[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.
Regards
Craig
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