Felony Interference Of A Business Model Is Not A Crime

from the it's-called-competition dept

Last week, in writing about how Viacom boss Philippe Dauman appeared to be wrong on almost every one of his assumptions about the trends and economics facing his business, someone challenged my thoughts in the comments, saying something to the effect of that it is "illegal interrupt a business model." That's a laughable statement -- but it seems to be one that pervades many of the stories we write about on Techdirt. Rather than recognizing that markets change, many companies seem to think that there's something illegal about changing the model a market works on, just because it makes it harder for them to make money -- even if it actually improves things for everyone else. Reader tom mcmillan writes in to point to a blog post that does a great job making this point, sarcastically referring to the practice as claiming "felony interference with a business model." The point, of course, is that there's nothing illegal about interfering with a business model. It's called competition and both history and economics has shown that it tends to not just lead to better products for consumers, but also opens up new markets for producers to make even more money. If interfering with a business model was illegal, any competition would be illegal.


Reader Comments (rss)

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    Danny, Oct 10th, 2007 @ 7:16pm

    I'm fed up...

    Why is it that companies think that just because they got into a certain market they are entitled to a constantly climbing profit margin? Are corporations gotten so arrogant that they just expect to be given money these days and if don't get the money they are "supposed" get they think they can cry lawsuit?

    I suppose next the NFL team that won the Super Bowl ( I hope I don't sued for mentioning the Super Bowl without proper consent ) last season will sue the NFL if they don't repeat this year.

     

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    Anonymous Coward, Oct 10th, 2007 @ 7:49pm

    Garage sales

    Back in the day, the only way to sell your worthless junk was with a garage sale. Now with eBay, people can get the same junk for slightly less. I'd better sue them for violating my business model!

     

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    dorpus, Oct 10th, 2007 @ 8:37pm

    What if it interferes with police business?

    Will Italian Police not appreciate this video?

    http://www.youtube.com/watch?v=U7LM5U9l17E

     

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      mkam, Oct 11th, 2007 @ 5:57am

      Re: What if it interferes with police business?

      WTF, dorpus? You owe me 1:55 of my life back. I kept thinking something was going to happen, and then bam! nothing. Actually since it didn't have anything to do with Asian culture it is probably a fake dorpus posting. Although it was highly irrelevant to the topic.

       

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      EnricoSuarve, Oct 11th, 2007 @ 10:24am

      Re: What if it interferes with police business?

      Dorpus. Dude. Too wierd

       

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    zcat, Oct 10th, 2007 @ 8:37pm

    "I suppose next the NFL team that won the You-know-what(tm) last season will sue the NFL if they don't repeat this year."

    To be a consistent analogy they'd sue the team that beat them. But yeah, nice analogy.

     

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    mike allen, Oct 10th, 2007 @ 11:42pm

    What

    Being a brit Whats the superbowl and why is it so secreat that you cant mention it is it CIA or some gay club or what??????????????????

     

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      YouKnowNothing, Oct 11th, 2007 @ 5:56am

      Re: What

      The Superbowl is the championship game of the National Football League.

      Much like the people who run the Olympics, the NFL has a trademark on the term "Superbowl" and protects it to the point of absurdity so that your local drinking establishment can't have a "Superbowl Party" but can have a "Big Game Party", or my favorite, an "Uberbowl Party."

       

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      Anonymous Coward, Oct 11th, 2007 @ 6:02am

      Re: What

      Oh. Well in the States the Super Bowl is the championship game for the National Football League (NFL). In recent year the NFL has started get very strict on how its image is used, even so far as to threaten stores that advertise Super Bowl sales (for big screen tvs, pizza places offering specials, etc.) with lawsuits.

      Although its still not as bad as Major League Baseball (MLB) in the States. They actually claim that statistics from league games fall under their complete control and think they have the rights to prevent people from using them.

       

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      James (profile), Aug 13th, 2009 @ 7:02am

      Re: What

      if it is so secret, how did you understand his post, smartass.

       

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    DisGuysed, Oct 11th, 2007 @ 12:50am

    It seems that either corporations just talk in a certain way to hide what they are really thinking leaving us smart people thinking they are either idiots or geniuses. Maybe people are learning some crazy insane babble in business school and then applying it to real life. Either way money is the new religion(well not that new) and you either follow it blindly or you write the book or you don't follow it and you lose. Sad world. Plus entitlement issues aren't an old ideas. I mean, how is Israel entitled to displace Palestine? They weren't the Germans. So whining the holocaust isn't a viable argument. A false sense of entitlement is the cause of so much trouble in all of history. When will humanity get over itself?

