The Decision Strategist

Most of you know by now that the RIAA just won a $220,000 settlement against Jammie Thomas for sharing a slew (thousands?) of music over the Kazaa network. This is (I think) the largest settlement to date and one of the first against someone accused of sharing music instead of just downloading it.

At this point technology and the music market have essentially aligned the RIAA against consumers. I say consumers here because an overwhelming number of people download music. And though the RIAA is winning cases, there are also important precedents being set in cases that it is losing.

RIAA Strategy

The RIAA’s motivation is several years of declining record sales. A problem it views as almost solely caused by the availability of music online (pdf link), but which many people argue is due more to releasing bad music(pdf link). Sales have been declining since at least 2001, but part of me can’t help but wonder if it isn’t because of the record-breaking sales of pop artists in the late 1990’s and 2000. If all industries experience bubbles, maybe that was the big music industry bubble. I’ve been trying to find a good data source on record sales but have yet to do so, if you know of one, let me know.

The RIAA’s response has been to use a carrot and stick method, heavy on the stick, to try and change downloading behavior. On the stick side, the main strategies have been:

• Spread FUD (fear, uncertainty and doubt) using a combination of high profile lawsuits and advertising.
• Attempt to develop sympathy with the public for people working in the music industry, particularly artists who they portray as being cheated out of their money.
• As a last resort, allowing for restricted legal downloading through a variety of services including itunes, rhapsody and others. By the way, a non-sponsered plug for emusic, which features a variety of unDRM’d music. You can also now download music from Amazon with no restrictions.

Downloader Strategy

There has emerged a coherent organized resistane among music downloaders, but several different strategies seem to be shared by most proponents of downloading music. Among them,

• Disputing the assumptions put for the by the RIAA, namely that downloading music,
  • leads to less sales or
  • hurts the artists.
• Developing or co-opting anonymous ways of downloading content such as using tor or free wifi spots.

Among the arguments used to counter the RIAA’s statements are that the artists see a tiny percentage of each record sale, that most downloaded songs wouldn’t be purchased if buying was the only option, and that record sale declines are a result of the poor quality of music rather than it’s availability for free online.

Why the RIAA Cannot Possibly Win

Notice any similarities to the US in Iraq, the War on Drugs, prohibition, or any other enforcement of an unpopular law on a population? Unpopular occupations or laws cannot hope to achieve their agenda by increasing costs of disobeying. You simply cannot criminalize a majority of the population.

During prohibition crime rates increased drastically. The drug war has had a similar effect with the result being the extreme cost to the public for hosting people arrested for possession of marijuana.

The pattern is familiar enough that we should be able to map it out fairly easily:

1. An unpopular law or occupation takes effect.
2. Initial resistance is met with increased penalties.
3. Resistance is driven further underground, but due to it’s popularity it still extracts a heavy costs on the oppressor (which may be it’s own government or corporate organizations).
4. Eventually the cost becomes too great, and the occupier leaves or the law is repealed.

That said, I know there are some examples of foreign powers (often the U.S.) overriding popular will to instill a benevolent dictator. However, these cases are different in at least two ways:

1. The local power base was co-opted. It is absolutely necessary that a powerful segment of the population is allied with the occupying force to help enforce the occupying agenda. This was specifically rejected early in the Iraq War, with the result that local power bases resisted U.S. efforts.
2. A segment of the resisting population fractures and begins turning resisters in to the authority.

To the music industry, neither of these options is currently available. The distribution of music over p2p is by design decentralized, and so there is no local power base to co-opt. The closest might be bands themselves, and Metallica for example has done just that. But more and more you have bands rejecting the music industry entirely, including big names like Prince, Radiohead, and others.

A scary possibility, and one the RIAA has no doubt considered, is developing a core group of sympathizers who could turn in their friends for downloading music. For this to happen though, the music downloading issue needs to be reframed as a moral issue in which the RIAA is a victim. The RIAA knows that it will never be seen as the victim, and so instead has tried to shift it to portraying artists themselves as the victim.

But in a world where music superstars are glamorized and idolized, there are precious few tangible pains to be seen.

