Amie Street Also Takes Away Features... But At Least Is Honest And Upfront About How They Hate Having To

from the take-a-lesson,-emusic dept

We've covered how eMusic (which had a fantastic reputation for a while) totally failed in communicating changes to its service, which involved increasing prices and taking away many valued features. The company tried to bury that news along with the fact that Sony Music would now be included, not recognizing that many of its users didn't care, and were pissed off at the way eMusic presented this as a good thing. At least some others may be learning. Ragaboo alerts us that online music site Amie Street is also removing some features (such as the ability to redownload tracks -- just like eMusic has done), but did so by admitting that it sucked and apologizing, but basically saying its hands were tied. They also gave advance warning of the changes. While Ragaboo isn't thrilled about he, notes that he appreciated the honesty from the company. Here's the email that he received:

"In several weeks we're going to be making a change to how Amie Street handles downloads, and we want to be certain you are fully informed in advance about this change. In brief, starting on August 5th we'll only be able to offer a single download of your purchased music unless you've encountered a technical problem.

Although most people only download their music one time, we've noticed that you have done so more than once on occasion. We realize that the ability to re-download files has been important to you, so it's understandable that you might be disappointed to see this no longer available. Unfortunately a number of factors beyond our control, including legal and royalty concerns, have made this impossible going forward.

We're very happy to say, however, that you can continue to stream all of the music you've purchased on Amie Street. That means wherever you have access to the internet, you also have immediate and unrestricted access to stream the entirety of your Amie Street music collection from your Library.

To make sure that downloading music continues to be as easy as possible, we'll be keeping a close eye on the user experience and making updates to the site as needed. The primary voice that directs any such changes will be yours, so if you have suggestions based on your experiences using the site, we'd love to hear from you. Tell us exactly what you like and don't like, and we can make Amie Street even better!

Peace,

The Amie Street Team""

Of course, the fact that both Amie Street and eMusic have removed the ability to redownload tracks over royalty issues makes you wonder what exactly is the issue here. Are record labels really demanding a royalty payment every time people redownload a song?

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The Psychology Of Externalities: Only I Can Benefit

from the welcome-to-the-world-of-entitlement dept

To understand the economics of the digital era, at some point or another you need to dig pretty deep into the issue of externalities -- a topic on which there's been a lot of recent research. However, the traditional view of externalities is that these are economic "spillovers" that either benefit (positive externalities) or harm (negative externalities) third parties. The traditional view is that too many externalities can lead to too much or too little of a good being produced, because all of the costs and benefits are not properly accounted for by those making the production decisions. Some recent research begins to question that assumption. And this becomes more and more important in a digital era, where externalities are less "spillover" and can, in some cases, be a major result of the good. For example, the ability to make a perfect copy of a song for free may be seen as an externality.

Either way, though, Clay Shirky recently brought up a point that touches on the psychology associated with externalities. He was talking about the silliness of Mannie Garcia claiming copyright on Shepard Fairey's iconic poster, and noted that people seem to view externalities quite differently, depending on how they impact them. For example, nearly the entire benefit of the photo that is being fought over was added by Fairey. That is, the only reason that the photo has any significant value these days is because of Fairey's poster. It's an externality from the poster. And yet, rather than recognizing that it has received a free benefit, both the AP and Garcia want to demand money from Fairey for causing the externality.

But, at the same time, the AP of course has no trouble profiting off the externalities of others. The fact that people make news that allows the AP to report on it, is an externality. The fact that tons of people are willing to talk to reporters and give them quotes and educate them is an externality. The fact that the AP learns about some stories from other news sources or researchers its stories via Google or any internet technology is an externality. And it has no problem benefiting from every one of those externalities, and would be quite upset at the thought that someone would come back later and try to charge them for it.

And, yet, when it comes to the other direction, suddenly the AP says that no one else might benefit from externalities. Only it may benefit from externalities.

Of course, this is not just limited to the AP. It's a common psychological problem when it comes to externalities. Look at almost any dispute that's being caused by the modern internet and you can find someone who's upset about some externality not being "fair." We see it with the blame being put by the entertainment industry on "piracy." We see it with the blame being placed on aggregators and Craigslist by newspapers. We see it in trademark, copyright and patent disputes. And it's always psychological. Recent behavioral economics studies have shown that rationality gets tossed out the window the second someone thinks that someone else is benefiting too much. Even if you would benefit more yourself, seeing someone else apparently benefit more seems unfair.

