Re: Corporate entities

From: Mike Lorrey (
Date: Fri Nov 02 2001 - 10:14:01 MST

Lee Daniel Crocker wrote:
> > So we are left to deal with why piracy occurs. Outside of skinflints who
> > don't want to pay for something, and spoiled brats who think that
> > everything should be free, you have a core audience of the economically
> > disadvantaged that the first two groups piggyback on. Perhaps with the
> > expansion of micropayment schemes, there could also be instituted a sort
> > of micro-financial aid, where those on public assistance and those in
> > school would get a hefty discount or even waived fees in electronic
> > music distribution. Instituting such a program would eliminate much of
> > the piracy propaganda, while at the same time attaching a stigma to
> > getting 'free music', which would imply that you are on an economic low
> > rung, something that peer pressure concious youths try very hard to
> > avoid.
> Who are you and what have you done with Michael Lorrey? Immigrants
> create a low-trust market? Public assistance for music? Big
> corporations taking advantage of poor artists?

Immigration, as well as poor civics education in schools, contribute to
diluting the trust foundations of a high trust society, when those
immigrants originate from predominantly low-trust societies.

I did not say 'public assistance' either, I said 'financial aid'. This
could be instituted on a private basis by distributors and creators of
IP who want to be proactive about combatting piracy. The software
business already does this with special low pricing for students and
educational institutions. By instituting different prices for the same
product for different markets, you realize wider sales than if you treat
everyone as the same market, and you reduce the incentive for piracy.

And, YES, I said 'big corporations taking advantage of poor artists'. It
is no secret or lie. The fact is that there are a limited number of
record companies and a limited amount of both retail space in record
stores and airtime on radios and music TV channels, while the supply of
artists is overwhelmingly huge. The natural market reaction when supply
far exceeds demand is that the suppliers are under pressure to either
leave the market or accept getting screwed by a limited number of buyers
who are aware of their status and power. When the buyers price in most
cases is below that one can obtain to remain on welfare, the artists are
certainly being screwed.

I am also quite aware of how many businesses use creative accounting
practices to create the impression that the company is losing money when
it is actually making it hand over fist.

The inventory game, for example, which the record companies are in,
allows them to produce a CD for $1.00, while stating it's retail value
is $16.99. If the record company instead sells the CD for an average of
$15.00, on paper the company took a loss of $1.99 on every CD, when it
actually profited $14.00.

In the arena of band tours, the record company will 'sell' the band
equipment and support people at inflated rates, then 'buy' them back at
depressed values that the record company itself sets, thus creating the
impression that the tour cost far more than it actually did, which eats
into the royalties the company pays to the artists. This is why most
artists don't make any profit on their work until their third or fourth
album with the label.

Mike Lorrey

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