     

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    Carme, Oct 11th, 2007 @ 3:26am

    You got it all wrong

    Mike, you got it all wrong. What he meant when he said "they are illegally interrupting the economic model" was really very clear when reading the discussion that followed: that their illegal actions are causing interruption to the business model. It's not that interrupting a business model is illegal or wrong per se, but doing so by breaking a law is.

    He said it very clearly: it's OK to compete by setting up a sandwich shop, but it's not OK to compete by stealing the pizza (and, say, reselling it) because stealing pizza is illegal by itself.

    What he means is that when someone threatens your business model, you need to adapt; but when they take illegal actions to do it (illegal by themselves, regardless of your business model) then you have a choice whether to adapt or to seek legal recourse. I think you should both agree on that, whether or not you agree on the best choice for each specific case.

    Carme

     

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      Paul, Oct 11th, 2007 @ 5:10am

      Re: You got it all wrong

      if you're trying to sell pizza and realize that people would rather resort to stealing as opposed to buying, you're obviously doing something wrong. there's a demand for your product, but not at the price you've given it. you then create the perfect environment for the black market. the recording companies have effectively done this to themselves. they might as well have just gone and said, "guys, how can we create a completely unstable business practice. sell something thats in high demand, but price it well beyond what that demand requires."

      the real question is this: if its completely impossible to stop the act of stealing of the pizza, wouldn't you try to put incentives in place to buy the pizza? or change some other parameters to stop people from stealing it? maybe lower the prices or offer some other service on top of it. iTunes is a perfect example of how willing people are to pay for music. Radiohead is offering their music for *any* price (though the true outcome of that is yet to be seen). Various big name artists are dropping record labels. They're becoming useless. Its time for a new business model.

       

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        Carme, Oct 11th, 2007 @ 9:39am

        Re: Re: You got it all wrong

         

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        Carme, Oct 11th, 2007 @ 10:14am

        Re: Re: You got it all wrong

        "if you're trying to sell pizza and realize that people would rather resort to stealing as opposed to buying, you're obviously doing something wrong."

        That's dishonest. The customers of every business would rather get the product for free than pay. Before the Napster-mp3-p2p revolution, music sounded the same and cost the same, and yet very few people decided they'd rather steal CDs. What drove people to "stealing" music (your word) wasn't that the offering changed, it was that "stealing" got so much easier. Piracy exists in all content industries: music, film, electronic games, adult entertainment, etc. You can try and explain the specifics of why each player in each industry is "doing something wrong", or just accept the simple explanation that when people can get something for free they'll do it, regardless of the specific market offering. Of course, ignoring piracy or wishing it away is "doing something wrong" by itself, but what drove the customers to piracy wasn't the businesses doing something wrong, it's the opportunity of getting stuff for free.

        "the real question is this: if its completely impossible to stop the act of stealing of the pizza, wouldn't you try to put incentives in place to buy the pizza?"

        Of course you should. But the fact you can't eliminate content piracy doesn't make it either right or legal. Piracy is wrong and illegal, regardless of whether it makes sense for any specific business to try and eliminate it or to accept it.

        Carme

         

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          Chris, Sep 20th, 2008 @ 1:19pm

          Re: Re: Re: You got it all wrong

          There is another way, a company can simply make it not worth the consumers time to steal it. By hosting a service such as iTunes, and making content available in all formats over all devices for free, they add value that most consumers dont want to invest time into doing. Sure you can take a dvd and rip it to Ipod format, but if it's 5 ducks and the company does it for you and lets your stream it over the phone whenever you want, it has value for live and you dont have to maintain storage of the media itself. It would be nice to be able to go to a pals house, login my account and have access to both of our collections at the same time. Authentication and credentials need to be worked out but, convergence and convience tied to a fair price always works, and the price will come down because of emerging markets overseas who will soon be able to afford the luxuries we have here. 1 million people paying 20$ is the same as 4 million paying 5$.

