Ian Ayres and Barry Nalebuff have an extremely interesting article in the Wall Street
Journal editorial section today.
COMMENTARY
Want to Call Me? Pay Me!
IAN AYRES AND BARRY NALEBUFF
The national Do Not Call Registry is the most popular consumer-protection initiative
in our nation's history -- because it makes clear that you "own" the right to be left
alone.
But the current law is flawed on two counts. Households can block commercial
telemarketers, but not annoying calls from the benevolent association of retired
dogcatchers. This government discrimination in favor of charities is why a federal
court struck down the regulations as unconstitutional.
More importantly, it misses a market opportunity. The classic role of government is to
establish a system of property rights and then to get out of the way to let
entitlement flow to highest valuers. But the Do Not Call registry needlessly prevents
you from selling a scarce resource -- your time and attention. Telemarketers could
call from a reverse 900 number. That way, you would get paid for taking the call.
While they are trying to sell you a product, you can be selling them your time.
The FTC can solve the constitutionality issue and create a market by simply tweaking
the current regulation.
First, the registry's coverage should be expanded to block calls from any telemarketer
that makes more than 100 unsolicited calls a day. This would solve the constitutional
difficulty, because the regulation would not turn on the content of the call but on
the manner of calling.
Then, households that sign up for the Do Not Call registry should have the right to
authorize their phone company to connect any calls that meet the household's price.
Just think of it: You could charge different prices for different times of day or for
different types of calls. You could even be given the option of hitting a button to
waive the compensation -- because you felt that a particular charitable pitch was
particularly worthy -- or let through any calls approved by Rush Limbaugh.
Just as Priceline turned the tables on airline pricing, this concept turns the tables
on advertising. You tell your phone company your price for listening, and prospective
callers can then decide whether it's worth their while. And instead of treating direct
marketing as a pariah industry that needs to be caged or crippled, we reconceive it as
an attractive business opportunity for everyone involved.
* Families get a system that gives them more control -- and an option to be paid for
their time.
* Intermediaries suddenly have a new service to sell. "Sign up with Verizon and choose
your own price for receiving promo calls." Just as Verizon makes money by selling its
900 service, it could charge telemarketers to connect calls for a kind of reverse 900
service that compensates the household for listening.
* But would telemarketers ever be willing to pay for your time? Of course they would,
that's what advertising is. A full page print ad in The Wall Street Journal, for
instance, costs $180,000 or 10 cents a reader. Firms are willing to pay dearly for the
chance to get their message to you. And telemarketers would pay here only for the
targets they reach. If they don't think the person is listening, they can hang up and
stop paying. (Consumers are equally free to quit the call and stop getting paid).
Telemarketers with a product that sells and a targeted list would be made better off
with a truly free market in compensated calling. Compensation would make people more
receptive. Also, regulations now block many forms of marketing. For instance,
telemarketers are not allowed to call cell phones, send faxes or use pre-recorded
calls (not that this law is universally obeyed). But under a system of compensated
calling, it might make more sense to pay you to listen to a recording of James Earl
Jones making a sales pitch than to pay a phone-bank caller minimum wage to try to
speak to you.
The appropriate role for government is not to tell us what type of calls we can and
cannot block. Instead, the "do not call" regulations should simply protect families'
right to control whether their phone rings. The current regulation is an important
step in this direction. But Congress should allow the market to do more of the work.
All that the FTC (or Congress) needs to do is to allow registered households to
authorize intermediaries to connect calls that meet their conditions. This can be done
by adding 21 words to the current regulation: "A 'specific seller' for purposes of
(section) 310.4(b)(1)(iii) shall include intermediaries who are authorized to connect
calls that meet pre-specified household prerequisites."
This simple change would strengthen consumers' privacy control and facilitate a true
market for telemarketing. You should be able to block any unsolicited calls that don't
meet your price and take the ones that do.
Messrs. Ayres and Nalebuff are profess