Is Piracy In the Consumers' Best Interests?

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.

They have less of my money at $1.50, which is good. When they get what they're currently charging there's a risk they'll make more crap films starring clueless overpaid actors, and that's not a risk I'm prepared to take. I only watch a film once, so why pay more for a DVD than it costs to watch in the theater?

Re:Less risk.

>>I only watch a film once, so why pay more for a DVD than it costs to watch in the theater?

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:They already have a website for these.

Inside you'll learn...

        * The truth about finding cars (and yes, even your DRM crippled Holywood Movie) for under $500!

OMFG! What a bargain!

        * How to instantly locate hundreds of DRM crippled Holywood Movies being sold right now in your area ...without having to talk to a dealer or a broker.

Broker? Blockbuster?

        * How to track down DRM crippled Holywood Movies that have been repossessed or siezed by the government ...and snatch them up for pennies on the dollar!

Seized from evil creatures with peg legs, steel hooks for hands, and eye patches?

        * How you can find your DRM crippled Holywood Movie on the Internet

Hell, I do this already(netflix, not BT or USNET like you criminals thought!)

        * How you can make anyone selling DRM crippled Holywood Movies drop their price by thousands!

At gunpoint?

        * And much, much more!

Do tell!

Better than nothing

At least they can make some money now selling cheap DVDs instead of nothing selling overpriced ones.

Re:Better than nothing

At least they can make some money now selling cheap DVDs

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

Re:Better than nothing

Congress has breached a lot of such contracts with the public in the past fifty years or so. But thats only because they've made some new ones. Thank Disney and that little bastardo Mickey for a good part what's been lost to the public domain. I have to ask: what would old Walt think now?

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.

P.S.

Congress has breached a lot of such contracts with the public in the past fifty years or so.

Perhaps the difference between me and most Slashdotters is that I have actually been alive through those 50 years.

To me these breaches are not historical breaches of contract with the public, but actual breaches with me.

I was made specific promises that specific works would enter the public domain at a specific time.

They did not.

This is the breach, not merely that copyright law was modified.

KFG

Spot on

Man, you're making me feel old ... I've witnessed 40 of those 50 years. BTW, your description of the situaiton as Breach of Contract is very well worded.

That said, I feel like I'm in the same exact situation. I've expressed my dissatisfaction with the Sonny Bono Indefinite Copyright Extension nastiness. [wikipedia.org] The retro-active part makes me particularly furious ... that's the piece I consider to be the material breach. More specifically, the original copyright terms formed a valid contract - the three requisite parts were satisfied (offer, acceptance, and consideration.) The "consideration" in this case is an exchange of a short-term monopoly for public-domain status at the end of that term. Disregarding the offer and acceptance aspects of the retroactive extension, there's only benefit for the copyright holders and none for the public. The copyright extension act therefore fails the consideration test, and is not a valid contract. The public already had the "revert to public-domain" element in the original contract. The extension offers benefit to the copyright holder in exchange for ... what? (hint: nothing.)

I've used the term "breach of contract" in many discussions. Is it possible to file a class-action lawsuit against Congress for Breach of Contract?

I'm quite certain that the lawyers would have a field day with that. The original contract was negotiated by representatives of the people, and I'm also quite certain that they'd argue that the terms of said contract were re-negotiated by representatives of the people. The whole "representation" thing creates a nasty grey area - we citizens aren't allowed to opt-out of laws we don't like.

In the words of Ed Howdershelt: [mauricereeves.com] "There are four boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order."

Looks like we're exhausted the first two ... are we up to number three already?

you got that right! Being around to see things cha

...gives you a unique perspective and brings home reality over their BS they spew. I'm in a similar half a century + change personally screwed by those bozos. A couple of my pet peeves are them continuuing to muck about with gun rights after they promised the 68 act would be "it", no more after that, and later on with the huge illegals amnesty during the reagan years (I think, don't remember, 84??), then they said they would "crack down" and "enforce the laws on the books".

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.

If they're serious about it, then it is

1.50? You don't even have to go that low. Make them 5 bucks and you already have a deal. 5 bucks, no DRM and, hell, why should anyone DL movies anymore? Wait for a day to DL stuff, only to find out that instead of Ice Age 2 you get a cheap copy of Sally does Houston. AND you find out when li'l Jimmy starts the film.

