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Zero Motorcycles announced their groundbreaking new battery "technology", in which they sell you a large capacity battery in a motorcycle with powerful motors and advanced traction control systems, and then lock all that away behind a software paywall that you can unlock (for a fee) in their app.
https://newatlas.com/motorcycles/zero-motorcycles-2022-battery-paid-upgrades/
Zero is not the first vehicle company to do this sort of thing. Notably, Tesla sells vehicles with capabilities that can be unlocked via software "upgrades". This strategy is also common in the CNC machine tool industry; it's long frustrated machinists that they can buy a machine with all the hardware, but then have a sizable portion of memory, advanced motion smoothing, and other functions locked behind activation keys, which often cost several thousand dollars. In that industry at least, if you know the right people and have a machine with a common control, you can get what you need to unlock it through other sources.
I anticipate a similar approach in the vehicle market, which has long sold "tuner" chips and has a great deal of modding enthusiasts.
https://www.youtube.com/watch?v=bIJiXNzpRMY
(Score: 3, Touché) by bradley13 on Saturday November 13 2021, @10:30AM (8 children)
How is producing and selling a product "rent seeking"? The fact that you don't give that product away?
Everyone is somebody else's weirdo.
(Score: 2, Touché) by Anonymous Coward on Saturday November 13 2021, @11:31AM
Unless they are selling the locked hardware at a loss then the 'extra' features were in fact paid for by the customer when they bought the hardware. Charging an additional fee for what the customer already paid for is rent seeking.
(Score: 3, Insightful) by Anonymous Coward on Saturday November 13 2021, @12:52PM (1 child)
First sale doctrine. You sold a box, anything that can be done with its physical instantiation is fair game.
Except for the exceptionally broken DMCA, which destroys private property rights that gorm the basis of our society (and privacy rights!), if you gave it to them, but weren't selling it, then it's a free gift with zero obligations to the recipient.
Tough titties. Convenience is all too often an excuse for not doing the right thing, or trying to pull a fast one. Don't want them to have it, don't give it to them.
Small children understand this..why don't you?
(Score: 2, Interesting) by Anonymous Coward on Saturday November 13 2021, @01:40PM
Yeah, sure. But like he said, some features can be unlocked with software update. I guess you can try to do that yourself or there is a group that does it for you. Whatevers. Maybe manufacturer can say that warranty is void but they can't brick your device remotely since they don't own it.
Putting in larger battery and restricting range is not all bad -- the battery in the device should really last much longer when operating in narrower band of discharge. Lower max power from the motor also reduces wear and tear. Probably most that want to pay less are happy with lower specs and if they want full specs, it's just extra payment away. And you have flexibility of doing this AFTER initial purchase and not need to swap actual hardware.
Anyway, this is not rent seeking, it's just features. It would be like Tesla locking the Ludicrous mode until you pay more ... but then buyers of this can decide if this is what they want in the first place. Basically, decide what you want and then decide if it's what you are willing to pay for it. Just don't get fooled by the "low end" price tag for the base model ;)
(Score: 5, Interesting) by Immerman on Saturday November 13 2021, @06:01PM (3 children)
>How is producing and selling a product "rent seeking"?
Just that alone? It isn't. Selling the product with huge profit margins IS.
The existence of a profit margin is proof of inefficiencies in a free market. The existence of FAT margins is proof that a free market doesn't exist - otherwise competitors would leap in and dramatically undercut your price.
That said, for low-volume products the distributed capital costs of development and tooling can easily rival the the incremental cost of production. If it only costs you $1000 to build one more widget, but it costs you $1M up front before you build the first one, and you only expect to sell 1000 units, then for each unit you need to charge $1000 for production plus another $1M/1000=$1000 for a total of $2000.
The problem is what to do if you see that there are X more people who would be willing to buy your product at $1001. Each sale would still make you money, but you can't afford to lower the price if you want to recoup your capital costs.
The traditional free-market answer is you start lowering the price as you pay off the capital costs, until eventually you're selling all your machines for $1001 (the free-market price would ).
A more recent answer is you simultaneously release lesser versions of the product at lower price points, that are all really just intentionally crippled versions of the original product, but still good enough to capture much of the untapped market. I think Intel's intentional speed-hobbling of CPUs was the first time I heard of the strategy. At first they weren't even crippled, just not certified to run at higher speeds, and it was luck of the draw whether you got a CPU that didn't pass QC at the higher speed, or overflow from higher tiers, though later they got more destructive about enforcing the rated clock speed.
If that's truly what's happening then it's a clever way to recoup capital costs faster, with buyers of the crippled machines getting the cheaper price sooner, at the cost of missing features.
However, in practice it seems that very often those price tiers remain in place long after the capital costs have been repaid. At which point it becomes pure rent-seeking.
And unfortunately, the two situations look exactly the same to anyone who hasn't studied the company's finances.
And when the crippling is implemented in a way that can be reversed for anyone willing to pay for the "upgrade", it really draws everyone's attention to the fact that you're behaving *exactly* like a rent-seeking parasite, regardless of the truth of the matter.
(Score: 2, Interesting) by Anonymous Coward on Saturday November 13 2021, @07:09PM (2 children)
Gee, and all along I thought "rent seeking" just meant hooking customers/consumers on subscription plans, "some dollars per month" -- just like rent or the ISP bill, or going back to my '60s childhood, the "Book of the Month Club". Current examples are SAAS - MS-Office 360 for $xx/month, etc.
Huge, un-earned profit margins are sometimes called "profiteering".
(Score: 4, Interesting) by Booga1 on Saturday November 13 2021, @09:53PM (1 child)
"Rent seeking" also encompasses things like:
The list of rent seeking behavior is quite extensive and not related exclusively to "subscriptions." The worst forms of rent seeking happen at the legislative level, not the consumer level.
(Score: 5, Informative) by MIRV888 on Sunday November 14 2021, @02:48AM
'Printer companies that make inkjet printers that refuse to print. This category has a high number of of rent-seeking techniques.'
Kill the printer because it has been used through it's 'service life'? (Read: You used it too much.)
I wouldn't know personally, but I hear this can be sidestepped with easily purchased software. You can also get large ink reservoir mod kits to end the ink cartridge gouging (I'm told).
(Score: 2) by bzipitidoo on Sunday November 14 2021, @03:35AM
In these primitive times, for business models we have only a choice of evils. I understand you had to profit somehow. Crippleware isn't a good model, but there are worse ones. Did you do anything beyond your immediate needs? Did you help in any way, in the slightest, to discover and bring to fruition better business models?