I wanted to start this thread because I think it is important for all business people here to think and be aware of this. This may be a long post. We all know that technology is changing. I personally see a world where in the near future the power of large transnational corporations may be diminished and small businesses will gain a foothold. The internet has greatly accellerated this. Now us webmasters are able to start online businesses for very little money where in the offline world it could take tens of thousands of dollars to get an operation off the ground. Filesharing technology is a technology that is taking the world by storm. large institutions like the RIAA and MPAA and software companies are crying because their profits have shrunk do to the ability of people to download free movies, music, software, and games online. While large corporations like Microsoft and Music companies fight a difficult battle and lose money, for us little business people their loss is our gain. How you ask? Well that is what I wanted to discuss. The p2p revolution is one of the greatest technological leaps ever seen in history. Whether or not you believe taking music, movies, and other things for free is right or wrong, you must admit that it is a revolution. The reason why us small business people can win while big corporations lose is because of the nature of the internet and filesharing technology. Filesharing technology is basically a bunch of networks where people share free things. It may be centralized like Kazaa on specific servers or may be decentralized like Bit Torrent. The point is a lot of free information flows through filesharing networks. A lot of people search these networks. Even though they get everything for free their is a huge potential for small webmaster/businesses to advertise and market their services. I believe that despite the fact pirates distribute files via networks a online company can actually advertise their services in these networks and make a profit! How? The reason Microsoft and the movie industry are losing big money is because they make big money. Think about the laws of thermodynamics, if you will. It is impossible to generate energy without losing some of that energy. Well the same goes for large corporations on the internet. Microsoft has made billions of dollars and has become a household name. So it should be logical then that pirates/hackers would have a reason to want to crack their software and use it for free, given the large amount Microsoft charges for windows. But the point I'm trying to make is this. For all the dollars Microsoft has lost due to Piracy they have already make more in the overall revenue history of their company. Many people still legally buy Windows OS. Microsoft should except the fact they will have some losses. In other words, on the internet the amount of money you lose due to piracy is proportional to how popular your service/company is and how much revenue you already generate. I will come in later and actually develop my own mathematical theory in detail for this. It may already exist. The difference between Microsoft and the small business person is this. You can intentionally upload free information related to your website to filesharing networks in order to make people aware your services exist. For example, lets say you are a musician. You produce music and you've tried unsuccessfully many times to get a record deal with the record companies. With the power of the internet/computers, you could get a webcam or digital camcorder, and record yourself playing your music. Or if you are really smart, you could by editing software(or pirate it) and use it to edit and produce your own music video. Then you could built a website about you and your music. You could use seo and all the marketing strategies discussed here a digital point to market your site. You could offer free mp3s on your site. You could have videos. Once you've built a successful site and increased its pr you could begin taking your music and videos, and uploading them to every filesharing network online. On your videos you could have your site's url at the bottom or on your mp3s you could read your site's url after every song. Do you get where I'm going with this? After a while you will become well known on the file sharing networks. You already give away some of your music, so why would anyone want to steal it? Lets say one day you come out with a new album and you decide to sell it for 4 bucks. Once your popularity in the filesharing networks has grown, people will pay the 4 bucks. Why? They will love your music. You've already given them free songs before, and if they like your music, they will buy it. Goodbye Record companies. With the power of the internet you can become a famous musician. And you don't need a middleman. The same goes for writers, artists, software developers, video game makers, and any other small business online even independent filmmakers.. In other words, Goodbye big corporations. Your days are numbered. Say hello to the rise of the internet and small businesses. Anyone who has any thoughts on my longest post yet, feel free to post.
Okay I have finally developed my own mathematical formula to describe how much money a company loses to filesharing piracy based on its revenue and number of years in operation. We can assume that the longer a company has been in operation, the more popular it will have become and the more it will generate. Thus it will lose a lot. I used the basic proportional formula here: L = Y/R L represents losses due to piracy from filsharing on the internet. Y represents number of years company begin selling software, and thus length of time software could be pirated. R represents average revenue company generates per year. Now lets say a company went public in the year 2000 and begin selling software. Lets say that company makes an average of 2 million dollars per year. The company is 5 years old. According to my formula above then: L = 2000000/5 L = 400,000(400 thousand dollars) According to my formula above in the age of filesharing, a company that is 5 years old that generates an average of 2 million dollars a year in worldwide sales that is fairly well known should expect to lose approximately four hundred thousand dollars due to piracy. The interesting thing about my little formula above, which I will name the Tesla proportional revenue/loss formula, the longer a company stays in existence, and the more money they make, the more they will lose. But according to my formula above, a company can never lose more money than it gains. A company can invest in other areas to recoup losses.
I don't want to be mean, but there is a lot missing here. What is the specific data that you used to come up with this? Terms like "big money" don't mean anything, especially in financial reporting. How much are they profiting and/or losing? I ask because a formula dervived without concrete specificity is meaningless. Why would you dare make such an assumption, especially when real life data counters such an assumption? So Microsoft is banned from doing this? Where is the source for this claim? How specifically are big businesses losing? How specifically are small business people winning? What consititues winning? What do you define as a big business? Anyway, it is late. I just wanted to try and give you some comments to help you learn how to prepare a better argument, statment and/or report. There is a lot more here that I could point out, but this should give you a start.
