Monday, October 09, 2006

Ghetto Latte

It seems that some Starbucks customers have developed the practice of ordering a cheaper latte, and then using the free milk and other condiments to convert it into a more expensive product. This is known as a ghetto latte or bootleg latte. There has been some discussion as to the ethics of this practice.

As Randy points out, this raises a more general question "under what circumstances can users deviate from the intended uses of producers" - a question that Randy links to digital rights management and the Digital Millennium Copyright Act.

Let's look at this form of arbitrage from a service-oriented perspective. The provider (in this case Starbucks) provides two products - one relatively expensive (the latte) and one free (the milk). The consumer composes these two products in a manner that deviates from the provider's evident intentions and expectations, in order to obtain something of an equivalent value but at a lower price. This can be regarded either as a form of clever repurposing, or as a minor form of abuse. The provider apparently tolerates this not just because the cost of tolerating the practice is less than the cost of enforcing compliance with the intended pricing scheme, but also because the opportunity of expanding its business more than compensates for any extra complexity and confusion.

Could Starbucks have anticipated this? Well this is a pretty simple case, but in general, it may not be possible for a service provider to calculate every possible combination of its products and services, and it may not be desirable for the service provider to suppress or preempt the imagination and ingenuity of its customers. (There are lots of consumers, many of them using the service every day, so we should expect a considerable proportion of such innovations to emerge from the consumer side.) Instead, service providers need to be flexible and robust enough to provide a reasonable service under unforeseen conditions.

Related Posts

Ghetto Wifi 1 2 (June 2010)
Starbucks Test (November 2006)


Charles Leroux, The bootleg latte: Would you make one? (Chicago Tribune, 5 October 2006)

Randy Picker, Hacking Starbucks (University of Chicago Law School Faculty Blog, 6 October 2006)

Hat Tip Tomorrows Fish and Chip Paper

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