Would You Rather Be 'Right' Or Realistic?

from the being-right-in-fantasy-land-doesn't-help-much-in-the-real-world dept

We recently wrote about the excellent comic from Matthew Inman's The Oatmeal to highlight how companies turn would-be buyers into infringers by not making the content available. Here's a snippet.
In response, some folks sent over columnist Andy Ihnatko's response, in which he suggests the comic is actually representative of the sense of entitlement that people feel towards such content. Ihnatko's writeup is slightly amusing as he tries to mock those consumers for actually having an opinion on how they consume content and concludes with this basic statement:
The world does not OWE you Season 1 of “Game Of Thrones” in the form you want it at the moment you want it at the price you want to pay for it. If it’s not available under 100% your terms, you have the free-and-clear option of not having it.

I sometimes wonder if this simple, grown-up fact gets ignored during all of these discussions about digital distribution.
I was going to write a rather long response to why this is kinda silly, but Marco Arment did a better job than I ever would in explaining the difference between being "right" and being "pragmatic." You really should read the whole thing, because it involves a rather detailed example involving the physical layout of a restroom. I'm going to skip over that part and highlight the summary point, but it's worth reading the full thing:
We often try to fight problems by yelling at them instead of accepting the reality of what people do, from controversial national legislation to passive-aggressive office signs. Such efforts usually fail, often with a lot of collateral damage, much like Prohibition and the ongoing “war” on “drugs”....


Relying solely on yelling about what’s right isn’t a pragmatic approach for the media industry to take. And it’s not working. It’s unrealistic and naive to expect everyone to do the “right” thing when the alternative is so much easier, faster, cheaper, and better for so many of them.
This point could be seen as the central theme of many of the 40,000 plus posts that have been made on this blog: dealing with reality is always going to be a more effective way to go about things than taking some "moral" stand on how things "should" be. And, if you can deal with the realities and it actually solves the whole moral "I'm right!" part at the same time, what good is it to not deal with realities?

Taking the point even further, there's a simple fact of today's world, which is that consumers have power. Ihnatko's entire point seems to assume that this consumer power is "entitlement." I tend to think of it as consumers making their will known -- and that tends to lead to better products that should make everyone better off. What Ihnatko ignores is that a market is not determined by just one side. It's the interplay between buyers and sellers, and if the buyers aren't happy, they express that to the sellers in certain ways -- and infringement is one of those ways. It's a market signalling method. I'd argue that it's just as much an "entitlement" mentality by the "sellers" to pretend that only they get to decide what the consumer should be able to get, without listening to what the consumer wants.

Filed Under: business models, infringement, morals, practicality, realism, right

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  1. identicon
    Anonymous Coward, 28 Feb 2012 @ 10:53am

    Re: Re: Re: Re: Re: Re: Re: Re:

    Yes, but when you deal with high dollar markets, and try to replace them with lower dollar markets, you don't really need much in the way of cannibalization to have a problem.

    In simple terms, if you have a customer giving you $100 a year, and they drop you to buy the $10 product, you need to make 9 other sales JUST TO BREAK EVEN. Even if he is a buyer of a few products, you would still have to make 10 individual sales with him to be back at the same part.

    Cannibalization is a real problem for any business moving into lower income marketplaces.

    So if HBO has 28 million viewers, and lose 10% of them as a result of a new, lower cost option to view their prime products, how many sales of that lower cost product do they have to add to even stay where they are right now? The price ratio might be 2 to 1, 3 to 1, or 100 to 1... in each case, it gives you an indication of how much larger the market has to be at the cheaper price for them to just stay in place.

    A great example is PPV pricing for the UFC. The price is fairly close to insane ($50 or more per event), but through testing in the PPV market, they know that dropping the price in half will not generate twice as many buys, which would be break even. It's not even close. So what should they do? Perhaps more viewers would bring them more t-shirt and hoodie sales, maybe not. Certainly the higher price has managed to keep them a certain cache and kept the fans coming back. They sell plenty of PPV for each event, that is for sure - and they they re-run parts of the event and maybe all of it at a later date over the air with commercials and take in even more money.

    Sometimes just dropping the price to satisfy some consumers isn't a good business model.

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