I was lucky enough to find an introduction for this piece that fitted perfectly. It comes from an interesting article on BBC’s ‘The Green Room’ site entitled “Where have all the leaders gone?”, written by Dr Matt Prescott, of banthebulb.org, an online campaign encouraging greater energy efficiency.“During World War II, a large share of humanity stared into the abyss.In the unforgiving conditions, traumatised by their collective experience, almost everyone wanted to build a better, safer and fairer world. They accepted this meant sharing some of their wealth and freedoms with others for the common good. Public hospitals and schools were built, living standards were deliberately raised and ancient class divisions were broken down.
Later, as the developed world came to feel more comfortable and less vulnerable, many started to begrudge the spending of their money on such intangible, long-term benefits; the post-war contract between citizens and their states started to break down.”
Subsequently, the two articles diverge, for whereas Dr Prescott’s article was about “Consumer Choice”, I am writing about a perceived lack of it.
You will remember phrases that used to be part of everyday speech, such as “The Customer is King”, and “The Customer is Always Right”, but which have long fallen into disuse. They have been replaced by unspoken attitudes that can be expressed by “The Customer will do what we want him to”, and “Take it, or Leave it!”. This may not be so apparent with tangible goods and products, for these can be accurately weighed and otherwise measured to ensure that true “value for money” is being given. And there is still a possibility of redress if something should not meet the claimed weight, measurements, quality, and function.
For “ethereals”, or “intangibles”, however, no such guarantee exists. Although the original telephone service was completely documented, with an itemised bill listing all calls made during the period, such a luxury has never been generally available for the mobile phone service. This means that instead of paying for what you have used, you are now paying for what you might use. Whether it be a monthly account, or prepaid cards, the principle is the same:- use the allocation by the date stipulated, or forfeit the balance!
If, out of necessity or oversight, you should use more than the allocation allotted on a monthly account, a supplementary bill ensures that you are ‘brought to book’. If you use less than the allocation, the surplus is not held over to reduce future bills, or offset possible excess usage, it is simply removed – ‘as if by invisible hand’ – and the customer loses that money. There is no refund! Of course, the prepaid card system does not permit excess use of allocation.
What does this mean exactly for the service providers?
A) It means that their calculated profit margin is now a minimum figure.
B) By requiring everything to be prepaid, they also get the interest on the amount invested.
C) As no alternative scheme is offered whereby the customer could pay only for what he/she uses, they are in “Take it, or Leave it” mode.
Has anybody ever investigated the profits made by these companies? I am absolutely certain that the term “reasonable” would not be applicable!
If we start to talk about Intellectual Property Rights, the situation is much worse.
First take another commodity as a basis for comparison. A contract for military aircraft will define everything down to the last penny, from the initial purchase to the end of service life, for a specified number of aircraft. Any escalation in price during the service period – usually 20 years – will be subject to rigid rules laid down by the selling company’s government. The price per aircraft, at whichever delivery date, is known at the outset. The selling company is expected to amortize the cost of development over the service lifetime, and calculate its profit margins accordingly.
Microsoft et al. take another approach completely. They fund the development costs themselves, and set a price according to the “what the market will bear” principle. Once the development costs have been recouped, the price of the product does not change, but now any income derived is virtually all profit!
Curiously enough, although Microsoft et al. insist that the customer does not “own” the product, which remains their property, there is no provision whatsoever for returning this property when it is no longer needed, eg, has been superceded by an upgrade. If these companies were serious about owning the media as they claim, they would have surely set up a system whereby old product should be returned to its owner, which would enable them to account for every piece ever produced. But no – profit would be reduced! (Could this be a legal loop-hole?).
Even that is not enough!
With Microsoft Visual Basic 7, (and other programs), software development moved from the home computer to a web-based system, ie. all development is done on-line. With this move, Microsoft has
– saved itself the cost of distributing CD’s, handbooks and packaging, (possible loophole closed!)
– gained the capability of varying the charges for use at will,
– neatly sidestepped a piracy problem
– gained direct insight into private software development, now stored on their computers,
– forced a customer who wishes to use the latest software to get connected to the Internet.
– excluded much of the developing world from using this software version, (no Internet connection).
If older versions of the software are still available for purchase, the customer still has an option. If not, Microsoft is operating in “Take it, or Leave it” mode too.
I suspect that a true report of real Intellectual Property Rights profits would evoke responses such as “Staggering!” “Extortionate!”, or “They What?!”, but while the truth remains hidden in the pages of the Annual Financial Statement we will never know.
And I thought it was only state banks that had a licence to print money!
I have a dim recollection of something called the “Baker’s Dozen”. Was that on this planet?