The Strange Pricing of Digital Goods

I buy a lot of digital goods and services but I’ve noticed that there is no consistency in pricing.  For example I subscribe to Rdio.com and pay $4.99 a month for access to millions of songs and albums.  Yet, The New York Times wants $15-$35 a month for access to just one newspaper.  $60 a year for 15,000,000 songs versus $180 for 365 issues of one newspaper – can you spot the obvious bargain?

Yet for $7.99 a month, or $96 a year I get access to 75,000 movies and TV shows at Netflix.  $7.99 a month is also the price Hulu Plus charges for thousands of shows too.  So why does one newspaper cost $15 a month, especially since it was free for years.  I love reading The New York Times, but I can’t make myself pay $15 a month for it when I get so much music for $4.99 a month, and so many movies and TV shows for $7.99 a month.  If I was getting access to several great papers for $7.99 a month I’d consider it a fair deal.  But for one title, I think it should be much less.

This makes The New York Times appear to be very expensive.  However, The Wall Street Journal is $3.99 a week, or $207.48 a year. Strangely, The Economist, a weekly is $126.99 a year for print and digital, or $126.99 for just digital. Go figure.

I also get digital audio books from Audible.com.  I pay $229.50 for a 24 pack, which is $9.56 per book, but they often have sales for $7.95 and $4.95 a book.  I can get two books from Audible for what I’d pay for 30 daily papers, but I actually spend way more time listening to books than I’d spend reading the paper online. 

I subscribe to several digital magazines through the Kindle store.  Right now I’m getting a month of The New Yorker for $2.99, but that’s suppose to go up to $5.99 soon.  (What is it about stuff from New York being more expensive?)  Most of the magazines I get from Amazon are $1.99 a month, way under the cost for a printed copy at the newsstand.  The Rolling Stone is $2.99 and I usually get two issues in a month.  So for $15 a month, the price of The New York Times, I get 11 magazines (4 New Yorkers, 2 Rolling Stones, Discover, Maximum PC, National Geographic, Home Theater and The Magazine of Fantasy and Science Fiction).  That’s a lot of reading for $15 a month, and a lot of variety.

However, I also subscribe to Zite, an app on my iPad where I do the most of my news reading, and that’s free.  I get free articles from those magazines above and who knows how many more, all for free.  In fact, I spend so much time reading Zite, because it’s customized to my interests, that I’m thinking of cancelling my magazine subscriptions.  But that’s another issue.  Like when I subscribed to paper copies of magazines I mostly let them go unread.

Even if I paid $15 a month for The New York Times I’m not sure how many articles I would read above the 10 articles a month they offer now for free.  I don’t expect everything to be free on the internet, but sadly, paid content has to compete with free.  Zite, which is free, is actually worth $15 a month, because I get access to zillions of magazine articles, newspaper stories, and web blogs.

I’m also a subscriber to Safari Books Online, a subscription library to technical books.  I pay $9.99 a month and get to have 5 books a month “checked out” to read.  I can keep them longer, but I have to keep them at least one month.  So for $120 a year I get to read as many as 60 books, which means the price could be as low as $2 a book.  That’s a bargain when most computer books are $40-50.

And I’m a member of Amazon Prime.  For $79 a year I get unlimited 2-day shipping, access to 12 ebooks (1 a month from their library of 100,000 titles) and unlimited access to thousands of movies and TV shows.  This is another tremendous bargain.  I also buy ebooks for my Kindle and iPad from Amazon.  Costs run from free to $9.99.  On very rare occasions I’ll pay more, but it hurts.  Digital books just seem less valuable than physical books.  I don’t feel like I collect digital books like I do with hardcovers.  I don’t even feel I own ebooks.

Next Issue Media is now offering a library of digital magazines Netflix style for $9.99-$14.99 a month, but only one of the magazines I currently subscribe to, The New Yorker, is part of the deal.  If all of my regular magazines and The New York Times were part of the deal, then I’d go for it.  However, Zite with it’s intelligent reading system would still dominate my reading.  Flipping through magazines is just too time consuming.  What I want is a Zite Plus, a service that provides access to all the free and paid content I like to read.

Can you spot the trend in all of this?

I think most people on the net are willing to pay for digital goods if they get a bargain, especially if it’s part of a library of goods like Netflix, Rdio, Rhapsody, Spotify, Hulu Plus, Safari Online, Amazon Prime, etc.

And there is another issue about buying digital goods.  Some companies charge extra if you use their content on a smartphone.  Rdio and Spotify are $4.99 a month for listening on your computer but $9.99 a month to also listen on your smartphone.  The New York Times is $15/month for reading online and smartphone, $20 for online and tablet, and $35 for online, smartphone and tablet.  Why the heck is that?  It’s the same damn words.  Why would they care where you read their paper.

