Thursday, February 15, 2007

RIAA: Guilty of not following the market

I've read a series of interesting articles finding historical occurances of where businesses have acted like the RIAA (Recording Industry Association of America).

History Repeats Itself: How The RIAA Is Like 17th Century French Button-Makers
In France, button-makers, faced with competition in the form of (gasp) cloth buttons, got the government to impose a fine, and, not yet satisfied, "demanded the right to search people's homes and wardrobes and fine and even arrest them on the streets if they are seen wearing these subversive goods."

The premise being, of course, that the RIAA, like the button makers before them, have forgotten what business they are in, and see new ways of doing things as a threat to their (now outmoded) business model.

The author goes further:
Step One To Embracing A Lack Of Scarcity: Recognize What Market You're Really In
Positing that if horse-drawn carriage makers had realized they were in the transporation business, not the horse-drawn carriage business, they might have leapt on automobiles rather that go out of business holding onto their old model.

People didn't want a horse-drawn carriage, they wanted something that got them from point A to point B. Similarly, the MPAA and the RIAA act as though they are in the business of controlling how movies or music is sold, when actually they are in the entertainment business, and these models have changed.

If you're looking to catch up on the posts in the series, I've listed them out below:

Economics Of Abundance Getting Some Well Deserved Attention
The Importance Of Zero In Destroying The Scarcity Myth Of Economics
The Economics Of Abundance Is Not A Moral Issue
A Lack Of Scarcity Has (Almost) Nothing To Do With Piracy
A Lack Of Scarcity Feeds The Long Tail By Increasing The Pie
Why The Lack Of Scarcity In Economics Is Getting More Important Now
History Repeats Itself: How The RIAA Is Like 17th Century French Button-Makers
Infinity Is Your Friend In Economics

RIAA vs. The Market
I don't knock the RIAA's responsibility to its investors nor the position it has come to hold over time. I think they are unwisely playing a delaying game with the market and it's going to bring them to their knees within 10 or 20 years.

I don't condone freeloading and think that Apple got something right with the idea of micropayments and it's iTunes store - a song for a buck. (Personally I dislike micropayments because the average consumer has trouble thinking of a dollar as something of value enough to give them pause in a knee-jerk transaction, but hey, that's business.) It's a new market that has arrived and existing business models are having trouble adjusting. The RIAA doesn't want performers to move en mass to this new model because it devalues the one they have put so much time in, instead of doing the smart thing and, say, buying iTunes, or becoming the lead contributor (and secondary beneficiary). That would be protecting their investors interests.

Patents will protect the RIAA for only so long before the pressure of a changed market obliterates their current business model.

RIAA Legal Tactics
Having read in depth the RIAA's civil suit strategy, from filing the suit in the wrong jurisdiction and pushing forward with so little regard they've netted dead people, grandparents, and folks who moved in after the fact, or calling people and threatening them over the phone with legal actions they can't take -- I call that a desperate last gasp, and like the button makers, parallels what's happening.

The RIAA wants the freedom to bypass laws the police obey in regards to invasive searching. As an American, that kind of incenses me.

See RIAA versus the People , a law firm specializing in handling their tactics, or how a typical case unfolds.

Penny Arcade gives in to pressure

First, the guys at Penny Arcade thought that (Sony Exec) Jack Tretton's claim that he would pay a $1,200 bounty for every PS3 anyone could find sitting idly on a store shelf was ludicrous. So they showed, by way of comicry, how stupid that claim really was [their write-up on the same day].

The next comic cycle, Wednesday, brings us to a complete opposite view: that the PS3 is really a great machine, it's only Sony's failure to understand how to communicate this awesome potential of optimism they have in their lambasted PS3 and PSP consoles.

But this view directly conflicts with the facts they brought up on Monday: PS3's are sitting idly on store shelves, un-bought and unsold. An unmentioned corollary is how poorly the PSP is doing compared to the Nintendo DS. The bottom line is that gamers vote with their purchases, and folks aren't purchasing enough PS3's or PSP's to keep Sony's #1 spot, and in the case of the PS3, #2.

I know Jerry / Tycho isn't stupid, I believe he sees this - I think he's just capitulating because a swath of angry readers e-mailed him vitriolic hate mail, stating basically "How dare you speak against my sacred cow? You suck, and so does your comic."

A friend of mine pointed out that Tycho has colorful language, but trouble getting ideas across, which makes for some great comics where Tycho tries to explain something and Gabe misunderstands him, but hurts the dynamic duo on this point. His point isn't that the PS3 is gold, it's that it is capable - it is not lacking in horsepower to do things.

This sounds accurate, though of course Tycho could use some clarification in point here.

Europe is Dying

Brad Wardell, creator of the Galactic Civilizations series and lead AI programmer for the version I know and love (among other things), is a hard working business and family man. His latest blog reveals something true:

Europe is dying. Or more accurately, several countries in Europe have a declining birthrate, and within several generations, if the trend continues, the existing population may find immigrants no longer a small minority.

What's insightful is what Brad attributes to be the cause of the problem:

"My opinion is that it is entitlements. Consider this: Why have children? What is the incentive other than biological urge, to have children?

Or more to the point, what is the incentive to have more than one child? Maybe you have a girl and want a boy so you have 2?

In the time before cradle to grave entitlements, people had children for a very specific reason: Because they needed them. They needed them to work the farms. They needed them to help out in the household. They needed them to take care of them when they became old and infirm.

But now? What do we need kids for? Mother government will provide for us. The more urbanized, the lower the population growth. All those government services are so convenient. It takes a village right? And when you get old, you don't need children anymore. No, the government will pay for your medicine, house you if necessary, and provide money to allow you to live pretty well."

Read the entire blog /article.

My comments? I agree, and with four children I'm currently out producing Brad by 2 to 1! Hah! But we can't have any more due to Maria developing worse complications each pregnancy, and Brad can raise my bet by "I have a company with more than 60 employees," at which point I fold.