Tag Archives: economics

Charitable Waste

I have always received a good laugh at people who will buy a product they otherwise would not so they can support some cause. After all, if you were really into the cause and really had the money to go and spend on something you would not otherwise buy, why not just donate it a relevant charity? Doing so would maximize the amount of money going to the victims, as opposed to having a large chunk of the amount deducted by a company.

One yearly example of this is Dining Out For Life, which is a single night where restaurants donate a at least 25 percent of your bill to local counter-HIV/AIDS efforts. As a side note, one of my best friends loves this program, and while I disagree with her intensely, she’s still awesome. Don’t be upset, SF!

Another example of providing companies with some unearned generosity and not doing much to help those needing it is (RED), the annoyingly trendy use of red-colored products to raise money for counter-HIV/AIDS efforts in Africa. You may remember Oprah teaming up with corporate standouts like Gap to push this program. Instead of individuals doing some real help and donating money to these efforts, they instead pay for a red t-shirt that is some sort of (red) badge of (false) good will. “Hey guys, I’m so hip cuz I wear this stupid red t-shirt and am not smart to actually donate directly!” Yeah.

Well, now the numbers are in for the sucker hipsters: Of the $100 million received from consumers (not philanthropists!), 82 percent is spent on advertising. Way to go! What an impact.

So instead of being silly and wearing a shirt that says you care, just donate. If you want something to show for it, look at your tax deduction.

We’re Still Asking The Wrong Questions (re Music Industry)

Note: I accidentally posted this before I finished, which is why you might have seen it before.

It surprises me at how chronically we ask the wrong questions regarding the music/movie industry’s failure to adapt, a failure that has marred its business efforts since its inception (for more on this, check out the excellent Setting the Record Straight by Colin Symes).

Usually, the problem is with the music/movie industry, which asks the wrong questions about consumer behavior and how it should respond to new distribution methods, etc. The latest wrong question, however, has been asked by /. editors when they titled a semi-recent post about cheaper DVD prices “Is Piracy In the Consumers’ Best Interests?.”

What is in the consumers’ best interest is for the industry to provide individuals with what they want. That is, industries are convenient because they (should) provide an easy delivery mechanism for desired goods, as well as a certain degree of quality control (e.g., you know the files/discs will work; that when the album says R. Kelley, it is the R. Kelley you, not me, knows and loves).

It is not in the consumers best interest for a black market (i.e., piracy) to exist, especially when both the government and industries are doing their best to expand what that black market encompasses through new/expanded intellectual property/copyright regimes (with the intentional side effect of criminalizing as many people as possible).

With black markets/piracy decidedly not in the consumers best interest, it makes more sense to ask whether piracy benefits the music/movie industry. The answer is, it does, and not in the conventional sense.

The conventional sense is that filesharing leads to increased sales. This is a standard argument with a great deal of controversy surrounding it.

An alternative argument is that piracy serves as an inexpensive test to identify consumer preferences and new business models. The music/movie industry has piggybacked on the labor of programmers and been able to observe how people download and interact for music. As a result, they have had an early and cheap beta phase for their numerous online/downloadable-music stores, such as iTunes and Napster.

It required zero market research on the industry’s part, zero cost in developing software, etc. Had they adopted the method earlier, rather than waiting, waiting, and then sueing everyone in sight, they would have also been spared legal costs and also the majority of the costs they claim come from piracy.

Piracy, therefore, serves as an enormous gift to the industry in that it has refined a new/adjusted business model, and yet the industry fails to accept the gift.

If you are not satisfied with that question, try asking whether Piracy Funds Terrorism.