Why do companies do this? Well it's all about maximising profits, companies want to charge you the maximum amount they think you will pay for a certain product. The figures will be different for every customer, but if you can sell at different prices you will usually maximise your revenue and profits. So the internet is a global shopping place, if you restrict what people can do by their IP address you can also charge them different prices - hmmm.
So that's the very basic economics out of the way, let's see how it works on the internet. I was recently emailed about accessing Napster UK for someone who had moved. They were a subscriber of Napster but couldn't access their account from Ireland. The reason was our friend Geotargeting, which checks your IP address and allows you access or not. You can see it work for yourself, if you're outside the US and try and navigate to www.napster.com - you'll get redirected to your local Napster site - e.g napster.co.uk, napster.de etc. If you're in the US, try and access napster.de or uk - it's not going to happen.
Using My Head and My Proxies
Anyway I can switch locations easily, just by selecting a UK proxy in Identity Cloaker meant my real IP address was obscured and I could access the UK Napster site without a problem. Ok not a problem, but then it occurred to me to check the US version of Napster, it's probably because I am really mean but everything always seems to cost more in the UK !
So I just switched proxies to a USA based one and then tried to get to napster.com, because it saw a US IP address from the anonymous server it let me go there.
Fine and then I checked the prices, not surprisingly I discovered that the Napster US plans are pretty
much the same as the UK ones, even the prices are the same except of course $5 is quite a lot cheaper than £5 ! A very good example of price discrimination in operation - annoyed ? I am !
Anyway just to double check, I signed up for the trial in the US version of Napster, I did put in a US Zip Code in the address field just in case it checked.
Two minutes later I was accessing exactly the same service as the UK Napster at a substantial saving - 40% discount at the current exchange rates !
There's a couple of German Servers to choose from so I selected one of these, and the next time I accessed Napster, it detected my German IP address and redirected me to Napster.de.
To be honest I really do find all this redirecting quite annoying, it's almost as though the web sites are controlling where you go and the content you see. In my mind the Internet shouldn't be like that, the user should control which websites they visit.
Checking via the European Proxies
Well on Napster.de I was in for a bit of a shock, I did imagine that the UK version of Napster was bound to be the most expensive but not in this case. As far as I could tell, the German site was exactly the same (apart from being in German obviously) but the same subscription was EUR10 a month, which was almost double the UK prices.
**Apparently the download model that Napster uses has been updated. You used to have unlimited downloads - maybe this German Version still has this to justify a higher price ? **
So German Napster users could potentially save a huge amount by using a US proxy and subscribing to Napster US. Of course they may put in restrictions in place to block this. I suppose the easiest way would be to block the payment method, I subscribed to US Napster using a paypal account, however it may be that if I tried to use a NON-US credit card they would have blocked my subscription.
This very blatent price discrimination model has hopefully a very limited future, the internet should and will be fairer than this. Why should music lovers in Germany pay so much more for exactly the same service? They should standardize their prices and allow all Napster users the same deal, not just those of us who can control their surfing and location via proxy servers. Using a service like Identity Cloaker to anonymise your surfing is becoming increasingly beneficial but I do think it shouldn't be necessary.