The Pirated, the Copied and the Faked
Trip Start Oct 05, 2009
35Trip End Mar 28, 2010
Map your own trip!
Show trip route
First, I must say that companies are greedy; this greed makes them a bit blind at times. Therefore, any statistic that can be utilized will, of course, be biased. What do I mean? For the sake of simplicity let's take an example of a product being copied: when a company says that they have lost $x million dollars due to copied products this is bias information. Why?
1) The company has not lost anything... it has merely not sold as much. This is a logical error. If I came to you and said, here are boxes of tissues $5 each. You bought one because you were sick. And then one week later, I tried to sell you the same tissues but now, you could by "fakes" which were $1 each. Did I lose money because you didn't buy from me? I didn't lose anything... I merely sold less.
2) Customer or market segmentation is not comparable to before the product was copied. In my example, maybe two customers end up buying the tissues for $1. Can I claim that the other ones should have bought from me too?
Let's go further, if a Rolex was copied, would this make a rich person buy the fake instead of a real one? Doubtful.... if anything, it would have the opposite effect. The rich person would demand a real one to show his status. The other end of the spectrum has what you might call, wanna-be rich people. They couldn't afford a $2000 watch in the first place. So... they are on the low-end segmentation of the market and a $50 rip-off doesn't look so bad anymore. Even if it breaks in a year. Do companies like Microsoft honestly believe that a worker in China would pay $100 for a copy of XP when they can get it for 10% of the price? Umm... no, sorry. If you pay workers 10% as much here, well guess what? They will expect 10% the prices for goods. This is difference in segmentation. The harsh reality is that there was never a low-end market for these high-priced goods.
The trouble is, of course, when these prices reach the "developing" Western world and undermine profits there. What happens if fakes entered the US market? I admit, it spells disaster. This does happen with music and sometimes imported goods (i.e. Canal St.). BUT, I still think that overall, this does not do as much damage as is complained. I mean, how many LESS people want to be singers now that music can be downloaded? How many less want to put out an album? How many less people want to work in the music industry? That is the true gage. The demand on that side has probably hardly fallen. Ok, well... how worse off is MTV? The radio? (even with the advent of online radio). It is not as bad as newspapers which are losing readership because everything is being converted/digitalized online. At least music is already in digital form to be readily utilized in the market. So we could argue forever that pirated music is a horrible thing but it does get the music out there, and does no damage to the brand / band name because... well, it's the same song!
It's becoming clear that a blog entry will not suffice to cover this complicated issue. And although I do not have solutions, my intentions were to say... the news is not as bad as it seems. All will not end in 2012.