How is it that almost nothing works correctly yet we still manage to keep on with our lives? This morning I was attempting to get an update on the weather. When I turned on the TV I was presented with the message “One moment please. This channel should be available shortly.” But that was not to be. Channel after channel mocked me with this promise and like a toddler waiting for Santa I sat in patient anticipation. Nothing. After a lengthy call to the cable company’s support center and Herculean efforts by a very polite and professional young man named Seth, my service was restored. Now it’s doing it again.
There was a time, let’s call it the seventies, when stuff broke all the time and got fixed in good faith. Let’s say your Ford Maverick broke down and you had it repaired at a local shop. It took a day or two, was probably performed at a reasonable expense, and the same problem did not occur again. Lot’s of other problems may have followed but in general stuff stayed fixed. But a ’75 Maverick was about as complex as a toaster. So let’s extend the discussion to services.
When I was a kid if Creature Double Feature was interrupted due to ‘technical difficulties’ at Channel 56 your adolescent shade tree economist would go apoplectic. After several precision strikes from a sock full of quarters delivered by his mother, he would be soothed enough to gather himself and wait around five to ten minutes for service to be restored. As Gamara took flight once again to battle Mothra the world would fall back into synch. No calls to Seth, no holding the function button down for ten seconds while the signal was refreshed, and no turning it off for five minutes and then turning back on. And, most importantly, no substitutes.
Back in the golden age of simplicity there were few alternatives (substitutes) for most products. We’re not talking about competition, channel 56 vs. channel 38 vs. channel 27 (if you had reception for channel 27 out of Worcester you either lived on a mountain or had an antenna that could also pick up pulsars from the other side of the galaxy), substitution in economics refers to replacing one type of good with another. In our example this would be trading TV for radio or a book. The measure of how easily one product can be substituted for another is referred to as the Marginal Rate of Substitution. There’s a whole lot of math that economists use to try to determine the cost of these trade-offs but simply put most people who want to watch TV at certain point in time really want to watch TV. Changing their minds to go read a book or listen to the radio presents a high cost, not in terms of dollars but rather in terms of satisfaction. The utility (satisfaction) lost in switching from one medium to another is high.
But that was then. These days technology continually provides us with more and more substitutes. When my cable went out I was still able to go online and bitch about it. I could watch TV online as well as movies and a frighteningly wide assortment of ‘videos’ on You Tube. I could play video games, watch a DVD, mess around with my kid’s iTouch, listen to iTunes, I think you get the picture.
Back in the seventies I didn’t have access to any of these forms of entertainment with the exception of a VCR, which at the time cost about as much as a used Ford Maverick (around $1,000). As technology has progressed it has delivered to us an amazingly diverse set of products. This increasing assortment of products has without doubt decreased the Marginal Rate of Substitution but at a cost. Actually, two costs.
The first is complexity. Implementing and supporting (not fixing) a PC or multi-use television is far more time consuming and complex than plugging in a TV set, adjusting the rabbit ears, and turning the dial. Although most gaming consoles are straight forward in their operation, try using an additional function on them. And due to the trend of offering similar services across platforms (TVs that use WiFi, computers that can download movies and TV shows) the level of standards and consistency has not caught up to the product offerings.
In short, the entertainment, media, and personal electronics industries have bet on the assumption that the lower cost of substitution will trump the increase cost of complexity. They have also carelessly bet on transferring the cost of that complexity to you and me. Hence an increase in what economists call Suckiness. The days of waiting for Channel 56 to resolve their technical difficulties have given way to you, me, and Seth figuring them out. There’s an opportunity here. Most people don’t watch even 10% of the 800 channels they get through their premium cable service. If there was a package that offered only 80 channels of your choosing but guaranteed 99.99% uptime or your money back for the interruption in service I bet you’d buy it. It’s no longer competition from other cable companies that cable companies worry about, it’s substitution.
If just one cable company provided a service that increased the cost of substitution through delivery of a superior product, they would reduce Complexity and Suckiness as well. I’m not going to hold my breath. I have to go and call Seth again, I have his personal line.