“Consumer Surplus” from Personal Technology Is Soaring in the Age of Appreciation

3/25/11Follow @wroush

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subscriptions to MLB.TV and NBA Game Time. But more to my liking, the 4.2 update also lets you stream video to your TV from many iPhone and iPad apps besides just iTunes—so now video from the New York Times app, for example, also plays on a TV. And it may seem like a small thing, but Apple also rolled out some nice new themes for Apple TV’s slide show function. I like to set the device’s screen saver function to slide show mode and connect it to my Flickr account; that way I can, in effect, make my TV into a giant digital photo frame showing my most recent shots. My favorite new slide show theme is called Scrapbook.

All in all, the new features take a gadget that was already quite inexpensive and make it into even more of a value. I had dinner guests over the other night, and while we were watching photos on my television, one of them asked how much I’d paid for the Apple TV. “It must be like $400, right?” he said. He nearly fell off the sofa when I told him it was only $99.

There are many, many more examples of software and software-enabled services that just keep getting better at no cost to users. Another TV-related one: friends have been raving to me for years about the Fox series “Prison Break,” and I figured that I would eventually have to break down and buy the DVDs. But just recently, the whole series showed up on Netflix Watch Instantly, where I can now watch it at zero cost beyond the $9.99 per month I’m already paying Netflix. One could also point to the way Microsoft keeps upgrading the software in its Xbox game console, or the way Google rolls out regular updates for the free Google Earth software, or the way smaller companies like Flipboard or Path keep adding features to their own mobile apps.

When people talk about benefits of computing technology, they usually focus on productivity gains in the workplace (the extent of which is actually disputed). But the improvements I’m talking about are less tangible. They don’t make us more effective producers; they enhance our leisure time or our ability to learn and be creative. When these benefits come at little or no cost, economists call them “consumer surplus,” meaning the difference between what we’re willing to pay for a good or service and what we actually pay.

I’d be happy to pay at least something for the regular updates to Apple TV and all my other iDevices, but they’re a zero-cost benefit of being an Apple customer. So it’s all surplus. And my big-picture point here is that in the new era of digital media and software-mediated services, the total consumer surplus seems to keep going up, and may in fact balance out our rising spending on personal gadgetry. This surplus is hard to quantify—indeed, there’s no place for it in our current methods for tallying up GDP. But it’s improving the quality of our lives nonetheless, and I think that’s something to be thankful for, even amidst the current turmoil of ongoing joblessness, natural and manmade disasters in Japan, and revolutions in the Arab world.

In a sketch on the Conan O’Brien show that’s grown into an Internet meme—complete with T-shirts—standup comedian Louis C.K. said, “Everything is amazing now, and nobody’s happy.” I get his point: it’s easy to grow jaded (or at least unimpressed) about the technological miracles that surround us, from jet travel to cell phones. But as experts like Mary Meeker and Ben Horowitz keep pointing out, we’re just at the beginning of a new wave in mobile and cloud-based computing, and that wave is probably going to transform, once again, the way we learn, communicate, do business, and have fun. Which means, I think, that the consumer surplus is going to keep growing—and that it’s going to be a lot harder to stay jaded.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • pipetodevnull

    I agree in principle, and here’s an “opposite end of the spectrum” anecdote: a tale of two PCs. One is the first I ever built, a 1.7GHz Pentium 4, the other a laptop I was given because the battery is lousy–it’s a 400MHz Pentium 2. Both are about 10 years old. With Ubuntu 10 on the former, and Lubuntu on the latter, I have relatively snappy and imminently useful machines. And they have a promising future. I find this wonderful.
    Nota bene: I am OS-agnostic, and run Windows 7/Vista/XP, OS X since 10.1, and many flavors of *nix–I am not grinding an axe here.

  • http://www.xconomy.com/author/wroush/ Wade Roush

    @pipetodevnull — That’s a great point. Computing devices have been generating surplus for a while now and your workhorse PCs are a great example. I just think the phenomenon is accelerating and reaching more people with the spread of connected gadgets, like smartphones and Internet set-top boxes, that are also open software platforms.

  • Steve Harig

    This sounds like Apple commercial, what a rod.

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