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Hollywood Accounting Hoodwinks All · Saturday August 27, 2011 by Crosbie Fitch

I’m amused by Stephan Kinsella’s posting of MPAA Copyright & Content “Theft” Propaganda that should remind us just how easily many people are hoodwinked into believing that monopoly based industries are highly ‘productive’.

Let’s imagine a country with a billion people, and a movie industry that produces a blockbuster movie for $1b in ‘movie production costs’, and prices it at a bargain price of $10 per copy.

To prevent copyright infringement hurting this highly productive industry, the government nationalises the Internet and freely distributes a copy of this movie to everyone, but deducts its $10 price via taxation. That means the movie industry has an ‘economic output’ of $9b ($10b revenue minus $1b costs).

Whereas, relying upon normal retail channels and good citizens to abstain from illicit file sharing, the movie industry is likely to have lost say $3b through infringement, leaving it with only $6b ‘economic output’.

Of course, anyone with any grasp of economics can readily translate ‘economic output’ as ‘revenue via extortion’, and ‘movie production costs’ as ‘costs at monopoly inflated pricing’.

Many people who propose ‘solving piracy’ with compulsory licensing schemes funded via ISP levies are unwittingly proposing such a scam (some wittingly), i.e. to solve copyright infringement by charging people a mulct via their ISP, and disbursing it back to ‘creators’ (copyright holding corporations) according to the popularity of the work.

Profits achieved via mulct or state granted monopolies are not benign profits such as may be achieved in a free market, but wholesale theft from the people.

In a free market (without monopoly), many movie production companies compete for the money of prospective viewers, i.e. haggling. The result is that there are modest profits, and actual/non-fabricated production costs drastically shrink to uninflated prices. In other words, your $1b blockbuster ends up costing $1m and is paid for by 100,000 fans subscribing at $10 each, and not being subject to copyright there are no reproduction/distribution/retail costs the producer can hide their ‘profits’ in.

Say goodbye to Queen Anne’s 18th century business model of extortion, and let us revert to the free market, as old as it is new. GOTO VODO for a glimpse of a new movie industry based on ancient, free market principles. Pay the artist for their work, not the monopolist for their copies.

drew Roberts said 2633 days ago :

VODO does not seem to be a pay before release site. (Well, at least not in the main.)

all the best,

drew



 

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