Protective Economic Policies May Be Killing The Entertainment Industry (Pt. II)

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Last time I was about to prove to you that over protective measures towards domestic markets can backfire – damaging many industries, such as entertainment’s.

In 2010, Argentina became just as overprotective. Let’s see.

Certain goods’ entry was downright banned, in order to enhance local industry – best known as import substitution. Some of that stuff could not be produced locally, at least at the current state of the country’s technology.

Protectionist measures would not just solve the problem, at least at this time and age. As Childish Gambino used to say, because the Internet.

Because people still wanted that stuff they saw on the Internet. Which stuff? Not necessities, of course. Certain brands of makeup, certain brands of clothing, certain sneaker models, certain books (it was not censorship, it had to do more with publishing companies), certain records (same, not censorship), iPhones and some luxury goods. It was all quite random, because it was not like all Nike products’ entry was denied – only certain items. Trust me, I will never get that.

If people still wanted those items, they would get them somehow. In a flourishing economy, some would travel overseas and buy the stuff. Others would bring a small stock and sell it locally. These are things that can be done only in times of prosperity.

Those that cannot afford to buy ‘the real thing’ have another resource: the manteros. The term comes from manta, a blanket they spread on sidewalks. On top of it they place illegal copies of films and records, which are sold for ridiculously low prices. Needless to say, no artist gets a dime out of these ‘operations’.

south america black market

A DVD black market in Ecuador.

But now the world is in crisis. China has the productive potential to fill every foreign market with products at ridiculously low prices (dumping prices). China should also be the greatest market by excellence, being the most populated country in the world. However, the Chinese produce for the world and not for themselves, and also consume mostly pirate goods. Not only do they consume illegally obtained music, but also produce and consume pirate versions of almost every product, from sneakers to breakfast cereal (?!). No matter how many millions of Chinese, country that pirates Tide might not be the greatest business opportunity for America…

Got some 'Tids'?

Got some ‘Tids’?

The Chinese may be one of the greatest – if not the greatest world economy today. But the actual Chinese makes less than a dollar a day. Same with India, the ‘I’ in the BRIC monster.

piracy economy

What could be the solution to this predicament? Lower the fees. Ergo, lower the prices. Still, protect your domestic market. But lower the fees and lower the prices. Why? Because what people cannot get – they will not refrain from its consumption. You can charge U$S 15 for a record (which is quite expensive for the Argentinian consumer)  because you are losing lots of money to piracy, but that will just create more piracy. Remember: capitalism=people want=people must have. The sad part is that this is not the artists’ strategy but the industry’s. Because of this stubborn policy of charging more than the actual product is worth, because of this greed, the industry as we know it is facing extinction. Because of the ridiculous fees some countries charge imports (and far from empowering local industry), end up destroying foreign’s.

If you try to introduce a product in a very protective market, in which its consumers have a moderate income, do not sell it for a luxury price – once domestic fees added, the product will go from ‘luxury’ to ‘exclusive’ to ‘impossible’.

The entertainment industry is producing too much obsolete-format-high-priced goods. Books, CDs, DVDs, BlueRays. Is this the smartest strategy? The sales figures say NO. So does my pocket.

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