Reputation Is A Scarce Good... As Metallica Is Learning

from the oops dept

On Thursday, we wrote about Metallica's latest foray online, where it's attempting to build a community around its latest music. Given Metallica's history of attacking Napster all the way back in 2000, we expected there to be some pushback, but what was really stunning was how many of the comments were from people (many of whom had been big fans of the band) still pissed off about Metallica's actions, and refusing to have anything to do with the band. We weren't the only ones to notice. Wired had a story on Metallica's efforts and discovered exactly the same thing. The vast majority of the comments were vehemently negative. Clearly, Metallica really tarnished its reputation by its actions eight years ago, and it's still paying for it.

This brings up a good point, that we've mentioned in the past in the comments, but not so clearly in a post. A person, organization, band or company's reputation is an important "scarce" good -- and once damaged, it's quite difficult (though not impossible) to rebuild the shattered goodwill. When talking about what would happen in a world without copyright, for example, people often say "but in a world without copyright, couldn't someone just copy your own creation and pretend they were their own." The answer is yes, but they do so at the risk to their own reputation. If the news comes out that the person/organization/band/whatever was taking others' works and not giving credit where it was due, that would harm their reputation. And, as Metallica is learning, a tainted reputation can have serious long-term impact.

Filed Under: metallica, reputation, scarce goods

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  1. identicon
    Ronald Hobbs, 30 May 2008 @ 10:57am


    @Ima Fish

    "You just disproved your entire point. If you trust your friend, you must base that trust on something. You would not trust on blind faith an opinion from someone you did not know. Thus, trust does not come out of nothing. It comes from past behaviors which necessarily have costs as energy was exerted."

    Well no, my point was that reputation is not a scarce good, if you consider that my relationship with my friend needed no input from you. All the effort that was expended to build the trust between me and my friend was expended by just us over time. and it's not the trust that's the scarce good there it's the time and skill to build and maintain the relationship.

    Yet because my friend likes your product, I give your product more trust, so in effect you've gotten two "units of reputation" yet possibly only had to expend effort to obtain the trust of one person. And that scales out depending on how trustworthy/popular Bob is, and the intelligence of his friends.

    When companies invest so much money in making something viral, they're directly trying to work this multiplication angle to get more value out than they're putting in. any good that you can do that with is not scarce.

    "Does that mean the cost of a good reputation is high? No, but no one said it was high."

    I also don't agree with this, I think the cost of a good reputation is high, in some cases very high. PR firms, Brand consultants, etc are founded on this concept.

    My point is simply that reputation can be increased at no cost to the subject of reputation, and therefore is not a scarce good.

    The people with trusted relationships however are a scarce good, and that's the bit the SocNets are trying to monetise.

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