Why is the IPod so popular? Affordable tracks and ... well, there is DRM, but so far nobody noticed it yet 'cause the IPods didn't break down yet.

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?

Re:If they're serious about it, then it is

Try reading the entire article summary next time. It mentions that they are trying to compete with $0.75 pirated copies.

Re:If they're serious about it, then it is

Man, you slashdotters are all the same. First, it was all "read the article, read the article, blah blah blah, rtfm", and now it's "read the summary, rtfs". I bet next you'll be wanting people to read the entire headline before posting! Well, good sir, from now on, I fully intend on just glazing over the keywords of the summary, maybe one or two of the works in the links, and then posting the first thing that comes to my mind!

Re:If they're serious about it, then it is

<html><head>...
Oh great, another dupe...

Re:If they're serious about it, then it is

1.50? You don't even have to go that low. Make them 5 bucks and you already have a deal.

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.

75 cents!?!

I think the contributor needs to check his sources....

Walking into the supermarket tonight I bought "V for Vendetta" for five RMB, currently thats about 60 cents. He's obviously a tourist.

It really is that bad here - but ive noticed that some studios are already doing this. Ive seen 60 RMB ($7) movie packs that are what we would see in the states - but who the hell would think of buying that when the best movies are not only cheaper but on every corner and more convenient. That said I have seen some maor releases (Harry Potter for one IIRC) that were on sale for only 20 kuai ($3) but still - when I can get it for 60 cents and its just around the corner.....

Its funny, a few weeks ago there were (almost) no bootleg DVD's for sale in Beijing. Apparently the government randomly declares "No Illegal Wares" weeks like twice a year. Who knows. The more I stay here the more it makes sense - and that is the scary part ;)

Killing copyrights is in their best interest

http://davidlita.googlepages.com/copyrights [googlepages.com]

Re:Killing copyrights is in their best interest

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. If you take this possibility away, the looser would be the artist who is already getting ripped by the studios. Studios wouldn't sign contracts with him anymore. They'd wait for him to perform, tape it and distribute the song that way, without giving him a cent. Or they wait for him to spend his own money to press a few CDs, rip those CDs, hype it, and sell it as their own.

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:Killing copyrights is in their best interest

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.

Re:Killing copyrights is in their best interest

No, he's representing the "standard Slashdotter's" feeling of moral outrage at what has been done to the copyright and patent systems, both of which were designed to encourage creativity and the cross-fertilization of ideas between creators that fosters rapid innovation. Using the law to effectively blackbox anything "new" or that is merely claimed to be "new" is not only immoral but dangerous, and when that same law can be used to bitchslap anyone or anything perceived as a threat to your way of doing business ... well. As an engineer with a few patents behind me, I am outraged by the subversion of national interests to corporate interests. Because that is precisely what has happened.

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 .44 Magnum, and are standing around watching us bleed. I will shed no tears for the likes of a Disney or a Sony ... they've earned whatever is happening to them.

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.

Why not here?

Apparently it IS possible to sell them for such a price. Why not here? This just proves that they CAN sell for less but do not WANT to.

Piracy is what made MS Windows

Geeks installing Windows 3.1 and 3.11 on their work computers on top of DOS, is the flagship operating system/GUI made its initial foothold. Wordperfect was originally the dominant tool for word processing and when people started pirating MS Word in the same offices, it gave MS an addition line into each office. Finally...look at the MP3 device industry. There wouldn't be a demand for Ipods and other MP3 players if it weren't for piracy. Piracy helps more than it hurts. But copyright holders issue these exaggerated claims about how much piracy hurts them and how much money it costs them. The truth is those claims are exaggerated because many of the installations of pirated software or music are things that most would never buy anyway. So piracy does have its plusses. It's just that intellectual property rights holders know that if they do not actively protect their intellectual assets, US law will not be on their side.

Re:Piracy is what made MS Windows

I think the important thing to note here is that piracy *can* be beneficial in some circumstances. It doesn't mean that it always is.

Re:How about quality?

If I BUY a DVD, I get warnings, ads and stupid menus that I can't bypass on my standard DVD player.

If I download a ripped movie, I get the movie I want without the crap. It starts the moment I put it in the player.

Right now, I prefer downloaded movies over pressed copies because I'm actually getting a superior product.

Of Course

Free stuff is always in the consumer interest.

