Internet service providers want to get rid of Flat Fees

Many ISP’s in the U.S. complain about the fact that their flat-fee subscriptions no longer cover costs as a result of the intensive use by subscribers. The non-illegal downloading is being held responsible, so including video sites like YouTube and the various providers of catch-up TV (Broadcast Missed, iPlayer, etc.). The new bill, the Broadband Internet Fairness Act of Senator Eric Massa, means that subscriptions that contain a use-element (with a cap) are actually cost-based. Large ISP’s, from 2 million subscribers, are, if the law is adopted, at this point being monitored by the FTC (competition authority) and the FCC (Telecom regulator).

In the U.S., it’s especially Time Warner Cable and AT&T that continue to fight for for subscriptions with a strict fair-use policy applies. Internet ‘outside the bundle’ could therefore become very costly.

The problem with ‘throttling’ is that it is highly questionable whether the costs increased this much because of the popularity of video sites. Network operators have the possibility to reduce the costs of backhaul drastically, both by more efficient technology (transition to a different transmission standard than STM, such as Gig-E) and good peering-agreements (exchange of traffic). In addition, the price of routers decreases steadily.

Therefore it looks like the ISP’s are simply out to raise their margins. The broadband market becomes saturated and there is no pricing power due to the high competition. They hardly have possibilities to impose a tax on content-providers (such as the BBC and Google), because those parties have already paid to place their content in the ‘cloud’.

Another reason for ISP’s to frustrate video-traffic may be that the iPlayer, YouTube and other over-the-top (OTT) providers are increasingly seen as a competitor of its own video services. Time Warner Cable is on the first and foremost a cable company and AT&T and BT offer IPTV.

ISP’s are not expected to enjoy closing illegal downloaders. It’s a large and lucrative customer group. It is hoped that users of illegal video content don’t want to frustrate either.

Internet service providers willen af van flat fees

Veel ISP’s in de VS beklagen zich over het feit dat hun flat-fee abonnementen niet meer kostendekkend zouden zijn als gevolg van het intensieve gebruik door abonnees. Het niet illegaal downloaden wordt verantwoordelijk gesteld, dus oa videosites zoals YouTube en de verschillende aanbieders van catch-up tv (Uitzendinggemist, iPlayer, etc.). Het nieuwe wetsvoorstel, de Broadband Internet Fairnesss Act van senator Eric Massa, houdt in dat abonnementen die een gebruikselement bevatten (met een cap) daadwerkelijk op kosten gebaseerd zijn. Grote ISP’s, vanaf 2 miljoen abonnees, worden, als de wet aangenomen wordt, op dit punt in de gaten gehouden door de FTC (concurrentie autoriteit) en de FCC (telecom toezichthouder).

In de VS zijn het met name Time Warner Cable en AT&T die zich sterk maken voor abonnementen waarbij een strikte fair-use policy geldt. Internetten ‘buiten de bundel’ kan daardoor zeer kostbaar worden. Een variant op deze trend dook recent op in Groot-Brittannie, toen bleek dat BT houders van een bepaald abonnement (8 Mbps) ’s avonds afknijpt (naar 896 kbps). Zelf zegt BT dat het de kosten van overmatig video-gebruik, zoals de populaire iPlayer van de BBC, wil verhalen op de leveranciers van de content. In afwachting daarvan knijpt BT dus nu abonnees af. Het probleem met afknijpen (‘throttling’) is dat het zeer de vraag is of de kosten door de populariteit van video sites wel zo hard gestegen zijn. Netwerkbedrijven hebben de mogelijkheid om de kosten van backhaul drastisch te verlagen, zowel door efficientere technologie (overgang naar een andere transmissiestandaard dan STM, zoals Gig-E) als door goede peering-overeenkomsten (uitwisselen van verkeer).

Daarnaast daalt de prijs van routers gestaag. Vanuit de overheid gezien is het ook zeer de vraag of het gebruik van een breedbandinternetverbinding op enigerlei wijze ontmoedigd moet worden. Zuinig zijn met water, gas of elektriciteit kan eenvoudig worden verdedigd, maar ‘gebruik’ van bits (breedband) moet eerder worden aangemoedigd. Breedband, zo blijkt immers uit een groeiend aantal studies, is goed voor de economie, de sociale cohesie en het milieu. In de woorden van Eric Massa, de man van het Amerikaanse wetsvoorstel: “volume-based pricing is detrimental to our economy”.

