Monday, January 18, 2010
People sometimes complain about being forced to buy cable TV channels they don't want because they are typically sold in bundles. Here is Felix Salmon. These people seem to be under the delusion that if for example the bundle price for say 50 channels was $25 per month then the a-la-carte price would be $.50 per channel. But that is not how volume pricing works, the individual prices would be higher and any consumer savings would have considerable cost in the form of fewer channels available. A-la-carte pricing is the sort of thing that mostly sounds good only because people don't understand how it would actually work out in practice.