On Solving All This Mess

I begin with a hope that this is the last thing I write about this topic, it has already extended to about nearly 4000 words before the start of this piece. So I hope with another 2000 or 3000 words in this one the whole thing is put to rest. Let me begin by saying that all this while I have been having a field day criticising just about anyone and everyone in the ‘industry’ with nobdy speaking up for them and so I therefore believe that either people have just got tired of this non-sense or they must be waiting for that magical solution that I purport to have hidden in my sleeve.

I suppose I could gladly state after my talks with lots and lots of people, whom I always ask one question, do you deal in pirated discs, if so why? I doubt whether the industry has ever tried to find out why people who do so, do so(am talking of the end-users). Whatever the industry view, atleast in my case more than 90% told me it was purely a question of cost. Mind you, more number of people distribute it for free than those who charge any money for it. Yet, almost every one of them them told me if it was cheap enough they BUY it, from the original maker itself. So without wasting more time, I shall launch right into some of the craziest ideas you have heard in a long long time(even if you did, the industry guys probably didn’t, so give them the benefit of doubt).

1. Cheaper than Dirt: The first reason why people don’t buy original is the cost. An original movie DVD costs about Rs. 300 and upwards, whereas a pirated one costs only about Rs. 30 and upwards. But the one fundamental aspect involved in both is that, in a capitalist economy, the ‘industry’ guys are trying to act like communists, demanding that you not only buy their products only, you also pay them whatever they ask even if it is not worth it. A blank DVD I bought yesterday in the market came for almost Rs. 7.50 and I am sure if the industry guys buy them in the qunatities that they do, they can get a blank one for Rs.5, the balance usually made up of middlemen’s profit margins. After taking into account the costs of duplication/recording and packaging, it would probably end up as a finished product ready to ship at a cost of about Rs.10. This would mean that even if they would definitely get in a margin of Rs.5 on every product, after taking into concern distribution costs and retailer margins.

The important point being that, the pirates don’t offer better packaging, nor do they offer better or even equivalent quality, in fact on both these counts they are far inferior. The only single reason why they sell as many as they sell is the price(meaning if the industry sold at the prices the pirates are selling, there would be no more piracy, because piracy exists almost solely due to the price gap, and mind you the pirates are not making losses selling at such prices). I always wonder why the industry refuses to acknowledge that fact and keeps on trying to spend increasing sums of customer-money on better protection technologies and anti-piracy measures. If only they could understand the minimum logic that people like Moser Baer have understood, they would have been much better off than they currently are. I fail to understand why they miss such a simple and obvious logic. In every city, only a thousand people pay for a MIcrosoft OS, because it ranges between Rs. 4000 to nearly Rs. 10,000 per PC. Which would translate into maybe 10,000×1,000, i.e. Rs. 1 crore. Conversely if they priced their OS at Rs.200 and bundled it along with the processor/board, they could have ensured that the more than 10 lakh PC’s that are sold every year are sold every year are sold with an OS already paid for, which would translate into revenues of 200×10,00,000, i.e. Rs. 20 crores. I am sure these people employ professionals who have more experience in the business and numbers than my age, but I would really love to see one of them questioning the logic of this arguement reasonably. I mean what would they prefer, revenues of 1 crore with millions of pirated installations around, or 20 crores of revenues with a million legitimate customers and that many lesser pirated copies going around?

2. New Age, New Avenues: Opponents of the first point might raise a valid point about it being uneconomical to distribute and sell at such low prices, given the margin expectations of retailers and other middlemen. I would simply say, have you tried alternative selling locations at the prices suggested above(I know you have tried the locations I am about to suggest above at your current prices)? Have you tried stocking your discs from the floor to the roof of a Big Bazaar, and then watch them fly off the racks at Rs. 20 per movie? You probably have more chance of selling 1 crore copies at Rs. 20 these days than you have at selling a few thousand copies at Rs. 300. have you tried hard-selling them in the same locations, for example getting Big Bazaar to give out your discs to customers instead of a cash discount of Rs. 15 or more. A cash discount of Rs. 15 might not mean as much to a customer as getting an original DVD from the shop as a complimentary gift although the items have to be paid for at MRP. That would I am sure you would agree, improve not only the industry sale prospects, it would also improve the goodwill for the store. Readers must note that the reason I mention names like Big Bazaar, is because of the changes in the marketplace that time has wrought. Nowadays hardly anybody visits specialty music stores like MusicWorld/PlanetM exclusively for the purpose of BUYING music(I mean hardly anybody goes out of their way to spend time looking for a music store, visiting one and then picking out the music), whereas the kinds of stores I have mentioned are high footfall areas, where even if they fail to purchase anything the store has to offer, they might just fall for this one, simply seeing the prices.

