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Up-front and clear fees, directly based on the product or service offered, are the most efficient way for a market economy to work. In this case, this should mean simple fees for the classes, and book prices based on the original content in that version divided by the number of people who demand that original content.

This patent describes a means to make the prices of things -- like a class -- much more obscure and indirect, which is obviously a perverse market. It's not really about piracy though; it more closely resembles a toll booth on the door to the classroom, or charging students to keep the lights on so they can read the chalkboard. This just happens to resemble a copyright issue, so it triggers that particular response from people interested in copyright.

So why are such perverse systems so common? Because we demand them. It's not some conspiracy. We like to play games with prices, and overestimate our ability to outplay our opponent, and think we can get the best of them (in reality, practical matters take over and we just end up paying more on average).

Take cellphones. You can buy an unlocked google phone for a simple, direct price based on the quality of the hardware and the support that you expect to receive from google (or the manufacturer). Then, you can get a prepaid service plan for cheap (I pay $30/mo for a good smartphone plan) that is based on the level of service you expect from the carrier for as long as you feel like being their customer. I will save hundreds per year over getting a contract and a discounted phone (let's say a typical smartphone plan is at least $60/mo, so I save $30/mo or $720 over a 2-year contract, but lose at most $400 from lack of a discount, netting me $320). I also have greater flexibility and choice.

Yet almost everybody in the U.S., including those reading this comment, are under a 2-year contract right now. Why? I don't know. Economics is about what people actually do though, not what they should do. And given a choice between clear pricing and obscure pricing, people choose obscure pricing.

EDIT: And after people get predictably tired playing pricing games with a large company, and end up just paying more, they complain.



Yes, I've definitely seen many people extolling the virtues of prepaid and I agree that prepaid is a fantastic option for many, but there are reasons why contracts are fine too.

Besides the psychological barriers to putting down an extra couple hundred to save a little money every month (where only in the aggregate do you start coming ahead), many of us just can't afford to drop that much cash at once for a phone. Not only that, but many have families, making that very expensive very quickly.

Speaking of families, prepaid doesn't cater well to families either! For most carriers, you can add a line for what, $10 a month (I use T-Mobile)? In my family of 4, a family plan would cost around $100 to $110 (without data).

The cheapest prepaid plans are now around $30 so a family of 4 would cost $120. Granted, that would include data, which I don't have. But with a contract plan, I would also get unlimited calling to others on the same carrier and free calling at night. Many Americans still actually use their phones as phones, so that's a huge plus that prepaid carriers don't offer.

So while prepaid works for many, it still isn't the perfect solution for a large majority of us.

One sidenote: If you're on T-Mobile, you can wait for phones to go on sale for free after 2 year contract and then get the cheapest data plan ($10 a month for 200mb) and your cost of the smartphone comes out to $240 over two years. Yes, if you HADN'T gone with the subsidy and brought your own phone (not to prepaid, but the other option T-Mobile has), your plan would be $10 less per month, but if you have a family, the benefits stated above quickly make that $10 feel a lot weaker. PM me if you don't quite understand.




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