Is Piracy In the Consumers' Best Interests? 574
moviemodel writes "Warner Home Video in China are beginning trials of 'simple pack' DVD releases at $1.50. They state they are doing this as a test to see if they can recover a market lost to pirate DVD's at 75c each. They also sell higher priced and more complete DVD sets as 'silver' and 'gold' packs. Maybe this marks the beginning of movie industry realism and long hoped for shift in business models, forced by piracy. Perhaps they can take it on as a better model for movie downloads worldwide, facing the same problem of competition from pirated movies. Is such a model viable in the long term?"
Less risk. (Score:5, Insightful)
Better than nothing (Score:4, Insightful)
If they're serious about it, then it is (Score:4, Insightful)
Why is the IPod so popular? Affordable tracks and
But for some reason I expect this to be some PR stunt, showing that in China you can't even get the market back when you go down to 1.50 bucks. One reason COULD be that the average Chinese doesn't have those 1.5 bucks to spend on DVDs. Why do you try it in China, why not in the US? Or Europe? Or some other country where people actually (still) have the money to actually buy content?
Killing copyrights is in their best interest (Score:3, Insightful)
Piracy is what made MS Windows (Score:3, Insightful)
DVD Rentals / Direct to DVD (Score:2, Insightful)
As much as I would like to see movies for $1.50. It will never happen.
Re:Killing copyrights is in their best interest (Score:5, Insightful)
And we all know how much they know about marketing and hyping, and how little about art.
In fact, killing copyrights would even put those artists out of business who still create art. They're few, they're well hidden on the 'net and you have to search them, the studios won't throw them at you.
And as a bottom line, we, the ones who enjoy their art, would be the loosers on this one.
Copyright isn't the problem. The problem is that the balance is off. Copyright came into existance to create a balance between those who produce, those who distribute and those who consume content. The balance is way off. But that doesn't mean we have to throw the right out, we just have to put it back into balance.
Re:If they're serious about it, then it is (Score:5, Insightful)
Your plan would work in the US. Unfortunately, the article is talking about China. These are two very different markets. And as deep44 mentioned, when you're competing with 75 cent versions, 5 bucks is still too much. $1.50 seems like a very reasonable number for this trial run.
Re:Less risk. (Score:3, Insightful)
Why would you even buy the movie in the first place then? Just go rent it for $3.50 (or whatever) at your video store. You're certainly not the market they're aiming for if you don't collect movies and watch them multiple times... or do you use that excuse to justify pirating them via BitTorrent or Usenet?
Re:In a true open market (Score:1, Insightful)
Thinking about how 1.50 dollars could be a days wage in some parts of the world, and just 3 minutes in other parts.
Do you think that such a trinket of entertainment should cost a full days work for one, and just 3 minutes of work for the other ? Or do you think that both should spend roughly the same ammount ?
And no, i'm no advocate of region-locking that DVD's are currently subject to. But paying everywhere the same ? Yeah, right.
But what does average Chinese person make? (Score:2, Insightful)
This article http://www.business-in-asia.com/china_wages.html [business-in-asia.com] states: "To give an example of the spread in salaries in a foreign firm in China, a professional employee could earn an annual salary of approximately 100,000 RMB (approx. US$12,000) while a factory worker or an ordinary employee could expect about 36,000 RMB (approx US$4,340).
So, one "cheap" DVD costs 12RMB, or 1/362nd of their yearly salary. In our terms, say with a salary of $30,000, that would be $82.95.
Re:Less risk. (Score:4, Insightful)
Because of the bonus features, of course!
Who doesnt want to see mind numbingly repetitive out-takes and deleted scenes that no one wants to see? what about the countless hours of commentry by random nobodies.. "oh yeah this is the bit where i was in the back doing nothing important and i dropped my pen, so if you turn up the volume REALLY LOUD you can just about hear it hit the floor!"
Hell, i'd pay twice what you pay in the theatre for that..!
Re:In a true open market (Score:3, Insightful)
The key word is "contribution margin" (Score:3, Insightful)
Now, to make a CD costs, say, 10 cents. That's the difference between pressing this single CD and not pressing it. Material cost, if you want. Because the artist played, whether the CD exists or not, the hype runs, the pressing machine is standing there with the master ready to press, the workers are there, all of that independent of whether or not this one CD is being pressed or not.
Now, selling this CD at anything more than 10 cents is better than NOT selling it at all. And in China, the market is saturated with bootlegs. So you usually DON'T sell at all.
Now, you can't sell all your CDs at 20 cents. Yes, sure, you'd cover the cost of the CD. But you would never be able to cover the fixed costs.
