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%.

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.
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 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?


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    Jay (profile), Jul 16th, 2013 @ 6:06pm

    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?

    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.

     

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    Dave, Jul 16th, 2013 @ 8:23pm

    Why do they still want even stricter copyright laws? It's very simple—greed. I came up with saying to explain the whole thing: "No matter how much money big corporations have, they're always wanting more." There's just no such thing to them as "enough".

     

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      Anonymous Coward, Jul 16th, 2013 @ 8:29pm

      Re:

      Not greed but selfishness.

       

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      jupiterkansas (profile), Jul 16th, 2013 @ 8:38pm

      Re:

      The only reason a corporation exists is to find ways to make more money. Even when they're extremely successful at finding ways to make more money, it can never slake the need to make more money. Give them everything they ask for, and they will still want more, at the expense of anything and everything else. Because the only measure of a successful company is how much money it makes. It's not how many lives they save, how many good deeds they do, how much art or education they fund, how many hungry mouths they feed - those charitable deeds are only ploys to engage the public's trust and help them make more money.

      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.

       

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        Kal Zekdor (profile), Jul 17th, 2013 @ 3:55am

        Re: Re:

        The only reason a corporation exists is to find ways to make more money. Even when they're extremely successful at finding ways to make more money, it can never slake the need to make more money. Give them everything they ask for, and they will still want more, at the expense of anything and everything else. Because the only measure of a successful company is how much money it makes. It's not how many lives they save, how many good deeds they do, how much art or education they fund, how many hungry mouths they feed - those charitable deeds are only ploys to engage the public's trust and help them make more money.

        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.

        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.

         

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          Ninja (profile), Jul 17th, 2013 @ 6:12am

          Re: Re: Re:

          Agreed. But I think that much like Piracy has acquired a very narrow meaning over time when people lash onto the corporations and call them greedy they are not thinking about the small shop/restaurant/business in general. We all know how hard it is to start a business. I think the issue here is about the larger players that engage in quite nefarious activities to ensure their dominant position and the money (the greed part) including but not limited to suing or using other excusable methods to destroy the smaller ones that achieve any amount of success.

          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.

           

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      Anonymous Coward, Jul 17th, 2013 @ 1:41am

      Re:

      Greed is a word for it, but it is too crude and ovely broad since you can be greedy in so many ways.

      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.

       

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      Dbass, Jul 18th, 2013 @ 8:51am

      Re: Copyrights

      Copyright is not about greed whatsoever. Copyright is used to protect your ideas and hard work. The copyright laws in this country were put in place to establish an order and code that would help our nation avoid pitfalls we have seen in other countries. A strong patent and copyright system is needed for business to grow. Is business growth a bad thing? Copyright isn't about making more money or as much money as possible; it is about protecting what you already have from those who wish to share your content without your consent.

       

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        frank87 (profile), Jul 18th, 2013 @ 1:46pm

        Re: Re: Copyrights

        My business doesn't grow by copyrights or patents. My business has to pay for them because my business needs machines, drugs, software. But I'm only feeding people, so I don't need protection.
        Entertainment: that's worth protecting, food isn't important anymore.

         

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        Anonymous Coward, Jul 19th, 2013 @ 6:24am

        Re: Re: Copyrights

        Except it's not. The point is you *temporarly* get a mnopoly in order to get more works out to the public, after which point others are free to share it

         

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    Trelly (profile), Jul 16th, 2013 @ 8:35pm

    They will probably argue that because copyright is more profitable, ever stronger copyrights mean ever increasing profits and therefore are good "for everyone".

     

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    out_of_the_blue, Jul 16th, 2013 @ 9:23pm

    Not "inefficiency" but desirability.

    For someone who claims to have a degree in economics, you sure know nothing about how business actually works.

    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.

     

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      Anonymous Coward, Jul 16th, 2013 @ 9:36pm

      Re: Not "inefficiency" but desirability.

      Good job not actually refuting the point of why more protection is needed. But it's no surprise that you'd rather defend grifters making money off cheap replication.

       

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      ottermaton (profile), Jul 16th, 2013 @ 10:07pm

      Re: Not "inefficiency" but desirability.

      For someone who claims to have a degree in economics ...

      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?

       

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    Anonymous Coward, Jul 16th, 2013 @ 10:09pm

    I can already point out a major flaw in this study: it's looking at the officially-reported revenue and profit margins reported by these companies.

    "Hollywood accounting" is still alive and well.

     

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      Techannon, Jul 16th, 2013 @ 10:18pm

      Re:

      I don't see that as a problem. Since "Hollywood accounting" consists largely in obfuscating profits. Claiming that just means that the reported "above average profits" are even bigger than reported.

       

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    identicon
    Anonymous Coward, Jul 16th, 2013 @ 11:36pm

    I thought you are always saying these industries are failing

    So which is it ?

    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 ??

