More like regional pricing is an attempt to maximise value extraction from consumers to best exploit their near monopoly. The abuse is by Google, and savvy consumers are working around the abuse, and then getting hit by more abuse from Google.
Regional pricing is done as a way to create differential pricing - all businesses dream of extracting more money from wealthy customers, while still being able to make a profit on less wealthy ones rather than driving them away with high prices. They find various ways to differentiate between wealthy and less wealthy (for example, if you come from a country with a higher average income, if you are using a User-Agent or fingerprint as coming from an expensive phone, and so on), and charge the wealthy more.
However, you can be assured that they are charging the people they’ve identified as less wealthy (e.g. in a low average income region) more than their marginal cost. Since YouTube is primarily going to be driven by marginal rather than fixed costs (it is very bandwidth and server heavy), and there is no reason to expect users in high-income locations cost YouTube more, it is a safe assumption that the gap between the regional prices is all extra profit.
High profits are a result of lack of competition - in a competitive market, they wouldn’t exist.
So all this comes full circle to Google exploiting a non-competitive market.
More like regional pricing is an attempt to maximise value extraction from consumers
And right there I’m done with your comment. Regional pricing is incredibly important, without it everyone pays the US or EU price and there is no service provided period.
However, you can be assured that they are charging the people they’ve identified as less wealthy (e.g. in a low average income region) more than their marginal cost. Since YouTube is primarily going to be driven by marginal rather than fixed costs (it is very bandwidth and server heavy), and there is no reason to expect users in high-income locations cost YouTube more, it is a safe assumption that the gap between the regional prices is all extra profit.
Even if true, that’s not what this hoopla is about. It’s about someone from say … the US using a VPN to get Kenyan pricing. As another person said “The internet’s most beloved company, Steam, also bans people for abusing the store using VPNs.”
Regional pricing is the only reason people in these countries even stand a chance at access to the service (because ultimately their costs might be a bit lower in these countries but not by much … I would not be surprised if regional pricing is pretty much just above the break even mark). People in other countries abusing those slashed prices threatens the whole system.
Your problem is that you’re working backwards. Is the “correct” price for youtube premium the US/EU price, and the rest of the world is getting a discount? No! Of course not! If that were the case then Google would be losing money on every single third world youtube user!
The “correct” price is something much, much lower, and the people in the most expensive regions are being gouged because they can afford it.
would not be surprised if regional pricing is pretty much just above the break even mark
And in the efficient market, that’s how much the service would cost for everyone, because otherwise I could just go to a competitor of YouTube for less, and YouTube would have to lower their pricing to get customers, and so on until no one can lose their prices without losing money.
Unfortunately, efficient markets are just a neoliberal fantasy. In real life, there are network effects - YouTube has people uploading videos to it because it has the most viewers, and it has the most viewers because it has the most videos. It’s practically impossible for anyone to compete with them effectively because of this, and this is why they can put their prices in some regions up to get more profit. The proper solution is for regulators to step in and require things like data portability (e.g. requiring monopolists to publish videos they receive over open standards like ActivityPub), but regulatory capture makes that unlikely. In a just world, this would happen and their pricing would be close to the costs of running the platform.
So the people paying higher regional prices are paying money in a just world they shouldn’t have to pay, while those using VPNs to pay less are paying an amount closer to what it should be in a just world. That makes the VPN users people mitigating Google’s abuse, not abusers.
More like regional pricing is an attempt to maximise value extraction from consumers to best exploit their near monopoly. The abuse is by Google, and savvy consumers are working around the abuse, and then getting hit by more abuse from Google.
Regional pricing is done as a way to create differential pricing - all businesses dream of extracting more money from wealthy customers, while still being able to make a profit on less wealthy ones rather than driving them away with high prices. They find various ways to differentiate between wealthy and less wealthy (for example, if you come from a country with a higher average income, if you are using a User-Agent or fingerprint as coming from an expensive phone, and so on), and charge the wealthy more.
However, you can be assured that they are charging the people they’ve identified as less wealthy (e.g. in a low average income region) more than their marginal cost. Since YouTube is primarily going to be driven by marginal rather than fixed costs (it is very bandwidth and server heavy), and there is no reason to expect users in high-income locations cost YouTube more, it is a safe assumption that the gap between the regional prices is all extra profit.
High profits are a result of lack of competition - in a competitive market, they wouldn’t exist.
So all this comes full circle to Google exploiting a non-competitive market.
And right there I’m done with your comment. Regional pricing is incredibly important, without it everyone pays the US or EU price and there is no service provided period.
Even if true, that’s not what this hoopla is about. It’s about someone from say … the US using a VPN to get Kenyan pricing. As another person said “The internet’s most beloved company, Steam, also bans people for abusing the store using VPNs.”
Regional pricing is the only reason people in these countries even stand a chance at access to the service (because ultimately their costs might be a bit lower in these countries but not by much … I would not be surprised if regional pricing is pretty much just above the break even mark). People in other countries abusing those slashed prices threatens the whole system.
This is people in “first world” countries trying to rig the system: https://www.reddit.com/r/youtube/comments/15hz5ys/found_country_that_works_to_get_youtube_premium/
Someone in Uzbekistan for instance would feel as the average US consumer would if a year of YouTube premium was $829.
Your problem is that you’re working backwards. Is the “correct” price for youtube premium the US/EU price, and the rest of the world is getting a discount? No! Of course not! If that were the case then Google would be losing money on every single third world youtube user!
The “correct” price is something much, much lower, and the people in the most expensive regions are being gouged because they can afford it.
And in the efficient market, that’s how much the service would cost for everyone, because otherwise I could just go to a competitor of YouTube for less, and YouTube would have to lower their pricing to get customers, and so on until no one can lose their prices without losing money.
Unfortunately, efficient markets are just a neoliberal fantasy. In real life, there are network effects - YouTube has people uploading videos to it because it has the most viewers, and it has the most viewers because it has the most videos. It’s practically impossible for anyone to compete with them effectively because of this, and this is why they can put their prices in some regions up to get more profit. The proper solution is for regulators to step in and require things like data portability (e.g. requiring monopolists to publish videos they receive over open standards like ActivityPub), but regulatory capture makes that unlikely. In a just world, this would happen and their pricing would be close to the costs of running the platform.
So the people paying higher regional prices are paying money in a just world they shouldn’t have to pay, while those using VPNs to pay less are paying an amount closer to what it should be in a just world. That makes the VPN users people mitigating Google’s abuse, not abusers.