RITZ
First Time Poster
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Posts: 1
Joined: 02 Sep 2005
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| Economics Question |
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I am a programmer and at a programming forum that I frequent we often have debates completely unrelated to programming, in this situation morality and ethics in hacking/cracking/piracy. The thread is 8 pages long presently so I will sum it up so you don't have to read, never the less it is located here. The debate after digressing enough somehow turned into a question of economics and one of the people that I am arguing with claiming that the recording industries are not dropping the price of CDs where they used to be up to $20 and now are $10 because of p2p networks (napster, kazaa, morpheus, bittorrent, etc...) but rather because of a manufacturing optimization where the price of printing the CD costs a few cents cheaper.
Here is his explanation for this rediculous claim:
quote:
Originally posted by Wizard
http://www.cb-cda.gc.ca/news/c20032004fs-e.html
21 cents per cd, passed onto everyone regardless of whether they download music or not, simply because some people do. That's about half, if not 2 thirds the cost of CDs that I buy.
Back to the cost of albums; when they first came out, the printing cost was nearly $1 per CD. Now it's pennies, if not less than a penny. Albums have come down from about $20 to mayb $10, although some still cost upwards of $20. So to translate, costs down 1/100th, consumer costs down 1/2, profit margin up 50x.
My responce:
quote:
Originally posted by me
Are you insane, Wizard? I've never seen someone twists words around with such a complete lack of sense. You think the price of the plastic CD is the only factor in manufacturing? Not to mention the resale markup and shipping and handling. The price of a record wouldn't drop 50% if the CDs were free. It would drop less than the price of the CD.
Even if what you are saying wasn't completely fictitious, you would only be proving that the record companies are charging more money than they should and refuting your very own argument.
His responce:
quote:
Originally posted by Wizard
Let's see... I learned that from Larry Smith, my first year economics prof, with more platinum cards than I even knew existed, who has started and sold more companies than most people will work at, who plays the stocks like a professional gambler plays poker, for whom the university bends over backwards to please because he's one of the best profs they have.
You refute it based on personal experience, the experience of a 16 year old with no credentials. I'm sorry if I'm a little biased.
And I don't see what's so hard to believe here? You say if the price to manufacture drops, the end cost drops the same? I don't see why that should be. If you cut costs, and lower retail significantly, to boost number of sales, then you get higher ultimate profit. In the same scenario I gave above, suppose costs were cut to 10% as I mentiond, but the price didn't drop, and you still only sold 10 units. Only if your profit margin was greater than 50% (which is rarely the case) would you make more than dropping the price and selling 20. Not including overhead for 30 unsold, but you take the risk assuming you will sell more than 30. It's a massive game that the aforementioned Larry Smith was quite fond of.
And at what point in time did I ever argue anything about whether the record companies were charging more or less than they should? This is capitalism, they can charge anything they want. If they gouge prices, and people still pay, that's the way it goes. If they slash prices to boost sales, that's all part of the game.
I told him over an instant messenger in an honest attempt to save him embarrassment that he screwed up on his elementary school math. He then later on complains that I didn't give him any explanation as to why his statements are wrong while repeatedly trying to claim that I just don't understand it, so I respond with this:
quote:
Originally posted by me
quote:
Originally posted by Wizard
You promised to explain where I was wrong. You haven't done that yet.
I never promised anything, infact I said I wouldn't decypher your bullshit because it is too obvious, even more obvious than mubafo's case. You blatantly ignore everything that goes into manufacturing a CD other than cost of burning the CD itself, and your example's percentages are warped in relativity to the actual situation all in a pathetic attempt to create an aura of bullshit and make it sound like a refutation to what was a completely minuscule argument in the first place. Then you try and leach onto your teacher's reputation as if it somehow makes your senseless arguments more credible because someone with a wallet of platinum cards taught you something similar in Economics 101. No Wizard, I am not going to condescend for you like I regrettably did for mubafo.
Still accusing me of not understanding, I registered here in hopes that he will shut the hell up if some financial experts explain exactly how much of a moron he is. So, if you have a minute to throw your two bits into our childish argument I would greatly appreciate it.
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