It depends on quality of disc (Score:5, Insightful)
If they sell discs where the main feature (i.e. the movie itself) is crippled, for example by lower bitrate than on premium edition, by having no English language track, or by having forced subtitles to go with, this won't beat pirates.
If they sell discs with high-bitrate main feature (DVD-9 filled to the brink please), original-language soundtrack available and no UOP gimmicks, they win. Hell, if they do it consistently, they could sell such discs for a whopping $4.30 in Russia and I would gladly buy them over pirated ones [vad1.com]. Besides I throw the box away, anyway, and pack the discs into a wallet to save space right away. Just give me the properly mastered stuff, no frills.
To bad I suspect the cheap licensed edition would be crippled. Then pirates, who care about customers more, get my business.
Re:Piracy is what made MS Windows (Score:5, Insightful)
Re:Better than nothing (Score:5, Insightful)
Which just goes to show ya exactly how overpriced DVDs are. CDs as well.
Think about stuff from the catalog too, say Chaplin's City Lights ($22) or Badfinger's No Dice ($17), whose costs were paid off decades ago and so aren't relevant in justifying the cost of the disk. In fact, under the copyright laws that were in effect the first time I ever saw/heard most of the stuff in the catalog they should be in the public domain already. As far as I'm concerned Congress has breached their contract with me when it comes to these.
KFG
monopoly vs piracy (Score:5, Insightful)
Re:Piracy-The new business model. (Score:5, Insightful)
Aren't pretty much all changes enacted through 'illegal' acts? civil disobedience, revolutions, founding of the United States of America..
Illegal
Re:Old argument (Score:5, Insightful)
Ya mean like constantly expanding the range of copyright laws so that nothing ever actually goes into the the public domain, so the free money cow never dries up?
KFG
Piracy = price balancing. (Score:2, Insightful)
Does anyone else remember $85 movies on VHS? In 1985!
All piracy is doing is forcing the software and entertainment industry to price their products into the affordable range.
$200+ dollars for an operating system? Why? There is something seriously wrong when a peice of easily replicated digital information (ie. ludicrously cheap) costs as much or more than full system hardware.
I've been seeing these $1 DVDs at 7-11 here in Utah. I've actually bought a couple (for my parents, as most of the stuff is old classics that they would probably like to see again.)
Everything above $1 better have a very serious justification for why it is so expensive.
Other than "to make the studios/developers really rich."
Re:Killing copyrights is in their best interest (Score:4, Insightful)
Copyright has its right to exist. When someone creates something, he puts time and money behind it, develops it and he should have a chance to earn money that way.
What? Copyrights don't have rights, individuals have rights. Anyhow, if someone wants to make money from a creation, try giving a concert - not monopolizing the distribution channel and microregulating how every individual on the planet copys information at their disposal. If you want balance, then let content flow freely and charge for content related services. Content doesn't have a natural limit in supply vs demand, content related services do.
Stealing or not? (Score:5, Insightful)
If I clone something (like a nice stereo, for instance - impossible, but for the sake of our conversation), it's not really stealing it. If I make it available to other people (i.e. like sharing my stuff on P2P), that's almost worse than stealing... but if I clone something that I wouldn't have purchased to begin with, that's incredibly easy to justify, because there's no money lost. Again, I wouldn't have gone out to purchase a $25 DVD, whether it could be had for free or not, just like I wouldn't have gone out and purchased a $1200 stereo when my $150 Aiwa that I already bought works great. There's no physical product missing somewhere... I cloned it. Now if I could only clone a Viper...
The ultimate question in my mind is, what is the actual cost of manufacturing and distributing? It's like a $0.03 piece of plastic, the disc that is. Generic packaging like they talk of here can't cost very much. If it gets 15x the people to start buying movies again IN ADDITION to the people who currently pirate them, well... for $3 or $4 per release like some have suggested, I bet they stand to make their money back.
Certainly the music industry won't be far behind in this little "experiment".
Re:Killing copyrights is in their best interest (Score:3, Insightful)
As you say, the amount of service you can provide behind some content is limited. You can only make so many appearances, you can only give so many concerts. What would keep a studio from ripping me off?
Let's say I write THE song of the century and go on tour as "The Opportunist". Now, Phony Records puts up some studio gang and has them go on tour as "The REAL Opportunists", puts a load of hype behind it, slanders me and makes sure that everyone believes that I'm the imposter. The only thing I could do is write statements myself, trying to tell the truth (Prior art? Original artist? Doesn't matter without copyrights).
