A few weeks ago I wrote about how companies need to understand the difference between customers being willing to pay and companies saying they should pay.  This is basic economics, and it’s the reason many industries, like newspapers and music, are struggling.

But let’s think of this another way.  There’s been a popular marketing saying that the customer’s always right.  This is a great gimmick, but not necessarily true.  Instead, let’s think in terms of the market.  The market, otherwise considered large groups of customers, are always right.

Think of it this way. If one customer gives you a bad review, you can probably ignore it. If two customers give you a bad review, maybe pay some attention, but no need for immediate action. If three customers give you a bad review, there’s something you need to fix.

When large groups of customers make the same decision, they are the market acting. In a free market economy, the market always decides what works and what doesn’t. This is not a moral statement. It is economics.  If people do not buy your product, it is because the market does not want it. There are many reasons why that might be, but the market as spoken and nothing except accommodating the market with help sell your product.

This is where the disconnect happens.  Music and movie companies blame file-sharing services for stealing their content and costing them money.  But file-sharing sites are the market showing customers want to consume entertainment differently.  Saying it’s immoral or illegal does nothing to change the market’s mind because you cannot change the market’s mind.  The market is never wrong. Companies succeed when they listen to and serve the market.

Slate’s Farhad Manjoo laments the near impossibility of an online movie rental service with real selection because of all the complex licensing required.  So instead of going to Hollywood’s own service, people go to file-sharing services because they serve the market demand for on demand, free entertainment with massive selection.

Many products floundered until the right combination of features, price, and demand met for the product to actually serve the market.  Michael Masnick points to netbooks as a perfect example of a product that floundered for years until companies found the right combination of specs and lower price to build a substantial marketplace.

Markets can change the other way, making products and business models obsolete.  The entertainment and newspaper industries are just examples of wide spread changes in these business models.  Once, single songs and news articles were easily commoditized because of limited distribution channels. But with uncontrollable distribution, the market has more control over how they can consume these products. It the cat’s out of the bag version of economics. No amount of legislation or educational campaigns will return the market back to the sweet days of the 1980s when people would pay because that is what the market would do.

The customers, as a group, are never to blame for a product not working because they just didn’t get it, like Time Warner’s metered broadband.  The market decided they don’t like this service. It could be possible to launch successful metered broadband. Doubtful, but possible with the right combination.  Time Warner’s plan had no market. End of story. It’s not a flawed PR campaign – the market did not like your product.

When launching your next product, always consider how your product serves a market need.  You always want to increase consumer value, not your own value. You increase your own, and your company’s, value only after you’ve increase the consumer’s value.  Scolding the market for just not getting you is not an effective business strategy.