Massdrop: Search Your Feelings

If it helps bring more poeple into the hobby, then it will benefit other business as well. It’s not all doom and gloom.


I do agree that their customer service can be better though.

 

@bazelio , I know that round things roll down hill. But the forces behind massdrop's success are not the point of discussion. I am not criticizing the soundness or even the ethics of their business model but the long term impact their business might have on this and other similar communities, and why I prefer to not support that end.

I wish you would address the issue of our discordant preferences, rather than walking me through a limited
description of the forces in free market capitalism as it exists in the us. I am not here for a political debate nor am
I advocating strengthening antitrust laws or anything like that. If you think massdrop's business will ultimately be a good thing
for this communities consumers and businesses I am more than happy to consideryour arguments there.
But as it stands you haven't disagreed with me or laid down a relevant thesis that I can engage
with. Do you think that massdrop will make things harder for the little guys? Do you think that it will lead to less
variety in the market place? You may not care about any of these things but you also don't seem to be disagreeing with my conclusions.

For my part I would prefer it massdrop focussed on marketing products and improving in that area and not participating in the development and manufacturing of them, but I have no control in that regard. I have this preference because it would benefit me and the companies I care about if it were so, I have no other agenda. Obviously someone with equity in massdrop would have different preferences. I though it would be rational for your preferences to line up with mine, although that may not be the cast. I am not looking at this from a big companies are bad, f**k capitalism perspective as you seem to have interpreted. Although I admit, looking back some of the language I used might indicate that.

Given my own preferences I am doing what I can. I am not doing business with them and advising the companies I care about to stay away
from them or at least make sure a few lawyers look at any agreements etc. I am trying to let people consider my view and if I am wrong convince me of it.
If they share my preferences, they could change their buying habits etc.

I had similar argument recently with one of my friends who is seeking funding for his 2 year old thriving small business. Personally, my familly
runs a few business and I would avoid accepting funding from anyone at all costs because I value autonomy, integrity and long term
viability over potentiall growth accompanied with a sack of money and a kick out the door. But some businesses need money to
be viable, sometimes theres a clock etc. And different people have different preferences.

In the massdrop case, its hard for me to understand what your preferences are and why you think mine are foolish.


BTW Most of the content in this thread is not from the zdt thread but was added afterwards.

 

Wow. Glad this became it's own thread. Christ on a cracker. I can't possibly conjure the energy to read this thread or to care enough about the issue. But maybe massdrop has it all figured out -- who was it that said that all publicity is good publicity...

 

@SteelCannon Mate, chill out. I totally understand wanting to protect small businesses/artisans/creators from big corporations, but you're making a lot of assumptions.

You keep bringing up patents, but oddly enough, intellectual property law is set up to prevent the very scenarios that you're talking about (aside: I'm a lawyer - not in the US of course, but IP law pretty much works the same in most common law jurisdictions). Nothing in Massdrop's business model suggests that it is forcibly acquiring patents from smaller companies. There would be no point, they would just negotiate a licence for whatever Chinese company they wanted to manufacture the product and move on. The original company could still make the product on its own, they just couldn't market the product in a way that would clash with the Massdrop version. Take the 6XX for example: Sennheiser can still makes 650s, it just can't sell them as 6XXs. This actually works out pretty well for Senn as they get bulk orders from Massdrop whilst never having to admit that the 6XX and the 650 are the same headphone.

OK, Senn is huge, Massdrop is hardly beating up a tiny company here. But let's think about Craig/EC for a minute. What does Craig actually give up here? He doesn't own the patent, he doesn't make the amps. He just licences the brand to Massdrop, takes a nice payment and walks away. No legal team is going to tell him he suddenly doesn't own the ZDT name or whatever, because that's not how IP law works. Massdrop is calling the amp the ZDT Jr for god's sake. The only potential loss comes if the amps suck, and he obviously trusts Massdrop/Laconic enough that he thinks that's not going to happen. I'm seriously confused as to what you think is the downside here?

Even for someone who *was* actually manufacturing the product, there is no incentive to let Massdrop control the patent. Sure, they could licence it to Massdrop for a price, but that's pretty much just the same as finding external investment in the normal way. If you want money to grow a business you have to give up some control, whether that be to individual investors or a financial entity like a bank. In fact, these days it's actually possible to circumvent a lot of this stuff by going down the crowdfunding route. You're being completely disingenuous by suggesting that small companies are going to have to sell out to Massdrop just to stay afloat in niche markets.

You're also ignoring the possibility that some designers are just happy to have their products available to a wider audience. Some people don't get into audio just to be millionaires.

