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It’s Free And Killing Business Everywhere

21 March 2009 by: Justin Gareau 12 Comments

kill-business
That’s right, if it’s free it’s killing business.

We are in the technology era, we run the world from our computer desk and some of us just love the fact we don’t even need to use the phone to order pizza anymore. Heck, nowadays we don’t even pay for some of the programs on our computers at all, and this my friends is why every recession is prolonged, even if it is human nature.

Let me start by explaining myself. Just think of this, between you, reader, and your friends, one of you probably likes music, a lot. Now if you like music your probably the owner of an ipod of some kind, or at least an mp3. Since there a lot of ipod sales lets stick with that one for now. Like I was saying, chances are one of you out there likes music, and to get your fix of some new, or old tunes, you have to find a way to download them, since it’s the new “in” way to do it. Now if you have an ipod, you have itunes, but I bet you didn’t go that way, did you. From my personal mini-research i found that less than 30% of students actually pay for their downloaded music, and from that 30% about half of them have their parents paying for them. So how much money does the music industry make off this? Well if your music genre is classic rock, the sales for records has already come and gone, so every new medium just gives an extra sales boost, but for any up and coming artist, he or she is being robbed blind of maybe half their deserved profits. Not to mention that what most of the students are doing to get their music, is pirating it. So lets look at this from a more business point of view.

Ok so lets say I put out a song. It’s a hit. We make some CD sales but of course CD’s are becoming less and less popular. We decide to release the song to itunes for extra sales and things go well, considering only about 30% of the people with their ipods actually paid to hear our song, which barely covers any cost on what could be a tour. Now we cancel a bunch of dates because of “complications” within the band (we are broke). Next thing you know rumors of us splitting up, of us being egotistic jerks, saying we wont “make” enough money with the tour so we are canceling dates, when the reality is that we just don’t have the money to transport the gig to a show unless the other ones kill, and even then its a stretch… Seems a little farfetched? Maybe, but luckily there are still some CD sales left.

Lets try another entertainment business, movies. This is becoming an even greater problem, as people are not just downloading, but copying the films and selling them for cheap to their friends. Have you ever seen the warnings just before the starting credits? 5 years and 250000$ for such an offense and it is being done daily. A lot of movies that will pass through theaters will not even break even in profit versus cost. Some actors have agreements to make 10 or 15 million if not more guaranteed for one movie. So the flick will look to do a killing on DVD sales just to make a few bucks, but wait, slowly declining are the sales, people can see it for free on their bloody computers!

Now I can understand a lot of people for doing this, not everyone has the money to buy tons of music or movies. Its still 15$ for a new CD and around 15-20$ for a DVD so if you wanted a 1000 song or 500 movie library, the cost is well, steep. Which is why a while back they considered putting an “ipod tax” because music was going to be shared via free distribution anyways, so they had better get some money off us to pay for the licensing and everything else. Although the courts wouldn’t hear it, or the plan was cancelled, it did raise some eyebrows and kind of cast a shadow on our society of stolen digital goods. Unfortunately there is no real solution to the problem unless they can ban all the free downloading websites or start making them charge for the downloading too.

Now I’m not trying to pick on the entertainment business, because they don’t have the biggest problem right now. Can you say GM or Chrysler? They are going through some rough patches right now, granted its mostly their own fault for having way to much stock in way too many same class brands, taking their own profit away. Hopefully that’s the past, but they are still asking 10 billion from the canadian government just to stay afloat. The more you look into it though, the more it looks like they are just delaying their own death. And Chrysler well, recently stated that if they didn’t get more help from the government they would move to another country, pretty bold statement from a company that also said they would be bankrupt somewhere around summer time… I thought beggars couldn’t be choosers, specially not broke beggars. So where would they go? To the United States? Is their economic position really that much better than Canada’s? In any case these car companies are in trouble, the saddest part of all though is that we don’t even help them. Once they said they would be bring down the prices we started waiting to see how low they could go so that we will be able to buy cars extra cheap with all kinds of “free” bonuses to go along with them. This from some of the same people who pulled out their invested money and only helped the stock plunge created by the credit crunch and everything else. If everything is cheap, why aren’t we buying more? Are we that stupid? Or just that greedy. We took out all that money to watch it sit in a bank account… that we can control online… right next to our downloaded music, movies and programs. If we don’t buy more we will force these companies to close, and if they do, the economy can only get worst. So spend furiously, buy a truck and fill the bed with CDs and DVDs go home and watch the economy come back. Or don’t, and pay the full price when it does, but whatever you do don’t try and save money, because that’s free, and it’s killing business everywhere.

Photo : Flickr 1

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12 Comments »

  • Posts about DVD as of March 21, 2009 » DVD Newsroom said:

    […] John Cena always does action movies with no emotion. It will be a great dvd rental though! It’s Free And Killing Business Everywhere – 360blog.org 03/21/2009 That’s right, if it’s free it’s killing business. We are in the […]

  • Bob said:

    Love your point of view, nice article! keep up the good work 🙂

  • Gerry said:

    Wow, I'm speechless. great article!