Het ziet er dan ook naar uit de ISP’s gewoonweg uit zijn op het verhogen van hun marges. De breedbandmarkt raakt verzadigd en van enige pricing power is door de hoge concurrentie geen sprake. Ook hebben zij nauwelijks mogelijkheden om content-aanbieders (zoals de BBC en Google) een heffing op te leggen, want die partijen betalen er al voor om hun content in de ‘cloud’ te plaatsen. Bovendien heeft de wens om content-aanbieders te belasten een conceptueel bezwaar. Het is alsof je Philips, als maker van consumentenelektronica, vraagt om te delen in de kosten van het elektriciteitsnetwerk.

Een andere reden voor ISP’s om videoverkeer te frustreren is mogelijk dat de iPlayer, YouTube en andere over-the-top (OTT) aanbieders steeds meer als concurrent gezien worden van de eigen videodiensten. Time Warner Cable is ten slotte op de eerste plaats een kabelbedrijf en AT&T en BT bieden IPTV aan. Van ISP’s hoeft niet verwacht te worden dat zij illegale downloaders graag zullen afsluiten. Het gaat hier immers om een grote en lucratieve klantengroep. Het is te hopen dat zij gebruikers van legale videocontent evenmin willen frustreren.

Variable ITunes pricing policy increases the margins (for now)

Since April 2009 Apple applies different prices for songs in the ITunes music stores. According to many music lovers it concerns a disguised price increase and they are somewhat right about that.. However the music labels benefit financially from this new policy.

The ITunes know three types of price tags now, for older music from the catalogue (69 cents), for newer songs that aren’t big hits (99 cents) and for the current hits ($ 1,29). Before April all songs had the same price tag of 99 cents.

An analysis of Nielsen SoundScan data by music magazine Billboard shows that although the sale of songs show a decline, the higher prices still ensure a higher income. As long as the sales numbers don’t decline for more than 29 percent, the record labels will receive more revenue from the $ 1,29 songs.

iTunes variabel prijsbeleid verhoogt (voorlopig) de marges

Sinds april 2009 hanteert Apple verschillende prijzen voor nummers in haar iTunes muziekwinkel. Volgens veel muziekliefhebbers betreft het een verkapte prijsverhoging en daar hebben ze wel een beetje gelijk in. Toch spinnen de muzieklabels garen bij het nieuwe beleid.

De iTunes kennen nu drie soorten prijskaartjes, voor oudere muziek uit de catalogus (69 cent), voor nieuwere muziek die geen grote hits vormen (99 cent) en voor huidige hits ($1,29). Voor april droegen alle nummers hetzelfde prijskaartje van 99 cent. Het merendeel van de iTunes nummers wordt nu onder de noemer hit geschaard, waardoor de prijzen gemiddeld gestegen zijn.

Een analyse van Nielsen SoundScan data door muziekvakblad Billboard wijst uit dat hoewel de verkoop van nummers een daling laat zien, de hogere prijzen toch voor hogere inkomsten zorgen. Zolang als de verkoopcijfers niet meer dan 29 procent afnemen, ontvangen de platenlabels meer inkomsten van de $1,29 nummers.

Guaranteed lowest possible price at Shell stations in Zeeland and Noord-Brabant

In June ‘Zeeuwen’ and ‘Brabanders’ can refuel guaranteed for the lowest price. Detouring for kilometres for a fraction of cheaper fuel is not necessary anymore, thanks to an action by Shell in Noord-Brabant en Zeeland where consumers can recover the difference in price if they can refuel cheaper with the competitor. The action runs, after successful initiatives elsewhere in the country, from June 8th until 21st in almost all large, manned Shell service stations in Zeeland and Noord-Brabant.

Zeeuwen en Brabanders kunnen in juni gegarandeerd voor de laagste prijs tanken. Kilometers omrijden voor een fractie goedkopere brandstof hoeft niet meer dankzij een actie van Shell in Noord-Brabant en Zeeland waarbij consumenten het prijsverschil terugkrijgen als ze bij de concurrent goedkoper kunnen tanken. De actie loopt, na succesvolle initiatieven elders in het land, van 8 tot 21 juni bij vrijwel alle grote, bemande Shell tankstations in Zeeland en Noord-Brabant.