You did mention some keyboard drama earlier, and I'd be interested in hearing some more details about how that played out. But overall I'm not sure you've really got your point across.

 

@mawk I wish you were right man. Do a search and you will see that massdrop has done this many times. Based on what I have seen of the contract I am pretty sure massdrop has a case, and input club doesnt have the funds to fight either way. It would be easier to find more info if massdrop were a public company.

Input Club

"We (Input Club) developed and invented the Halo switches, and worked with Massdrop to finance the physical tooling that allows them to go to mass production. We assigned Massdrop the patent rights in exchange for a royalty and a “license-back” that we believe allows us to source the switches for use in keyboards. But when we tried to order switches for the WhiteFox/NightFox, Massdrop would not let us source them. They then claimed to own the “Halo” name and asked us to give up the license-back altogether, so we would essentially lose all access to our own invention."

Massdrop's response
https://www.massdrop.com/talk/2342/massdrop-halo-switch-update

"As you may know, for some time Input Club has collaborated with Massdrop in the design of Massdrop's HALO switch. Throughout our relationship, Input Club has acknowledged they are the "Designer" of the HALO switch, with Massdrop as the "Manufacturer and Distributor" of the HALO switch.

Along the way, Massdrop spent tens of thousands of dollars, dozens of hours, and many domestic and international flights to help bring this concept to life. In our agreement, in exchange for this effort, Input Club agreed to receive a royalty from Massdrop from the sale of the HALO switch and Massdrop would be able to exclusively manufacture and distribute the switch.

In our agreement for the HALO switch, Input Club requested an exception to our exclusive distribution rights to allow them to offer switches directly to end customers as replacement parts and as standalone switches via their website. This was a reasonable request, so we agreed and wrote it into the agreement."

 

I agree, Input Club should have known what they were getting and talked to lawyers earlier. Massdrop
is asking for damages because IC are selling the switches on kickstarter and not their own website. The contract
says they are allowed to sell to end users, and whether selling on kickstarter fulfills that requirement or not is the legal battle.

The patent application is Massdrop's, IC aren't on there at all.

But this legal case sufficiently reveals a side of massdrop's business that some people are unaware of.

Here is a snippet.

BEGINNING –

Sec. 3(c)(ii)(2)(c)

Limited License Back. Massdrop does hereby grant Designer a limited, non-exclusive and revocable license to use Massdrop’s Joint Inventions solely to the extent necessary for Designer to (i) perform Designer’s obligations under this Agreement; and (ii) to request manufacture of, and purchase, Products solely from the manufacturer designated in Exhibit C, and to sell products incorporating such Products to end users. Input Club (itself or with or through other entities) agrees to not distribute or sell such Products to resellers or distributors.

END
------------------------------

 

Contracts are just filing-cabinet fillers, and nobody cares what they say until there is a problem. Then, they and their exact wordings become very important indeed, and understandings fly out of the window.

Lawyering up, as I think some people in America call it, is much simpler, easier, and cheaper, at the beginning rather than at the end.

It's like... How many times in life, personal and business, did I oh-so-wish I'd made notes of those conversations that didn't seem to matter much at the time. Especially when dealing with support people. And I still don't.

 

All of the business transactions that Massdrop makes are by definition good for the consumer and the vendors. This is intrinsic when you have a voluntary transaction. If the actors at play believed they would be better off making deals directly to consumers or with other retailers or with other group buy sites, they would take those paths.

Steel has already pointed out the tradeoffs inherent to doing business with Massdrop. As a consumer, when you choose Massdrop you might be getting a marginally lower price, but at the expense of a higher time to deliver, limited returns, etc. This all goes into the calculation of the consumer and needs to be weighed against what he values as far as price, time preference, other services. The same reasoning applies to the businesses that choose to work through Massdrop. Higher unit sales but with a lowered margin, but perhaps less marketing cost on your side, etc.

The argument that Massdrop destroys small businesses reminds me of how people said Walmart destroyed small businesses. It's really just sophistry based on a certain brand of propaganda that is present in our modern dialectic. CONSUMERS destroyed small businesses. Consumers preferred the lower prices and one-stop shopping that Walmart had to offer, and chose those options accordingly. Consumers also prefer cheap chinese goods to more expensive and perhaps higher quality American goods for certain uses, and the market has responded accordingly. Consumers preferred not driving an American made car that would die on them, and so went US auto industry. Massdrop also shows that millenials seem to prefer lower prices on their yuppie goods and hold a fairly low time preference for those goods. Massdrop delivers what they want, so they do business with Massdrop. Do not blame Massdrop/Walmart for what consumers prefer. The purpose of markets is ultimately to deliver what people value, and we can see the market is working swimmingly.