3. Impulse vs. Investment: The second major problem with the pricing is that it simply takes music/movies from the regions of the ordinary affordable forms of entertainment into the realms of a premium indulgence, more relatable to filthily rich people. There is a very fine line of difference between what makes up an impulse purchase and what makes up an investment, and the industry with its current pricing structure is far far away form that line. People perceive spending more than Rs. 300 on something that they usually watch once or twice as an ‘investment'(as in would you go to a restaurant everyday, or cook everyday at home and go to the restaurants on the weekends?, remember I am talking of the majority), as compared to spending Rs. 20 which they would deem as anyway lost on lots of other frivolities, instead of which if they bought this it would atleast last longer than those other frivolities. Just think to yourself, would you rather buy a cool drink everyday if it was priced at Rs. 5 or would you do so if it was priced at Rs. 30, and the answer will be clear and definite. One example I would like to quote of a company that was able to see this logic and able to MINT money from it, is Apple. They set up the iTunes store with the intention of selling songs at 99 cents. To paraphrase Steve Jobs own words, the idea was to make music an impulse purchase, so that people would think, what the heck, it’s hardly a dollar, and I get to legitimately own a song that I like, and the hundreds of millions of downloads are a testimony to the concept. Alas it seems the industry is sleeping on such an opportunity.

The industry could probably try to even better that by officially making the songs available for download onto mobiles for Rs.3 or 4 each. I am sure they would get more from 10 people downloading that one hit song, than one person buying the entire album. And in such a scenario we are talking of a market size that numbers in the crores(I understand it can only be done in smartphones, and am sure there must be lakhs of smartphones across the country).

4. Customer is King: For long the music companies have got away with many excesses, the primary of them being, selling the customer an entire album and charging them for the entire album, when most of the songs were trash, and only a song or two were wonderful. The customer had no choice because although he/she wanted to buy only that particular good song, the companies bundled the entire album and forced the customers to pay up for the rest of the mediocre stuff. The arrival of iTunes changed all that, because all those who refrained from investing that $10 or $12 on an album of mostly mediocre stuff or even worse mostly banal stuff, with only one or two redeeming songs, could now buy only that one single song, and hence, there arose a new trend of selling singles, and the sales of those single songs far outcrossed the entire sales of the albums in both numbers and revenues. iTunes was something that put the customer back in the driver’s seat again.

The next phenomenal thing that happened to change the way music is sold is to take it back to the medieval times, when musicians played in the streets and doffed their hats, and people showed their appreciation by filling it with coins. Lesson from it, let people pay when they like the product and let them pay the value they can afford, and the value they believe the music deserves rather than force a uniform price upon them. Case in point, Radiohead, who recently put up their album online for people to pay how much ever they wanted, which also included paying nothing if they didn’t want to. Peopl e who think both they are I are crazy should read the link above to know for themselves the results of such an experiment. By allowing the customer to pay for the music as and when they wanted and how much they wanted, it would ensure that you always brought out only excellent stuff, because nobody would pay you for sub-standard works. That way not only would you be able to give quality stuff to the customers, you would also be able to let them show their appreciation of the same. One small observation, guys like me who can never afford the music currently could get it for free now, and pay for it later when I actually can, kind of like the credit card system, that way the consumer as well as the industry benefits.

Too tired to type anymore now, so this article shall (un)fortunately remain a work in progress to which I shall keep adding, as and when I feel like putting more energy into the topic. So thats it for now. Time for you to let those profanities flow.

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