Dagelijks checken 300 Shell-medewerkers in het hele land de prijzen bij andere benzinestations in de directe omgeving, op basis waarvan indien nodig de pompprijs wordt aangepast. Dat brandstofprijzen belangrijk zijn voor automobilisten blijkt uit het feit dat zij deze minstens zo fanatiek vergelijken. Shell erkent dit en roept consumenten in steden zoals Goes, Breda, Eindhoven, ’s-Hertogenbosch, Roosendaal en Tilburg op om, net als zijzelf, de prijzen van de concur¬rentie in de gaten te houden. Wanneer blijkt dat de prijs bij soortgelijke, bemande stations binnen de gemeentegrenzen2 lager is, dan krijgt de consument het verschil terug. Bovendien wordt de prijs verlaagd tot het niveau van de concurrent. Dit geldt voor de producten FuelSave Euro 95, Diesel en LPG.

Tijdelijke actie, blijvend laag. Eind 2008 liep het eerste ‘Elders Goedkoper? Verschil Terug!’-initiatief in Nijmegen en omgeving. “Consumenten reageerden positief en het besef dat Shell niet duurder is dan de concurrent, is gegroeid,” aldus Robin Bressers, Fuels Pricing Manager Benelux bij Shell. “Er wordt nu tijdelijk extra aandacht besteed aan het scherpe prijsbeleid dat Shell altijd heeft gehanteerd en ook in de toekomst zal blijven hanteren.”

Bulmers pays price for being marketed as a premium brand

PRICE DEFLATION is taking its toll on some brands that, not so long ago, charged premium prices with little consumer resistance, writes SIOBHÁN O'CONNELL from the Irish times. Now the game has changed, with consumers demanding better value. According to the Central Statistics Office (CSO), the consumer price index plunged by 4.7 per cent in the year to May, though not everyone has been cutting prices. p> The average price of a soft drink is 2 per cent less than a year ago, but the price of beer is 4.5 per cent higher, while in the CSO’s wine and cider category prices are 2.6 per cent higher. Some of this is down to tax increases but it is also the case that drinks companies and publicans have become used to regularly jacking up their prices. Drinkers are fed up with the bilking, so much so that the latest data shows that sales volumes in bars have plummeted by 9.4 per cent in the past year.

The first big brand to respond to this alarming trend is Bulmers cider, which recently announced a 10 per cent reduction in the price of its pint bottle product sold in pubs. The price cut marks a shift in strategy by the owner of Bulmers, CC Group, which is under new management. A few years ago, Bulmers was the poster story for how a cheap and cheerful brand could be transformed by nice packaging and a lot of advertising. Under Maurice Pratt, CC secured a premium price for Bulmers, sank some of the enormous profits into television advertising and delivered a huge surplus for shareholders. But over the past year, sales of bottled drinks have fallen by 5 per cent and, in that category, Bulmers has been losing market share.

The marketing challenge for CC is to square the circle of promoting a price cut for a premium brand while still trying to maintain the premium values of the brand. Michael Merrins, commercial managing director at Bulmers, says moving away from the premium pricing strategy “was a very big decision”.

“During the height of the Celtic Tiger, most people didn’t even look at their receipts,” he says. “Now there is a greater awareness of price and, in a lot of pubs, a pint bottle of Bulmers costs more than a fiver. In all our research over the last five years about what’s good and bad about our product, price was never an issue. But it is now, as it is for everybody. There is a demand from consumers to cut prices. The negativity around price is very apparent.” He adds: “We would like to think this price reduction will bring the cost of the pint bottle below a fiver. We will still only be in line with other premium brands but not as expensive as we were.”

Though Bulmers has cut its wholesale price to publicans by 10 per cent, there is no guarantee that pub owners will pass on all the savings to drinkers. Part of the aim of the advertising announcing the price cut is to ensure pub customers know about it. CC has also been rolling out Bulmers Pear, which is eating up most of the advertising budget at the expense of the cider product. Merrins admits Bulmers cider drinkers have been migrating to the pear beverage, but says sales of the latter are exceeding expectations.