Of course

s such a model viable in the long term?
Of course is viable. You just profit less. And even that perhaps is not true. I've been in China, where you can get absolutely anything in DVD for about 1 dollar each. In fact, it would be difficult for you to try and get a properly licensed film in China. I know I didn't found any. And there was another difference. I had friends there that had more that two thousand DVDs at home, many of which they hadn't had time to see. They simply bought on impulse, because spending 1 dollar is not something you think a lot about. Of course my friends had higher than average (for China) earnings, but in time more and more chinese families will approach that income level.

My bet is that if you had DVDs priced at 1.5$, film copyright infringement would end as we know it, and the amount of dollars spent in DVDs by the average family would grow. I cannot guess if that increase would be enough to compensate for the much-reduced margin on each DVD, but I would bet it would be better bussiness in the long term.

Add to that the release of DVDs on the same day of first screening (sell the things as people exits the cinema), and you have the film distribution model of the future. Big-screen film watching is a fundamentally different experience than DVD watching, and there is but little market cannibalising between the two of them. Film distributors should start to know that.

Re:Of course

>> if you set your price point correctly; you make up in volume what you lack in single sales profit.

Yes, it's almost as if you could draw two intersecting lines. One line would represent the number of units people would demand as the price increases. The other would represent the number that manufacturers would be willing to supply as the price decreases. I wonder what it would mean when those two lines intersected.

Price discrimination

The next refinement is to look at the area between those lines. It's lost revenue. If supply and demand converge at 50 quatloos for an isolinear chip, then all the people who would have been willing to pay 100 quatloos get a free ride.

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.

Re:But what does average Chinese person make?

12 of 36 000 is 1/3000 = so your math is out by a factor of around 10.

$8 for a DVD isn't so bad (assuming the rest of your calcs are correct - I didn't check)

It depends on quality of disc

Okay, I am not in China, but...

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:It depends on quality of disc

The point is, in my experience, pirates in Russia usually sell higher-quality mastered discs of the movies I want than licensed discs with the same movies. I don't know why it is so.

Only if they realize what's *REALLY* going on...

What's really going on is the effect of the public community.

OpenSource, GPL, Musicians and Bands offering their music for free MP3 download, Linux - free OS, Blender, Gimp, OpenOffice...all free software that are comparable to commercial versions are a part of a HUGE new revolution that have literally SNEAKED upon the commercial industry, and because of their own onslaught on people...threatening legal users with DRM, SpyWare and restrictions....haunting people down for just being "people" - have brought fire to this revolution.

Because of this revolution, more and more people will witch to free alternatives, and the "biggies" didnt even see it coming for all their own greed and hysteria.

The way we exchange services - will change forever.

monopoly vs piracy

when you abuse your monopoly position by price gauging, piracy becomes your competition.

Lower prices and equal greater profits

All they need to do now is package advertising for cheap drugs / medications, low interst mortgages, genitalia enhancement, etc. Good for the consumer, eh?

it the economics

It seems to me that the price of a DVD is not set by the intrinsic value of the product, but the economics of the markets. I mean it used to be a movie cost $50 or more retail. It was not that the movie was worth that much. After all, a movie is a stale product. My the time it is released to home video it has been in the theater, pay TV, free TV, and god knows where else. The vlaue to the consumer is merely wanting a good copy of it to watch when one wants.

I think video rental changed that by showing that alot of people would buy a video if it were sold at a lower price, and the studios would reap the profit instead of the people who rented the video. In many ways the video rentals places were stealing money from the studios in the same want online piracy is, and video became priced to compete with that grey area of acquisition.

Now, when we got DVDs the studios got greedy. They jacked the price, but that was somewhat defesible becuase of the added value. What they did do is put unskippable ads, warning, etc that made the DVD less valuable. In most cases, one cannot just put a DVD in and have it play. In addition, if one just wants a movie, it can't be had. The consumer is forced to pay for the extra content. And if the consumer wants to keep the original for backup and watch a compressed version in a more convinent format, for instant putting an entire series of one DVD, that cannot be easily done.

So the economics is this. People who want the DVD product tend to pay for it. People who merely want to watch the film once tend to rent it. People who do not want the DVD product, but want the film, are just out of luck. There is simply no legal way to aquire the film without the baggage.

And so we back to the dawn of video rental. There is no legal way to acquire the product, but there are many grey areas in which the product can be aquired. So the studios are either going to ignore this demand and perhpas not maximize profit, or find a way to tap at least some of the sales. There are limits. DVD DRM is not going away, so person who do not want to deal with 10 DVD for a season are still going to download, but a $1-5 basic edition goes a long way to satisifying the basic market.

