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Let's Make Up Numbers

Apparently there's a piracy boom in Latin America. Music and video media is ripped off and sold for prices way below what the giant media companies would give you. I'm not advocating piracy – I think if the companies provide us with the entertainment, they ought to reap…

Apparently there’s a piracy boom in Latin America. Music and video media is ripped off and sold for prices way below what the giant media companies would give you. I’m not advocating piracy – I think if the companies provide us with the entertainment, they ought to reap the rewards. Too many people are digging that socialist vibe where big companies are evil. I don’t.

Where I do have a problem is that these companies are saying that they lost billions. In this article, it mentions the loss of $3.5 billion. Let’s get real. If the movies and music were priced like the companies selling them wanted to price them, sure they might lose that kind of money. But if they were priced like that, they wouldn’t sell.

I have no doubt that some would, and I am not encouraging them to lower their price, or supporting the piracy efforts.

All I am saying is that just because a thousand people bought a $20 DVD on the streets of Bolivia for $1.50, it doesn’t mean that the company who created the movie lost $18,500 – there is simply no way it would have sold for that price there. I also don’t know how they calculate the numbers. If they can so accurately track the piracy, perhaps they could better fight it. But it sounds like more sensationalism to me.

8 replies on “Let's Make Up Numbers”

Are you aware that blockbuster like franchises in venezuela stock the shelves with copies, not one has originals.

A friendof my venezuelan wife works as a copier for a major franchise there.

Must be nice to live where rules dont apply.

Good post, and i agree with you on both counts. I’ve also recently decided that calling this sort of thing “piracy” is just plain silly, and an insult to us real high-seas privateers! Avast ye lubbers! Arrrgggghhh!!!!

A: A number of CDs are available for discounts. Perhaps they have 12 songs, and the whole thing is available for $9.99. Maybe there are 10 songs and the price is $7.99. Even if there are 10 songs and the price s $9.99, I think you’d be hard-pressed to find that price regularly for a new CD.

B: You don’t have to buy the whole CD. Like a song? Buy it, and don’t end up with 9 songs you don’t want just for the one you do. In that case, you’ve saved (roughly) $9.

I disagree. If it’s medicine or something, you’ll likely pay the price because if you buy some cheap knock-off from the street to save a few bucks, you might end up with some severe problems.

If you buy a $1.50 DVD off the street and the quality isn’t good? Throw it away.

“when they feel that they are being ripped off”

We are talking music, after all. It is hardly a critical commodity. We are not talking food or drugs here. I don’t see how one can feel ripped off for something that is so low on the “must have” list.

Good point, Ted.

I think the other thing that we’ve been shown is that if there is a viable, useful alternative (such as iTunes), people will take it. It’s when they feel that they are being ripped off that they start to explore alternatives.

$3.5 Billion at $10 per CD comes to 350 million CD’s. I think what they do is estimate how many people are buying bootleg music and then mulitply that number by gross profit at list price.

Economics teaches us that for products with elastic demand, the cheaper you can sell your product for, the more money you make. I would think music would have elastic demand. It’s curious that they haven’t experimented with price to see what the sweet spot is to maximize profits. Perhaps they are so large, that it’s impossible to do that experiment. Smaller companies can try different prices in different markets and find what price maximizes profits.

What troubles me is, that this shows that people are only honest if it’s difficult to steal. If stealing is very easy, then there are no limits.

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