UGAthecat
10th July 2002, 09:14
This is kind of an offshoot of the priacy/theft thread. because it doesn't fit within the scope of that thread (way too detailed to meet Neo Neko's intent for his thread), I'm posting it as a new thread. This is just my experience with some of the motivation that makes people pirate. Maybe it will get a productive discussion going on fixing the problem at it's cause. I'd like to hear other's experiences as well.
my view is: Priacy = theft.
I do also agree that what mass media in general does is severe abuse of their collective monopoly (oligopoly?) power.
While theft/piracy is not a good way to fight against their abuse, I do agree something should be done. The info here explains one of the more insane moral deprevities of music & movie companies.
====begin long story about what i found out====
In the mid 90's I worked at Wal-Mart, and at that time, Wal-Mart made anywhere from 0% to 15% on cds, tapes, and videos sold. The rest of the money that walmart made went back to the distribution company that provided the copies to be sold. The distribution company basically leased space in Wal-Mart at a rate of about 10% per copy, and Wal-Mart adjusted the actual price (and profit margin) per title based on demand, resulting in the 0-15% range. Bonus for wally world is they aren't fully responsible for the inventory of these items (meaning they don't soak up 100% loss for each item stolen), and they still make a killing if you look at the money made per square foot of space taken up by the merchandise.
Anyway, so for something that sells for $10, Wal-Mart made about $1, and the distribution company made $9. Now granted the distribution company pays for the copies from the record & Movie companies, but because these companies only provide a master and x # of licences, the distribution company pays very little for these copies. I never got hard numbers on this, but rumor says it was from $1 - $3 per title, reguardless of the ultimate selling price.
Now while all of the above was confirmed to be standard operating procedure by the rep of the distribution company that came in to check inventory once, the rest of this was explained to me by the same person, but they say they don't have proof that all of it is true, it is just rumor of how things work in the corporate offices of the distribution company (almost all large companies hide true business practices from their peons and customers, as I have found out from working in the corporate offices of ExxonMobil for the last few years, providing tech support to all of the execs, and speaking with people who have done similar for other large companies).
so...
Why would the record and movie companies be willing to sell their material so cheaply? because the cheaper they sell the items for, the less they have to give to the artists(Smaller dividends)! See, these distribution companies were all about 'unofficial' kickbacks! Like, if wallyworld sold 1 millon copies of 'X' artist's cd in the first 2 weeks of it's release, they would get a bonus of $1 million. This encourages wallyworld to sell at close to 0% profit, or even at a loss. At worst this makes the item sold a loss-leader (doesn't make any money itself, but brings people to the store), at best it makes a hefty bonus for them.
Additionally, all of the promotional materials (stand up cardboard displays, etc) are provided to the store by the distribution company, but provided to the distribution company by the record/movie companies at really high prices. This makes more revenue for the record companies, but this revenue is not tied to a certain number of sales of an item, so none of it goes to the artist creating the item. On top of that, the stores have to return all of the promotional materials or pay penalties (as a side note, the store i worked at had to pay $5000 to the distribution company for a certain piece of promotional material related to starwars that was never returned, so this part at least is confirmed). Other things like this also make money for the record companies without providing income to artists.
If this weren't bad enough, as many people already know, lots of 'promotional' costs come out of artist's part of profit for most recording industry contracts (remember TLC?). Of course making the cd, distributing copies to radio stations, making videos, etc are all considered promotional costs. So, the poor artist gets pennies per copy of records sold(dimes if they are lucky/really smart/have great lawyers or agents), the company that got the contract with the artist makes money hand over fist.
The rest here is just my conspiracy theory:
Ever notice how recording companies do not directly sell stock, you can only get stock for the parent companies of recording companies? This is just a way for execs to get huge bonuses under the 'child company' which takes money from the amount of net profit of the child company, which reduces the gross profits of the parent company, further reducing the net profit the parent company has to claim as income, and distribute to shareholders. Yeah, it sounds like a sick conspiracy theory, but then why is it the likes of Sony and Time Warner (before AOL takeover) have never faced real financial threats to their wellbeing?
I've also heard (don't remember from where) that 'materials' cost (ignoring all intellectual and manpower costs) of CDs and DVDs are 1/10 - 1/100 the costs of Cassete Tapes and video tapes, and the intellectual and manpower costs are roughly the same for all of the above (even when DVD's have additional 'bonus materials'). This is basically what I base my 'ultimate' fair price of $4 - $8 for all media on. My 'ultimate' fair price for digitally distributed media would be $1 - $5.
====end long winded rant===
Since the time that I found out the stuff I learned at Wal-Mart, I do not buy cd's or video tapes unless the cost less than $10, and DVDs unless they are < $15, because each time i pick something off of the shelf I feel dirty for supporting this sick system. I would much rather pay about 1/2 of the prices I quoted above, because that is what i feel is fair, but I still buy at those prices, because it is the fairest price that the market will provide me to buy at.
BUT, even with the stuff that makes me feel sick about buying things, I agree that piracy=theft. Priating the materials produced by the music and movie industries doesn't hurt them in any measureable way (and some say it helps them), but what it does do is bring the pirate down to their level. While I don't have the motivation to start a nation/world-wide effort to put the RIAA/MPAA back in their places, I would definitely join and support such an organization.
Even though it definitely makes me just as 'not so nice' as the industries, I do still pirate music but usually when I just can't find what I want through record clubs and retail stores (like stuff I couldn't afford when I was in school, still want to listen to, but just isn't available anymore on the radio or in stores).
