Promises to Keep: Technology, Law, and the Future of Entertainment by William Fisher III

Author:William Fisher III
Language: eng
Format: azw3
Published: 2009-05-20T11:16:00+00:00

Price Discrimination

The last and the most complex of the likely effects of the proposed raft of reforms concerns the increased opportunities that they would provide copyright owners to engage in price discrimination. In Chapter z, we discussed this issue briefly, when considering the "windowing" system used by film studios to increase their revenues. It's now time to explore the topic in more depth.

First, some background. Roughly speaking, price discrimination refers to the practice of charging different consumers different prices for access to the same good or service. Somewhat more precisely, it means charging different consumers different prices when the variation cannot be explained by differences in the costs of the versions of the good or service that is supplied to them. A traditional example of price discrimination is the practice of airlines to offer discounts to customers who "stay over" at their destinations for a Saturday night. The cost to the airline of supplying the service in questionthe various expenditures necessary to carry a person in a plane from, say, Boston to San Francisco and back-is the same regardless of whether the passenger stays in San Francisco for a day or a week. The only reason for varying the price is to extract higher fares from people who are able and willing to pay more (in this case, business travelers, most of whom have expense accounts), without pricing out of the market people who are able and willing to pay less (in this case, tourists).32

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