Tech Mediums

So I’m going through the news and come across this article on Yahoo! News.
Basically, Chan has a Segway dealership in Hong Kong, his home town.

He wants to assemble the units in China to lower his costs, but China is NOTORIOUS for piracy. Nonetheless, according to Chan, Segway really isn’t a money maker for him. Since opening in 2006, gross sales are in the “millions of dollars”.

Reactions:

1. You really have to price in the lost revenues from piracy to think about using China for manufacturing/assembly for cost savings.  On a per unit basis, it makes sense, but lost revenues is a cost as well.
2. Chan & Segways? – who knew???  Reminds me of athletes wanting to do either a clothing line or restaurant (one financial advisor to the stars told me he tells his clients who want to go into this area to just throw away their money - horrible businesses).
3. Popular – while I see them around town (presumably, they do much better in the city than anywhere else), I never knew they were popular enough for anyone (certainly one as high profile as Chan) to have an actual dealership.  I didn’t think the demand was particularly strong and the margins were that good (low margins don’t scare me since you can make up for it with high volume).  But looking at their website, it looks like they have many more customers than I thought.
4. Sounds like Chan is gearing up for the Olympics, which makes sense, since the only people I know using these things are government workers (apparently one of Segway’s primary target customers).
5. I wonder if there are other business applications for Segways, besides toys (like Wowwee), outside of governmental uses…so the technology is about stabilization, right?  So anything where that would be necessary: cars, motorcycles, boats (might be good for people who get motion sickness), food carts on a plan J…

Before we get into piracy, a word from McLovin (of SuperBad) on the topic.

Matt Mason, in his book “Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism” discusses a fascinating look into what is very possible a mega trend…piracy in other forms – not just music but everything, how technology is making piracy easier and how, on some level, it should be embraced.

As far as the first two points, sure, there have been bootleg BMWs, watches, software, but Matt’s talking about a world where it’s becoming much easier.

An example, is the 3D printer, which has been talked about for a while (heard about this at about the same time I heard that someone built a PC accessory that could replicate smells over the internet).

As far as it being embraced, I remember an old professor of mine, Pete Fader, a marketing professor at Wharton who’s known for his patented rants, arguing that file sharing was actually good for copyright holders (primarily record labels and their artists). It created buzz. Matt also talks about this in that the demographic who would get pirated material is not the demographic who would actually buy the material. Fader argued that the labels were wrong when saying that they lost $X amount in revenues due to pirated materials. “That’s ridiculous!” Fader said. Just because you can’t get something for free, doesn’t mean you’ll buy it otherwise.

While thinking that copyright laws should be updated, Matt likes the idea of piracy (mentioning that he can’t wait for his book to be pirated).

I actually agree, in concept. I like the idea that new business models need to emerge. That’s why I like open markets. It forces companies, and thus, products, to evolve.

But if I spend a lot of money to make intellectual property, I deserve the right to protect it, regardless of borders.

That notwithstanding, I also think some forms of IP can be seen as marketing materials for a greater thing. Classic example is music. Because of the amount of music put out yearly and the lack of distinguishing characteristics of some tracks to others, music seems more like a commodity. As such, it could be effectively used to market the artist. Artists can let viral marketing take over, bootlegged or not. In fact, in this scenario, you want people to pirate it because it costs you nothing…free marketing to create demand.

The model that I favor is a controlled “open” IP.

Software companies have been doing things like this for a LONG time. Adobe let people get Reader (reads pdf documents) for free to help create demand for Acrobat (to make pdf), for which it charges.

This model might be able to be used consistently for all IP and is a direct link to revenue– that’s why I like it.

Here’s Matt’s video. Enjoy!

Thanks to ProHipHop.com for the video.