There is now real evidence in the marketplace that some customers, given a choice of fixed or usage-based pricing, will prefer the fixed-fee structure. Thus, whatever the providers may prefer to do, competition may force some forms of fixed-fee pricing in the marketplace.
Predictor: Clark, David D.
Prediction, in context:David D. Clark stated the following at a presentation at a MIT Workshop on Internet Economics March 1995: ”There is a large worry that usage-based pricing will lead to a collapse of the whole revenue model. Usage-based pricing will tend to drive away the large users (who may, for example, build their own network out of fixed-price trunks), leaving only the smaller users, who will (in a usage-based scheme) contribute only small fees. This will require the provider to raise his usage-based fees in an attempt to recover his fixed costs, and this will start a downward spiral of fleeing users and rising prices. There is now real evidence in the marketplace that some customers, given a choice of fixed or usage-based pricing, will prefer the fixed-fee structure. Thus, whatever the providers may prefer to do, competition may force some forms of fixed-fee pricing in the marketplace.”
Biography:David D. Clark was a senior research scientist at MIT’s Laboratory for Computer Science. (Pioneer/Originator.)
Date of prediction: March 1, 1995
Topic of prediction: Information Infrastructure
Subtopic: Cost/Pricing
Name of publication: The Journal of Electronic Publishing
Title, headline, chapter name: A Model for Cost Allocation and Pricing in the Internet
Quote Type: Direct quote
Page number or URL of document at time of study:
http://www.press.umich.edu/jep/works/ClarkModel.html
This data was logged into the Elon/Pew Predictions Database by: Catalfumo, Cara J.