This thinking is both pervasive and dangerous -- even if it's natural. It leads to a destruction of value (or, at the very least, a hindrance of it). It focuses on pulling others down, rather than looking at how we can all, individually, be better off. Both Mannie Garcia and the AP benefited greatly from Shepard Fairey's externalities. But because they feel he benefited too much, they want to sue him. And all that does is prevent them from benefiting from similar externalities in the future. The same is true in pretty much every industry that we talk about. It's as if people don't realize how much they benefit from externalities. They assume that benefiting themselves is "normal." But the second anyone else benefits, it's "theft" or a massive problem that needs intervention. And that's a problem.

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If You're Taking Away Features From Users, Don't Tell Them It's For Their Own Benefit

from the that's-called-lying dept

Sometimes, I really wonder if companies think their users are stupid. There are times when they treat them that way. My favorite examples are when companies are taking away features or raising prices, and claiming (somehow) that it's for the benefit of those customers/users. For example, when eMusic raised prices and disabled features it put up a blog post trying to spin it as a positive, claiming "more of the good stuff!" Yes, at a higher price, with fewer features, but why let that get in the way of claiming good news?

The latest example is online music streaming site imeem. The company has struggled of late under absolutely draconian terms forced on it by the record labels. Rumors held that the company came close to going out of business until Warner Music agreed to renegotiate its suffocating deal. Still, there are many who question how the company can survive without a drastic change in business models. But, taking away features from customers with little warning and pretending it's a good thing isn't exactly the best way to go about things. Clay Shirky points us to the news that imeem is removing features for users to upload videos or pictures without even offering a "download to save" option. But, even worse, the blog post announcing the change tries to play this up as good news again, saying that it's all about "simplifying imeem" as part of an effort to enhance the site.

Sure, simplifying a site can be a good thing -- but unilaterally removing features that people use, with little warning, isn't really simplifying. You can simplify without removing features. If you have to remove features, for whatever reason, why not at least admit the truth: it's not for consumer's benefit, but for some other reason, and you realize it sucks for many users.

In other words, sound human, rather acting like your users are morons. If you want to see a company that's actually done a good job of this, look at Hulu. While we think it's ridiculous that the company caved in to content providers and tried (and failed) to block a specific browser (Boxee) from viewing its content, at least Hulu's CEO was upfront and honest about the fact that it sucked:

The maddening part of writing this blog entry is that we realize that there is no immediate win here for users. Please know that we take very seriously our role of representing users such that we are able to provide more and more content in more and more ways over time. We embrace this activity in ways that respect content owners' -- and even the entire industry's -- challenges to create great content that users love. Yes, it's a complex matter. A tough mission, and a never-ending one, but one we are passionately committed to.

For those Boxee users reading this post, we understand and appreciate that you're likely to tell us that we're nuts. Please know that we do share the same interests and won't stop innovating in support of the bigger mission.

eMusic, imeem and others would be wise to take note. Taking features away and pretending your customers are stupid enough to believe it's for their benefit isn't likely to fly.

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The Benefits Of Piracy Aren't Always In The Expected Places

from the and-that's-not-a-bad-thing dept

One of the issues that comes up when we discuss the economics of infinite goods is people too often falsely define the product that's being sold as the market, rather than the benefit. As we mentioned the other day, that's why the builders of horse carriages reacted the wrong way to the automobile. If they had realized they were in the transportation business, the automobile would have been as an opportunity to provide a better transportation experience. One of the side effects of properly recognizing the benefit is that it often shifts around the business model of the market you're in. The money may end up coming from somewhere entirely differently than before. The music industry is discovering this today (painfully). The money isn't in the product itself (music) but in the scarcities made valuable by the product (concerts, access to the artists, creating new works, etc.).

So, for folks struggling with these issues, one of the most important things to do after figuring out what your real market is, is to then figure out where all the scarcities are that are made more valuable by freeing up the infinite goods. The trick is to then position yourself to capture money in that market. But where this gets really tricky is those products may be surprising or appear to be in a totally different space (e.g., concerts rather than selling plastic discs) and that can be scary for those who are used to the old model.

