Copyright Intensive Firms Are Excessively Profitable
from the that's-what-monopolies-do... dept
For all the talk from the copyright intensive companies out there lately about how they need stronger and stronger copyright laws because their business is collapsing, a new study points out that copyright intensive firms appear to be inordinately profitable.We found that the firms in the copyright-intensive industries were significantly more profitable than the firms in the other industries in every period examined. Moreover, in this ten-year period, the copyright-intensive industries’ profit margins on average grew by 3.98%, while the other industries’ profit margins on average decreased by 0.75%.Actually, you can go even further than that. If entire industries are making profits well above the norm, it actually suggests an inefficiency in the market -- which is basically exactly what you'd expect when you're talking about an industry that's given a set of government-granted monopolies. What those do is limit competition, create artificial scarcity, drive up the prices for consumers, and limit innovation that might provide more consumer surplus. The fact that the industries appear to be quite profitable suggests that may be a key issue at play here. At the very least, it certainly suggests that there's no reason to strengthen copyright laws at this point.
The high level of profitability of the copyright-intensive industries suggests that the copyright system serves these industries effectively, and that they are not in need of special government assistance in the form of new legislation or law enforcement resources.
The details of the report show that, as you'd expect, some companies in the space are doing quite well, while others have had a bit more trouble. That's not a surprise. Some companies are adapting better than others. But, on the whole, the trends are pretty clear: greater revenue, greater profits. But we keep getting told that those companies need the government to step in and save them? Really?
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: copyright, profitability
Reader Comments
The First Word
“Lemme esplain... no, there is too much, lemme sum up
Mike seems to think that the IP industries are doing okay, but are trying to legislate there way into remaining profitable, rather than adapting, which means their time is limited, as newcomers who are able and willing to adapt to the changing market will inevitably take their places and customers right from them.The IP industry people on the other hand are constantly going on and on about how doomed they are, how they are on their last legs and won't survive another year without massive bailouts, new laws, and other things to support them(the fact that they have been saying this for decades, and are not only still around, but making excellent profits apparently is something they prefer to ignore).
This latest reports says that despite being 'on their last legs', they are actually doing far better than just about every other industry around, so all the calls for 'new laws to protect our businesses' is nothing but greed, an attempt to get even more than they already have.
Subscribe: RSS
View by: Time | Thread
That's been the point for the last 30 years. Use taxpayer money to make a small group rich while others have no choice but to work on new innovations at a slower pace.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
This is why corporations need to be watched and regulated and why the government needs to be separated from their financial influence - because when it comes down to it, the only card they have to play is money. It's the only power they have.
[ link to this | view in chronology ]
Re: Re:
I find this somewhat offensive and narrow-minded. There are an unfathomable number of reasons to start a business, and claiming that profit is the sole impetus for every person who ever started a business is just disingenuous.
You may or may not find this surprising, but there is no physical entity that is called a Corporation. A "Corporation" is just a pattern of organization that has legal recognition. They are comprised of people; good people, bad people, indifferent people, but always people.
As a co-founder of a (small) corporation, it always annoys me when people use the word "Corporations" in the singular, as though we're all just part of the same amalgamation, the same "enemy". It's either naive or manipulative, and I'm not sure which is worse.
Knowing firsthand the sheer amount of toil, hardship, and uncertainty that goes with starting your own business, I can certainly tell you that anyone who does so for the sole purpose of making money is either a fool or a masochist. The money is the means, not the end.
Of course, none of this is to say that there aren't those people out there running corporations who are after a quick buck, and don't mind using unscrupulous means to achieve that, but again, they are people; individual entities who are doing wrong, not the entirety of everyone who starts a business. People like that are fortunately in the minority (though of course the majority reported, for obvious reasons).
If you want to rail against individuals who act in the manner you describe, hell, lemme grab my pitchfork. But next time don't paint all "corporations" under that same brush because you think they're all alike.
[ link to this | view in chronology ]
Re: Re: Re:
Sure these larger corporations are also run by people and I assume a good bunch of them must feel disgusted about the situation. But they need the money. And if they quit over all the rotten corruption there will always be a piece of shit that will actually be okay with it or someone in need that will close their eyes to the wrongdoing. Ultimately the ones running the corporations are the ones I think of when I lash out at the big players.
[ link to this | view in chronology ]
Re:
At a certain point, the easiest way to "make more money" for a corporation is through advocacy (lobbyism) of laws that would benefit them instead of just the industry lobby many smaller corporations are part of. The other way is increasing their grip on a products rights to increase scarcity and thereby increasing profit margin (See the history of the CD where they milked the decreasing cost of the physical items).
Since new markets such as the internet makes it impossible to control scarcity, to the same extend, it is inevitably a problem for them that it exists.
At the same time, they have an interest in keeping their products in poor countries out of free trade agreements, simply because they have far too low a profit margin there to pollute the rest of the world with disgustingly cheap CDs.
In total they are forced by their way of doing business to fight tooth and nail for limitations to inventions to avoid a further segregation in their marketplace and therefore reduction of their scarcity control.
The industry is not in itself regressive, it is just the prevalent scarcity control with its increase in profit margins as a business model that is creating a very bad position.
