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. icon
    chris (profile), 30 May 2008 @ 11:11am

    Re: Dunno about scarce

    Then you can also have your reputation ruined due to some troll on Digg posting a complete fabrication, yet your product, effort and value offering hasn't changed at all.

    your initial investment hasn't changed, nor has the amount of time and effort you put into a product, but if your product stops selling because of your damaged reputation, then the value of that product has changed immensely.

    the value of something is nothing more than what the market is willing to pay for it. markets are made up of people; people have money that they use to buy things. if people don't want to buy something, it's not worth very much. a reputation is what people think of you, so clearly what people think of you as a vendor or service provider has a very real effect on the value of your product.

    you can't just sell something for whatever arbitrary price you decide, you have to see what the market (people) is willing to pay.

    sure, you might get lucky and move a few units, but selling something at a higher price than the market is willing to pay is not sustainable.

    the right product, at the right price, from a reputable vendor, is worth exactly what it sells for. if people stop buying that product, it becomes worthless. if your reputation influences the sale of your product, then it influences the value of that product.

    if you can sell something for a million dollars, it's worth a million dollars. if you can't sell it at all, then it has no market value.

    if your reputation is damaged to the point that people are not interested in your products, like in metallica's case, then your products have decreased significantly in value, and may actually become worthless, regardless of your investment or your personal feelings. that's why there are phrases like "it's worth less than the paper it's printed on" and "it's just business... nothing personal".

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