Until the RIAA can shift public perception so that downloading music is seen as a moral violation similar to being a Jew in Nazi Germany or being against the state in mother Russia, this is not likely to happen.

As always, I’ll post responses in an article next Sunday.

-zot.

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After a year and a half of hard work to pay off my credit cards I am finally making the last payment this morning. My only remaining debt is school loans at 3.5% interest and a car loan at 4.5%. Getting out of debt has been one of my primary goals, and I’m really excited to have achieved it.

So how did I eliminate my credit card debt?

To be honest the single biggest factor in paying off my credit cards was making a significant (to me) amount of money. Slightly less than two years ago I was just out of a masters program and was making a paltry salary as a part time adjunct faculty to a state college in Massachusetts. But in January of 2006 I moved to New Mexico for a great job doing economic analysis and began making significantly more.

I can’t directly take credit for that, but I can take credit for not allowing my lifestyle to expand to meet my income. I’ve done a number of things to fight the desire to buy things that have cut my expenses pretty drastically:

• Living with roommates. Though I didn’t really know anyone in Albuquerque, I always moved into places with roommates. This was less enjoyable than living alone until my girlfriend and I got a place together, which is the best of both worlds.
• Resisting big ticket items. I’ve succumbed to an Ipod shuffle and a first gen Ipod nano, but have resisted buying an Xbox 360, a Playstation 3, a big flat screen TV and a speaker system (I really wish I was playing Halo 3 though). I haven’t upgraded my Toyota Corolla to a more expensive car with a bigger monthly payment.
• Cutting back on small luxuries. I’ve been less successful at this. My chai consumption is still out of this world, and I typically spend more money per month eating out than I do buying groceries. I’ve made improvements, but I could do even better.
• Tracking my expenses. Tracking your money does have any direct money-saving effects, but it put me in a much better position to know how much I was spending on different things. What I saw initially appalled me and provided me with much of my motivation to reduce expenses. Aside from living with roommates, this has been the most important factor.
• Discussing finances. I’ve gotten some good ideas and motivation from personal finance blogs like The Simple Dollar, Digerati Life and Get Rich Slowly, but I’ve also talked a lot more about money and finance with family and friends, sharing ideas and providing further motivation to reduce spending.

The Story of Frugality

I’ve talked a lot in the past month about metaphors and how the stories we tell about ourselves affect many of our decisions. A big part of my journey to being credit card debt free has been re-aligning my view of myself to be more frugal and fiscally conservative. This is probably a natural progression as I get older, but I’m much happier with a story about myself as a frugal simple living advocate than I was with the self-story of a consumption-driven post-college kid.

-zot

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One of the worst things you can do when facing an important decision is to try and make the decision while engaged in other tasks. As we increase the number of things we are thinking about at a given time, our ability to consider information relative to the decision declines fairly sharply.

The basic problem is that people can hold only 3 to 7 bits of information in their head at one time. As that limit is approached, we necessarily begin limiting the information we take in. Evolutionarily speaking, it’s not surprising that when faced with limited bandwidth/storage problems our brains filter out the content of the information but leave the underlying factors like tone of voice and body language. These are the clues that tell us whether we are in physical danger.

What’s really interesting is that when we are distracted we respond to positive signals as well.

The Deception Blog has a post about how people judge things when they are distracted or unmotivated. A lack of motivation (either because people are busy or they don’t care) causes people judge what they hear not according to what they are actually hearing, but to the superficial physical clues such as whether the speaker is good looking or sounds confident. But when people are actively engaged, they analyze both what they hear and what they see in an effort to detect deception.

Most of us recognize that making decisions when distracted isn’t a good idea, but I don’t think we are really aware of how impeded our decision making ability becomes.

-zot

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A quick note that Money Smart Life is running a series of posts on different tactics used by companies to get you to buy their products in Sales Tactics Revealed. The two posts so far: “Don’t Miss Out” and “You’ll Be Sorry” are relevant to tactics and decision making errors used in the buyer-seller conflict.

In How to Fight Advertising, I discuss some different ways to approach the same issue.

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