Retailers Blame eBay For Driving Good People To Shoplift

from the gotta-feed-the-habit dept

Wow. Earlier this year we wrote about a bill, basically pushed for by big offline retailers, that would regulate online retailers. The big retailers made some bogus claims about an online "crimewave" that necessitated such legislation. Since that first bill was introduced in the house two other related bills have also been introduced, one in the House and one in the Senate. Earlier this week, hearings were held on the three bills, and the big retailers made the astounding claim that online auction sites need to be regulated because their "addictive qualities" lure perfectly innocent people into becoming shoplifters to feed their habit of selling online:

"Thieves often tell the same disturbing story: they begin legitimately selling product on eBay and then become hooked by its addictive qualities, the anonymity it provides and the ease with which they gain exposure to millions of customers. When they run out of legitimate merchandise, they begin to steal intermittently, many times for the first time in their life, so they can continue selling online. The thefts then begin to spiral out of control and before they know it they quit their jobs, are recruiting accomplices and are crossing states lines to steal, all so they can support and perpetuate their online selling habit."

Nevermind that the actual stats show that retail theft has been on the decline, while the majority of retail theft is actually due to insiders. Yes, the problem isn't with online retailers magically luring perfectly innocent individuals into lives of crime, but the big retailers own employees swiping stuff. Yet, when stores were questioned why they don't do more to prevent in-store theft themselves, a representative from Safeway claimed: "our associates are there to sell groceries, not to be police officers." However, even though the problem is with their own employees, who they don't want to turn into police officers, the retailers are asking Congress to, instead, turn all online retailers into police officers for them.

The combination of bills under consideration would give offline retailers the power to demand that online retailers interrogate sellers to find out if the goods they're offering for sale were stolen. They would also include a DMCA-like notice and takedown provision, allowing retailers to force auctions offline with a single letter and little proof. Yet, the notice-and-takedown is even worse than the DMCA's already dreadful system in that there's no provision to deal with any abuse -- meaning retailers could abuse the system sending false takedown notices and burdening online retailers over and over again, and there would be no punishment. On top of that, the bills would put liability on the retailers, directly contradicting the very point of section 230 of the CDA, which was designed to make sure liability went to the actually guilty party.

Basically, these three bills in combination are nothing more than a bogus effort by big traditional retailers to put a ridiculous liability and burden on online retailers to fix a problem that isn't as big as they make it out to be, and which they, themselves, have the most control over -- though they purposely choose not to do much to exercise that control. And, finally, these big retailers make up a totally bogus and unsubstantiated claim that online selling "addiction" is drawing a large group of folks into an unanticipated life of crime. Hopefully Congress sees through this blatant attempt by big traditional retailers to put a bunch of hurdles in front of online sellers.

Filed Under: competition, e-fencing, online auctions, politics, retail stores, shoplifting
Companies: ebay, safeway, target

Another 'Free' Business Model Experiment

from the they're-all-over dept

When we discuss the basic economics having to do with infinite goods, sometimes the debates in the comments accuse me of promoting one "business model" over all others. The truth is quite different. The economics at work are fundamental. Price gets driven to marginal cost. The business models that then result, however, are numerous and varied. The key is simply recognizing that the infinite good works as a resource, increasing the value of all sorts of scarce goods. Thus, you release the infinite goods widely, and sell scarce goods that are made more valuable. How you do that can take all different concepts into account. Just in the music space alone we see so many varied models, from Radiohead's name your own price to Trent Reznor's tiered premium model to Jill Sobule's tiered support model to Maria Schneider's fan-supported production model all the way to things like The String Cheese Incident setting up their own travel agency to help fans follow them around for gigs. The key isn't a single business model. In fact, each of these individual business models might not work for any other artist. But all recognize the promotional power of the music in making something else much more valuable.

And we're seeing that show up in totally unexpected places as well. Take, for example, this recent post on Boing Boing about what's happened with a bunch of experimental video games, developed originally as part of a Carnegie Mellon project. Each game was developed in 7 days and many are given away for free. However, now a company has taken those games and made t-shirts (yes, t-shirts) using images from some of the games. Even better, though, is that with each t-shirt, you get a copy of the video game itself, and the shirts are now for sale at Target. In other words, these games are helping to make the t-shirts more valuable, even though the games themselves are free. It's yet another example of understanding the difference between infinite and scarce goods and how to use one to make money from the other.

Filed Under: business models, economics, free, t-shirts, video games
Companies: target

Gibson Sues More Than Just Activision Over Virtual Music Concert Patent

from the who-else-can-we-sue dept

Remember how Activision had preemptively sued Gibson for a declaratory judgment that it didn't infringe on a really questionable patent concerning a computerized guitar for a "virtual" concert? Well, Gibson has now struck back, and it's not just suing Activision, but almost all the retailers who sell it as well, including Wal-Mart, Target, Kmart, Amazon.com, Toys 'R' Us and GameStop. The idea, clearly, is to have those retailers put pressure on Activision. Update: Wired reports that the lawsuit also covers a bunch of other companies. Basically, Gibson is suing anyone even remotely connected to video games that involve fake guitars.

Of course, there are all sorts of questionable things about this lawsuit. As we pointed out when Activision first sued, Gibson's patent doesn't seem similar to "Guitar Hero" at all. It talks about playing a real concert, with a real guitar (with strings) attached to a head mounted display. Also, as Activision points out, Gibson didn't care about the patent as long as Activision and Gibson had a marketing agreement. They only started calling for patent infringement after the marketing agreement ended. Finally, suing retailers for selling the game is quite sketchy. In fact, the Supreme Court just heard a case looking at whether or not that was legit, and the Justices sounded quite skeptical. Gibson is clearly posturing to try to push for a settlement -- and in the process, showing yet another way to abuse the patent system.

Filed Under: guitar hero, lawsuits, patents, retailers, supply chain
Companies: activision, amazon, gamestop, gibson, kmart, target, toys r us, wal-mart