Adam Ozinek ponders the economic perks and social drawbacks of an entertainment market driven by Big Data. He notes that the “more information we have, the more profitable first degree price discrimination will be”:
If knowing where people go on the web can increase profits by over 1% compared to simple demographics based price discrimination, then how much will it help to know where people go in the real world? How about who they encounter and speak with? What products they look at and how much time they spend looking at them?
Is this kind of world sort of creepy and unfair? I think this is somewhat true and my guess is most people think this is very true. But consider the benefits. For example, I’ve written before that TVs that watch us are the best hope for breaking up the technologically stagnant and poor service that cable companies provide. Many wish for an a la carte system but the economics mean that whatever system replaces cable is going to need to find a way cover the large fixed costs of creating TV shows. This is why I am skeptical of any systems that only manage cheaper prices. What is needed is alternative revenues to provide a subsidy or lower real costs, and few have found a way to deliver this. TVs that watch you, in contrast, can deliver on the former.
Previous Dish on Netflix’s Big Data strategy here. Recent thoughts from Kevin Spacey on the Netflix model here.
The Dish 