| HN Mirror

All of which is to be expected, to a certain extent. Certain categories of goods -- especially games and entertainment -- have always had broad userbases or fanbases with very small, but fanatical "hardcore" segments. Only in recent years have companies have been able to address the segments so effectively. In the old days, you had low-tech segmentation strategies, like Collector's Edition DVDs, or value-added merchandise, or mailing lists, or fan clubs. These days, you can offer in-app purchases, expansions, or slightly different price points based on different release windows and platforms. On the surface, these tactics seem exploitative. In practice, not all of it has to be. Certain value-added stuff is not for everybody. Clearly. It's for the tiny percentage (anywhere from a fractional percentage to roughly 8%, in most cases) who is willing to pay for a lot more. The thing is, there's an ethical way and a less-ethical way to a) figure out who those people are, and b) offer them more. The ethical way involves giving people the choice to be hardcore or not to be. It involves offering a hardcore value-add that in no way detracts from the experience the casual fans enjoy. That's what Radiohead did. It's what some mobile gaming companies do, and what other mobile gaming companies do not.

IAP in gaming has been a fraught subject, and rightfully so. That's largely because certain gaming companies have realized the potential for IAP vis-a-vis the natural segments of hardcore gamers, and have attempted to IAP-gate the basic gameplay. Rather than offer a standard product to everyone, and a hardcore product to the hardcore, they try to hook everyone into playing at a "hardcore" level -- and sell IAP accordingly. This stinks, frankly. A lot of companies have picked a lot of low-hanging fruit with this model, but the model is already creating backlash. Unfortunately, it's not going away anytime soon. It's so damned lucrative.

I would almost call that strategy a pay-ladder, rather than a true segmentation. You get everyone onto the ladder, and you make people pay to climb it. It's exploitative. It's also very effective. (For now.)

We should distinguish this strategy from a less exploitative segmentation, like what Radiohead did with "In Rainbows," and what a lot of artists and performers are attempting to do with their own albums, books, or shows. Radiohead didn't force anyone onto a pay-ladder. Radiohead gave people legitimate choice, and the $81 box set was a choice that people who really wanted it could opt into. Both strategies arrive at a segmentation of the userbase; Radiohead's strategy arrives at that segmentation through a more positive and consumer-friendly method.

Segmentation, in and of itself, is not evil. It's just smart business strategy. How you set up the segmentation, and how you enforce it, delineate the boundaries between ethical and unethical.