Truthiness on the Market

Last week, a couple of bloggers—one of whom spent a few years as an assistant law professor a decade or so back—wrote a laughably inaccurate critique of my paper with Chris Hoofnagle, What We Buy When We Buy Now, which is out now in the University of Pennsylvania Law Review. 

A response of commensurate seriousness and rigor probably would have taken the form of a single animated gif. Nonetheless, I can't resist the urge to outline their inept effort in more detail. But before getting into the specifics, some context might be helpful. What We Buy When We Buy Now reports the results of an empirical survey designed to measure the extent to which consumers understand the bundles of rights they acquire when they obtain digital media goods from companies like Amazon and Apple. In particular, we were interested in whether the phrase "Buy Now" accurately communicates to consumers the restrictions on use, possession, and alienability that are part of those bargains.

As it turns out, after constructing a simulated e-commerce site offering digital books, music, and movies and surveying nearly 1300 respondents, we found that a significant number of consumers are mistaken about what rights they get when they Buy Now. And that rate of confusion was considerably higher than the rate among those who purchase corresponding physical goods. What’s more, removing the Buy Now button and replacing it with a short notice outlining the things consumers can and can’t do with their purchases reduced confusion significantly. We also establish that these rights are material to consumers. That is, they affect whether consumers will buy these products and at what price. 

One final prefatory point on the timing here. The critique of our work comes on the heels of  the USPTO and NTIA announcing a Public Meeting on Consumer Messaging in Connection With Online Transactions Involving Copyrighted Works. The event grows out of the Commerce Department's White Paper on Remixes, First Sale, and Statutory Damages, which expressed some concerns about misleading terms like Buy Now. I was asked to present our work there and expect it to play a role in shaping the conversation. The critique does a great job of distracting from the issues on the agenda, issues that could have uncomfortable financial and public relations consequences for a handful of powerful companies.

Ok, so these two wrote a 2600 word response to our article. It was a real slog. I mean, are these guys paid by the word, or what? I expect long-winded posts from academics; we have nothing better to do with our time. But I'd expect a couple of free-marketeers to be out there contributing productively to the economy or something. So what flaws do they point out in our study? The following is as close as they come to actually addressing that question:

The authors seek to establish this deception through a poorly constructed survey regarding consumers’ understanding of the parameters of their property interests in digitally acquired copies. (The survey’s considerable limitations is [sic] a topic for another day….)

Cool story, bro.

In all that text, they don’t offer a single meaningful critique of our survey methodology, the reliability of our data, or our analysis of the data. Hell, they don’t even bother to summarize our findings, lest some stray reader make up their own mind. Instead, they argue the data don’t matter. And they offer their own set of assumptions about the state of the world that are inconsistent with the facts we present. Call me old fashioned, but I’m not ready to embrace the world of alternative facts just yet. If you want to critique empirical research, you have to engage with the evidence. These guys don't even try.

From there, they begin constructing their straw man, putting words in our mouths and mischaracterizing our conclusions in terms that are easier for them to dismiss. For example:

[T]he authors assert, because the common usage of the term “buy” indicates that there will be some conveyance of property that necessarily includes absolute rights such as alienability, descendibility, and excludability, and digital content doesn’t generally come with these attributes. 

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We assert no such thing. In fact, we did the opposite. Rather than asserting, we asked consumers what rights they thought they obtained in digital transactions. The results were mixed. Some thought they obtained a right to lend their ebooks; others didn't. Some thought they obtained the right to leave their mp3 collections in their wills; others didn't. The key point, however, is that a significant percentage of consumers—far more than in the case of physical goods—misunderstood the nature of these admittedly and obviously non-absolute rights.

Our critics might not like the results that we uncovered, but they don't get to dismiss them by insisting that our conception of property requires some sort of absolute transfer of rights.

But they go on:

Getting to their conclusion that platforms are engaged in deceptive practices requires two leaps of faith: First, that property interests are absolute and that any restraint on the use of “property” is inconsistent with the notion of ownership; and second, that consumers’ stated expectations (even assuming that they were measured correctly) alone determine the appropriate contours of legal (and economic) property interests. Both leaps are meritless.

They are wrong on two fronts here. First, neither of these assumptions are necessary to establish our fairly modest claims. Second, we don't make either of these assumptions in the paper.

The claim we are making is that the Buy Now button inaccurately communicates something to consumers about the bundle of rights they acquire. The precise content of that bundle isn't all that important, so long as the rights at issue are material. It could be a big bundle or a small one, an absolute bundle or one subject to all sorts of restrictions and limitations imposed by public or private actors. Our goal was to assess the potential mismatch between the bundle consumers thought they were getting on the basis of the Buy Now label—whatever it happened to be—and the bundle as described by the license terms under which these goods were sold.

