Changing "consumers"
In the past, we've been able to recognize that consumers have gotten dumber in some contexts — and we've created laws to help them. In the online world, consumers are arguably getting smarter. But for some reason laws aren't arriving that recognize this trend. Is consumer dumbness a one-way ratchet?
The specific analogy I'm thinking of has to do with landlord-tenant relationships. Before the 1970s in America, leases were thought of as estate transfers. The landlord made no promises at all about what the housing quality would be of a leased property. Livable housing was not something that a tenant had a right to and courts refused to imply landlord duties to fix rental units if something went wrong. So if a tenant failed to pay his rent, the landlord had a cause of action against him — and there were no defenses available based on horrendous conditions existing in the rented place.
Then, in the 1970s, courts abandoned caveat emptor. Many judges took the view that leases were contracts as well as estate transfers, and that landlords implicitly had promised to keep leased premises in habitable condition. Thus, the old common law rule imposing an obligation on the lessee to repair the premises during the term of his lease changed to an implied warranty of habitability for all lease contracts.
There's a key opinion on this by Judge Skelly Wright, writing for the DC Circuit court [link is to great web resource on the case put together by Georgetown law professor Richard Chused]. Skelly Wright reasoned that the old common law rule absolving the lessor of all obligation to repair had come from a different time:
Such a rule was perhaps well suited to an agrarian economy; the land was more important than whatever small living structure was included in the leasehold, and the tenant farmer was fully capable of making repairs himself.
So the old norm was simple: in return for permission to use land, the tenant would pay rent, keep the land in good condition, and return the land when the lease was over. Given that modern urban tenants would have no idea how to deal with “major problems, such as heating, plumbing, electrical or structural defects, the tenant’s position corresponds precisely with the ‘ordinary consumer’. . ” Urban tenants, Judge Wright concluded, were far from the “jack of all trades” farmers whose skills formed the premise of the old common law rule. So modern tenants couldn’t be assumed to be able to fix anything for themselves.
The jack-of-all-trades farmer tenant was replaced by the housing consumer..
This generally accepted story about the shift from medieval farmer tenants to modern housing consumers has had tremendous anecdotal appeal. It has been repeated in countless cases. And it was based on a broad generalization about consumer empowerment – that consumers of rental property had become more helpless over time, less able to fix things, and more in need of legal protection.
In the online world, consumers are (arguably) getting more competent all the time. From The Economist (Mar. 31, 2005):
“I am constantly amazed at the confidence level and sophistication of the average consumer,” says Mike George, Dell's chief marketing officer and general manager of its consumer business in the United States. Dell soared to the top of the personal-computer business by cutting out retailers and selling directly to consumers. If Dell changes prices on its website, its customers' buying patterns change literally within a minute. “That tells you people are well-researched and knowledgeable,” adds Mr George. . . . “In the past you would keep pounding the creative message out into the market place and look at reach frequency,” says Howard Draft, a veteran direct-marketing expert and chief executive of his eponymous New York agency, part of Interpublic. “Well, basically that is dead. What you have today is an informed consumer who is taking control of the way he learns and hears about products.
According to a 2005 Edison Media Research report [pdf], growing numbers (close to 70%) of internet users have found applications to use that help them block pop-up ads, spyware, and spam, and almost 80% of “heavy” internet users use such programs. Consumers are learning. Consumers aren't even “consumers” — they're producers! They're cooperating and blogging and working away in gigantic numbers, all across the world.
But we don't seem to have the language to talk about “empowered” consumers in a way that doesn't sound like a sales pitch. More importantly, regulators don't think consumers are getting smarter online. And so they assume the worst, and the worst gets made into law.
[Many thanks to Y.B. for talking to me about this over gelato.]