Patronism vs. Consumerism
Created: 20 May 2003

Of course, that time has apparently came and gone here in the new millennium. Customers? We packed all them up in a box, and sent them away for these new things we call "consumers." But I'm getting ahead of myself a bit.

So, I was thinking about why the mass media industry (particularly the RIAA and the MPAA) seems to think that all this digital rights management and other related BS will work. I mean, aside from the technical flaws in the systems (both mathematical ones and logistics ones), there's the Big "If": what IF nobody buys it?

Back in the late 90's, there was a great failed experiment by the movie studios to create competition for the (open) DVD standard that was encumbered with lots of draconian DRM. That format was called DIVX. It isn't the same "DiVX" that you can currently use to swap movies on gnutella. So, we'll call it by it's other name, Digital Videl Express, or DVE.

The idea behind DVE was simple. Produce a disc that could be sold for well under $10 (in practice, it was competitive with movie rental prices), that would play on special DVE-enabled DVD players. When you first brought it home and slid it into your player, you were "authorized" to play that disc for the next 48 hours. Afterwards, you would need to "reauthorize" the disc for another period.

The idea was to make a format that could provide competition with rentals. Gone were the problems of returning the movie to the rental store. Over time, you could even amass a fairly large collection of discs, and only "pay" for the ones you actually watch. Provisions were even made to turn them into "Silver" discs, which would then play on your DVE player an infinite number of times (note: but only on YOUR registered DVE player).

It flopped. Badly.

DVE shows that if it dosen't fit the model of what consumers want, then they won't buy it, regardless. If the product is too inconvenient to use, or has too high a barrier to entry, then it dosen't matter how much content is there, it won't sell.

Or at least, that's the theory put forth by those who think that DRM blows Purina Dog Chow. But it's a little more complicated than that.

DVE failed not because people viewed it as inconvenient, or because it had a high barrier. There wasn't enough different about DVE to differentiate it from conventional DVD. DVD had a fairly large software library, cost about $50 less (on average), and most people don't view stopping off at Blockbuster next door to the grocery store to be that incredible of an inconvienence. Ask anybody in the cable pay-per-view business how "inconvenient" the average consumer thinks Blockbuster is.

So, DVE failed not because of the stupidity of the system, but because there was competition to it's entire business model that made more sense to the average consumer, combined with the extra up-front costs of a DVE player.

Here's the rub. If DVD did not exist, would DVE have succeeded? Probably. What does this mean for the future of recorded music, now that the RIAA is progressively moving towards a "pay to listen" model, where intelligent devices all control when (and where) you listen to the music you buy? It means one thing. The final step towards music being a consumer commodity, and placing the customer (read: you and I) in the role of consumer, not patron.

Patronism Versus Consumerism, Microeconomics Style

Think back to a time when this might have been appropriate for your community. If you're lucky, you may still live in one of the tiny parts of the US where life has not become an endless Wal-Mart shopping trip... you're one of the lucky ones.

In my youth, I distinctly remember various businesses in my old neighborhood, businesses that had existed in West Anaheim (my home town) for at least 20-30 years before I was born. There was the "Bread Truck" guy, who had a large stepvan filled with fresh bread that he sold out of the back. My parents bought bread from him when they lived in downtown Anaheim before moving out to the relative 'burbs, and continued for quite some time. The Bread Guy was on a first-name basis with my parents, and the reverse was true as well. Eventually, the Bread Guy retired, and that was the end of Bread On Wheels.

But the thing is, everybody who lived in downtown and west Anaheim knew the Bread Guy. Other people I know who grew up in other Anaheim neighborhoods that I've met later in life all had a vague memory of the Bread Guy. Some of the parents knew the guy's name even still.

We had a grocery store literally a half-block away, where we could buy bread any day of the week. But my parents bought bread from this guy, out of the back of the truck. He was probably a bit more expensive... and certainly less convenient than the supermarket around the corner. The quality was good, but not THAT much better than the high-end stuff you'd get in the store. So what gives? Why did my parents (who were definately not rich by any definition) spend a little more money on buying bread from this guy rather than get it from the market?

