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TESS VIGELAND: It’s here! It’s here! It’s here! This week, Apple started shipping and selling the alternately vaunted and reviled iPad. Yet another gadget with the potential to improve our lives. Oh… and drain our wallets, too. First, there’s the cost to just buy the thing — minimum 500 bucks. And then there’s the cost to get unlimited 3G access to the Internet, an additional $30 a month.
As Brendan Francis Newnam reports, it’s just the latest addition to a whole new generation of bills.
Brendan Francis Newnam: Meet…
Melissa McNeeley: Melissa McNeeley.
Ryan McNeeley: Ryan McNeeley.
They’re newlyweds, and they live with their two dogs in a charming little house in Los Angeles. Recently, I asked them to do something they’ve never done before: Add up how much they spend a month on staying connected and entertained — stuff like cable and Internet access.
Ryan: $150 a month.
Melissa: Twenty or 30 bucks a month.
Ryan: $30 a month.
And cell phone bills.
Ryan: 270 bucks.
Melissa: I know.
You heard correctly. $270. And that’s not even a family plan.
Ryan: We can’t afford children because of our phones.
OK, he’s joking about the kid thing. But he’s serious when he explains that these bills have simply become part of the cost of living.
Ryan: What’s funny is two months ago, we were really tight, and we were trying to figure out what we could cut out of our lives and none of this stuff came up.
The McNeeleys are us. Over 200 million Americans are online now. 235 million of us have cell phones. Last month, iTunes sold its 10 billionth song. Then there’s the cable bill, movie downloads… It’s clear: These new digital bills are here to stay. So, are they worth it?
Andrew Zolli: Gosh, it has never been better to be a consumer of information and telecommunication services.
Andrew Zolli is a consultant who studies trends in culture and technology.
Zolli: You have this explosion of choice, you have tons of innovation. We are getting a lot more value than we are paying for.
Zolli’s referring to how phone calls now cost a fraction of what they used to, and how we now have loads of information at our fingertips.
The McNeeley’s agree.
Melissa: I work in the fashion industry, so I read fashion blogs constantly, art blogs and access all of international culture, not just Western culture. It’s pretty amazing.
Ryan: I mean, it also seems like you’re paying for this second brain.
True, but it’s how we pay for this second brain that makes these bills feel different. The charges sneak up on you — you pay a dollar for a song here, a few dollars for a movie there, you expand your texting plan, get an on-line subscription or two — and pretty soon it adds up. Last month, the McNeeley’s spent 700 bucks.
Ryan: I think if somebody was like, “You can have all of this stuff for 700 a month…”
Melissa: There is no way we would ever sign up for that.
Zolli: And there’s the rub, right?
Andrew Zolli again.
Zolli: This is the paradox of choice. The upside is, you’ve got millions of choices, you’ve got more content and more ways of reaching it. The downside of all that wonderful opportunity is that you may end up paying for the same thing a couple of different times, a couple of different ways. And navigating that choice is incredibly complicated.
Not surprisingly, amidst this world of complicated choices, companies have sprung up to help you make these complicated choices. BillShrink and MyValidas are two of them; they help you analyze your wireless bills. And the iTunes store is loaded with apps like Pennies and PocketMoney that are designed to help you keep track of your budget. But the most helpful saving tool to emerge in this brave new world of instant digo-tainment everywhere is our own behavior.
Ross Rubin: At some point consumers make substitutions.
Ross Rubin is an analyst for the NPD group, a consumer research firm.
Rubin: A lot of the spending that we’re seeing on digital goods is coming at the expense of physical, packaged media. And as we see increases in spending on cellular bills, some of that is coming at the expense of landline telecom.
In other words, we’re saving money by buying less tangible stuff — like CDs, newspapers, and magazines — as well as getting rid of old technology that isn’t working for us. Yet if the McNeeley’s are any indication, we’re not so much cutting costs as shifting costs.
Ryan: For some reason, all these things are justified, and I don’t know that they should be, because we can’t really afford them.
Melissa: And at the same time, I still don’t feel like there’s anything on this list that I’m totally comfortable giving up.
And that’s how new bills turn into old bills.
I’m Brendan Francis Newnam for Marketplace Money.
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