Clicking "Buy now" doesn't "buy" anything, but people think it does

In What We Buy When We "Buy Now", a paper forthcoming in The University of Pennsylvania Law Review, respected copyright scholars Aaron Perzanowski and Chris Jay Hoofnagle report on an experiment they set up to test what people clicking the "buy now" button on stores selling digital things (ebooks, games, music, videos, etc) think they get for their money — it's not what they think.

The researchers set up their own storefront, selling digital and physical, and had 1299 experimental subjects make purchases on the store. Then they interviewed the purchases about what they thought they'd got for their money, and contrasted it with the normal deal from this kind of store.

When it came to physical goods, the shoppers pretty much knew exactly what they thought they were getting. But when it came to digital goods, there was a violent mismatch between what the customers thought they were buying (something they could resell, lend, or give away) and what the small print said they were getting (an extremely limited copyright license that required them to use their media in conjunction with special restrictive players that prohibited all these activities).

The confusion stems from the word "buy" in "buy now." Buy has a widely agreed-upon meaning: to purchase clear title to something. When you buy a car, it's yours. When you buy a shirt, it's yours. When you "buy" an ebook, you're actually taking a one-sided, limited license. It's not surprising that purchasers would be confused.

Of course, there's a simple solution to this: the FTC could require that companies only use the word "buy" for things that you're, you know, buying. For everything else, merchants would have to make buttons that said, "Take a limited license now!"

Chances are fewer people would click that button. That's the point: people are buying things because they have mistaken beliefs about what they're getting, and if they knew better, they wouldn't buy those things on those terms. That's exactly the situation the FTC exists to remedy.

This article presents the results of the first-ever empirical study of consumers' perceptions of the marketing language used by digital media retailers. We created a fictitious Internet retail site, surveyed a nationally representative sample of nearly 1300 online consumers, and analyzed their perceptions through the lens of false advertising and unfair and deceptive trade practices. The resulting data reveal a number of insights about how consumers understand and misunderstand digital transactions. A surprisingly high percentage of consumers believe that when they "buy now," they acquire the same sorts of rights to use and transfer digital media goods that they enjoy for physical goods. The survey also strongly suggests that these rights matter to consumers. Consumers are willing to pay more for them and are more likely to acquire media through other means, both lawful and unlawful, in their absence. Our study suggests that a relatively simple and inexpensive intervention—adding a short notice to a digital product page that outlines consumer rights in straightforward language—is an effective means of significantly reducing consumers' material misperceptions.

Sales of digital media generate hundreds of billions in revenue, and some percentage of this revenue is based on deception. Presumably, if consumers knew of the limited bundle of rights they were acquiring, the market could drive down the price of digital media or generate competitive business models that offered a different set of rights. We thus turn to legal interventions, such as state false advertising law, the Lanham Act, and federal unfair and deceptive trade practice law as possible remedies for digital media deception. Because of impediments to suit, including arbitration clauses and basic economic disincentives for plaintiffs, we conclude that the Federal Trade Commission (FTC) could help align business practices with consumer perceptions. The FTC's deep expertise in consumer disclosures, along with a series of investigations into companies that interfered with consumers' use of media through digital rights management makes the agency a good fit for deceptions that result when we "buy now."

What We Buy When We "Buy Now"
[Aaron Perzanowski and Chris Jay Hoofnagle/University of Pennsylvania Law Review]

Do you actually 'buy' digital content on Amazon or iTunes? [David Lazarus/LA Times]

(Thanks, Aaron!)

(Image: Buy Now!, Ed Kohler, CC-BY)