Someone has finally challenged my post! First I will comment on your question about Microsoft being banned from using file sharing networks. 1. Microsoft isn't banned from filesharing networks anymore than you and I. But the crucial difference is Microsoft is a household name and because they are such a large company it actually hurts them to use filesharing networks. Because Microsoft has made billions of dollars and are a household name pirates have a reason to rip them off because they are an easy target. But if you are a new software company, musician, porn producer, etc, people will not know your brand so therefore you could successfully use p2p networks in order to get your brand information out. In a sense you have beaten big Juggernauts like Microsoft because they are too big to use p2p networks effectively. 2. You asked the question how are small businesses winning while big businesses are losing? Simple. Before the power of the internet and p2p technology it cost thousands to run tv ads or place billboards on busy streets in large cities. So before p2p big corporations fully controlled advertising. They still do on tv. But with filesharing networks they do not have this control. Small business people win because they can cost effectively upload and spread their products and information like a virus for free, why big corps have to spend millions on commercials, magazines, and billboards in order to make money. Big businesse cannot easily use filesharing networks due to reasons discussed above. When I use the term "winning" I mean any person/business who are able to make an astounding amount of money per year in relation to their expenses. Big Business is in this article is defined as fortune 500 companies. 3. My theory that the longer a company has been in operation, the more it will lose due to piracy is a very sound one. I cannot understand how real life data could tell the opposite. According to my theory the more Microsoft makes in the sell of Windows OS the more they will lose in piracy. Why? Because in order for Microsoft to sell large amounts of Windows, they need to market/advertise it. This costs alot of money to do. Once Windows becomes a household name(it already is) some people(pirates) feel the need to rip copies of the software and freely distribute it. The mathematical formual above is perfect. The amount that Microsoft losses to pirates is directly proportional to how much money it makes per year, to be exact. Perhaps I wasn't clear at the top because I used vague terms. According to my theory, Microsoft will lose more money to piracy worldwide than say, a smaller software company like Axandra(makers of Arelis) simply because Microsoft generates more revenue per year than Axandra. But if Axandra was to become as big as Microsoft, more people will pirate Arelis than ever. But if you check filesharing networks and try to find pirated versions of Arelis vs Windows, you will find that Windows is on every network, while very few(if any) have Arelis. I hoped I covered everything. Feel free to point out an errors. I really do believe this theory makes sense.
Well, we are still missing specifics and sources. In your first point you stated that Microsoft is not utilizing file sharing networks, however, there is no source for this statement. You are assuming that because they are a big company, they have no need for marketing. I have read in my trade journals that larger companies are indeed using file sharing networks to market. For example, Company X might have a new movie coming out. They then take a piece, or perhaps the trailer, and release it in the network. Many times changing the name (insert your own interpretation here) to get more downloads. As to your second point, for one side to lose and one side to win, the winning side needs to be able to do something the losing can't, or at least do it more effectively. I would suggest that your view on the Internet and business marketing world in general is somewhat limited. If you can advertise somewhere, so can I, so can anyone reading this, and so can a fortune 500 company. So you would rather be a webmaster who spends $10 in expenses and profits $10,000 a year than the CEO of a fortune 500 company? I would hope not. As to point three, taking some college level business courses will help. You will learn more about how businesses operate, success & failure rates, and so forth. Unless you are basing this all on successful businesses only and who have operated for a certain term and have a certain income. If so, this is why specificity is a must. That way we know exactly what you are talking about. Since we are stuck on Microsoft, you keep saying that the more money "Microsoft" makes, the more "Windows" is pirated. Microsoft is a large company with many divisions, which are basically their own company. Let me ask you this. Many games produced for the Xbox by Microsoft are pirated all over the place YET Microsoft's Xbox division is in the red. Care to explain? If piracy is directly proportional to how much money one makes, the Xbox division should have zero piracy. I would also like to see specific profit & loss data to support your formula. I could, without offering any proof, tell you that piracy is directly correlated to the popularity of the item. Pirated Units = Estimated Customers / Estimated Unit Sales Therefore, if you created a game that is very hot and there are potentially 15,000,000 customers out there and you estimate selling 5,000,000 copies: Pirated Units = 15,000,000 - 5,000,000 Pirated Units = 10,000,000 units Piracy Cost = Pirated Units * Production Cost While this formula might seem sound, do you see what has happened? I have given no real proof. If you were an Economist, you would not simply tell people you have a formula. You would have to show, in vivid detail, how you arrived at said formula by showing supporting data in proper quantity.
You know even if I'm wrong, as Theon, Hypatia's father once famously said "it is better to think wrongly than not think at all." In any event time will tell if my strategy will work. Can you and I atleast agree that small business people can beat big corporations as far as prices on the internet and on p2p networks? That seems to make logical sense. In any event I will need to do more research on my findings to see if they are accurate. When I was in college I never took up business, or saw the need to. Their have many small business people without college degrees who have gone on to become millionaire's. I'm going to test out the theories above myself. I have a 36 page digital 3D manga I completed earlier this year that I want to market. I'm going to use the p2p networks and my opt in list at my site to start a viral marketing campaign, giving away the first chapter for free(After I've copyrighted it, of course.) After a while, when my site's traffic skyrockets, I'm going to produce chapter two and underprice every comic book company out there. I'm going to then sell it for dirt cheap and create a high turnover. Will people rip it off eventually? Yes. but according to theory above by the time they do I would have already sold numerous copies and made substantial profits. Only time will tell.
When you attended college, you should (and this applies to anyone reading) at least take a beginning business and a beginning marketing course. It can help you set the foundation for later. You should always read, read and read some more. I can not agree that small business people can beat big corporations as far as price on the Internet. First, that does not even make sense. Also, for your statement to make logical sense, it needs to be based on FACT. As of yet, you still need to cite sources to establish fact. What can you do that a big business can not? You can't negotiate a better price for anything. You can put an item on a p2p network, but so can any company, and many do that now. Instead of making generalized wide sweeping statements, get specific. What can you Mr. Tesla do that Microsoft, since we are using them as an example, can not? If you can answer what you can do that a "big business" can't, that will be a start towards proper specificity.