Here's another story, from my own life. There used to be this little computer store in Orange, not far from where I lived when I was in my late teens and early twenties. It wasn't exceptional, by any strech of the imagination. Yeah, the guy carried some really esoteric stuff, but it wasn't anything that I couldn't get mail order.. sometimes for a lot less. And, his prices on computer hardware was always high. It also wasn't incredibly convenient... the store hours were something like noon-6, which put kindof a crimp in my 9-5 work schedule at the time. But I shopped there regularly... and eventually even worked for the guy. Why, when I had other places to buy the same thing from, for less?

It's really simple. I wasn't thinking like a Consumer. I was thinking like a Patron.

Consumerism has as it's fundamental premise that "there's always a lower price out there" and that cost is fundamentally the most important reason to buy merchandise from a particular store. In a Consumerism scheme, Item A sold by Store A is exactly the same as Item A at Store B, so therefore, price becomes the differentiation between the stores. Stores like Wal-Mart, for example, realized this early on. The extent of "service" is "We'll give you your money back if not satisfied." This isn't service in the true meaning of the word. Try getting "service" at Wal-Mart sometime.

But Patronism goes much deeper than that. With Patronism, there are considerably more factors than just cost in the picture. There are human and emotional issues. There is perhaps even a friendship that carries beyond just the financial transaction at hand. You know the baker's kids, and perhaps even do business with them as adults when they take over the family business. Often times, you don't even think about how much the item costs compared to prices elsewhere... because it's a PERSONAL relationship, the concept of going elsewhere dosen't even enter your reality sphere.

Consumerism has a flipside that's much more.. well, insidious. Customers are just as disposable as the cheap plastic trinkets in the store. It purely becomes a game of numbers: if we're able to turn a profit, regardless of how many people we irritate, who cares about the people? As long as we keep bringing people in the front door with loss leaders and marketing, and consider that we'll eventually piss off 10% of everybody in particular market... that's still 90% of people coming in here, and those aren't bad numbers.

Besides, in Consumerism, since there's no difference between products and level of service, it makes the playing field much easier to watch for everybody. Need to know why K-Mart has better sales than you this month? Just pick up their ad flyer and see what items are bringing people into the store.

Under the Patronism philosophy, every customer is valuable. In part, because Patronism assumes that a considerably smaller group of people are your customer base, and they are doing business with YOU, not with the company you own. You have to greet these people on the street. Your children share classes with theirs in Junior High. You may even have to interact with your customers at the local Elks lodge or as neighbors. Every customer puts money directly into your pocket, and every one is valuable.

Which brings me to what might be the most important part of the distinction.

Why Apple has succeeded where others haven't.

Recent events have kinda given me the perspective that I need to knit this up into a nice package: the fact that Apple has succeeded at making a DRM-encumbered product that is actually selling.

Apple's iTunes Music Store is really no better than DVE, in some ways. Apple has been a bit more flexible (like, allowing you to authorize up to three machines to playback content, so it's not locked to one machine, and allowing limited burning to "red-book" CDs that you can play on any CD player), but at the same time, the pricing isn't really that competitive, and the selection is (at best) marginal.

Yet, few are bitching about Apple's product like they did DVE. Anti-DVE hate sites sprouted up even before the product was available for purchase. Apple, on the other hand, has been patted on the back by both their supporters and their critics as having pulled off something pretty cool.

Why? Because Apple treats their customers as patrons, not consumers, and historically has been. Apple's products aren't the fastest computers on the market.. and they're certainly not the best priced. But, their support is good, and their "support" of their customers is unmatched in the industry.

I'm not going to say that it isn't without problems, or issues. No company is perfect. But it does tell me that this is why I recently bought an iBook instead of a PC Clone machine, and why I'm seriously considering permanently swapping out my Windows 2000 workstation with a G4 Macintosh.

Apple respects me, as a customer, enough to make an effort to provide me with a computer that works, an operating system that dosen't suck, and a support structure that returns my calls. And, it's empowering.

Finally, a computer company I can patronize.

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the world needs more mayo © 1998-2007 C. Sullivan (random.2.feedle@spamgourmet.com) i like honey [Creative Commons License] [No-Spam Notice] [Legal Stuff] patronism.shtml, Updated: Monday, 15-Sep-2003 13:03:32 PDT .