In a recently published paper, Andrew Odlyzko, a professor at the University of Minnesota, divines lessons from the history of transportation to explain the telecoms industry’s attraction to price discrimination, and what it may mean in future. Of course, in general telecoms, companies already exploit variations in what customers are willing to pay for digital bits, depending on whether they take the form of a cable television programme or an SMS text message. On the internet, however, charging according to content would mark a big change.
On the net, discrimination might mean one price for web and e-mail traffic, another for instant messaging and still others for telephone calls, music and films. Is it likely? Mr Odlyzko hopes not, although history strongly suggests that the temptation exists. He thinks that price discrimination might not be in telecoms companies’ interests after all. Unlike on canals, toll roads and so forth, internet capacity is abundant. Internet service is therefore a commodity. Simpler, flat-rate pricing, he argues, is likely to increase usage: discrimination would turn some users away.
Indeed, he says, distinguishing between different types of traffic would mean so much technical rejigging that the openness of the internet would be destroyed. Because the internet is decentralised and simply priced, it is cheap for many other networksrun by big companies, universities and telecoms firmsto connect to it. This in turn gives the internet a great capacity for innovation. Price discrimination could jeopardise all this. While content delivery does lend itself to a closed network, connectivity does not. Open networks are likely to win because they can attract more revenues from users, Mr Odlyzko says. Is this wishful thinking? History, as he shows, is full of examples of successful price discrimination. The telecoms companies may yet think it worth a try.
Malcolm Gladwell of “The Tipping Point” fame is one of those people who has to be read whenever he writes something. His new book “Blink” is due out shortly. Meanwhile, here’s his latest: “Mustard now comes in dozens of varieties. Why has ketchup stayed the same?”
There are five known fundamental tastes in the human palate: salty, sweet, sour, bitter, and umami. Umami is the proteiny, full-bodied taste of chicken soup, or cured meat, or fish stock, or aged cheese, or mothers milk, or soy sauce, or mushrooms, or seaweed, or cooked tomato. “Umami adds body,” Gary Beauchamp, who heads the Monell Chemical Senses Center, in Philadelphia, says. “If you add it to a soup, it makes the soup seem like its thicker–it gives it sensory heft. It turns a soup from salt water into a food.” When Heinz moved to ripe tomatoes and increased the percentage of tomato solids, he made ketchup, first and foremost, a potent source of umami. Then he dramatically increased the concentration of vinegar, so that his ketchup had twice the acidity of most other ketchups; now ketchup was sour, another of the fundamental tastes. The post-benzoate ketchups also doubled the concentration of sugar–so now ketchup was also sweet–and all along ketchup had been salty and bitter. These are not trivial issues. Give a baby soup, and then soup with MSG (an amino-acid salt that is pure umami), and the baby will go back for the MSG soup every time, the same way a baby will always prefer water with sugar to water alone. Salt and sugar and umami are primal signals about the food we are eating–about how dense it is in calories, for example, or, in the case of umami, about the presence of proteins and amino acids. What Heinz had done was come up with a condiment that pushed all five of these primal buttons. The taste of Heinzs ketchup began at the tip of the tongue, where our receptors for sweet and salty first appear, moved along the sides, where sour notes seem the strongest, then hit the back of the tongue, for umami and bitter, in one long crescendo. How many things in the supermarket run the sensory spectrum like this?
This is quite hilarious!