never buy bottled water since the convenience is not worth the cost to me and I buy in bulk.

The point you are trying (and failing) to make is the fungible goods substitution which is wholly separate from the expectations of zero marginal cost.

Re:What a shocker

[Cederic]

a lot of people's idea of a "fair" price is wildly out of proportion to average production costs and return

Companies are competing with centuries of existing music, books and visual arts, and decades of cinema.

I don't have to pay £8 for a book from my local charity shop yet I'm expected to pay that for one from Amazon. Even worse, I'm expected to pay £8+VAT for the digital version that doesn't have physical printing costs, or the packing and delivery overheads. Meanwhile I can go to Project Gutenberg and access several years worth of reading material absolutely for free.

EA want me to pay £40 for a computer game, then continue paying them through microtransactions to play it. Or I could build up a backlog of 140 games I haven't even yet played but acquired for an average of £5 each.

A fair price may not reflect the investment being put into creating this material, but that isn't the fault of the consumer. Meet the market demand at a fair price point instead of bitching that you can't reap excessive profits from your customers.

Of course they would like it cheap/free, but that's probably not a fair price

I'm happy to pay full price. I just want that price to be identical to the one being paid in China. I'm competing with those guys for work, my salary is lower because of that competition and yet they get to enjoy a far lower cost of entertainment that makes it easier for them to work for less.

If your product is only worth $3 in China then don't go pretending it's worth more than $3 to me.

Re:What a shocker

[Anonymous Brave Guy]

Suppliers of course believe that pricing should reflect what the market can bear.

That's an assumption, and not always a valid one. It may be true in most cases at the high end, but at the low end the question is often closer to "Can we afford to do this at all?"

If demand can be increased by reducing price such that more profit can be made, suppliers would be better off. Unfortunately many suppliers are afraid of upsetting existing markets by changing strategies.

Both of these things are true, but the "if" in your first point is important, and some of the fear in your second point is justified. The reality is more complicated than just increasing/decreasing prices resulting in decreasing/increasing demand, even allowing for the possibility of a non-linear relationship between the two.

There certainly have been some success stories of quite dramatic price reductions resulting in even more dramatic increases in sales and ultimately much better results. Steam famously succeeded doing this with their sales, for example.

On the other hand, for a smaller business selling content on a smaller scale, your transaction overheads probably include a fixed cost element as well as some that are proportionate to the price. Obviously that means the lower your price, the more that fixed element is eating out of your margin.

Another one that isn't always considered by those who haven't worked in this sort of market is that people who purchase low value products and services are much more likely to cause customer support issues later. Since they are also generating relatively little profit if you adopt a high volume, low price strategy, one customer support request can easily cost more to service than that customer's entire purchase was worth. So your support overheads are likely to increase significantly if you go high volume, low price as well.

In short, it's not an easy decision to make. I have businesses where we've debated these issues many times, and we've done some experiments, and we know that small changes can make big differences. We also know that it's very difficult to wind back a big cut in your headline price, and that making such a cut and then finding it didn't result in a big enough increase in customer numbers would without doubt result in the business failing. It's easy to look from the customer's side and say businesses should try it, but that's a tough call to make when your staff have mortgages to pay and kids to put through school and you're being asked to gamble with their livelihoods.

Re:What a shocker

[Anonymous Brave Guy]

The costs are lower, but so are the revenues and profits. Most creative content isn't produced in big, high profile arenas like Hollywood, and the organisations producing it often aren't working on a scale where Hollywood Accounting tricks are relevant.

Re:What a shocker

[Anonymous Brave Guy]

I want to point out that you're describing a very specific environment -- I'm guessing you're based in the US from some of the details? -- but much of what you wrote isn't how IP laws necessarily work elsewhere.

In various other places, the issues with DRM and defective physical media are covered by the same consumer protection laws as any other defective physical product, and in many cases you'd be entitled to return a product that didn't play (because of a bad DRM implementation or otherwise) for a full refund. Likewise, there have been laws on the books for a while in places like the EU that provide better consumer protections for digital/online content.