  • Slava said:

    Some artists are praising torrents and things like that, telling it helps sales. Hardcore fans of some music group would buy $100 albums, which is actually easier than selling 100 of $1 copies or even 20 of $5 ones. The industry sells albums for 5$ because it's PROFITABLE now (for that industry, maybe not for the artist, but now thanks to the Internet the artist has a way to directly sell to customers).

    Artists want $10M for a movie. Well, if the movie industry would find it unprofitable, they'll hire actors who want $50K per movie until $10M guys are broke and want reasonable pay. They ask (and get) for $10M because it's PROFITABLE now.

    It's economy, love it or hate, it works.

  • J-DOG said:

    I understand that it is profitable in some cases as you pointed out, Slava. But I still think 10M for someone to make a movie that can still be sub par is atrocious. I just think some people that deserve some of that money are getting short changed (like the music artists stuck in bad contracts). And I think a 5$ CD is only profitable on a slim margin (because of changing technologies for one) and usually only the music company behind it will really get paid. I doubt the band makes more than 5 or 10% of the end result. I love how the economy works, I just think it isn't always fair.

  • Slava said:

    If they (movie industry) pays $10M, that means it's profitable. You can call that atrocity or extortion or even yabba-dabba-doo, but it can't change the fact that he/she is getting those $10M, and unless it was profitable for the industry as whole – they'd not be paying it. And as soon as it get's like this (too expensive) – they won't those guys a cent.

    $5 CD is slim-margin profitable? I'd say Warner Music would disagree with you with it's 1 600 000 000 $ (no typo -> 1.6billion) profit in 2008. http://www.google.com/finance?q=NYSE:WMG Well, they would probably agree, as it says in great “Suckers” movie (about money): ” Enough? It's N-E-V-E-R ENOUGH!”.

    Economy is ALWAYS fair. It's just that bands are great at making music and boy do they suck in economics, compared to great minds of music labels. That's doesn't mean it's not fair. They both agreed on the deal, nobody held them at gun point when they signed it.

    If you look from the global humanitarian point-of-view, yes, economy is almost never “fair” to regular Joe. But that's the problem that this guy should solve himself. If the bands were better at negotiations, maybe they should sign $10M upfront contracts 🙂

  • J-DOG said:

    I wasn't debating the fact the music companies make that much money, you are in fact proving my point. No the musicians aren't held at gun point, but its because the big companies wont offer anything good to any new bands, very slim margins are all you'll get. However a brand name band will sign for 10M upfront, if not more. And by the way it isn't all movies that are profitable, the companies always make money, but someone always goes broke in the end if they don't pull a profit. You just don't hear the real sufferer because well, he wasn't paid 10M and can't post an article in a hollywood magazine, the poor broke bastard.

  • O-D-C said:

    Great article Jus!

  • Nick said:

    Wow, this is terrible. I'm going to have to read a book or something to get back those brain cells. Don't worry though, I won't go to a library because, from what I gather from your article, they destroy the publishing industry (never mind, the two peacefully co-existed for centuries).

    Firstly, never say cite “personal research” unless you provide methodology, otherwise you might as well have said “I asked a couple of guys at the bar while we were sitting around drinking.”

    Secondly, your music industry analysis is flat wrong. You claim bands lose money by touring. How many bands with slow record sales survive solely on touring? I can think of dozens. The Rolling Stones don't still go on tour because they got a new shipment of Viagra.

    The movie industry shows a complete disregard for the current reality. Thanks to the recession, ticket sales are up in 2009. Now, the many years of decline means that the industry is where it once was, but you have to consider the variety of alternate entertainment sources, plus the widespread use of air-conditioning.

    Your argument reminds me of the athletic team owner who won't let her team's games be shown on television for fear that doing so may hurt sales. There's a reason nearly every team is available on TV in their respective home markets.

    I will leave the auto claims because by the time I reached that part I was flustered and you'd digressed.

  • Girl said:

    If the film industry can't support 15million dollar starring roles then maybe they should consider not paying 15million? Actors and actresses only make that much because they can.

  • J-DOG said:

    Alright Nick, let me start by saying sorry. Sorry for writing an opinion about the way I see things around me and the way I perceive them. Where do you get off reading an article with less than 500 views and leaving a completely developed and thought up argumentative, negative comment.

    Firstly, I used my opinion and people that live around ME thats why its a fu@#$%! personal research.

    Secondly I never said bands lose money by touring, I said and I quote myself “which barely covers any cost on what could be a tour” . My room mate is in a band and they cant afford to tour. The Rolling Stones were NEVER mentioned in my article because they have 30000 people paying 300$ per ticket, of course their tours are worthwhile.

    Thirdly thank you for your ” team owner who won't let her team's games be shown on television” remark. That decision is entirely up to the team owner's, once again only an opinion.

    Listen I don't mind different opinions, even on my posts, but keep your negative blatant disrespectful attitude out of our blog.

  • Melissa said:

    According to Keynes he says basically the same thing you said. That we need to spend money in order to get out of the recession we are in. I had to do a project on him for HR thats the only reason i know that..lol..but good job Justin yay 🙂

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