Who's gonna win in that scenario? Me, the artist or Phony, the multinational record company? Who's gonna have a bigger audience in those concerts? Who's gonna make a killing from concert tickets and who's gonna kill himself trying to sell his?
Next scenario: Software. Without copyrights, what would keep MS from taking Linux and running with it? Stuff their marketing and GUI guys behind it, create a flashy and squeaky colorful GUI for it, then "embrace and extend" until it's no longer compatible with ordinary Linux. Oh, it is, but it has "additional features" that people will enjoy and use, thus making sure that it's not really compatible with the old stuff anymore.
Yes, people could "pirate" Windix without a problem. Legally, even. Only problem is that MS could, without a problem, create a "service" that you have to pay for, like, patches, codecs, content, update, etc. only for money, encrypted to match a paid key so it only works with this key, which in turn changes often enough to make it a PITA to keep up with your "copy" of it if you're not willing to pay.
Face it, killing copyright would never hurt the fat cats. It hurts the free artist, the free author and thus, in turn, the customer.
Copyrights are out of balance. Completely. The scale is tipped too far, the rightholder has too many rights on his hands, while the user is getting cornered more and more. That has to change. And copyright has to become the balancing tool between the creator and the consumer again.
But it should definitly not be removed from existance.
Re:If they're serious about it, then it is (Score:2, Insightful)
also, there is an excessive market for $0.75 pirated DVDs in China. i.e. people buy lots of them.
2 x
thats right, for the cost of 2 questionably well done pirated copies you can have one authentic copy.
It reminds me of a couple chinese pirated movies I got in China. . .
The Tahor of Panama
Goideneye 007
Regally Blonde
I kid you not, those were the names on the discs. . .
The reason they aren't trying it anywhere else is because there is no market for bootlegged copies of movies.
Re:Better than nothing (Score:4, Insightful)
On a similar note, a friend once mentioned that our local Wal-Mart has a $5 bin of DVDs. I don't shop Wal-Mart ordinarily (for oh, so many reasons) but this brought me in. Older stuff, but since I don't go to the theater very often (or watch much TV) they're all new to me. So for five bucks each I bought a few "new" movies. I know, it's still going to a bad cause (two bad causes in this case) but at least it wasn't $17 or $22.
Probably took Wal-Mart's considerable clout to get the studios to release even their old stuff that cheap. Concerns of true piracy and illegal downloading aside, I think some market realities are catching up to the movie people. Besides, here in the U.S. with gas fast approaching four bucks a gallon (with five on the horizon), heating bills through the roof, and everything else getting more expensive by leaps and bounds I know that I, for one, have less disposable income to blow on $22 movies (over twice what our local iMax charges!)
As another poster pointed out, how many movies are just so good that you'll watch them multiple times, justifying the expense of buying the disc? Not many. There are some, to be sure, but not many. The vast majority of new releases sold are crap. The studios know they're crap before the first scene is shot, which is why so many movies go direct to disc nowadays. They'd never make it in the theaters. Heck, if the gross rake-in figures you hear are anywhere near correct, I don't think a lot of theater releases are in the black either.
But that's okay. At seventeen bucks a disc, they'll just make it up in the DVD market.
Re:Stealing or not? (Score:4, Insightful)
That's certainly an argument that I've used myself; however, it's still illegal, and so if you do indulge in copyright infringement, you have to accept the risk of getting caught and being punished for it.
Just becaues you personally disagree with a law doesn't mean it doesn't apply to you.
The ultimate question in my mind is, what is the actual cost of manufacturing and distributing? It's like a $0.03 piece of plastic, the disc that is. Generic packaging like they talk of here can't cost very much.
Cost of manufacture and distribution of the disc is peanuts. Don't forget, however, that the film on it wasn't free to make. For old films and those that have already recopued their costs the production cost is immaterial, but for newer ones that have yet to break even (they don't all manage to at the box office) it's definitely a factor.
Re:Killing copyrights is in their best interest (Score:2, Insightful)
Re:Killing copyrights is in their best interest (Score:4, Insightful)
The big rightsholders (in the case of copyright) made two fundamental errors in their long-range planning. One, they failed to understand that advances in communications and processing technology would render their grip on their distribution channels useless. Utterly useless, and so far as music is concerned that cat will never get put back in the bag. Even if they could, by pressing some magic switch, turn off all peer-to-peer activity right now, there are a lot of people that have already downloaded so many tracks they'll never need to buy another CD. So, if the studios want any sales at all they'd best start learning to play nice. What, they're going to have to behave like any other manufacturer that wants to stay in business by treating its customers with respect because those customers can now go elsewhere? Oh my, the humanity, the humanity!