Many places also provide for some degree of backup, format shifting and so on, at least for personal use. The law is changing too slowly in this respect, IMHO. I don't have much sympathy for Big Media complaining about, say, people who already bought a song on CD wanting to put it on their phone so they can actually listen to it when they're out. I also don't have much sympathy for software companies who try to use technical measures to lock a program to a specific computer, given how often people replace their hardware. But at least the winds seem to be blowing in the right direction, and there have been moves to update laws in various places and make them more appropriate for modern technologies and behaviour. And of course the market is responding on its own as well, with most of the new subscription services being tied to the subscriber rather than the device or physical media.

I don't really have a problem with restricting acts that redistribute content to a much larger audience and on a commercial basis, like buying a CD or downloading an MP3 but then playing the music at many large public events. That's exactly the sort of scaling up without compensation where I think copyright is a reasonable economic model in the absence of anything shown to work better. In this respect, again I would point out that the anomaly that you mentioned with radio stations isn't universal.

Re:What a shocker

[Anonymous Brave Guy]

The American movie industry seems to live in its own crazy world, and it's big enough to look after itself. But most content isn't produced by the American movie industry, and all the little guys have to play by the same rules too.

Re:What a shocker

[Anonymous Brave Guy]

You seem to be objecting to market segmentation and differential pricing, on some sort of ethical basis. The trouble is, the world isn't really one big, global market where the same price makes sense everywhere.

For one thing, people in different places might have wildly different buying power. If you look past the unicorn productions that make staggering money no matter what, a lot of content might not be cost-effective to produce at all if you had to sell it everywhere at the lowest price you sold it anywhere, nor if you tried to sell it everywhere at the highest price the market would pay anywhere because many potential customers would immediately be priced out of the market.

For another, the overheads in different parts of the world can vary dramatically. My businesses are in the UK, and we would immediately make around 21% less revenue selling at the same "sticker price" to a customer in Hungary (highest VAT rate in the EU) than to a customer who is outside the scope of VAT here (so we don't need to deduct tax on that sale). If we sell to a customer in the US, we're going to have to deal with the uncertainties of exchange rates and the fees for transacting in a foreign currency, which are overheads we don't have selling to a customer who is also in the UK.

Then you have secondary markets to consider. The reason you have to pay £8 for a book from Amazon but the same book might cost less from your local charity shop is that the latter is probably a second hand copy. You have no guarantee that it will be available from there, nor do you know what physical condition it might be in. And if it is available, that's because someone bought a new copy from somewhere else first, and then donated it. The original author and editor and publishing team didn't get anything at all from that secondary sale, yet two people have enjoyed reading the book instead of one, so the cost of lost potential sales due to the secondary market has to be taken into account in the first sale price.

Maybe one day everyone in the world will live in economies with similar cost of living and purchasing power, and maybe one day we'll have simple and uniform taxation policies and overheads around the world, but if that day ever comes it will be far into the future. For now, price discrimination is an economic reality and it might be objectively justified for many different reasons depending on the circumstances. If a product is worth $3 in China and isn't worth more than $3 to you, you're welcome not to buy it at whatever higher price it's offered at, or you can move to China and pick it up for $3. But if you live in the West and you really believe your position financially is the same as a Chinese person who can only afford the $3 copy, you might be in for a nasty shock if you try that one.

Re:What a shocker

[fuzznutz]

Another one that isn't always considered by those who haven't worked in this sort of market is that people who purchase low value products and services are much more likely to cause customer support issues later.

That is a true concern. Particularly with complicated products. I deal with software licensing problems every day for my job and although the software itself has zero marginal cost, the licensing and activation schemes can be ridiculously complicated at times and require tech support to resolve. And I am aware of the phenomenon of "firing your customer." Just yesterday, my bank notified me that they were closing my credit card since it had been too long since I had used it. There are other hidden costs that need to be covered too. I know someone who has a habit of a high rate of returning items, often just because she changed her mind afterwards.

In short, it's not an easy decision to make. I have businesses where we've debated these issues many times, and we've done some experiments, and we know that small changes can make big differences. We also know that it's very difficult to wind back a big cut in your headline price, and that making such a cut and then finding it didn't result in a big enough increase in customer numbers would without doubt result in the business failing. It's easy to look from the customer's side and say businesses should try it, but that's a tough call to make when your staff have mortgages to pay and kids to put through school and you're being asked to gamble with their livelihoods.

You won't get an argument from me on that. It is a gamble. However, when dealing with a zero marginal cost product, it's a much smaller gamble, particularly with media when your leftover demand is being pirated already.