     

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      Anonymous Coward, Jul 17th, 2013 @ 12:19am

      Re: I thought you are always saying these industries are failing

      If you think that Masnick has been saying the industries are doing poorly, you have no idea what you're talking about. But then, you're darryl. You mix up your mouth with your anus would explain why you can't speak in any language other than shit.

       

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        Ninja (profile), Jul 17th, 2013 @ 3:48am

        Re: Re: I thought you are always saying these industries are failing

        He sniffed some poisonous mushrooms and came post some random bs again. It's actually entertaining. And "That One Guy" gave an awesome reply too.

         

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          Anonymous Coward, Jul 17th, 2013 @ 4:19am

          Re: Re: Re: I thought you are always saying these industries are failing

          It's a shame he didn't eat them. For that matter, overdose on them.

           

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      That One Guy (profile), Jul 17th, 2013 @ 12:28am

      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.

       

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      gnudist, Jul 17th, 2013 @ 3:31am

      Re: I thought you are always saying these industries are failing

      Wait a minute there.

      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"

       

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    horse with no name, Jul 17th, 2013 @ 12:10am

    inforjustice

    As infojustice is incredibly anti-copyright, it would seem that they have a vested interest in reading the numbers in on way.

    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!

     

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    Richard (profile), Jul 17th, 2013 @ 1:47am

    Capitalists don't like capitalism

    Actually the problem exists in all companies. At root the point is that capitalists don't actually like capitalism. All companies try to create monopolies for themselves. The ones who are able to use copyright to do this have an extra advantage and so are more successful.

     

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      gnudist, Jul 17th, 2013 @ 3:19am

      Re: Capitalists don't like capitalism

      It's more that capitalists hate the free market flavor of capitalism, but they love the taste of crony capitalism and merchantilism

       

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    Anonymous Coward, Jul 17th, 2013 @ 3:52am

    Just wanted to say is it not publicresource.org that is a squatter site. but public.resource.org

     

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    PlayNicely, Jul 17th, 2013 @ 3:57am

    Incentives

    If this accurately describes reality we have a problematic incentive structure on our hands: If imaginary-property-reliant industries are that much more profitable they will attract investor money, diverting it from manufacturing industries for example. Is it possible that this effect contributes to the decline of manufacturing in the US?

     

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    Anonymous Coward, Jul 17th, 2013 @ 5:34am

    In a word "Wow!" The attitude here seems to be that at a macro level these "copyright-reliant" companies are earning more than their fair share, so it is uncharitable of them to have the audacity to seek the enforcement of laws that have long been on the books.

    As for "monopolies", just how many of these "greedy" companies earning "excessive" profits vend products that are absolutely essential to sustain life?

     

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      Anonymous Coward, Jul 17th, 2013 @ 5:38am

      Re:

      Right, six strikes and the DMCA have long been on the books, and are irrefutable and unchallengeable. Do you know who didn't have copyright law? The Roman Empire. And you know what's the Roman Empire like right now? Dead, that's what! How else can Hollywood make money if they didn't sue people like Gertrude Walton, Ray Scantlebury and Tanya Andersen? Filthy pirates, all of them, and found guilty too!

       

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        Anonymous Coward, Jul 17th, 2013 @ 10:22am

        Re: Re:

        Can't tell if this is sarcasm or troll bait, because no one is so stupid to actually think like this.

         

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    Anonymous Coward, Jul 17th, 2013 @ 7:13am

    The likes of the MPAA/RIAA et al. are like Oliver "Please Sir I want some more" Twist with their copyright laws.

     

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      Anonymous Coward, Jul 17th, 2013 @ 10:36am

      Re:

      I bet they'd be happy if the laws that exist were actually enforced.

       

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        That One Guy (profile), Jul 17th, 2013 @ 12:00pm

        Re: Re:

        Hit by perjury charges a couple hundred/thousand times a day... no, they probably wouldn't be too happy if the laws that exist were enforced actually.

         

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          Anonymous Coward, Jul 17th, 2013 @ 4:54pm

          Re: Re: Re:

          yep, up to 2 years jail for every false takedown notice. I would like to see that law enforced too.

          It would certainly cut down on the millions of false takedown notices.

           

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    Konstantin, Jul 17th, 2013 @ 8:06am

    Authors of the study

    Do we know anything about the authors of the study?

     

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    frank87 (profile), Jul 17th, 2013 @ 12:37pm

    It's all hindsigth

    This study studied existing firms. So all firms that failed don't count in the statistics.

    Could it be, that most startups in IP-intensive industries get sued out of the statistics, so only the profitable firms stay?

     

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    Skye, Jul 17th, 2013 @ 4:33pm

    The numbers point to a need being met and an environment where it is necessary.

     

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    David Sanger (profile), Jul 18th, 2013 @ 9:49pm

    Yes some of those industries are profitable exactly because they have tended to abuse copyright, to wit the publishing companies which have regularly exceeded the terms of the licenses granted to them

     

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