I've had a few folks submit the GameIndustry.biz interview with Todd Hollenshead, the CEO of id Games, where he talks about the "hidden benefit" of piracy... but for computer makers, not video game producers. He's correct, other than the fact that it's not that hidden. There's a very real and admitted benefit to computer manufacturers -- but that doesn't mean that there also isn't a benefit for the video game makers themselves. Basically, when you look at the video game market, one of the big scarcities that benefits from free games is the computer makers.

But rather than somehow blaming them for not fighting piracy hard enough, why not take advantage of that? Get PC makers to finance new games, pointing out that if they give out the games for free it will help drive more people to buy the next generation of high powered PCs that are needed to run the games. In that way, everyone can benefit. The PC makers (or maybe even Intel or someone) can pay for the game, and then use that to turn in more sales of high powered computers. The video game developers get paid, the computer makers get a great tool to sell more new PCs and users get a free game with their PC. Everyone comes out better off and there's no "problem" of piracy.

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Understanding The Difference Between Price And Value; Product And Benefit

from the let's-try-this-again dept

Earlier this year, in response to yet another editorial somewhere where someone insisted that if something has a price of zero, it means that people don't think it has any value, we pointed out that price and value are two different things. Price isn't determined by value -- it's determined by the intersection of supply and demand. Value plays into that, by determining what the demand part is. That is, if I value widget X at $10, then I'd be willing to pay anything less than $10 for it. If the intersection of supply and demand prices widget X at $5, it doesn't mean that I value it at $5, but it does make it likely that I'll buy it. The same is true if the market prices it at $0. It doesn't mean I place a $0 value on it. It just means it's worth getting at that price, since it's below what I value it at.

In the past few months, this discussion keeps coming up again and again -- and it's good to see folks pushing back and pointing out the difference between price and value. The latest is Amy Gahran, over at eMedia Tidbits, where she takes a journalism professor to task for asking whether journalism should even be done at all if people don't "find value in what we as journalists do." First, Gahran makes the point that, historically journalism has always been more supported by ads than people anyway, and then makes the price/value distinction:

just because people aren't willing to directly pay cash for something does not necessarily mean they don't "find value" in it. For instance, when was the last time you personally chipped in for a clinical trial? And how are you paying for that air you're breathing right now?

Some benefits are assumed to be part of the environment in which we exist. That's what it means to have an environment. If a benefit grows scarce to the point that people feel they must directly pay cash from their pocket to keep getting it, there's probably a far more dire calamity at hand than that single point of scarcity. Most people will almost always seek other free sources of a benefit first.

She then goes on to make another favorite point: too often, those in dying industries mistake the product they're selling with the benefit they're selling. The horse carriage makers mistakenly thought they were in the horse carriage business (product) rather than the transportation market (benefit). The best way to succeed is not to focus on the product, but the benefit you're providing your customers:

I think it's important to bear in mind that people value benefits, not necessarily forms. The key benefit that journalists and news organizations have provided has been relevant, timely, accurate information that helps people make decisions, take action, and form opinions. For over a century we've established an ad-supported business model around packaging that benefit in a form known as "journalism." But that's not the only form this benefit can take, and many parts of the "American public" (and the advertising industry) are figuring that out.

Good stuff.

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How Does Taking Away A Popular Feature 'Improve Netflix'?

from the please-explain dept

I am not currently a Netflix customer, but one of the features of the service that I thought was quite useful (and I know plenty of people who use it actively) was the "profiles" feature that let a single family/household set up separate queues of movies they wanted. So, for example, a husband, wife and kids could each get their own list of movies with separate logins, rather than having to manage a single queue. This made the service a lot more useful for a household. And yet... Netflix is eliminating the feature, and doing so with the bizarre Orwellian explanation:

Why? While it may be disappointing to see this feature go away, this change will help us to continue to improve the Netflix website for all our customers.

Can someone explain how eliminating a feature that many people use improves the Netflix website? You see, Netflix, if you're going to remove a feature and say that the website is better because of it, it would actually help if you explained how or why it's better (i.e., you're replacing that feature with something better). To simply say that removing a well-liked feature makes the website better without any further explanation, you're basically calling your customers stupid because you think they'll believe what's clearly bogus.

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