Quote:
| Although way off the mark, look at Star Trek. No music rights, and selling for $100 a season. I'd love to see the net profit margin they made off of those! |
I'd like to introduce two phrases that are apparently wholly unfamiliar to some of those in this thread:
"Supply and demand"
"What the market will bear"
Some of you may want to look them up. Prices are
data, a form of communication between buyer and seller. The only rational definition of the monetary value of any item is: "What someone else is willing to pay for it." If
Trek fans weren't willing to pay $100 for those sets, Paramount would either have to cut the price or stop producing them. If people were willing to pay $200 for them, Paramount would be stupid to charge a dime less. Their costs have nothing to do with this
except to the degree that if their costs were so high that they'd have to charge more than people would spend in order to break even, they (rationally) wouldn't produce the sets at all. That is exactly the decision that Fox has taken with regard to
WKRP. Once they added in what the music rights holders wanted to all the other costs of producing and marketing the discs, they calculated what they'd have to charge per set to at least break even and concluded that it would be more than the public would collectively be wiling to pay. It isn't like the studios don't do polling and market research on this stuff.
Fox's numbers tell them that fans will buy "x" copies of the discs at price points "a", "b" and "c". If "c" is the highest price and the smallest number of sales, and the music rights would drive the cost up to the point where Fox would have to charge "c" or higher to make a profit, Fox isn't going to release the show.
These are just economic realities. They are morally neutral. It is absurd to talk about "evil" studios or "greedy" rights holders or to impute bad faith to either party. Everybody tries to get the best deal for him or herself, the numbers either work or do not. To bring some kinder higher ethics or morality into the discussion is to appeal to the kind of "cosmic justice" that is not the purview of law or government or business.
I think a case can be made that the studios bear all the cost and produce the product, so their economic parameters are more limited. The rights holders are being offered money for the use of something that already exists and they need only accept or reject the offer. I would suggest to the rights-holders that 10% of something is better than 100% of nothing, but people are not always rational in these matters. One thing everyone thinks of in negotiating today's deals is what effect they may have on
tomorrow's. If I own a song and license if for a relatively low fee for a DVD set, does that hurt my ability to charge more for someone to use it next year in a feature film? Sure it "shouldn't" do so in the "cosmic justice" sense, and in fact the film producer's shouldn't even know how much the DVD producer paid for the song. But in the real world the movie producer is going to find out, because the industry is a hot-bed of gossip, and people are going to use such knoweldge to try to maximize their advantage.
If you want more information about how markets actually work, based on empirical observation of reality instead of airy theories about how things
should work, go to the nearest public or university library and see if you can find a copy of
Basic Economics by Thomas Sowell.
Regards,
Joe