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Suing Your Customers: Winning Business Strategy?
Cobarde Anonimo writes "The Knowledge at Wharton has an interesting
text
about the RIAA strategy of suing its customers.
As Wharton legal studies professor G. Richard Shell writes below, this same tactic was tried 100 years ago against Henry Ford. It didn't work then, and it won't work today."
Glad I got that off my chest.
The lawyer profession is still alive and well, isn't it? ;)
"Old man yells at systemd"
The judge wasn't constrained by laws such as the DMCA and other nonsense that favors business over innovation. The same scenario today would probably have swung against Ford, despite public support.
The Blaster Master Fighting for Truth, Justice, and Evil Pie since 1979
I think this is more commonly known as an "exit strategy" in the business world.
I Am My Own Worst Enemy
They best thing about the RIAA's strategy is that their heavy-handed tactics have brought them to the mainstream press and now has A LOT of people pissed at them. Before, it was just rumbling amongst the geeks and a few other industry players. But suing 12-year olds, suing thousands of people, going after anyone and everyone with reckless abandon, has forced even the most average news-reading Joe to go "man...what a bunch of sleezeballs". Had the RIAA kept this an underground fight and sued more discriminately, they may have succeeded in their scare campaign. Luckily they didn't and now that it's in the mainstream press maybe something will be done to halt their actions.
"He uses statistics as a drunken man uses lampposts...for support rather than illumination." - Andrew Lang
1. Upon clearance of your check by the bank, we will sue you.
2. You agree to settle out of court for whatever amount we ask.
3. Failure to follow the terms of this agreement are grounds for lawsuit.
From the article: "But having a strong legal claim on the merits is only one factor in legal strategy success. Indeed, this factor is often the least important one from a business point of view." Does this explain SCO?
A Slashdot favorite, you can read about it here, here, here and a synopsis here and another one here.
Basically, suing the customers backfired horribly and Mr Novak ended up being countersued and lost. A cautionary tale!
Never email donotemail@WeAreSpammers.com
Still, the ill-will the industry is generating (and the resources it is expending on being the bigger bully) do expand the opportunity of independent publishers to band together and take the high road. Let's hope we get some Ford-scale contenders in the mix soon.
It Is the Nature of Information to Transgress Artificial Boundaries
A customer is someone who buys something from you
Fine, instead of calling them customers, call them "the market" or "potential customers" or even "previous customers." Either way, they represent the people with whom the RIAA have the greatest potential to do business.
They are music lovers. The RIAA members sell music. Ergo, it is *not* in the RIAA's best interest to piss off these people. Pretty straight-forward, if you ask me.
If someone offered litigation insurance, I think I would gladly pay. Join a P2P network for a small fee, and have that money go for insurance. If the RIAA decides to sue individuals en mass, this money would be used to fight them. I would rather flush my money down the toilet than give it to the RIAA.
the RIAA is going to lose no matter what happens to its consituent recording companies. it knows this.
when distribution becomes primarily eletronic, then if the RIAA doesn't wholly control the distributor (if that distributor gives a fair deal to any recording company) their monopoly falls apart, their income will evaporate and the RIAA itself will be redundant and removed.
the recording companies will once again have to compete (because startups and independents can make money even if they're not in Best Buy and Media Play) and the association will dramatically lose funding. whether the individual record companies compete well enough to remain doesn't matter. odds are that they will, but they won't need to donate money to the RIAA to protect their distribution monopoly.
keep in mind, it's the RIAA doing the suing. Not sony, not bmg, not time warner - not even in joint litigation. the same RIAA who are mainly comprised of organizational management and lawyers who exist to perpetuate the monopoly. The same RIAA that operates as a nonprofit, and would be required to donate any existing capital should they go bankrupt.
So they are doing what only makes sense. Invent litigation and lobbying efforts to stall the end of the monopoly (to make more on wages) and to drum up extra legal fees (drain the coffers before the end), and brush up the resume.
The RIAA itself has no other option. It can't adapt, it can't compete. Once the distribution monopoly is gone, the record companies will at the least dramatically scale back their contributions, and the party will be over.
illegal p2p file sharing will lose ground to legit music download services. most people -will- pay to get the right song at the right bit rate at the best download speeds the first time. many already do, and there isn't even much competition. the fact that illegal p2p transfers -are- illegal is important and will contribute to the adoption of legal alternatives, but only slightly for most of the people downloading.
// "Can't clowns and pirates just -try- to get along?"
The RIAA should consider trying an auction strategy for selling music.