Two, they are finally starting to realize that what they have to offer are luxuries not necessities, for people with disposable income. Since Americans have traditionally had plenty of disposable income they were able to ride pretty high on the hog. Well, that particularly gravy train is slowing down and will probably come to its last station soon. The media companies (the "big rightsholders") certainly didn't help matters by buying laws like the DMCA, which have had an additional detrimental effect upon the economy. They shot us all in the foot with a
Better to have no copyright at all than the mess we have now. But the grandparent was right: there was a balance that was struck between the perceived needs of the creator of an original work, and everyone else. Given the pace of change in the modern world compared to when those laws were originally written, if anything the balance should have been tilted a little more towards the public domain. Instead, it has been dramatically shifted in favor of the major copyright holders.
If the price was the only issue, (Score:2, Insightful)
Re:Less risk. (Score:2, Insightful)
Re:The key word is "contribution margin" (Score:1, Insightful)
Additionally, there is media in which the cost of creation will never be recovered at the present cost of media. Most industries drop prices to sell more product. You end up with a longer period of time before creation costs will be recovered, but for much media you still COULD recover the cost, or at least minimize your losses.
I might add that the cost to create much music has dropped IMMENSELY in just the past 30 years, with samplers, digital recording (that you can even do in your home), cheap effects which are used in more recordings than you may think. I remember in the eighties doing a demo at a small studio that had a $300,000 64 track mixing board. A comparable board costs a fraction of that now. I myself have a 4 track kensington mixing board that people have said is the quietest board they've ever heard, and I bought it for $80. I can tell you from experience that it is quieter than the 64 track board from my youth.
Ultimately, media is NOT sold at market rates, as evidenced by piracy. I would buy many albums, for the 1 or 2 songs on them that I like even, were they not sold for &15-$20 dollars. As long as distribution is forcefully maintained by corporate bureaucrats whose high salaries rely on an outdated model, media will NOT be competetive and therefore media will not have prices determined by the market.
Re:In a true open market (Score:2, Insightful)
Fixed. There is a large distinction. The cost of a digital product is the initial costs, which could be quite large + the reproduction costs. While pressing a DVD may cost $0.50, the material you are pressing on that DVD might have cost $100+ million to produce. So, even if you do sell 100 million copies at $1, you still have yet to break even.
I applaud Warner Home Video... (Score:2, Insightful)
DVDs are a discretionary purchase. Consumers in every country have an individual price point where they will buy a DVD because the price is reasonable for the limited entertainment value it provides. I believe, in the US, that the optimum price point is about $5. Look at how many DVDs Wal-Mart sells at that price point.
The question, of course, is where is the optimum price point for DVDs to sell in China, given its consumers' standard of living. I believe WHV is on the right track here.
A quick personal note: I bought 6 old John Wayne films earlier this week for $5 each. How many would I have purchased if they were $10 each? None...
The black market is always a market force (Score:4, Insightful)
As an example, consider the cost of cigarettes in Canada in the late 1980s. Tax rates were so amazingly high that ordinary people were willing to buy cigarettes smuggled in from the U.S. -- exact duplicates of the "legal" product, sold at a fraction of the price. The black market became ubiquitous and socially accepted. It undercut the legitimate market so badly that the government had to lower taxes so there would be a legal product left to tax.
Now consider a product like a movie, where the cost of reproduction is absurdly low -- zero, in fact, if you just download the movie from the Internet. DVDs in the U.S. are priced to compete with that, and I do in fact buy DVDs of films I could easily download. In China, movies are burned to DVD then sold for $0.5. Studios, trying to compete with that, hope that a price point of three times the black market rate will attract buyers to their legitimate product, thereby making the production of ripoffs unprofitable.
The truth is (Score:3, Insightful)
Same goes double and triple for software. One DVD's worth of data, in a fat 6 by 4 by 2 inch box with a half-inch thick printed manual (how quaint!) and some packing peanuts. As unsubtle as a puffer-fish!
Re:Of course (Score:2, Insightful)
The graph you describe tells you the equalibrium point between a given supply and demand graph; thus giving you the price of the product. The graphy that you'd want to draw is {(Unit Price)-(Unit Cost)}X(quantity demanded) [knowing that quantity demanded is a function of unit price] if you assume that supply is flexable (which it mostly is with all electronic distribution) then you simply look for the maximum of the curve.
