Siva points to this LATimes article, Rampant Piracy Threatens to Silence Latin Music Industry, citing Mexico’s bootleg CD/DVD business as destroying the opportunities for existing (not to mention new) Latic music acts. Such an outcome, apparently mirroring what’s already happened in smaller Latin American markets, is certainly a tragedy.
But, there is another interpretation of the statistics presented — if the barriers to entry are so low, and the margins for bootleggers are so high, who’s really responsible for this cataclysm? When a record company offers CDs at prices equal to a week’s wage, and pirates can make a profit selling knockoffs that are indistinguishable from the legal copies, we’re facing something more complex than simple piracy. It may be that digital copies have a zero marginal cost of production, but this is competition in CD/DVD sales! And the article suggests that organized crime only controls production and distribution in “some” locations. So, where do the bootlegger’s margins come from?
If the difference is the cost of promotion (rather than a criminally high copyright licensing fees), then effective promotion via P2P might actually benefit this market.
Mexican consumers say record companies could learn a thing or two from pirates, who provide entertainment that’s fast, cheap, reliable and customized. Bootleggers have been known to provide special orders and speedy delivery to rival anything from the studios.
[…] Mexico’s piracy is a gigantic commercial enterprise involving everyone from importers of blank discs and the plastic jewel cases to hold them, to factory workers in clandestine factories and an army of street vendors. This vast underground assembly line last year delivered more than 85 million illegal CDs to eager buyers, according to Amprofon.
The cost of entry is low, just a few hundred dollars for a CD burner and some blanks. And profit margins are fat. Bootleg discs are so cheap to produce that CDs selling on the street for as little as 6 pesos, or about 50 cents, can still fetch a 100% markup.
[…] “I can buy five fakes for the price of one original,” Sanchez said. “It just doesn’t make sense to pay more.”
Some industry veterans agree. Former music industry executive Sarquiz said the labels had been slow to tailor products suited to the tastes and pocketbooks of consumers in the developing world. He said bootleggers had filled that void, doing special orders, compiling greatest-hits collections and more.
“They deliver incredibly good service,” Sarquiz said.
In fact, bootlegging is so ingrained in the culture that many have simply resigned themselves to the fact. El Tri’s Lora lent his name to the industry’s anti-piracy campaign. But he admits that his band does nothing to stop sales of illegal music — even outside its own concerts. He said the group’s one attempt to negotiate sidewalk space for legal vendors ended after bootleggers picketed the gig, accusing El Tri’s members of being corporate sell-outs.
Lora said the band’s main source of income has always come from performing about 250 live shows a year, something that even Mexico’s powerful pirates can’t take away.