Hacker News Reader

Comment by olalonde | Hacker News Reader

> "renting" only causes more surplus to be captured by the publisher, and not by the consumer

This assertion is demonstrably false. If this were the case, it would beg the question as to why many consumers and businesses willingly opt for rental models. Cloud hosting and music streaming are prime examples of the popularity of such models.

You have a personal preference for ownership, but if we look at consumer trends in the past decade, I doubt your preference will be shared by a majority of consumers. My bet is the majority of consumers are likely to prefer the flexible, less costly options, rather than ownership (assuming the technology is competitive).

View on HN

Selective quoting to misconstrue what I'm arguing won't win you any favors. I'm suggesting that in this particular case (you carefully avoided quoting the "this" that I used) the surplus is being captured by the producer.

Anyways, not interested in discussing further with someone who quotes selectively to argue with a strawman. See ya.

It was not deliberate but my point stands with or without the "it". I'm not exactly sure what you mean by the surplus being captured by the producer in this case, but typically, for a voluntary transaction to occur in a free market, both the buyer and the seller must perceive some kind of surplus or benefit. If consumers willingly opt in for the streaming service, they must see the transaction as beneficial to themselves right?

What I am saying is that, looking at past trends and assuming the technology becomes competitive, I believe a majority of consumers will opt for option B (streaming) rather than stick with option A (owning).

> If this were the case, it would beg the question as to why many consumers and businesses willingly opt for rental models.

Lack of understanding on consumer side and malicious intent on business side?

Because it's a smaller upfront cost, and a "pay per usage" cost ongoing. Many people don't want to (for example) dedicate the space to a large dvd collection for something they're only going to watch once, or to buy a media cupboard to hold two extra dvds. People don't want the hassle of reselling/searching the second hand market (where companies like eBay provide value, but friction and risk at the same time as anyone who has ever had an "item not received" case opened against them will tell you).

That's a common theory among people who hold a minority preference in a market, but it's almost invariably wrong. On aggregate, people tend to be rational. And there's plenty of valid and rational reasons for preferring to rent vs owning. Some reasons I can think of: lower cost, convenience (don't need to go to a store or wait for a shipment, doesn't take space in your apartment), not having to worry about hardware breaking, not having to worry about upgrading when a new model comes out, not having to worry about backups, portability, access to a huge catalog, personalized experience, ability to easily switch service providers, etc. It's not hard for me to understand why many people would prefer to rent.

If only that could be true. Economics would be more simple, and maybe actually a science. Modern economics is nearly entirely how to deal with the fact that individual actors are indeed not rational according to the traditional definition of the term. Which is why advertising works so well.

It's a model that mostly reflects reality. I find the alternative much more unbelievable (e.g. that this trend is the result of general ignorance and dumbness). It's simply more likely that your personal preference simply isn't shared by the majority.

> If this were the case, it would beg the question as to why many consumers and businesses willingly opt for rental models.

Consumers: because "as-a-Service" can have cheaper sticker price (often free), people have hard time seeing long-term costs, and social immune system hasn't caught up with this particular type of abusive business practices.

Businesses: because they're much more focused and high-cadence economic units than are individuals living a life, and most importantly, they're abstract. Their don't have lives that are valued. They're an entirely different kind of economic agents, and it makes much more sense for them to be "cash flow minded" instead of ownership-minded.

Then there's also the angle that, in B2B, typically both sides of the relationship are much closer in terms of relative power than in B2C, which is why there's less blatant abuse happening there.

> Consumers: because "as-a-Service" can have cheaper sticker price (often free), people have hard time seeing long-term costs, and social immune system hasn't caught up with this particular type of abusive business practices.

That seems a bit elitist to me. "Ah, if only the consumers knew what you know?" Maybe you're right but I find it more likely that they simply like the deal being offered.

Reply on news.ycombinator.com