Netflix charges $7.99 a month and you can watch it on a whole array of possible devices.

JWH – 4/24/12

6 Responses

  1. You make a good point, Jim. But if you were just buying access to the archives of the New York Times, you might get a better deal.

    After all, with both music and movies, you’re mostly getting content that was created years ago – sometimes, many years ago. I suspect that Netflix doesn’t include movies which have just been released in theaters, and even if it does, most of their content is older than that.

    But old newspapers are rarely read. Would you even pay $4.99 a month for access only to a newspaper’s archives? You generally read a newspaper for current content, and that might just warrant premium pricing.

    Just a thought. Note that I wish the New York Times were cheaper, too, especially now that they’ve dropped the number of free articles I can read from 20 to just 10 a month. I never did read much of it, but that’s really restrictive (especially since it includes blog posts, or so I believe).

    • The music I get on Rdio is archives of the past, but it’s also all the latest albums too. Every Tuesday new albums are published and Rdio has most of them. It’s amazing. For $4.99 a month I have music, old and new, rock, jazz, classical, folk, world, German, Japanese, etc.

      From that $4.99 a month Rdio is also paying royalties to those artists which get played. So they aren’t getting paid much. By the way, many people spend $9.99 a month to get the same music on their smartphones.

      At $15 a month, The New York Times is also paying a bunch of writers, but I can’t help believe that most of the money goes into their corporation.

      I think the music is worth more, and the news is worth less. But that’s how it’s priced right now.

      There is no relationship to reality with the pricing. We aren’t buying by the pound, or paying prices set by supply and demand. We’re buying electrons. Sometimes they create patterns we call music, and sometimes it’s patterns we call movies, and sometimes it’s patterns we call newspapers.

      • You’re not buying electrons, Jim. You’re buying information, knowledge. And it costs a newspaper like the New York Times a great deal to get that information.

        You can say that music is worth more, because that’s just a value judgment and depends entirely on individual opinion. But as far as fixed costs go, I suspect that there’s really no comparison.

        I’m surprised that you can get brand new albums at Rdio (but not brand new movies at Netflix, right?). But note that old news, unlike old music and old movies, is completely worthless. They might all be media companies, but they’re quite different.

  2. I think media companies and publishers are still trying to figure out what they’re doing in digital…hence the reason for the varied pricing. Naturally they’re going to charge what the market will bear but I think over time, as innovative startups enter the fray, pricing will be driven down and eventually we’ll see a leveling off of some kind. Competition is good for everyone so I’m hopeful that some bright young kids in a dorm room somewhere are thinking up new ways to disrupt these industries even further.

    • And there is a lot of competition. I love The New York Times. It’s great. But their pricing is forcing me to turn to other papers around the world. And that’s another thing, competition is global. I can read papers from England or India, it doesn’t matter to my browser.

      Sooner or later I have to decide if The New York Times and it’s unique content is worth $15 a month. They have star columnists I want to read.

      By the way, I am afraid to subscribe. I had a friend who did and then wanted to drop the paper and he said there was no online cancel button, and he had to get in a fight on the phone to get them to stop his subscription.

  3. It’s easy to criticise news pricing models, but the fact is that getting rid of physical publishing and distribution saves only a fraction of the total cost. Instead of achieving brand exposure via news stands, it has to be achieved by targeted advertising, by extensive creative ads, more mixed-media exposure (TV, Print, Online, etc) and laid out by creative personnel page by page, with as much care as the print version. The news is expensive to get – flights, expenses and payments for interviewees, digital storage and transmission media, backup devices, and the visuals that go with them especially so. While it’s cheap to take a photograph in your living room, working with medium format or high-end DSLR’s and lenses good enough to let you shoot under any conditions starts taking you to 5 figures of kit in a heartbeat – and you can only be one place at one time with that kit.

    While books are about creative output sustained over time being compensated for, swapping the typewriter for the laptop hasn’t changed much (objectively), and audiobooks are benefiting authors by no longer being the preserve of those suffering from some kind of ‘impairment’ (usually vision; including myself and my wife). Most people don’t even remember ‘books on tape’ libraries prior to the mid-90s, when listening to self-help tapes in the car on the drive to work because fashionable. While there is a question of value for the New York based publications, conversely emerging markets and individuals are eroding our sense of value at the bottom end. Where people are achieving exposure in a market by selling an app for $free on the App Store – everything from Audacity to Burn to Carbon Copy Cloner (using the mac as an example) may give exposure to the companies and individuals behind the software, but conversely makes the market they work in harder to turn a decent profit in. Setting arbitrary values based on the cost of the ‘cheapest, discounted’ things you can find on the internet is a cost-effective way of shopping, and as a disabled person without an income I see the attraction, but ultimately, I feel our society as a whole pays an enormous price.

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