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CBS would not even be on the bubble. They wouldn’t make the NIT either. They are planning on offering online video streaming to fans who wish to watch NCAA Tournament basketball games online. The problem is that their system can only accommodate 300,000 users at any one time, but that they expect many more people will be interested in watching the games in this manner.

Their solution is taken right from the playbook of the folks in the Kremlin and in the Canadian health offices (here too)… make people go to online waiting rooms until enough users leave to allow new ones in!

They used to charge prices, but now make access free, and earn revenues from online advertisers. But, is getting money from advertisers any reason to make the access free to users? Sure, many users will benefit from having free access, but queuing people is in no way optimal. By not allowing people to pay for access, those folks who place the highest value on watching out-of-market games will not necessarily be able to watch it. And for those high valued users who end up in the queue, there is a strong incetive to find ways to get to the front of the line. Whatever goodwill CBS may create by making the service free to everyone, will be more than lost from the anger of the frustrated fans who will not be able to access this product.

Sadly, the aversion to the price system even pervades corporate America. Relying on other mechanisms to allocate scarce resources is a foul of enormous proportions.

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