08-17-2004, 03:32 AM
The difference on a second hand market on bottom line is different in that the seller actually got money in the first place on that single item. Sure they aren't getting a second sale from the second hand buyer, but that second hand buyer is generally not in their sales demographic anyway. A DVD, assuming that a copy wasn't made, can only be in one persons hand at a time. With file sharing, that one original that was bought can simultaneously be in the hands of everyone now. It's a non tangible item with no limits on distribution. A physical DVD isn't. If you buy that DVD second hand, no one else can. If there are only 10 second hand copies and 15 people want it and will buy a copy, you still get 5 new sales. If the second hand seller wants the unit again, they have to buy it back second hand or purchase a new one.
A second hand market is just that a different market. They have been around for as long as there have been product markets, they have well documented economic factors as well. They aren't a big deal. Sure some second hand markets are much larger than others and this new information and digital market has really blossomed with the durability of the media, but the car industry has a bigger second hand market than any other product, I believe. It doesn't really hurt the bottom line, or at least not in a way that can't be accounted for. The new product was sold and it sold as many units as expected for the manufacturer. Those units then circulate to other buyers with no impact because the total sold was what was planned.
The danger with games, music and movies that is different from cards is that the 2nd hand item you buy may have been copied and kept before being sold off. So now you have one unit in multiple hands and that is a similar issue to the file sharing. Well, it's the same thing but just via a different conduit. However, most of the 2nd hand market isn't of that nature. The product is sold because people didn't want it in the first place or they don't care about it anymore. In that case a second hand buyer is like the original buyer. The manufacturer got their sale, it just went through 2 hands to get to the actual buyer.
Overstock isn't really any different. Demand wasn't interpreted correctly, which is the real damage. In many cases, the associated loss is taken by the reseller, though not always. If Wal-Mart buys too many Weekend at Bernies DVD's to sell and then puts them on clearance, Wal-Mart, not whoever made that horrible movie, is the one who eats the loss since the production studio already got its money from Wal-Mart on the initial product purchase.
So, where are the obvious consequence on the movie/recording industry. It slows market growth for that product. That is really the only real impact. When you have a product that only has a 6 month life cycle, and most of your second hand markets are a year out, that stunted market growth is meaningless.
It's discussions like that this that really make me believe that 2 or 3 semesters of econ is good for everyone, because it means you don't have to have a lot of the discussion because it's already been explained. :) Admittedly you don't usually see the 2nd hand market analysis stuff until advanded or at a good school, intermediate, level studies, but eh.
A second hand market is just that a different market. They have been around for as long as there have been product markets, they have well documented economic factors as well. They aren't a big deal. Sure some second hand markets are much larger than others and this new information and digital market has really blossomed with the durability of the media, but the car industry has a bigger second hand market than any other product, I believe. It doesn't really hurt the bottom line, or at least not in a way that can't be accounted for. The new product was sold and it sold as many units as expected for the manufacturer. Those units then circulate to other buyers with no impact because the total sold was what was planned.
The danger with games, music and movies that is different from cards is that the 2nd hand item you buy may have been copied and kept before being sold off. So now you have one unit in multiple hands and that is a similar issue to the file sharing. Well, it's the same thing but just via a different conduit. However, most of the 2nd hand market isn't of that nature. The product is sold because people didn't want it in the first place or they don't care about it anymore. In that case a second hand buyer is like the original buyer. The manufacturer got their sale, it just went through 2 hands to get to the actual buyer.
Overstock isn't really any different. Demand wasn't interpreted correctly, which is the real damage. In many cases, the associated loss is taken by the reseller, though not always. If Wal-Mart buys too many Weekend at Bernies DVD's to sell and then puts them on clearance, Wal-Mart, not whoever made that horrible movie, is the one who eats the loss since the production studio already got its money from Wal-Mart on the initial product purchase.
So, where are the obvious consequence on the movie/recording industry. It slows market growth for that product. That is really the only real impact. When you have a product that only has a 6 month life cycle, and most of your second hand markets are a year out, that stunted market growth is meaningless.
It's discussions like that this that really make me believe that 2 or 3 semesters of econ is good for everyone, because it means you don't have to have a lot of the discussion because it's already been explained. :) Admittedly you don't usually see the 2nd hand market analysis stuff until advanded or at a good school, intermediate, level studies, but eh.
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It's all just zeroes and ones and duct tape in the end.
It's all just zeroes and ones and duct tape in the end.