Re:What a shocker

[Anonymous Brave Guy]

I suppose what a lot of this comes down to is that just because the cost of reproducing an electronic work may be close to zero, that very much doesn't mean that the marginal cost of selling that copy will be zero.

Re:What a shocker

[Anonymous Coward]

The problem is that revenues has to cover the fixed production costs as well as the marginal costs. The idea that users should only be responsible for the marginal cost of digital goods (which is zero, or very close to it) is ridiculous. That cannot support product development unless the "product" is something like the TechDirt blog, which not coincidentally, is perhaps the chief proponent of the "price must equal marginal cost, which equals zero" economic theory.

Look at the life expectancy of video game houses. Many of them can't survive because their fixed costs are enormous compared to their revenue streams, even though their marginal costs are quite small.

Re:What a shocker

[Cederic]

I'm not going to reply to most of your comments, because they're well stated and I understand (and in some cases agree with) your position. Just a couple of bits though.

some sort of ethical basis. The trouble is, the world isn't really one big, global market

Fuck the ethics, it's the fairness of it. The labour market is one big global market, so why aren't the others.

you're welcome not to buy it at whatever higher price it's offered at, or you can move to China and pick it up for $3

Unfortunately I'm not allowed to take advantage of globalisation as a consumer. See https://en.wikipedia.org/wiki/... for the reason I stopped buying physical music media.

(I now buy my music from a Ukrainian website, as they sell it at a price I feel is fair and reasonable)

Re:What a shocker

[Anonymous Brave Guy]

Fuck the ethics, it's the fairness of it. The labour market is one big global market, so why aren't the others.

If that's your ideal then I'd agree that in that case price discrimination shouldn't be necessary either. I'm not sure whether reasonable economics could ever actually result in a completely level playing field across all markets, but sure, we could be closer than we are today.

I suppose where we do differ is that I don't really see that the global labour market is one single, unified entity today. Of course there are many elements of international movement and international competition, but if the global labour market were truly a single common market, I'd be out of a job and so would almost everyone I know.

I suggest instead that there are some barriers to labour competition and some barriers to trade competition, and there are some factors affecting household income and some affecting spending power, and maybe the more interesting questions would be whether those opposing forces are roughly proportionate.

Re:What a shocker

[tlhIngan]

The difficulty is that a lot of people's idea of a "fair" price is wildly out of proportion to average production costs and returns, particularly if you're looking at smaller markets or more niche products and not just the top end Hollywood blockbusters, top-of-charts music, this season's must-have game that are the unicorns in this business.

Read any Slashdot discussion on this subject, and after a few hundred comments you'll find no shortage of people who think that because the marginal cost of online distribution is close to zero, the price should be as well. Go talk to real world customers about your library of original content, and you'll find plenty of people who say they'd buy it if it were a $3 app for the whole thing instead of $10/month. Of course they would like it cheap/free, but that's probably not a fair price unless you have a very large market or very low production costs.

And sometimes, people don't believe just how cheap the regular mechanism is. Everyone says ebooks should be really cheap, but the marginal cost of the actual physical bok itself (trees, paper, binding, printing, warehousing, etc) is extremely efficient. Over the centuries, we've come up with a system to very efficiently move books around. So much so that the real cost of the physical distribution is at most, $2. Yes, it's that low for the paper, printing, shipping, warehousing, distribution, etc.

The vast majority of costs of books isn't in the physical, it's in the editing, the artwork, the typesetting, etc. Things that are shared with the ebook.

If demand can be increased by reducing price such that more profit can be made, suppliers would be better off. Unfortunately many suppliers are afraid of upsetting existing markets by changing strategies. And of course some take the alternative tactic and increase price (and profit) per unit [cough] Apple [cough] while reducing overall demand for a product. This, however, makes very little sense in a market with near zero marginal cost unless you have totally inelastic demand.

Apple does it because they often know they cannot meet demand. If you know you can only make a million units s month, it's best to price your stuff so demand is about a million units a month. You may wish to price it lower, but if that causes demand to soar to 3 million units a month, you end up with a perpetually sold out thing, unhappy customers, and scalpers.