Someone might be willing to pay $10US for the newest Sarah Brightman album and $1 for the four Simon & Garfunkel albums released between 1965 and 1970. Another person would be willing to pay the reverse.
The RIAA would offer to make available to your local record store certain albums. You would offer a bid for a selection of songs or albums. The RIAA would delay the release of certain titles to you depending upon their popularity.
For example, if you bid $10 for the latest Sarah Brightman then you could have it burned onto a CD-ROM at your local record store today. But you bid only $1, then you would have to wait thirty days. The ratio of the length of time that you would have to wait vs. your bid price would change according to the overall demand for a particular title. A $0.50 bid for the latest Backside Boys release would have a wait period of three months while bidding $0.50 for Sam The Sham's Greatest Hits would have no waiting period at all.
Since there very little marginal cost for reproducing and distributing the music on the internet, the industry should consider that they could maximize their profit on each album through a flexible pricing structure that reflects the demand curve (i.e. the musical preference and budget) of each different customer.
You shouldn't have to go through the hassle of downloading music through the internet (and it is a real hassle for those of us with dial-up access). You should be able to just go to a local record store and have a blank CD-R burned with your selections, then and there. The record store would download from the RIAA your auction 'winnings', take your payment, and deliver up your CD.
So many new marketing stategies...So many new ways to make money and make their customers happy...So little willingness to try new things...too many lawyers and sleezeballs...too much historical baggage. That's the whole MP3 vs. RIAA conflict in a nutshell.
First, you will never win your market by suing your customers
SCO is not suing its main customers. SCO knows it doesn't really have a viable Unix business. It knows its Unix customers will go away, whatever it does.
Its real customers are Microsoft and Sun. They have paid (and Microsoft will continue to pay) millions of dollars to SCO. They are buying a service, the service of generating FUD around Linux. Selling this service looks like being a viable business, until the IBM lawsuit comes to court in 2005, when SCO will presumably cease to exist.
If it were only an intellectual property issue. I could take my collection of albums, walk into a music store, hand over the old-media copies of the music and buy a new-media copy discounted by the "license" cost of the content.
Yeah, that'll happen...
But it's not an intellectual property issue. I've got 1 CD (Queen's "A night at the Opera" - showing my age) that I've bought 4 times - 8-track for the car, album for the house, cassette for the car, and now CD. And if I put an MP3 of it on my home desktop and then access it from my notebook I could be sued???
If I steal a car I've got it and the original owner doesn't. If I steal "Intellectual Property" I've got it, but so does the original owner. Moreover the production cost of intellectual property drops dramatically with digital copying. The margins increase with every copy. I'm not advocating theft, but it's awful hard to feel any sympathy for the RIAA's position.
If this attitude wasn't pervasive ("win at all costs!"), we wouldn't have scummy lawyers. The scummy lawyers are just providing the services we want.
There are some things more important then "winning". In fact, there's a lot of things more important then winning.
Well, not to split hairs but you wouldn't be advocating theft anyway. Unauthorized distribution of copyrighted material is not theft, it's copyright violation and has to do with the perceived dilution of value of an activity the rights-holder has exclusive license to do.
And I have NO sympathy for the RIAA's position or more specifically that of the businesses they represent. What I do have is a belief that the basic architecture of copyright is going to stick around. It will be illegal to distribute unauthorized copies of copyrighted works. And this fundamental flaw will continue to interfere with anyone trying to make a go of alternative distribution of THEIR product. Dance our way or go to hell. Do it your own way, get sued.
But what you point out is that as the conventional industry is REDUCING the value of their product (don't use it this way, don't use it that way, oh look now it breaks your computer, sure you can have a compressed file but only this bundled Windows Media version! What you're an online store and you want to stream our product so potential buyers can browse the catalog? Heavens no, what if they capture it off the sound card, it'll be like they've got a cassette tape made off the radio, horror! You're welcome to start an internet radio station to stream our product - here's all your paperwork and here's your fat bill for royalties, and no you may not serve on demand and no you may not say what will be playing next! Thank you for sharing our music with thousands of potential customers. You're sued.) In this atmosphere, independents can RAISE the value of their product simply by doing NOTHING - just producing regular old CDs and not suing anyone - or even doing NEXT TO NOTHING - releasing under a license that specifically sanctions certain types of redistribution, like open source licenses do. That's a pretty cool opportunity the indies have and I'd like to see it used more and more, is all I'm saying.
It Is the Nature of Information to Transgress Artificial Boundaries