Bron: Irishtimes.com

Is the great eMusic pricing experiment over?

EMusic pioneered the music-by-subscription model nine years ago, and it's been refining it ever since. The latest iteration debuted Monday, when the service announced that it had finally struck a licensing deal with a major record company, Sony Music. Specifically, Sony will be mixing some of its back catalog (releases at least two years old) into eMusic's library of more than 5.5 million tracks. It's looks like an important step forward for eMusic's catalog, which to this point has been dominated by independent labels and acts. But it's yet another move away from the steep discounts and high-volume purchasing that have differentiated the company from the likes of Apple's iTunes Store.

Unlike Napster (the legit version, not the song-swapping network), Rhapsody and the handful of other services that tried to sell access to music for a monthly fee, eMusic has always offered subscribers ownership in the form of DRM-free MP3 downloads. The store updates the industry's old music-club model -- persuading people to buy music every month by offering discounts for bulk purchasing -- in two important ways: It sells music by the track, not the album, and it makes the discounts deeper. Or at least it used to -- as part of the Sony deal, the company has raised its price from $10 a month to $12, and lowered the allotment of tracks from 30 per month to 24. In other words, the price per track jumped from 30 cents to 50 cents. (Worse, it did so before adding Sony's offerings, which will be folded in later this year.)

Compared with iTunes, which sells individual songs for 69 cents to $1.29, eMusic remains a bargain. But it doesn't have iTunes' catalog -- it has a large selection of indie labels and some high-profile independent artists, including Radiohead and Paul McCartney, but few of the top hits. And its new pricing scheme isn't better on a per-track basis than the latest iteration of the major labels' music club, which offers mainly older ("catalog") CDs for $7 each.

In that sense, eMusic doesn't seem like the brave experiment in price elasticity that it used to be. The company offered labels less money per track than conventional music retailers did -- about 33 cents per track instead of 60 to 70 cents, judging by one band's royalties -- but promised to make up the difference by selling more tracks. In other words, it was the kind of lower-margin, higher-volume business that the Web promotes (e.g., Amazon.com). EMusic's value proposition was designed to induce fans to spend more on music over the course of a year than they would have otherwise, which would be a good thing for the industry regardless of the per-track results. But from an individual label's perspective, the question has always been whether eMusic's sales were incremental or cannibalistic -- in other words, whether eMusic was bringing in new customers or just offering discounts to people who would have otherwise purchased the label's CDs.

A few labels have tried to avoid the cannibalization problem by holding back their highest-profile releases from eMusic for several weeks. Some also pressed eMusic to increase its royalty payments by reducing subscribers' monthly track allotment. When the company launched the subscription service in 2000, it offered unlimited downloads for $10 a month -- an offer so aggressive, eMusic had trouble attracting labels and, consequently, customers. After Dimensional Associates bought eMusic in 2003, it wasted little time ending the unlimited-download plan, offering 40 downloads for $10 a month instead. That was good enough to attract more indie labels, which in turn drew more subscribers. Four years later, the offer dropped to 30 downloads for $10 a month. Now it's at 24 for $12.

The new pricing scheme may attract more labels, but the risk is that the service is now too expensive to draw in casual consumers. EMusic has been stuck in the aficionado ghetto -- its appeal has been limited to heavy consumers of music. By the time former Chief Executive David Pakman (a persistent and articulate advocate of the low-margin, high-volume model) left last fall, eMusic had about 400,000 subscribers -- not a whopping total by any means, and only half of what Rhapsody has drawn. The same problem afflicts Rhapsody and Napster, whose subscriber numbers have grown slowly in the last year, if at all. That's why Napster recently went the opposite direction with its pricing, introducing an all-streaming service for $5 a month, or one-third the price of its previous offer. Going from $10 to $12 a month doesn't seem like a sure-fire way to broaden eMusic's base, but there's no question that adding older Sony titles (including works by The Clash, Bruce Springsteen and OutKast) will increase its appeal. After all, the problem for eMusic and other subscription services might not be the price point. It may simply be that music fans don't like to commit to spending any amount on tunes month in and month out.

Source : Los Angeles Times Blog