How much? We mentally pigeonhole values of things. It seems reasonable to travel well out of your way to save a fiver on a £20 scarf but not worth making the same journey to save £10 on a £300 handbag. If you think about it the idea is nonsensical. The journey should be compared to the absolute saving not the relative one. You don't care about the margin however important it is to the nice camp guy in the shop.
It's the same problem that jinxes mobile payments and particularly apps stores.
Warning: I'm going to talk about the bloody iTunes apps store here. I'm almost as sick of it as you are, especially since it's used to back up every preconception out there, but here goes..
One of the things that distinguishes the it from operators apps stores, apart from the level playing field, and apart from the cool device with an excellent SDK, and apart from the sensible revenue model and apart from the ease with which you can get your application listed, and apart from the high traffic and savvy customer base and apart from the great mechanics for browsing and downloading applications, is the way you pay for them.
Applications are billed to your iTunes account and from there to your credit card. This of course cuts out a significant majority of the worlds phone users as they have neither a computer nor a credit card. They think bank is something at the side of a river.
But for the few who can afford an iPhone they are happy with their apps bill going to Visa. And this is good because the odd £20 of apps on a monthly £300 credit card bill (I wish) is fine. It's like the handbag. Adding £20 to phone bill of £30 (ditto) seems outrageous.
So what do you do if you get £50 phone bill? Assuming you are an ordinary consumer – which given that you are reading this you are probably not, but let's pretend for a bit – you react to the bill by using your phone less next month. Obviously you don't buy any more apps but you make fewer calls and don't send as many texts.
For the network this is disastrous. Even at the usurious rates the networks charge content providers they don't see all the money. The network is built around call revenue so the margin on that is great: particularly on 3G. It's even better with text where all the SS7 infrastructure has to be there anyway so the costs are nigh on zero. Losing a couple of months text revenue because someone downloaded a rubbish game is not something they like to do.
The solution has to be around perceived value. Making the content, and more importantly the monthly bill, feel more like the handbag and less like the scarf. We came from there when mobiles were new, expensive and prestigious but now they are an everyday utility is there any going back?
Cat Keynes publishes her thoughts on the mobile phone industry every Sunday at www.catkeynes.com you can read the column the previous Friday by subscribing here. Follow me on Twitter here.
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