[opendtv] Re: Is 'Fair Use' in Peril?

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Thu, 2 Dec 2004 08:58:45 -0500

At 2:23 PM -0800 12/1/04, johnwillkie@xxxxxxxxxx wrote:
>So, if you don't buy advertised products, TV is free?  TV is certainly
>free for me, other than the time and hardware.

I guess that you do not eat anything, drive a car, or buy any kind of 
consumer products like clothing or deodorant.

>Actually, as is so often the case, you've gotten it backwards.  If there
>was no TV advertising (very few products are actually advertised on TV,
>and most of them have very high price tags) people interested in promoting
>those tv-advertised products would use less efficient means for
>advertising, resulting in higher ad costs per sale, hence higher costs per
>sale, hence higher sales prices.  Did someone sleep through an economics
>class?  Ever hear of opportunity costs?

The prevailing economic theory is wrong, or at least incomplete.

Yes, there are benefits to mass production that are driven by 
stimulating consumer demand. Clearly many of the most popular brands 
in the world today were built, at least in part, via TV advertising.

Where the theory falls apart, is AFTER the product/brand is 
established in the marketplace. At this point many companies believe 
that they must keep advertising to maintain the current demand 
levels. I guess you have never had a Coke or Pepsi either. Both of 
these brands carry a significant price premium BECAUSE of the high 
levels of advertising spending.

And then there are all of those products that are obnoxiously 
expensive, because their price is inflated to cover the cost of 
endorsements and promotion that keep the sale price to consumers 
high. Why can Nike charge >$100 for a pair of shoes made in China 
that cost a few bucks, while converse is still selling affordable 
"Tennis Shoes?"

And now we see the Pharmecutical industry spending billions to drive 
up demand for drugs that are already VERY cheap to produce. Every 
once in awhile a company figures out that they can make more money 
selling a drug over-the-counter, rather than via prescription; then 
they spend millions more creating demand for the over-the-counter 
brand. Clearly this is a marketing/distribution strategy, not a 
benefit from TV advertising.

Sorry John, but you are a little behind the curve on this subject.


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