This is to cut their piracy losses

Every time you pirate a movie, the studios lose the cost of that movie. If the movie costs $20 then they lose $20, and if it costs $30, then they lose $30. They know they can't possibly compete with free, so they're doing the best they possibly can to reduce their losses. By only charging $1.50 for each copy, this will cut their piracy losses considerably even if they don't sell any.

Fictitious losses

Every time you pirate a movie, the studios lose the cost of that movie.

So if I make 100 billion pirated copies of a movie, does that mean they will go bankrupt?

Stealing or not?

I've seen several people refer to pirating as "stealing". Keep in mind, it's only stealing when you would have gone out to purchase it in the first place! At least that's how most justify it.

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:Stealing or not?

Keep in mind, it's only stealing when you would have gone out to purchase it in the first place! At least that's how most justify it.

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.

It worked in Poland

A few years ago Polish magazines started to include DVD movies. I'm not sure how the deal with the distributors worked but essentially you could buy a magazine without a movie for $1-$2 or with a movie for $3-$4. With some less popular movies you could even get 2 or 3 movies in one magazine so one movie could cost you $1 (I got 3 excellent Almodovar's movies this way). The magazines were doing it for the promotion and probably didn't earn anything extra (but got more circulation). The movies were indeed basic, in a paper envelope, without extras, without other language versions but they were just fine. The movies were not new but you could buy good movies that were a few years old or sometimes last year's movies. I don't know how the deal worked for the distributors but I bought several movies that I would never purchased for a full price so they got a profit from me. The only drawback was that the selection was limited (essentially with several magazines on sale at a time you could choose among several titles). But you also got the magazine (ussually a stupid one, though) free. The movies are still sold this way so it seems it is profitable.

Starting, in China? Try Poland for years...

That's funny... They claim, that they will start doing this in China, but in Poland, for years now, you can buy legal DVDs with papers and magazines for $2-$3, and normal commercial releases of not-so-fresh movies for $5-$6. When you factor in costs and risks associated, many people see no incentive in pirating dvds.

Meanwhile CDs with latest crappy pop music start far beyond the $20 point and -- SURPRISE!!! -- no one is buying them ;)

Robert

yeah friggin' right

I wish I could agree with moviemodel's dreamy idealism, but I've seen enough of the ugliness of the MPAA to believe that it's completely unfounded. The situation in China is desperate, it's not only cheaper, it's often more convenient to purchase pirated movies there, and often you're getting some pretty decent fake packaging and decent quality rips too. The MPAA does not have the power to manipulate the Chinese government as they do in this country and they are finally realizing that they must compete at the basest level - competitive pricing, to survive there. Between lobbying and lawyers, the MPAA will continue their reign of terror in the US at least for years to come.

Is such a model viable in the long term?

Yes, this model is viable in the long term. My reasoning isn't based on how much they can make on a movie today but on how little it will cost to make a movie tomorrow. Computer generated effects have already cut the cost of making movies by reducing the number of extras, allowing production in settings that would not otherwise be possible, allowing complete "green screen" movies, and allowing completely CG movies. I feel certain that within fifteen years movies will routinely be made without human actors and the cost of production will be quite low. This will bring an explosion of creativity as hordes of amateurs try their hand at movie production.

The black market is always a market force

The black market always influences the prices on the legitimate market. The question has always been about a price point that's high enough to attract risk-takers to the criminal markets.

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

...that every bit of packaging beyond a printed cardboard sleeve and a waterproof plastic wrapper exists solely to convince you on a subliminal level that you're buying something more substantial than data.

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!

75 cents

In China, the price of pirated DVDs in Shanghai (pirated DVD capitol of the world -- they have brick and mortar shops) is firmly set at 8 kaui by the pirated DVD mafia. Whereas you can haggle with Shanghai shops on nearly anything (I got a North Face jacket for 20$ when they wanted $150), I couldn't once budge even a street DVD hustler off the 8 kuai price point (they're people that walk up to you on the sidewalk and sell unsleeved DVDs). The street "Rolex" hustlers, by comparison, would usually haggle down to a 10-to-1 ratio off their starting price.

