Category Archives: CCI

A Lesson on Price Points from the Craziest Guy in the MegaUpload Indictment

While I was wrapping up my post on the MegaUpload indictment, a colleague made a comment over IM that seems to be the prevailing wisdom on the motives of those who participate in piracy:

“people like to steal music and movies.”

It makes sense; people like their money and don’t want to spend it if they don’t have to, even if they get something decent in return.

This reminded me of what may be the craziest part of the indictment: a customer complaint about not being able to access his favorite TV shows:

“I used to buy monthly fees to help with the cost of you guys doing business . … I miss being about to view tv shows on you service . My most favorite was True blood and battle star Gallactica . I would be happy to continue to pay for the service ,but some thing would needs to change. I don’t mind your services be bogged down from time to time. I don’t mind paying, but i need to get something for the service i pay for.” (Indictment par. 69.oooo, p. 49)

So… This “customer” was complaining about not being able to watch BSG and True Blood on MegaUpload when he wanted to because he wasn’t getting what he was paying for!? And this guy wasn’t alone; premium access accounts are part of how MegaUpload made money.

My first instinct is to think this guy is simply nuts. If he’s going somewhere illegal, why pay at all? On further reflection, I still think he’s a little nutty for complaining to MegaUpload for not being able to illegally watch shows, but perhaps there is a lesson about price points in this “customer.” To watch these shows when they’re released, monthly cable service would cost around $80-100. On iTunes, to buy all four seasons of Battlestar Galactica in HD will run you $212.96 (or you can watch it streaming on Netflix), and each season of True Blood is $47.

If our complaining customer is a broke college student, perhaps he doesn’t have the cash to shell out to get the real thing, but if there’s a black market alternative, it’s worth it.

So maybe there’s some logic here. Perhaps it’s along the lines of cable descramblers in the 80’s; it still costs something, and the users were doing something criminal, but it wasn’t as expensive as the real thing (ask your parents if you’re too young to remember).

The point, of course, is not that going to the black market is the right thing for such a customer to do, but that there may be wisdom in lower price points that could capture a much larger potential customer base, thereby potentially increasing profits while drawing users away from black market sources.

At the same time, legitimate companies will never be able to compete with pirates whose overhead is limited to finding infringing copies of TV shows and paying for server space. Particularly if they don’t have to pay for customer support to answer emails like these…