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Used VPN for cheaper YouTube Premium? Congrats, your subscription has been canceled
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this post was submitted on 19 Jun 2024
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This really is not a service issue. This is not a privacy issue.
YouTube as a service is ... actually a great service, it pays creators well, it's fast, it has decades of content, and it has tons of features.
It's monetized with ads, you either watch those ads or you pay them. Using a VPN to get a lower price on the subscription is not a service issue, that's abuse of regional pricing, and no company would accept that.
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.
Why wouldn't high income areas be more expensive to serve?
Don't they have to have local servers all around the world to even allow this instant-like transfer of videos for anyone to watch at anytime?
I actually don't know the back end stuff so you might be able to explain this part.
Yes, but for companies like Google, the vast majority of systems administration and SRE work is done over the Internet from wherever staff are, not by someone locally (excluding things like physical rack installation or pulling fibre, which is a minority of total effort). And generally the costs of bandwidth and installing hardware is higher in places with a smaller tech industry. For example, when Google on-sells their compute services through GCP (which are likely proportional to costs) they charge about 20% more for an n1-highcpu-2 instance in Mumbai than in Oregon, US.
Would you say its unfair to base pricing on any attribute of your customer/customer base? I haven't seen much discussion around how to fairly set prices for any kind of service/good. Seems most people agree they should make a profit of some kind, and I've heard some rough rules suggested but it almost seems like the logical conclusion is that prioritizing profit is always bad for society.
A business being in a position to be able to implement differential pricing (at least beyond how they divide up their fixed costs) is a sign that something is unfair. The unfairness is not how they implement differential pricing, but that they can do it at all and still have customers.
YouTube can implement differential pricing because there is a power imbalance between them and consumers - if the consumers want access to a lot of content provided by people other than YouTube through YouTube, YouTube is in a position to say 'take it or leave it' about their prices, and consumers do not have another reasonable choice.
The reason they have this imbalance of market power and can implement differential pricing is because there are significant barriers to entry to compete with YouTube, preventing the emergence of a field of competitors. If anyone on the Internet could easily spin up a clone of YouTube, and charge lower prices for the equivalent service, competitors would pop up and undercut YouTube on pricing.
The biggest barrier is network effects - YouTube has the most users because they have the most content. They have the most content because people only upload it to them because they have the most users. So this becomes a cycle that helps YouTube and hinders competitors.
This is a classic case where regulators should step in. Imagine if large video providers were required to federated uploaded content on ActivityPub, and anyone could set up their own YouTube competitor with all the content. The price of the cheapest YouTube clones (which would have all the same content as YouTube) would quickly drop, and no one would have a reason to use YouTube.