8 kuai is right at $1 right now (buying at 7.99, selling at 8.02), not 75 cents. So they're coming in closer to the pirates price point than that. And Chinese people I talked to actually prefer real goods; it's just hard for them to justify when the pirated goods are so much cheaper... sounds like it should work.

This points to a tactic for developed worlds

So, in China piracy is rampant, and Warner cannot sell any movie at its usual price. Thus, they decrease the price to a considerably more reasonable $1.50. Does that mean that in the US and in Europe, we have been paying too much for these DVDs all along? That we did not pirate enough? It seems consumers should start pirating much more, to get those reasonable prices over here too. Thanks, Warner, for showing us the light.

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:Piracy-The new business model.

Shame humanity has to enact change through illegal acts. Next up we change the US government via sniper rifle.


Aren't pretty much all changes enacted through 'illegal' acts? civil disobedience, revolutions, founding of the United States of America..

Illegal /= Immoral.. Yet, if something is illegal long enough, people seem to think it is immoral.

Re:Old argument

People who steal are very good at talking people into thinking that what they did is OK

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

Huge difference between real property and IP

That position is very short-sighted. It isn't "theft" to extend copyright laws. The rough analog to the copyrighted material devolving from private property to public property is Congress writing a law that causes your house to be turned over to the city after 100 years. While you almost certainly will be dead when it happens, what public good is enhanced by destroying private ownership?

That's not even a roughly accurate analog. Real property is finite. There is only so much real estate on the planet. Ideas are not. Therefore, scarcity of real property exists without any outside involvement by the state or any other actor. Scarcity of intellectual property is a legal construct designed to provide people who create innovative ideas with the ability to profit from them for a short time, in order to spur the development of new ideas, which are beneficial to society as a whole.

The impetus for creation of intellectual property right flowed from the goal to improve society by providing a carrot to innovators. It was government intervention in economics, not the development of a fundamental right akin to life, liberty, and the pursuit of happiness.

While I'm sure the public good can be shown to be "served" by confiscating physical works of art, it still smells like theft to me. Is the case any less obvious with intellectual property that is essentially entertainment?

The public good has not been shown to be served by confiscating physical works of art, which is why in the United States the government can't just come and snatch up that Picasso you have hanging in your den. Intellectual property that primarily serves entertainment purposes is not physical. It is constructed by the legal system, in the same way that any other IP right is constructed. Recorded art in particular is the beneficiary of government largesse.

If there were no way for us to record musical works or create movies, artists would still be able to make money through live performances, because those performances would be naturally scarce, without any government intervention. This is in contrast to the situation we have today, where music and movies are anything but scarce. They are all around us, distributed in a wide variety of forms. Yet the movie and music industry would have the government continue to enforce an arbitrary scarcity that bears no relationship to economic reality. If we were talking about the distribution of physical products like silicon chips or automobiles, we'd call this protectionism - government intervention that serves no party but the big businesses being protected. Ultimately, it doesn't even serve them, given that it only shields them from economic forces that should be causing them to alter their business model.

Copyright coverage for a short time does spur creation of new art, but copyright of any duration is always a tradeoff between the previously-existing natural rights of society at large and the artificially-created rights given to the copyright holder.

"The primary objective of copyright is not to reward the labor of authors, but '[t]o promote the Progress of Science and useful Arts.'" - Justice Sandra Day O'Connor, writing for the majority in Feist v. Rural Telephone Service Company, Inc. (1991)

Re:Just Think

Now add price point of $0.99 with only 20 minutes or total of two episodes or better yet, single episode with multiple language versions. Parents now purchase 2 discs per week for total of 102 per year instead of 12-24 per year.

Great. And since nobody has a place to store 102 DVDs we will start throwing them out to make room for new ones. Since there will be no secondary market they will just go in the trash and the landfill. Then the environmentalists will start bitching about it, the EPA will pass laws restricting the number of DVDs that can be manufactured and the prices will go back up. People will be digging through landfills for old Blues Clues DVDs. Anarchy will ensue and modern civilization will come to a halt.

Nice plan for causing the end of the world.

Re:Old argument

People who steal are very good at talking people into thinking that what they did is OK

Thats no more true than "People make excuses for their choices in life" It has nothing to do with theft.

What a theif can do is be honest and explain why the had to steal...

Also there is a big problem in this country where most people think criminals are just murderers, drug dealers and online pirates.

Most people fail to realize that the most severe forms of crime are at the corperate white collar level. Ask a Criminology professor.