Myth Debunking: Fans Just Want Everything For Free

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.

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  • icon
    Ima Fish (profile), Aug 18th, 2009 @ 11:06am

    "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."

    Yes you can. That's why IP has nothing to do with property. It's a government granted monopoly which exists solely to create a market where none exists. It creates a market by creating artificial scarcity out of a legal fiction. But the scarcity is not real.

    To analogize the sales of imaginary scarcity to physical goods is simply asinine.

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    • identicon
      Anonymous Coward, Aug 18th, 2009 @ 12:51pm

      Re:

      First disclaimer....I don not endorse the RIAA or the MPAA.

      However i do agree with sheffner, in that expect evrything should be free, like a divine right.

      Lets side step for second and go to the android marketplace. now I see on a daily basis comments that go like this.

      A. wow, this is totally the bestr app ever, does exactly what I want but it should be free.

      B. hey jerk why you charging $0.99 for this killer app, I thought Android was open source, everything should be free.

      never have I seen people so far removed from reality, to think that these developers owes it the end user to give away the fruit of their labor, and yes ,their IP. Lets not consider that these same people have families and mortgages and bills, and need to eat. or maybe they imagine that google or TMO pays these guys a salary. or maybe they just beleive their entitled to free, I think it was the twelth ammenment or something, thou shall live of the labor of others.

      Now, this is not nearly the same as the DRM debate, but it speaks volumes to the relevancy of why this is a big issue.
      Like the TFA says, people want things for free, people expect things for free. Hell, as long as I can eat who cares about the next guy, I want it for free.

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      • icon
        Mike Masnick (profile), Aug 18th, 2009 @ 1:00pm

        Re: Re:

        However i do agree with sheffner, in that expect evrything should be free, like a divine right.

        So because you found some comments in a single arena you think that means all customers expect all things to be free? Even in spite of all of the evidence presented to the contrary?

        And, the example you used is, again, infinite goods. Goods that are infinitely reproduceable is a situation where people will gravitate *naturally* towards thinking they should be free, because it's basic supply and demand.

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      • icon
        Steven (profile), Aug 18th, 2009 @ 1:36pm

        Re: Re:

        As a developer who is looking at creating applications for Android phones, and possibly other devices, here is my opinion on the subject.

        I personally plan to offer a free, and a paid version of my app, paid would probably a buck. In general yes I would like to charge for the software I create. All this is fine. The current market allows for such things. However I recognize this is artificial and will not last. My completed software has a zero marginal cost to produce. If I want to be successful as a developer I need to find ways to charge for those things that are scare, namely my time and expertise.

        Selling software is not a good business model to bet your future on any more than selling digital copies of music. Even if they work out great now, they are artificial and temporary and if you are in business you need to recognize that and be able to make the transition when (or before) it comes.

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        • icon
          Marcus Carab (profile), Aug 18th, 2009 @ 3:44pm

          Re: Re: Re:

          Well said. I don't think anyone is suggesting that all charging for content must stop immediately. When and where markets allow it, go for it! In the case of apps, a dollar feels worthwhile - not for the individual app itself, but for the convenience of easily finding an app that suits your needs and instantly obtaining it. This is why iTunes will be able to sell songs long after CDs fall entirely off the map, especially if they find ways to lower the price.

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  • identicon
    Free Capitalist, Aug 18th, 2009 @ 11:16am

    Losing at record speeds...

    http://arstechnica.com/apple/news/2009/08/itunes-sells-25-of-all-music-in-the-us-69-of-digital.ars

    iTunes basically sucks considering it is a closed system. And yet for all the time the RIAA and their member orgs fighting for protectionist entitlements, their distribution channels of significance are about to be reduced to one man. So much for leverage.

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  • icon
    Chronno S. Trigger (profile), Aug 18th, 2009 @ 11:16am

    Copyright law

    "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."

    Wouldn't that suggest there is something really wrong with it? Especially the eight volumes of definition.

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    • identicon
      Heya, Aug 18th, 2009 @ 5:31pm

      Re: Copyright law

      That struck me too. If it takes so much time, space and wind for just the professionals to define or understand, how do they expect the average piker to get what they're talking about?

      And when the pikers do get an idea of what it is, they just might see it as merely time, space and wind, certainly not a tangible product they can pay for to drive themselves to a local restaurant.

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  • identicon
    Anonymous Coward, Aug 18th, 2009 @ 11:17am

    Bear in mind that the two participants are being tasked to argue specific sides of issues. It would be interesting for Messrs. Sheffner and Patry to change roles and see what comes out of the debate. The results may very well surprise you. I daresay that Mr. Sheffner would present arguments along the lines Patry has presented to date and Mr. Patry would present arguments along the lines Sheffner has presented to date.

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    • identicon
      Ryan, Aug 18th, 2009 @ 11:29am

      Re:

      The problem with Patry(and with many critical of...file sharing? free products? what exactly is the problem here?) is that they portray contrary arguments as normative and that we merely want them to be free, ignoring that in reality they already are. Whether consumers want them to be free or not is irrelevant--the marginal cost to copy and distribute digital goods is zero. Somebody will always be offering them for free, and there is no way around that. Saying the customer is wrong in consuming goods that are naturally free is like arguing against gravity. Patry and others making his arguments need to recognize that this is not a matter of customers "wanting" free things, but how producers can adapt to the new world.

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      • icon
        Mike Masnick (profile), Aug 18th, 2009 @ 12:00pm

        Re: Re:

        The problem with Patry(and with many critical of...file sharing? free products? what exactly is the problem here?) is that they portray contrary arguments as normative and that we merely want them to be free, ignoring that in reality they already are. Whether consumers want them to be free or not is irrelevant--the marginal cost to copy and distribute digital goods is zero. Somebody will always be offering them for free, and there is no way around that. Saying the customer is wrong in consuming goods that are naturally free is like arguing against gravity. Patry and others making his arguments need to recognize that this is not a matter of customers "wanting" free things, but how producers can adapt to the new world.

        I think you're confusing Patry and Sheffner here.

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  • identicon
    Anonymous Coward, Aug 18th, 2009 @ 11:18am

    "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."

    Express one of them.

    So far, the only ideas I see on techdirt are trading dollars for pennies. Like selling a DVD of the movie on the same day you release them in the theater. Yeah, let's make it easy for a bunch of people to see the movie cheaper. YEAH! That will make us more money.

    Techdirt: 10 years, and still no idea how to make real money. A profit, perhaps, but not real money.

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    • identicon
      Ryan, Aug 18th, 2009 @ 11:37am

      Re:

      A profit, perhaps, but not real money.

      Your post contributes nothing to the discussion. For instance, Wolverine did just fine despite being quite famously leaked online before its release for free. Where were you on that one, dipshit? But then we get to the end and you grant that a profit can be made, despite everything you just said. So what exactly are you bitching about? You think the government should force citizens to contribute artificially high amounts of money so that incumbent producers cannot only effortlessly make a profit, but a very large one? You are a very stupid (wo)man.