The interesting thing is with a product like an MP3 the unit cost (to distribute) is minimal; thus the unit cost is the (total cost to develpo the product)/(quantity demanded) meaning the Unit Cost is {(small constant) + (Function of price) ).
If I haven't written it down incorrectly, what you should find is that you maximize your profits in this type of envoronment when you minimize the price of your product.
Re:Less risk. (Score:3, Insightful)
you got that right! Being around to see things cha (Score:5, Insightful)
Oh ya, my all time *favorite* "random courtesy roadblocks". WTF is up with that?? Remember back in school we were taught only supremely evil and totalitarian bad places like east germany and whatnot had those sorts of roadblocks (Your papers please!) and how wrong and illegal it would be here?
Man, there's a bunch. You are right, people of a younger age don't have any frame of reference on some of these subjects outside of an academic one.
Now here's one I keep trying to maintain a frame of reference on, the great depression. It's hard, but I try, I keep it in the back of my mind when I look at economic news andd geopolitical events. I wasn't around then, but my parents and aunts and uncles, etc, were, and I distinctly remember the stories they told me about it and how amazingly fast things can change and how utterly bogus the stock market/government currency manipulators are when it comes to hosing the population with their congames. Keep promising them just this huge something for nothing deal until they are all sucked in, then WHAMO, drop the hammer and walk off with all the REAL wealth leaving the peons holding the bag with worthless paper. Seems they pull this stunt on a big scale every other generation or something, because it takes that long for people to "forget" those "leaders" main skill set is *lying*. They are professional grifters.
Re:Piracy in the Wake of Market Failure (Score:3, Insightful)
The problem is, this has morphed into a black market...not because laws have failed...but because the market has performed as predictably as ever. Thanks to the ease of replication of digital media, the supply of entertainment has been raised to nearly infinity, and so the laws of supply and demand have accordingly lowered the street value of entertainment to zero.
Imagine what will happen when the majority of material goods achieve this same ease of distribution and duplication. Don't laugh...you can use a 3-D printer to manufacture real objects now. What happens when you can buy one of THOSE at Costco?
DRM is the unwanted band aid of desperate fat cats stalling for time. Our culture is facing a much more far-reaching problem: the market economy just hit the ground harder than Humpty Dumpty.
Price discrimination (Score:4, Insightful)
Look around and you'll see zillions of clever ways to charge both 50 quatloos and 100 quatloos for the same isolinear chip. One is the "early adopter tax", in which the 100-quatloo folks get the first samples of the chip. Another example is air fares, where expense-account people get on-demand anytime travel but 50-quatloo people have to stay over Saruday.
Price discrimination feels unfair but economists say it's efficient and beneficial. More planes fly, more isolinear chips get built.
Piracy happens when there's no price discrimination. There are people willing to pay $15 for a CD, or at least there used to be. If you insist on selling all your CDs for $15 you miss out on the $7.50 narket and on the people who'd be happy to pay $3 to avoid the hassles of P2P. If you're not blinded by greed and scrambled by drugs you segment the market and put products at all of those price points.
This points to a tactic for developed worlds (Score:3, Insightful)
Warner is rewarding a country for having a legion of pirates. As a consequence, Warner is punishing us for being legitimate buyers. That really annoys me.
Re:Old counter-argument (Score:2, Insightful)
To those with the means and ability to create content, a right is granted: to control the distribution of that content by utilizing legal systems. It is an artificial right, but it is given to counteract the fact that it is unfairly easy, given the simple physical requirements of copying, for a copier to profit from someone else's much more laborous act of actually creating content. The creator, without copy control rights, would be a fool to create anything at all, as the inventive work would be worthless after the first knock-off artist came along and did the simple task of pumping out bootlegs.
Do you have the means and motivation to create a couple hours of movie entertainment? If not, than pony up to the people who do, or go without. It's called "specialization" and "trade", and it's been a part of civilized society for quite a while.
Considering that "content" is not a right or a basic sustainance need, and that publishing is not an esoteric or vastly expensive art only available to a select few, then it's a perfect playing field to "let the market decide". So Sony, EMI, BMG, Warner, etc. are all raging bastards? Don't buy... and don't give me lip service about "boycotting" and taking the high road if you'd just go and grab it bootleg. It's not a need, and there are alternatives out there, so a "boycott" without the rather mild sacrifice involved in not actually seeing or hearing the latest blockbuster hit is just hypocritical.
I'd be right with anyone saying that the DMCA is a travesty and that things like legal enforcement for region-encoding and against modchipping is downright wrong, but to "fight" them with piracy has no real weight at all.