 

What you say is true, but look behind the mirror as well. There is indeed another side to all that.

I remember this lesson from school, 1967. The botany teacher explained to us how [giant-chain-store-of-the-period]* destroyed horticultural growers**. They went in buying at a good price, took more and more of the output, causing the grower to expand, becoming his sole customer... and then they start dropping the price. They milk the guy, paying less and less until he, now having no other customers, collapses. But they have plenty of others somewhere in that cycle, so they don't care.

An ex-colleague of mine went into business producing high-class fine-quality prints. The word inkjet does not even begin to conjure up the industrial machine that printed them, and digital, back when I last saw him came in many multiples of the number of megapixels that the camera back that he used to photograph the originals. 1980s, this was. Being a one couple business, they had to do sales and marketing as well as production. He told his story of getting into one of London's two most prestigious stores: they wanted his product, but were entirely unsympathetic to the fact that the discount they demanded put his selling price below production cost.



*I think it was Woolworth (UK). Well, they don't exist any more, so doesn't matter if it wasn't.

**They were called Market Gardeners in the British English of the Day. I don't know what they call themselves now.

 

I disagree with the first paragraph and addressed it when I characterized the situation as a tragedy of the commons in an earlier post. For the small business, I think It would be optimal if none of them worked with massdrop, but we all know how prisoner's dilemmas usually go. Let me know if you think this is a false characterization. Also its not uncommon for people to make irrational decisions that are not in their benefit.

"It is actually a tragedy of the commons, basically companies that don't work with massdrop will still be pushed out of the way once massdrop has the ability(patents and means of production) to mass produce "their products". Companies that work with them will be hurt in the long run, but at least they will make some money in the process. Everyone in the keyboard, headphone etc industries knows this, but since they know that their competitors are working with massdrop already and giving them trade secrets, patents and intel on how to produce relevant technologies, there is a lot of pressure for these companies to take the short term reward thus hastening their own and others demise."

I assign agency to all the participants, in this case Massdrop as well as the small businesses and consumer.
Unfortunately consumers have a hard time recognizing their agency.

Companies are also responsible for their actions. GE and Ford are responsible for making crappy cars and not investing in innovation, the result of which are collapsed economies in places like Detroit.

Yes consumers drive these niche markets, and we have the ability to influence them at least when it comes to the purchasing of audio products. That is why I am discussing this. Consumers searching online and reading our discussion might ultimately impact Massdrop's business practice. If massdrop loses market share or gets emails about this they might rethinki some of their practices and treatment of businesses and their consumers.

 

Wal-Mart is just an innocent victim of our dialectic. lol wtf

 

so, MassDrop is evil because they use a pretty benign ToS? What am I missing?

 

What's grimy about their ToS?

 

Great thread. A side of this hobby that many are in complete ignorance of. Should be re-labeled.

 

Pushing businesses aside is just bassackwards. It's as if there is some coercion involved by that line of thinking.

Three reasons off the top of my head, if I'm a business owner, I enter in to a "collab" with Massdrop: (1) I am struggling already, and have no better business plan. (2) I want to blow out inventory before releasing a newer model. (3) I'm in retirement mode.

#1 is likely a big piece of the pie. A lot of these guys are hobbyists turned business owner who have no idea about the means of production end to end, and were on a coarse for self-destruction from day one. They have no idea about TAM analysis, marketing, etc. Massdrop can't hurt these guys. They'd already managed it without Massdrop. They basically need a Massdrop in their lives. And if Massdrop doesn't save these non-viable businesses, oh well. I mean how much room IS there for rinky dink mechanical keyboard outfits? Not a whole lot.

#2 is a case where I've either already made my money on said product, or I haven't. But either way, I'm ready to move on. Massdrop can only help.

#3 is a don't care.

 

Tragedy of commons applies to public goods, by definition. So yes a grossly false characterization. Is Massdrop dumping toxic mechanical keyboards in the water supply? Or am I unaware of some other abuse of "common" or "public" property commited on their behalf?

The fact that actors within a market can change the market trends (price, distribution, etc.) in ways that correspond to what consumers/producers want is not a bug nor a tragedy. It's the primary feature of a market system.

Absolutely true, consumers should consider all these factors and have healthy discussion. I'm certainly not one to stifle discussion unlike certain other folks. It ultimately won't stop me from a bargain deal on toe socks next time they pop up.