Tuesday, January 31, 2012

Piracy is the Symptom, not the Disease

Shock and AHH!!'s Economist and Business know-stuff-about-guy, Dr. Alan Gunty explains why you should be frustrated that the U.S. has moved on to policing the internet.  That is, if you aren't already:
"Anonymous," the spooky hacker alliance thingy ...It's G20 summit action in cyber space, bitches.


The entertainment industry believes 2 fallacies:


1. Piracy is hurting their industry, and
2. If piracy was somehow altogether eliminated then any undue stress to the industry would be resolved. 


Piracy is a symptom of bad customer service. Piracy is the customer doing a better job at distributing content than the companies creating it. 


This shit just got real, yo...


Piracy, in a legalized format, is content distribution. A guy uploading a ripped CD isn’t a pirate: he’s a small music distributor. What about a site seeding ripped games overseas? That’s a game publisher. If delivering content to people as efficiently as possible is anything, it’s a great business opportunity. Monetization of that business is something else entirely.




Piracy is a symptom of demand: People will not pirate things that don’t want. If piracy was non-existent, then that would suggest that there was nothing worth pirating. As awkward as it may sound, the entertainment industry is constantly selling its worth. 

Kinda like this.


Big-budget flicks are the name of the game in Hollywood. But nobody wants to see ‘Transformers 3’. They want to see a concoction of sound and images sold to them through extraordinarily costly advertising and cross-promotion (videogames, Happy Meals, action figures etc.) The customer was told to see the film and thus demand was created. And since lots of people went to see the film, money was made.


Giv'em what they want.


This is the business model for all entertainment: give the customer what they want; plan future sales by replicating/improving on currently successful products. Now if a film tanks at the box office, does the movie going audience owe the studio money to recoup its losses? Of course not. In a free-market, the customer uses money to decide the final worth of a product. If piracy is a measure of demand, and demand is an indicator of worth, then modern entertainment is extraordinarily valuable.



video
Entertainment industry: This is not how it works.


The entertainment industry can offset any profit-loss two ways:


Stop spending so much money on litigation and advertising.

Start spending that money on customer service.


By doing these two things, the industry ensures smart spending on projects while anticipating consumers’ content-delivery demands. It's not rocket-surgery.

Dr. Gunty lives in Nevada with his partner "Pat" and there fourteen Himalayan cats.  He has built an international reputation in economics, having served as a financial adviser to Kim Jong Il, Moammar Gadhafi, and Hosni Mubarak.  Job offers can be sent to captainpuddinpants@shockandahh.com.



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