Apple had trouble with the iPhone X. They knew it, so they priced it high to temper demand I'm sure they didn't want to price it so high, but given the difficulty in manufacturing, better to price it high and lower demand (and potentially drive sales to lower cost units like the iPhone 8) than anger customers who can't find it and storm off.

Re:What a shocker

[mentil]

What malware and other crap? Buy counterfeit blu-ray from the market, put it in your gray-market region-free blu-ray player, done.

Re:What a shocker

[Anonymous Coward]

People complain about ebooks because it's blindingly obvious that they're getting less for more. Not because of some inane understanding of the variable costs.

I did meant water market because you can't reason about the bottled water market alone without considering the impact of the availability of cheap/free water by other means. Just like you can't isolate the media market without considering the pirate bay.

Water being a necessary component for life, while important in some contexts, penury, rationing, drought, is completely irrelevant to the discussion at hand.

Just like my hypothesis predicts, and therefore I'm right, and you're not, once the entertainment industry started offering their stuff in a convenient (good point) way at a price the customers were willing to pay, they started paying. What they didn't want to do was pay $20 for a gallon now that they could get it for free.

You're making the mistake of assuming that other people reason like you. The fact that you state that if you were on city water you would not buy bottled, when a lot of people do just that, but then refuse to consider that fact in your reasoning, makes this very clear.

Those dishonest chinese!

[Anonymous Coward]

Meanwhile, piracy is still overly prevalent in the west and in particular the U.S. who is still busy pointing fingers at those thieving chinese! Ironic.

Re: Those dishonest chinese!

[Anonymous Coward]

We know, we know. Its so hard being yellow and having a tiny cock. Time to kys maybe. Your culture is gross, rude, and has contributed nothing to humanity since 1200 bce.

what's an average techie businessman to do?

[Anonymous Coward]

All that expensive pirating equipment, hundreds of discs ready for burning, plenty of time this lunar new year, date said she'll call back, and not a rom-com to burn

Re:Trump is switching from POTUS to PRISONER

[Anonymous Coward]

FFS get a life

You're Doing It Wrong

[Anonymous Coward]

When you have to spend two-to-three hours digging up pirated content...

Somebody isn't very good at pirating. It did used to be a problem in the days of warez sites when you had to download 50 .rars and the sites were constantly being shut down, but torrents made pirating extremely convenient and far superior to streaming.

The only real problem with pirated content is subtitles for non-English dialog. Frequently pirated movies don't include the subtitles so you have to quickly check everything before watching to see if it contains non-English dialog and of so if the subtitles are there. That can be annoying. Of course, that's a problem with legitimate releases as well. I have read that the Game of Thrones Blu-rays didn't contain subtitles for the non-English parts and people had to turn the full subtitles on and off while watching.

Re:You're Doing It Wrong

[Anonymous Coward]

Why bother with that kind of subtitles since americans can't read anyway.
And the other countries watch the movie with full subtitles so they don't need the "just for non english dialogue" option.

ends at the border

[speedlaw]

Travelling, I have learned that US Copyright ends at our borders...Mexico City ? All programs all day $5 before haggling. Any military base ? Please fill the group hard drive with whatever movies or music you have. The demise of Net Neutrality is a gift to content providers...once an ISP is responsible for your russian downloads that hole can be plugged.

Warez is dead?

[fubarrr]

Warez is dead? I disagree, ftp://91.217.9.230/pub

Re:Warez is dead?

[antdude]

Prove it. What's the username and password? :P

Pay to Stream

[dohzer]

Games are going Pay-2-Win while videos are moving to Pay-2-Stream format.
You no longer own anything, you need to pay every time you want to play/watch, and the availability and pricing can change at any moment.

Pay?

[Anonymous Coward]

Pay for streaming? I hear the words individually, but they do not combine in my brain. How broken is yours? Also, warez still rulez. And I have zero regret (Edith Piaff).

Will they go back?

[supremebob]

I wonder if the Chinese will go back to pirating content once they realize that they content that they want to watch is spread out over 4 or 5 different streaming services (like Netflix, Amazon Prime, Hulu, HBO Go, and CBS AllAccess just to name a few in the US), each one of which having it's own monthly subscription fee.

Once you realize how big media is trying to nickel and dime you to death, it makes one long for a return to the high seas. Yarrr!

Re:Will they go back?

