The simple thing why copyright industry pushes ACTA, SOPA and similar laws is obvious: they have problems with their business. And the problem is simple: they can’t earn enough. They blame piracy for their problems, but actually,  piracy isn’t a problem for them. Piracy is only a symptom. The real problem is dramatically decreased costs of reproduction.

It is a big paradox: when your costs decrease dramatically, you can’t do your business in the same way you did before. When you need to change your business process, that will cost you money. But you can’t get money because of decreased costs. At first look this seems illogical, because decreased costs seem to increase your profit, but that’s not the case. The paradox is that when your costs decrease, your profits decrease too. So, get a look at the roots of this problem.

Pirate cat

The problem is, that every stinky cat is able to compete with copyright industry now. He can produce and distribute songs of "meow meow" for costs of rotten herring. So, britneys and biebers are going to fail. That's the problem of copyright industry.

Let’s say that costs of production and distribution is 10 bucks per CD. You then add 20% margin (2 bucks) and sell CD for 12 bucks. So your profit is 2 bucks per CD. You can’t change that margin freely: for example, when you try to increase your profit for 10 times, you get lots of competitors and they bring you down. And authors will flee away to those competitors who pay more. When you try to get less profit, you suffer from shortage of funds. Your profit isn’t directly related to your needs, but obviously related to prime costs.

Let’s say now, that you have produced 10,000 CDs and sold them. Your costs were 100,000 bucks, but you had covered them and got 20,000 bucks profit. This seems well to me. But now, try to calculate similar business in the internets. Let say, you sell 10,000 online albums. Your costs will be around 100 bucks for the distribution of the same amount of albums. And what happens when you try to increase your margin? Yes, there are lots of competitors who bring you down. So, your profit will be 20 bucks instead of 20 thousand.

And remember that not only distribution and production costs reduced drastically. With computers, recording costs dropped too: everybody can have his very own studio at home. Entry barriers for new authors are crashing down, that means increased competition too. Despite that, copyright industry try to increase their margins while reducing costs, but that is temporary process. For example, profits of Apple Music store skyrocketed several years ago, but competitors are already on the way.

That’s the point why all those lobbyists of antipiracy laws are flooding governments with their shit. That’s the reason why they put so much of their efforts. That’s the reason why they want censorship. And that’s the reason why they want to close the  internet. You get 1000 times less profit when you do business in the internet. This is because the production and distribution costs are lower up to 1000 times.

The problem of copyright industry isn’t piracy. The problem is decreased production costs, competition and industry’s inability to change. They’re simply losers who fail. They’re losing market because of changing World.

 

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I’d like to thank Mister Galva Žmogų Puošia from Lithuanian blog Commonsense.lt for correcting my terrible mistakes I made here. By the way, he is lobbyist of Lithuanian bloggers and him and Skirmantas Tumelis are pushing law against ACTA. I hope they will win.