Suing Your Customers: Winning Business Strategy? 395
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."
One big difference (Score:5, Interesting)
The best thing about the strategy (Score:5, Interesting)
Think again... (Score:2, Interesting)
Think again, this is scaring everyone around me into going out and buying CD's or purchasing rights to the music (mp3's) online. I think it is worthwhile for the RIAA to bring on these lawsuits. I only think they were too late in the game that it may not have near the effect it would have had had it been a few years back and with slightly different tactics.
Reminds me of Pets Warehouse (Score:5, Interesting)
A Slashdot favorite, you can read about it here [slashdot.org], here [slashdot.org], here [slashdot.org] and a synopsis here [petsforum.com] and another one here [dynamoo.com].
Basically, suing the customers backfired horribly and Mr Novak ended up being countersued and lost. A cautionary tale!
Litigation insurance! What a great idea! (Score:3, Interesting)
Re:Suing your customers *does* save industries! (Score:2, Interesting)
Well... sort of. Once the lawyers that work for RIAA have stopped working for them, they'll probably find it harder to get work. Would you want to employ a lawyer that sued a 12 year-old [siliconvalley.com] for downloading music?
Re:Misconceptions. (Score:3, Interesting)
That's a dangerous assumption.
Though I'm not one of the sued, I'll give you an example. A friend of mine had a KMFDM CD and let me listen to it. I liked it, and bought myself a copy, but I wanted to see if I'd like their other albums before I went and purchased them. I went online, downloaded some mp3s from their other albums.
At that point I was a customer of theirs, even though I was getting mp3s of other albums online. (Turns out I liked those mp3s too, so I picked up the other albums.)
In fact with increased file sharing these people won't be customers.
This is also a dangerous assumption. It assumes that everyone, everywhere, will eventually be using file sharing to get files instead of buying the CDs in stores. This is impossible under our capitalist system, because *someone* has to buy the CDs.
But the sueing will convert them into customers.
???
File sharing is illegal.
I do not believe there is any law that prevents me from lending a CD I've purchased to a friend. If there is, could you please point me in that direction?
SCO is a completely different case (Score:5, Interesting)
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.
It worked for Patterson and National Cash Register (Score:3, Interesting)
The National Cash Register Company, under John Patterson, sued customers who bought competing cash registers, and forced most of the competing manufacturers out of business. NCR became the largest cash register company and maintained that position for most of a century. This was contemporary with Ford's litigation with the Association of Licensed Vehicle Manufacturers, around 1900. Details can be found in biographies of Patterson or of T.J. Watson, the founder of IBM and once Patterson's top salesman.
Patent lawsuits are hard enough to win that sueing customers is not particularly productive, so this is rare. Copyright lawsuits are much easier to win, especially after the DMCA, so sueing customers is a workable strategy.
Re:Reminds me of Pets Warehouse (Score:2, Interesting)
With that sceme they lost their rights of claiming money twice...
Sigh (Score:3, Interesting)
Here's the other thing: Most people that download songs, also buy CDs. Often the more they download, the more they buy. I've known more than one person who loved to play with P2P software and owned literally over a thousand CDs. That would not only make them a customer, that would make them a big customer. You do not want to piss these people off.
Also there are plenty of people that were customers but are now no longer buying CDs because of the tactics, though not targeted at them. I know more than a few people that never used P2P software (yes, luddites exist) but as so enraged by the tactics that they are boycotting (or claiming to at least).
So this is not at all like going after a theif. this is going after people who sample your msuic, at no cost to you, and then buy it. Making them, and others who hear about it, angry is a BAD IDEA. Music is a pure luxury good. People like buying music but it is not in any way required for survival. Hence, if you piss them off, they can very successfully boycott you.
What's more, it is leading to the strengthening of indie labels. People decide they are sick of this shit, but still want music, they look for alternative sources. They will happen across indie labels. Now those labels might not have just what they want, it may turn out to be sub par to what they are used to. But they buy it anyhow since they want music and are pissed at the RIAA. This strengthens the indie market.
Really, their strategy is stupid. When MILLIONS of customers do something like P2P, you find a way to exploit it, not try to stand in its way. There are plenty of ways they could turn an Internet distribution to their advantage, but they stubbornly refuse those and just go on trying to stop a tsunami with a sandbag.
A "No-Nonsense Indie" certification mark (Score:2, Interesting)
- The record company is not a member of the RIAA, and that it is not affiliated with any company that is
- The CD record itself does not employ any DRM technology that aims to restrict the rights of the purchaser
The word mark could be accompanied by some eye-catching logo and put on the CDs, to make it easy for customers who are fed up with the RIAA members' attitude towards them, but would still like to spend some money on music, simply because they enjoy listening to it.
What is a "certification trademark"? It's basically like a normal trademark, except that anybody who fulfills the criteria that are specified for that particular mark can use it. One example of a certification mark is the OSI [opensource.org] mark for Open Source software.
I believe you're missing the point. (Score:2, Interesting)
If Wal-Mart suddenly started charging 5 times what everything was worth to the average consumer, but most consumers had no real stores to shop at that weren't Wal-Marts, and in addition if the quality of most products unpredictably shot below even Wal-Mart standards...
Some shoppers might start going into the store and think, gee, that bag of chips costs $25, but I have little confidence that it doesn't suck. I think I'll eat some right here in the store before I take a chance of wasting that much money. Once a few people started doing it, lots of people might start doing it. When Wal-Mart executives found out this was going on, they might call the police and have thousands of people arrested for shoplifting. But even though shoplifting is wrong, and can be enforced, putting many of the people who might shop in your stores in jail (or in the RIAA's case, the poorhouse) won't do anything to fix this hypothetical Wal-Mart's flawed business model. It would eventually make people scared to "sample" the products, but it would also represent the last straw for most of them, who aren't about to sit back quietly and pay $25 for a bag of chips of dubious quality. Even though in this analogy they didn't have a nearby competitor, that wouldn't protect them forever. The shoppers will eventually seek out a competitor and take their business there. The competitor in the RIAA's case is independent music. Customers will eventually quit buying RIAA music altogether and shift to listening to excellent bands from smaller, independent labels like Vagrant [vagrant.com] or Kung Fu Records [kungfurecords.com]. Labels like these just give away MP3's on their websites [newams.net]. No, not WMA's or some RealPlayer format. They give the fans lots of free music to sample and they know that one way or another, the fans will support the bands they love. And they do.
Either all RIAA music has to suddenly become undeniably friggin' amazing, or the fscking prices have to come down. The way it stands people won't pay that much for music that's that mediocre. They'll listen to it for free, sure, but I for one would not have paid much of anything for most of the MP3s and AAC's I downloaded from Napster, KL, and Gnutella.