Myth Debunking: Fans Just Want Everything For Free

Overhype

from the except-when-they-don't dept

The debate between Ben Sheffner and William Patry continues over at Patry’s blog, and Sheffner has an interesting piece where he argues (delicately) that sometimes the customer isn’t right. He admits upfront that this is a tricky position to defend, and he starts out with a more nuanced view as to why that is, but then he gets to this:

So everyone wants the product — but too many don’t want to pay for it. Hell, I don’t want to pay for it. I would love it if I could get all the movies and music I want for free. And I would love it if I could get all the BMWs, houses in the hills, and meals at Urasawa I want for free as well. But of course I realize I can’t. Just about everyone is with me on the BMWs and houses part. But too many think that movies and music should be free, and don’t see anything wrong with taking them. I’m willing to say they’re wrong.

Everyone understands why they can’t have all the physical goods they want for free. But they have a much harder time understanding that with intangible goods like movies and music. IP is just harder to understand, and to explain, than physical property. We need theories to undergird it, special laws to define it, and special classes at law school to learn how to fight over it — not to mention eight-volume treatises to tell us what the law actually is. So when people commit copyright infringement, they may think they’re causing no harm — but they are. They’re undermining a system that enables those big, bad companies that everyone loves to hate, to finance the movies and albums that we all love.

This is a myth. It’s a popular myth, and I’m quite sure that Sheffner and lots of folks on both sides of the debate think its entirely accurate. But it’s a myth. The nature of a good economic transaction is one in which both parties are better off after the exchange. That means the people “paying” don’t mind paying. They’re happy to pay because they believe that what they have received is better than the cost it took to acquire it. But basic economics plays into the situation here: if the same thing can be made available by others in a better way, it’s only natural for people to ask why they should have to pay.

But if you want real proof that there’s a lot more at work than the idea that consumers just want everything for free and think that if it’s not free they should just take it, look no further than the countless examples we’ve shown of people paying lots of money to support those providers who don’t treat their fans as criminals, who don’t try to prevent what the technology allows and who actually work to connect with those fans and give them a true reason to buy.

Everyone wants a good deal, and a fair deal, but people are more than willing to pay if it makes economic sense. Whether consciously or not, there are an awful lot of people who inherently recognize that the economics don’t make sense when a good is infinitely available. As much as people have trouble understanding explicit economic concepts like supply and demand, instinctively many do, in fact, understand the very nature of abundance and what it means for pricing. It’s not some nefarious story of a bunch of immoral “thieves” wanting stuff for free. It’s an inherent understanding of competitive markets.

On top of that, Sheffner takes the position that paying for these things is necessary, because not paying for them “undermines the system,” he is once again being misleading. It may undermine one particular way that the system works, but the false statement is implicit in his argument: that this is the only way of funding such creation. That is demonstrably false, as we’ve shown time and time again. I have no doubt that Sheffner is sincere in his argument, but it’s based on a false premise that because the system used to work one way, back before technology changed the basic economics it relied on, that somehow we should all suffer by limiting what the technology allows and by ignoring basic economics.

It would be nice if it were possible, but I cannot find a single example of a modern society being able to successfully hold back or ignore what technology allows when it comes to economics.

Finally, way back when I was in high school, I worked at a bagel shop, which also sold other baked goods. The boss’s position was that “the customer is always right” except for one particular issue: the customer could only get the next piece of coffee cake in order. We had this giant sheet cake coffee cake, and many customers didn’t want “end pieces,” and would ask for middle pieces instead. On more than one occasion, this resulted in angry customers stomping out — and even once resulted in a fist fight between a customer and the owner’s son. Over time, as more competition entered the neighborhood (a Dunkin’ Donuts across the street, another bagel shop a block away), we lost a lot of business for our baked goods.

The point, which should be clear, is that you can say the customer is wrong all you want. But, in the end, the market will decide that the customer is right. Always. If you don’t provide what the customer wants (a fair transaction) and others are able to do so, you will suffer.

The movie industry and the music industry both have had numerous opportunities to embrace what the technology allows — and to craft new business models that would be massive money makers in doing so. They have chosen not to do so. They have said that the customer is wrong, and, as Sheffner notes, they have no problem saying so. The problem is that, whether legal or not, the competition is springing up left and right. Sheffner and his former colleagues can stand on whatever principles they want. The market doesn’t care. The market only cares for those who serve the customers’ needs. Plenty of others are doing so (both legally and illegally). Those who want to survive in business would be smart to take lessons from those who are succeeding and looking to implement smart business models around them. Those who want to insist that “the customer can be wrong” may feel good when they look in the mirror, but they’re going to have to contend with a rapidly diminishing customer base.

The customer can be wrong, but focusing on that doesn’t get them to pay you.

Filed Under: ben sheffner, business models, customers, economics, free, william patry