The relevance of that assessment has precisely nothing to do with "the appropriate contours of legal (and economic) property interests." This paper does not argue that we should reshape property law or expand copyright's first sale doctrine in response to these survey results. We certainly don't claim that consumer perceptions alone should define the scope of property interests. Our critics don't provide a quote or citation for that claim, because they can't.

Instead, what we argue is far more modest: that digital retailers should use language that informs consumers in a clear and effective way about the nature of these transactions. For the market to work well, consumers need accurate information about the products they are buying. And what bundle of rights is transferred in the context of a digital good is crucially important information. Today, consumers are expected to wade through 20,000 word license agreements in order to obtain it. Fixing that particular problem does not require a change to copyright or property law. 

Then things start to get comical, as our critics—in response to a study that reveals what consumers actually think based on, you know, like, evidence and stuff—make a number of speculative and wholly unsupported claims about how they assume consumers should think. Here are a handful of highlights:

When we buy digital goods, we probably care a great deal about a few terms. For a digital music file, for example, we care first and foremost about whether it will play on our device(s). 

In fact, given the price-to-value ratio, it is perhaps reasonable to think that consumers know full well (or at least suspect) that there might be some corresponding limitations on use — the inability to resell, for example — that would explain the discount. 

P&H want us to believe that consumers can’t distinguish between the physical and virtual worlds, and that their ability to use media doesn’t differentiate between these realms. But consumers do understand (to the extent that they care) that they are buying a different product, with different attributes.

And, furthermore, the notion that consumers better understood their rights — and the limitations on ownership — in the physical world and that they carried these well-informed expectations into the digital realm is fantasy. 

Here we have a set of claims about what consumers "probably" care about and what is "perhaps reasonable" to assume they "suspect." Upon what are these suppositions based? Apparently, our critics' superior instincts about consumer psychology. Because they sure aren't based on evidence. We went out and did the hard work of finding out what consumers actually believe. But our critics would rather trust their guts than accept the evidence we present. Part of what is on display here is the reluctance of a certain lineage of law & econ dude to admit that his convenient assumptions about the way the world works might not correspond all that well to reality.  

It turns out this unwillingness to confront reality carries over to the question of price as well. Our critics argue consumers should know they are getting a lesser set of rights because digital goods are so much cheaper than their physical counterparts. To support that claim, we get some back of the envelope calculations based on—and I'm not joking here—the price of CDs in 1982, which adjusted for inflation is $38 today. Putting aside the fact that we took price variation into account in our study, this is an astoundingly dumb argument. Let me get this straight: Today's consumers, many of whom weren't even born in 1982, should know they are getting a lesser bundle of rights in digital goods because CDs were really expensive 35 years ago? Back to the real world, the fact is digital and analog copies are often priced very similarly today, and in a surprising number of cases, digital copies are actually more expensive, not less. But hey, don't let the facts stand in the way of a good story, right?

Then they move back to this refrain:

P&H believe that digital copies of works are sufficiently similar to analog versions, that traditional doctrines of exhaustion (which would permit a lawful owner of a copy of a work to dispose of that copy as he or she deems appropriate) should apply equally to digital copies, and thus that the inability to alienate the copy as the consumer wants means that there is no ownership interest per se.

Citation needed. We do not make this claim in the article. That's not what this article is about. And any honest person who bothered to read what we wrote would understand that it is not advocating for a change in copyright law, the first sale doctrine, the law of sales, or the law of property. It is presenting data that reveal how consumers understand these transactions and then analyzing that data through the lens of false advertising law. 

At root, P&H are not truly concerned about consumer deception; they are concerned about what they view as unreasonable constraints on the “rights” of consumers imposed by copyright law in the digital realm. 

At root, Geoffrey Manne & Neil Turkewitz are not truly concerned with our scholarship; they are concerned about maintaining cozy and profitable relationships with companies like Amazon. See how easy that is? I have no idea if it’s true. And even if it is, it wouldn’t invalidate any accurate, substantive critique in their post—assuming you can find one. 

But I confess, through their unparalleled powers of reading between the lines and divining the secret motivations, these two have uncovered my deep dark secret. I admit to you all today: I support a digital first sale right

At times, it feels like these guys would rather be writing a hit piece on my book with Jason Schultz, The End of Ownership. And these concerns about digital first sale and the balance between IP and personal property would be legitimate grounds for disagreement there. But this paper, to repeat the refrain, isn't about that question, no matter how much they want it to be. Fellas, if you want to write a nasty blog post about the book, just let me know. I'd be happy to send you a couple of copies.

Then, without a hint of self awareness, they conclude with this gem:

When one starts an analysis with an already-identified conclusion, the path from hypothesis to result is unlikely to withstand scrutiny, and that is certainly the case here.

Finally, a point on which we can agree.