If Your Business Model Requires An Overly Restrictive Contracts... You Have No Real Business Model

from the that's-not-satisfying-customers dept

We've discussed in the past how consumers are gaining more power over companies these days (and how that's a good thing), and that leads to a separate, but also interesting observation: if your business model relies on denying customers what they want -- such as through the use of overly restrictive contracts -- your business model is in trouble. Thomas O'Toole has a good discussion about some recent lawsuits involving overly restrictive contracts that try (and usually fail) to prevent customers from doing what they really want to do. First, it discusses the recent attempt by MediaFire to stop the distribution of a Firefox extension that routes around MediaFire's ad-driven business model. Second, it discusses a legal fight between Virgin Mobile and MetroPCS over whether or not MetroPCS can legally reprogram Virgin Mobile phones to work on its network.

The thing that shines through in both instances, however, is that they involved companies who didn't rely on providing the best product for consumers, enabling them to do what they wanted -- but instead, relied on contracts with overly restrictive terms designed to prevent customers from doing what they want. As far as I'm concerned, in most cases, business models like that won't be long for this world. Consumers are increasingly fed up with bogus legal restrictions that try to prevent what the technology clearly allows. If you're trying to create a business model, the second you consider putting in ideas that inherently limit your consumers from doing what they want, you're asking for trouble. A smart business model enables more customers to do what they want, and does so in a way that makes everyone better off. While there are still companies who can get away with anti-consumer business models enforced by overly restrict contracts, it's not a long term strategy for success.
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Filed Under: business models, restrictions


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  1. identicon
    Kevin Carson, 19 Oct 2009 @ 3:38pm

    Nah, MS Office Sucks

    Word 2003 wasn't too bad, but 2007 is a typical Microsoft gold-plated turd. So many "features" piled on that the dashboard has to be tabbed. Open Office is simple and streamlined, and anyone who would pay $200 bucks for MS Word when they can download OO for free is a shithead.

    I specifically complained to the IT person at the local public library about their switching from Word 2003 to 2007, and what an abysmal decline in quality the latter's user interface had. She replied that the decision was consistent with the "productivity software choices of corporations and other organizations across America. I told her the fact that they paid enormous amounts of money for something that was actually worse should be an object lesson in basing your decisions on what the clueless management of large organizations was doing, instead of feedback from your own user community. Never heard back from her.

    MS's prime market must be clueless suits whose institutional culture meshes with that at the Whore of Redmond: they're the same people who assume something must be the best because it's a "brand name." I keep telling the IT people at the hospital where I work that they'd get a lot fewer viruses if they installed Firefox, and they look at me like I've grown a second head.

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