Apr 09
20
The Customer As The Enemy – Its the way that some industries think.
I was listening to the “Big Ideas” ABC podcast today. It was an address given in Melbourne by Dr Raj Patel, who has written a book called “Stuffed and Starved”. It is about food.
Apparently Dr Patel has degrees from Oxford and the London School of Economics and Cornell. He has also worked for the WTO and the World Bank. Pretty good credentials, eh! And it definitely makes him a knowledgeable insider.
Dr Patel had some interesting things to say.
Companies you might not have heard of. Like Archer Daniels Midland. And Bungee and ConAgra. What’s interesting is that these companies have achieved a position of market dominance while we’re told that having more than one company is going to promote competition. There’s going to be some benefit to us as a result of having these companies fight between themselves to provide us with food.
So let me quote from Dwayne Andres, who was, when he said this, the chair of Archer Daniels Midland, one of the largest food corporations. He has this to say, “The competitor is our friend. And the customer is our enemy. There isn’t one grain of anything in the world that is sold in a free market. Not one. The only place that you see a free market is in the speeches of politicians. People who are not from the mid west of the United States do not realize that this is a socialist country.”
Dr Patel goes on to talk about, among other things, the idea that the problem for most of the world is the World Bank and the WTO.
He talks about how they are set up to very specifically shift the wealth of smaller nations to the US through a number of quite obvious tactics that are part of the Free Trade Agreements that the US gets people to sign off on through the promise of various things.
Kind of like the way that the original settlers in the US and other countries gave beads as the trade for the lands that they were arriving in.
It made me think of the way that the content industry works and particularly how it works with respect to P2P.
Since I was at one time an insider too – myself with regard to the content industry, I feel that I have some insights that remain valid even after having been away from the industry for a decade.
There is no doubt that the global content industry takes its marching orders from parent companies situated in the US. (Whether they are run by Americans or not is of no matter – the headquarters are by and large in the US).
No one in any of the corporations located in Australia makes any kind of major decision without being briefed on what needs to be said by Head Office.
Now lets assume that this is all generally agreed as being valid.
Now let’s think about what that means…
It means that Australia as a country is basically a milk cow that shifts royalties from sales of content here to the coffers of the corporations in the US. Oh yes, there are a bunch of quite successful Australian musical acts, the occasional hit movie from Australia, and a few books each year of international significance. Their numbers are relatively few, because our population is relatively small. And yes, we probably, do punch above our weight in terms of population and worthwhile artists and artisans.
But the net net is that a huge amount of royalty revenues that are generated go straight out of Australia. As we have blogged about in the past a good amount of it goes to countries where there are royalty free tax laws instead of to the US, ensuring that the shareholders in the enterprises don’t get burdened with any of the usurious taxes that the US and other governments may want to impose on creative works.
So that means that there is a double negative result.
The money goes out of Australia and doesn’t add anything to our net worth either creatively or financially. It doesn’t add anything to the US either. What it does is add to the shareholder returns of a very few media and content super powers.
These superpowers are the ones that are the most vigorous lobbyists against P2P.
They take the position that P2P damages the value of creative people and that the people who share files online are Pirates.
The people who share files online may or may not be doing something against the laws of the land. My view is that when the vast majority of people within a society do the same thing it is part of the culture, and if it is part of the culture it is very hard to argue that it is breaking the law.
P2P, regardless of what our government may choose to believe, is undertaken by a very substantial proportion of this nation.
As it happens, the net result of the activity has little bearing on Australian creative workers, although there is some, I have to admit, which I would like to see stop.
The result of P2P is to reduce the vast amount of money that goes out of this country to the people who are able to create legal tax minimisation structures. These people can afford it.
Now here is the rub. The fundamental problem is this:
The people who own the content – that is the big 5 or 6 media and content giants – want to get paid more money per copy that is delivered online than the market will bear. That is why P2P exists.
If they adjusted their requirements with regard to the retail price from dollars down to cents, they might be able to get paid for everything that people currently consume, because it would be fair (and God help me for using that word among capitalists). The reality is that while the content companies are asking dollars instead of cents, they will get bupkus. And rightly so.
I don't have to imagine too hard the people who I know who are at the top of some of the content companies saying things like the aforementioned chair of Archer Daniels Midland…