[ link to this | view in chronology ]
Re: Copyrights
[ link to this | view in chronology ]
Re: Re: Copyrights
Entertainment: that's worth protecting, food isn't important anymore.
[ link to this | view in chronology ]
Re: Re: Copyrights
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Not "inefficiency" but desirability.
Making movies, or other items that can be duplicated at tiny fraction of production costs, software especially, has always been more profitable than making gadgets -- or at least has once "sunk (or fixed) costs" are recovered: pure gravy from there. I hope that by now that at least you recognize the phrase "sunk (or fixed) costs" as your own, because you wrote one or two pieces where you tried to 'splain the obvious, that when incremental costs are low, then one can put exclamation points after "Profit", and in the referenced piece I pointed out to you that doesn't apply for gadgets:
http://www.techdirt.com/articles/20110621/16071614792/misconceptions-free-abound-why-do-brains-sto p-zero.shtml
Anyhoo, despite downturn overall, bailouts given to big banks, madcap defense and security spending, trillions of dollars printed up and inflating the stock market but doing little lasting, entertainment remains more popular than ever. But it's nearly always been more lucrative than gadgetry, so this is like suddenly noticing that Starbucks is selling a nickel's worth of coffee for three bucks.
[ link to this | view in chronology ]
Re: Not "inefficiency" but desirability.
[ link to this | view in chronology ]
Re: Not "inefficiency" but desirability.
Maybe I missed it, but I've never seen Mike claim that. And I've been here for a while.
you sure know nothing about how business actually works.
Yea, someone with a Masters of Business Administration (a "claim" made by none other than Cornell University itself!) and has been running his own successful businesses (plural!) for years probably doesn't know how business actually works.
Do tell, what kind of degree(s) do you have? And what business(es) have you started and successfully led?
Do you have any idea how stupid you make yourself sound?
[ link to this | view in chronology ]
Re: Re: Not "inefficiency" but desirability.
Mike Masnick is such a college boy!
- out_of_the_blue, "Rant against College Boys", 2012
[ link to this | view in chronology ]
Re: Re: Re: Not "inefficiency" but desirability.
[ link to this | view in chronology ]
"Hollywood accounting" is still alive and well.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
I thought you are always saying these industries are failing
Are they failing or are they doing well ?
If they are doing well, it simply means copyright laws are keeping up with the industry and technology !
You cant blame how well or how badly an industry is doing by blaming the rules. Fact is under the present rules, industries can do well or do badly.
It's not about the rules, it's about the players.
Because an industry does well in the market is NOT an indication of inefficiency. What a ridicules statement, even from you Masnick.
So you leave us wondering if you believe the 'copyright' industries are doing well or doing badly?
You appear to be confused.
Or that you simply do not actually have your own opinion, you just take opinion from others, cut / paste / comment.
Journalists do not report solely on other journalists, sometimes they actually do their own journalism.. they are not that lazy to simply steal comment and opinion from someone else.. then comment on that opinion.
Do you have an opinion Masnick ??
[ link to this | view in chronology ]
Re: I thought you are always saying these industries are failing
[ link to this | view in chronology ]
Re: Re: I thought you are always saying these industries are failing
[ link to this | view in chronology ]
Re: Re: Re: I thought you are always saying these industries are failing
[ link to this | view in chronology ]
Lemme esplain... no, there is too much, lemme sum up
The IP industry people on the other hand are constantly going on and on about how doomed they are, how they are on their last legs and won't survive another year without massive bailouts, new laws, and other things to support them(the fact that they have been saying this for decades, and are not only still around, but making excellent profits apparently is something they prefer to ignore).
This latest reports says that despite being 'on their last legs', they are actually doing far better than just about every other industry around, so all the calls for 'new laws to protect our businesses' is nothing but greed, an attempt to get even more than they already have.
[ link to this | view in chronology ]
Re: Lemme esplain... no, there is too much, lemme sum up
This!
[ link to this | view in chronology ]
Re: I thought you are always saying these industries are failing
Mike position has always been that the content industries have been doing well despite all thier screaming about how piracy has devestated them.
Now, Mike has argued that the industry needs to adapt instead of fretting over realities they cannot change but that's not the same statement as "the industry is in a death spiral"
[ link to this | view in chronology ]
inforjustice
What they don't seem to want to point out is that profitability has as much to do with producing an in demand product as it does with anything else.
I wonder what the profitablity is of Amanda Fucking Palmer. If she's making more than 3%, she better watch out and risk being damned!
[ link to this | view in chronology ]
Re: inforjustice
[ link to this | view in chronology ]
Capitalists don't like capitalism
[ link to this | view in chronology ]
Re: Capitalists don't like capitalism
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Incentives
[ link to this | view in chronology ]
As for "monopolies", just how many of these "greedy" companies earning "excessive" profits vend products that are absolutely essential to sustain life?
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
It would certainly cut down on the millions of false takedown notices.
[ link to this | view in chronology ]
Authors of the study
[ link to this | view in chronology ]
It's all hindsigth
Could it be, that most startups in IP-intensive industries get sued out of the statistics, so only the profitable firms stay?
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
[ link to this | view in chronology ]