Pay as you go
An article by Christopher Camz of UnfashionablyLateReviews.blogspot.com
We are living in a unique era. We are slowly, but surely leaving CDs and DVDs behind in favor of digital downloads and instant streaming services. As we make the conversion, however, companies are still learning the best ways to earn a profit from a purely digital product. This is why it's a perfect time to write about one of the more commonly used payment models for the new era: pay as you go.
The success of the digital era can largely be attributed to cloud storage. While nothing especially mind-bending or new, cloud storage remains an excellent way to store the purchases you make on popular websites and online retailers. Excellent, that is, until the servers are compromised, but that has yet to happen on any major site. Additionally, people have begun backing up images and videos saved onto their computers to off-site, secure servers, or "clouds," owned by larger companies for monthly protection fees. And, while it seems like cloud storage is the answer to all the problems, and it very well may be, it has one major obstacle that needs to be overcome: The pay-as-you-go model.
More commonly known as the monthly subscription, this is commonly used by a number of digital services, such as: Music Unlimited, Netflix, and even online-games, like World of Warcraft. The subscription system is unique in such that it is best used in certain situations, as sometimes it can be a great asset, while other times it is enough to ward off potential customers. I will begin the breakdown with working situations.
The best way to utilize the pay-as-you go option is to use it for things that can be enjoyed once for best results. The typical, lasting appeal of a movie or TV episode is about as long as the video remains on the screen, and in some cases up to an hour afterwards. This is largely why Netflix has become so successful using the system. No matter how many times someone watches a movie or episode of "The Office," the video will always continue the same way. Nothing in the story will change, which is why, all but a few people will just watch the video once, and retain crucial plot points in their minds.
This means that the pay-as-you-go model is perfect for movies and TV episodes, as Netflix offers access to thousands of movies and TV episodes for only $7.99 a month, a value that would cost hundreds to thousands of dollars on instant stream or download sites that charge per episode or movie. Given that videos need only be experienced once, Netflix's use of the pay-as-you-go system is genius and saves people (especially movie buffs) hundreds of dollars. This is why Netflix works, and this is why they are rich.
What Could Work
Music streaming services, such as Music Unlimited, offer instant streaming of gargantuan libraries, for a nominal, monthly fee. For comparison, Music Unlimited offers their services for a mere $3-10 depending on the plan you subscribe to. While it is far from a threat to Netflix, Music Unlimited has a lot to offer, especially to music lovers, such as myself. That is why it fits into the category of what could work. For people who adore music from a select few artists, this would be a poor investment, as they could just buy that CD online or in a store, and eventually save money by not having to continue paying for the same few songs. People who listen to a certain genre could just stick to free online radios, such as Last.fm or Pandora, and they too would save money.
That said, for those of us that have dozens to hundreds of favorite bands spanning many, or every, genre (such as myself), would save considerable money with this $30 annual subscription. As someone who typically loses $30 a month on fresh CDs, I would have a decent amount of success with this model, as would anyone who cannot get dressed in the morning without hitting the shuffle button on an iPod or computer. By paying $30-120, one can access all the music he or she wants for a simple fee, and enjoy that selection on a number of devices. This would prevent the individual from needing to continually add to their personal library, as new songs could simply be added to the MU library at no additional fee. That is why the pay-as-you-go system works well based on the person when streaming music, which can be enjoyed for years.
What Doesn't Work
The Third classification is that which doesn't work. The pay-as-you-go model, as we have seen, can work based on what media it offers. For something that is only experienced once, and never carries quite the same weight afterwards, the pay-as-you-go option is fantastic, and for media that can be continually enjoyed, the pay-as-you-go model can be good depending on how frequently you plan to use it. However, for media with extensive usage, such as videogames, the pay-as-you-go model can be a deal breaker for many customers.
Videogames are a unique medium in that they can be played anywhere from 10-100 hours and even beyond. Many PC games, typically massively multiplayer titles (or MMOs) such as World of Warcraft, Star Wars: The Old Republic, and APB use the pay-as-you-go model to squeeze money out of their customers every month. The problem with this is that the mechanics and key points of the game remain the same. So allow me to break this down for you using World of Warcraft as an example. First, you buy the game ($20) and install it on your computer. You may think you are ready to go, but to access the online portion of the game, the game prompts you to break out your credit card again and sign up for a monthly fee to play ($15 monthly- $80 for 6 months). You decide against it and search for a single-player mode, but there isn't one, so, you begrudgingly buy a 3-month plan for $42. After a few months you have explored the greater part of the land, and you start to get bored, however Blizzard (the developer) isn't done with you quite yet. They have, to date released 3 expansion packs (Burning Crusade, Wrath of the Lich King, and Cataclysm). Now each of these will run you additional $30, bringing your World of Warcraft experience to a total of $122, but wait, there's more. It seems your 3 months are almost up, time for another $42. This brings you to $164, for a single game. Blizzard, however is still not done however, as you will have to continue paying that $42 or even $80 to continue playing, for as long as you want to use the game, and the second your payment is late, you lose access to the game you spent so much money on. This also means that, as the game has no single-player option, you lose the WHOLE game when you stop paying for it. They don't care if you spent 60 dollars or 1000 dollars, you lose the entire product that you were paying for.
Now, I don't claim to be a nice person. I probably fall somewhere between a taxi driver who overcharges and a person who goes to the dollar tree for Christmas gifts on the niceness scale, but this is just pure evil that has earned Blizzard millions of dollars. Not only are the keeping their own customers in a choke-hold, they are forcing them to continue paying for a single product infinitely, and demanding more money to ensure that their experience remains up to date, and the second anyone stops paying, they lose the entire game, as they aren't even allowed to continue accessing what they already paid for. Evil? Most definitely.