Monday, 1 January 2018

How Businesses Can Make Money Out Of Your Misery


Apple recently admitted to reducing performance on older devices- leading to understandable discontent with the firm. But such practice is in fact more common than you'd first think. 





















Though Apple refused the accusations, its recent apology for the 'misunderstanding' regarding how it treats devices with older batteries only reassured what many cynics suspected- that Apple had been slowing down older devices, in order to push users of these devices to upgrade. There is no way of knowing 100% that this is was Apple's intention- but, if this suspicion were to be true, Apple would not be alone in such a practice.

This is a strategy known as 'planned obsolescence', and it dates back as far as 1932. At this time, America was in the pits of its economic depression- and Bernard London, a real-estate broker, asserted in his paper 'Ending the Depression through Planned Obsolescence' that businesses should "chart the obsolescence of capital and consumption goods at the time of their production". Essentially, he wanted businesses to plan for the goods they sell to become obsolete, and thus demand for the goods to be reinvigorated. So because goods would become obsolete, people would buy essential items more often, providing a boost to the economy.

Planned obsolescence is all around us in today's world. Some argue that shaving razor companies, for example, deliberately do not select the most durable materials for their razors, as they want users to continue to replace their razors regularly. Even something like a 'best before' date on food and drink could be argued to accommodate planned obsolescence- many people throw away milk that is perfectly fine, just because it has passed the best before date by one day. Of course, they then buy more milk to replace it.

The problem is that it is usually difficult to identify where it is happening, as it is not a practice most businesses would be happy to admit to. 'Best before' dates may be deliberately early to protect the consumer from any possibility of spoilt food (or protect the seller from legal action). Razor companies may not use the most durable material for their razors because it might not be profitable to do so. Going back to the Apple example- one cannot be certain that the company practiced planned obsolescence for revenues' sake, as we have no fully reliable insight into the company's intentions when it decided to reduce performance on older devices.

Given that the world of business, however, is not always the most ethical, it is almost certain that many businesses engage in planned obsolescence with the primary intention of squeezing more money out of the customer, with little care for the disruption caused to them.

Another practice that is closely related to, and perhaps overlapping with, planned obsolescence, and is arguably easier to detect, is what Tim Wu of The New Yorker calls 'calculated misery'. In his very insightful piece, Wu explores what he sees as calculated misery being dished out by American airline firms to its customers, to accommodate its fees system. "Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it", Wu says- and when you think about it, this is true indeed.

Many of the airlines practicing calculated misery tactics have contributed to flying being generally known today as a miserable experience, at least for those not able to shell out on business or first class seats.

The emergence of premium economy is a classic example of this. Premium economy has recently emerged as a mid-way point between economy and business class, typically for middle-class passengers with a little more money to spend, but not enough for business class. They enjoy features like longer legroom, maybe some extra food, and other amenities.

To accommodate the extra space needed for these seats, some airlines have had to redesign their plane layouts- and of course, they would not make any changes that would come at the cost of the highest paying passengers up front. Rather, some airlines have made subtle changes to economy class- whether it is bunching together more cramped seats in a row, or more commonly, pushing together seats and reducing legroom. The phenomenon of falling legroom has been so common that investigations have been ordered into it by courts in the USA. Not only does this change allow more room for the greater profiting premium economy seats, but it also dishes out calculated misery to those in economy- squeezing them (quite literally) and incentivising them to pay the extra sum for premium economy.

Another recent example of calculated misery being dished out is evident in British Airways' recent plans to board passengers in order of how much they paid for their ticket. Even within classes- those paying the least are made to board last. Despite the fact that this is a less than optimal strategy for boarding, it again incentivises passengers to pay more for their ticket.

So, to summarise: some businesses, whether through planned obsolescence or calculated misery tactics, are squeezing more money from consumers, despite and in fact because, they are providing a worse customer experience.

But how are businesses getting away with it? The fact is, that the lack of competition between them is allowing them to do whatever they want. If one airline charges extra to jump ahead of the boarding queue, it won't suffer- if the rest of the industry does the same. As consumers, we are often held to ransom by collusion between businesses in an industry, as businesses are allowed to prioritise profits over customer experience.

There is some action that can be taken, however; it is our duty as consumers to show our discontent, both with our words and our pockets, where possible. Government must also intervene to prevent such collusion between businesses, and to ensure healthy competition in the marketplace. Only then will the relationship between business and consumers be mutually beneficial and profitable.
Mohammad Lone Editor