[Anonymous Coward]

Read the article: China doesn't really have that problem because they have monopolies.

Is the streamed content licensed?

[Not-a-Neg]

Makes me wonder if the streaming services have actually licensed all of the content they are streaming? China is notorious for ignoring international copyright, trademarks and IP.

Re:Is the streamed content licensed?

[Anonymous Coward]

I'm going to go out on a limb and assume it's those hacked services that have you "share" accounts from netflix and all the big ones. They are, in fact, compromised accounts to which you pay for access to someone elses legally purchased service. I would avoid it like the plague

Re:Is the streamed content licensed?

[crimson tsunami]

Since you were too lazy to rtf article, I guess you will never know.

Stuff that matters

[nospam007]

Some country abandons CDs and DVDs in 2018.
News for nerds indeed.

What a shocker-Crackdowns.

[Anonymous Coward]

Well the whole "crack-down on piracy" I'm sure was a shocker considering all the years of Slashdot telling everyone how ineffective it was. Apparently carrots need sticks to be effective.

Re:Chinese cinema is censored and not a complete m

[DontBeAMoran]

Kill Bill, China Edition
Running time: 4 minutes and 25 seconds.

Um

[Ryanrule]

They are just streaming pirated content.

Will they go back?-OPC

[Anonymous Coward]

They'll go back as long as it's OPC (Other People's Content). Once it shifts to domestic they'll be fighting just as hard as everyone else against piracy.

Ignorance is bliss

[Anonymous Coward]

Don't let any facts get into that little bubble of yours :)

Why is music cheaper?

[sims 2]

Everything else I get but why is music cheaper there?
AFAIK everywhere else streaming music services are more costly than streaming video services.

From my understanding that's because to have a music service you have to have pretty much everything under the sun to keep subscribers so while the content costs considerably less you have to buy a ton more of it.

What makes it different there?

DUH!

[p51d007]

Good business too. Instead of getting next to nothing, by lowering the price and making it AFFORDABLE, they will have a steady stream of revenue each month.

Do you need a participation trophy?

[Anonymous Coward]

Yea, why bother with all those words and reading and knowledge. Better to just tell everyone you're an American and are above those kinds of things. Go with your feelings, your country is doing great :)

Do you need a participation trophy?

[Anonymous Coward]

Yea, why bother with all those words and reading and knowledge. Better to just tell everyone you're an American and are above those kinds of things.
Go with your snowflake feelings, your country is doing great :)

Suuurrreee they are!

[Anonymous Coward]

Cos Chinks NEVER like stealin'.

Fucking propaganda whores here.

Re: Nip Chong King Kong

[Anonymous Coward]

You all rook saem! /see how mine needs less words? //good luck chinky dinky

Don't worry...

[dasgoober]

... they'll screw it up by raising streaming prices or adding commercials, pushing people back to pirating.

WTF?

[fuzznutz]

The problem is that revenues has to cover the fixed production costs as well as the marginal costs. The idea that users should only be responsible for the marginal cost of digital goods (which is zero, or very close to it) is ridiculous. That cannot support product development unless the "product" is something like the TechDirt blog, which not coincidentally, is perhaps the chief proponent of the "price must equal marginal cost, which equals zero" economic theory.

Show me where I said "users should only be responsible for the marginal cost of digital goods" or anything like that. I said:

the product should be priced lower than when the same product has marginal costs that are much higher.

Take your strawman elsewhere, asshole. Let me explain it to you. I said products with lower marginal costs should be lower than the same product when it is available in another form with higher marginal costs. I did not say it should be the price of marginal costs or free.

Convenience

[XSportSeeker]

It's all about convenience.
This has less to do with price, which is still important of course, and more to do with how they setup the system to work with the payment systems, social networks, and chat apps that are majorly used throughout the country.
Similar thing happening in Brazil, but related to businesses. Even though WhatsApp still didn't implement comprehensive and easy payment systems inside the app that everyone can use, no businesses in Brazil go without a WhatsApp contact, and a whole ton of transactions are happening there, specially with small businesses.
If WhatsApp and Facebook were smart enough, they'd have long integrated a store and payment system into the app. They have been working for quite a while on it, rumored to go out, etc... but up to now they still didn't figure an easy way to make it happen.
Lost opportunity, really. Because they already have the convenience factor working for them.