           

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      Anonymous Coward, May 31st, 2012 @ 2:00pm

      Re: You got it all wrong

      No, everything that this company is doing is considerably legal, unless you want to argue the legality of repeaters. However, repeaters were found to be legal way back in the 70's as long as they followed FCC guidelines. Unless you want to argue that they're suddenly illegal because "on the internet" was added to the end of it, they have no case.

       

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    Danny, Oct 11th, 2007 @ 1:53pm

    I agree but...


    "the real question is this: if its completely impossible to stop the act of stealing of the pizza, wouldn't you try to put incentives in place to buy the pizza?"

    Of course you should. But the fact you can't eliminate content piracy doesn't make it either right or legal. Piracy is wrong and illegal, regardless of whether it makes sense for any specific business to try and eliminate it or to accept it.



    Yes piracy is just wrong as stealing pizza and to remedy that you:
    1.Try to get people to buy instead of steal.
    2.Use the law within reason to protect the pizza.

    Papa John's isn't trying to go after people that don't eat pizza accusing them stealing.

    Domino's isn't putting out false reports and lying about stolen pizza statistics to get the government to write the law to their liking.

    Pizza Hut doesn't trying to offer you "deal" in which you only serve 5 years in prison for stealing a pizza to prevent a court case where they have weak evidence but still try to put you away for 15 years for stealing said pizza.

    Pizza Inn does not assume that everyone wants to steal their pizza and in an effort to prevent stealing they make the ordering process so watered down (no delivery, only certian toppings, raise the price, etc...) that people that once like Pizza Inn either resort to stealing or just go to another pizza shop.

     

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    zbu, Oct 14th, 2007 @ 8:34am

    another re: You got it all wrong

    "That's dishonest. The customers of every business would rather get the product for free than pay. " Well, as an example we can look at the Linux distribution scheme: You can download it for free (legaly), or you can buy it from one of the companies. Some people buy linux, so don't.
    The same example can serve to show that let's say Red Hat doesn't sue people who prefer downloading it for free.
    Talking about CDs, I remember when i still bought them, broken jewel cases, missprints in booklets, no booklet at all. Poor studio work on tracks (I have a CD from Flipmode Squad where the song ends in the middle of a word). I still buy a CD now and then, but only from street-musicians. The rest I download. Not from iTunes, I decided to boycot mayors and I hope others wake up and do the same.

    Before Napster it happened that I copied CDs or tapes from friends, and others did so too, so it's not something new.

    Music is art, and as with every art the buyer decides how much he wants to give, and the owner has the right to sell at that price or not. It should not be the other way around.
    And if I cannot buy a real Picasso, I can buy a copy of it, available at some supermarkets.

    And about the pizza example: there is no law preventing me making my own pizza, and if I like the one in pizza hut, I can make that one at home, I can even sell it if I want. The only thing I cannot is selling it and saying it's a pizzahut pizza.

    It's so copywrong lately.

     

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    Chris Beck, Oct 21st, 2007 @ 11:35am

    CRIA wants to make it so

    Graham Henderson, president of the Canadian Recording Industry Association (which doesn't actually represent any *Canadian* recording industry companies) had this to say about the recently announced intent of the Canadian gov't to focus on copyright in the near future: "We're concerned about hackers, the people who attack the business models," said Mr. Henderson. Sigh. Quoated in The National Post

     

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    interval, Oct 24th, 2007 @ 8:04am

    The fact of the matter is that the music business is and always has been run by mafia don wannabees. This business is the only one that; when the business dries up, says; rather than make our product better we'll just beat up the people who aren't buying it.

    I will dance on the graves of Warner, Sony-BMG, and their tools, the MPAA and the like.

     

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    Anonymous Coward, Sep 17th, 2010 @ 8:22am

    Piracy is stealing. Justify it however you want.

     

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    austin, Jun 4th, 2012 @ 10:03am

    piracy

    i know a good number of people who pirate videos, but when the video is available on netflix they don't bother (hulu is a tossup because even having a plus membership and frikken PAYING for the service they STILL attack you with advertisement. look im paying so i dont have to SEE this crap, but even with that most i know will take hulu over downloading)
    if you offer a service and price it fairly people will pay, if they feel you are trying to fuck them, they will pirate.
    itunes reduced music downloading, netflix reduced video downloading (for videos on netflix)
    rather than trying to fight this they would be well served to fix their business model

     

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