UGAthecat
PS - sorry to all forum members if this message induces the mods to consider reducing the max message length to <5000 letters ;)
pps - piracy of software is another story, but too off topic to devote any further typing to in this forum.
my view is: Priacy = theft.
I do also agree that what mass media in general does is severe abuse of their collective monopoly (oligopoly?) power.
While theft/piracy is not a good way to fight against their abuse, I do agree something should be done. The info here explains one of the more insane moral deprevities of music & movie companies.
====begin long story about what i found out====
In the mid 90's I worked at Wal-Mart, and at that time, Wal-Mart made anywhere from 0% to 15% on cds, tapes, and videos sold. The rest of the money that walmart made went back to the distribution company that provided the copies to be sold. The distribution company basically leased space in Wal-Mart at a rate of about 10% per copy, and Wal-Mart adjusted the actual price (and profit margin) per title based on demand, resulting in the 0-15% range. Bonus for wally world is they aren't fully responsible for the inventory of these items (meaning they don't soak up 100% loss for each item stolen), and they still make a killing if you look at the money made per square foot of space taken up by the merchandise.
Anyway, so for something that sells for $10, Wal-Mart made about $1, and the distribution company made $9. Now granted the distribution company pays for the copies from the record & Movie companies, but because these companies only provide a master and x # of licences, the distribution company pays very little for these copies. I never got hard numbers on this, but rumor says it was from $1 - $3 per title, reguardless of the ultimate selling price.
Now while all of the above was confirmed to be standard operating procedure by the rep of the distribution company that came in to check inventory once, the rest of this was explained to me by the same person, but they say they don't have proof that all of it is true, it is just rumor of how things work in the corporate offices of the distribution company (almost all large companies hide true business practices from their peons and customers, as I have found out from working in the corporate offices of ExxonMobil for the last few years, providing tech support to all of the execs, and speaking with people who have done similar for other large companies).
so...
Why would the record and movie companies be willing to sell their material so cheaply? because the cheaper they sell the items for, the less they have to give to the artists(Smaller dividends)! See, these distribution companies were all about 'unofficial' kickbacks! Like, if wallyworld sold 1 millon copies of 'X' artist's cd in the first 2 weeks of it's release, they would get a bonus of $1 million. This encourages wallyworld to sell at close to 0% profit, or even at a loss. At worst this makes the item sold a loss-leader (doesn't make any money itself, but brings people to the store), at best it makes a hefty bonus for them.
Additionally, all of the promotional materials (stand up cardboard displays, etc) are provided to the store by the distribution company, but provided to the distribution company by the record/movie companies at really high prices. This makes more revenue for the record companies, but this revenue is not tied to a certain number of sales of an item, so none of it goes to the artist creating the item. On top of that, the stores have to return all of the promotional materials or pay penalties (as a side note, the store i worked at had to pay $5000 to the distribution company for a certain piece of promotional material related to starwars that was never returned, so this part at least is confirmed). Other things like this also make money for the record companies without providing income to artists.
If this weren't bad enough, as many people already know, lots of 'promotional' costs come out of artist's part of profit for most recording industry contracts (remember TLC?). Of course making the cd, distributing copies to radio stations, making videos, etc are all considered promotional costs. So, the poor artist gets pennies per copy of records sold(dimes if they are lucky/really smart/have great lawyers or agents), the company that got the contract with the artist makes money hand over fist.
The rest here is just my conspiracy theory:
Ever notice how recording companies do not directly sell stock, you can only get stock for the parent companies of recording companies? This is just a way for execs to get huge bonuses under the 'child company' which takes money from the amount of net profit of the child company, which reduces the gross profits of the parent company, further reducing the net profit the parent company has to claim as income, and distribute to shareholders. Yeah, it sounds like a sick conspiracy theory, but then why is it the likes of Sony and Time Warner (before AOL takeover) have never faced real financial threats to their wellbeing?
I've also heard (don't remember from where) that 'materials' cost (ignoring all intellectual and manpower costs) of CDs and DVDs are 1/10 - 1/100 the costs of Cassete Tapes and video tapes, and the intellectual and manpower costs are roughly the same for all of the above (even when DVD's have additional 'bonus materials'). This is basically what I base my 'ultimate' fair price of $4 - $8 for all media on. My 'ultimate' fair price for digitally distributed media would be $1 - $5.
====end long winded rant===
Since the time that I found out the stuff I learned at Wal-Mart, I do not buy cd's or video tapes unless the cost less than $10, and DVDs unless they are < $15, because each time i pick something off of the shelf I feel dirty for supporting this sick system. I would much rather pay about 1/2 of the prices I quoted above, because that is what i feel is fair, but I still buy at those prices, because it is the fairest price that the market will provide me to buy at.
BUT, even with the stuff that makes me feel sick about buying things, I agree that piracy=theft. Priating the materials produced by the music and movie industries doesn't hurt them in any measureable way (and some say it helps them), but what it does do is bring the pirate down to their level. While I don't have the motivation to start a nation/world-wide effort to put the RIAA/MPAA back in their places, I would definitely join and support such an organization.
Even though it definitely makes me just as 'not so nice' as the industries, I do still pirate music but usually when I just can't find what I want through record clubs and retail stores (like stuff I couldn't afford when I was in school, still want to listen to, but just isn't available anymore on the radio or in stores).
UGAthecat
PS - sorry to all forum members if this message induces the mods to consider reducing the max message length to <5000 letters ;)
pps - piracy of software is another story, but too off topic to devote any further typing to in this forum.