Nov 12 2007

SAS Economists Podcast #8 – Shanghai’s fake DVD market

by Alice Su and Jessica Ng

Is it true what they say about the DVD market in China? Can you really buy fake DVDs on the streets for ONE DOLLAR? Come on, that’s a bit extreme, isn’t it? In fact, it’s not just under bridges and in dark alleys where you can buy pirated DVDs in Shanghai, but in respectable shops all over the city that on the outside and in look just like a legitimate DVD shop in the states or Europe.

This podcast will explore the economic characteristics of the market for fake DVDs in Shanghai and determine what it would take for the makers of real DVDs to be able to compete with the well established market for fakes.

[youtube fJkpvaU9izk]

About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

9 responses so far

9 Responses to “SAS Economists Podcast #8 – Shanghai’s fake DVD market”

  1. Tim Con 12 Nov 2007 at 5:20 pm

    Great stuff guys. Yeah, the concept was a bit obvious but you did a good job explaining it economically. It's pretty clear that the market for fake dvds will be more popular than that of any real dvd. The price tells it all, i dont even think the utility of a real dvd matters all that much. there have been more than enough times where i've paid 8 RMB for a crappy copy of a movie just to watch it.

    You also forgot to mention that fake dvds come out a lot earlier than real ones and therefore have an advantage since they enter the market first.

  2. Michael Dailyon 12 Nov 2007 at 9:30 pm

    I agree with Tim, the whole concept is pretty obvious but you guys did a good job explaining it in economic terms. I was surprised to even see that big of a difference between the utils of a fake dvd and a real dvd. I mean as long as the quality of the fake dvd is decent it should yield basically the same amount of utils. But the point was still clear, fake dvds are obviously more popular. And although Tim said that fake dvds also have more value that real dvds because they come out earlier, I don't necessarily agree. The quality of those dvds is so poor, that not too many consumers buy them. I mean sometimes when I'm in the dvd shop the salesman tells me not to buy the new dvds because the quality is so poor. But the podcast was very nicely done.

  3. yunqimokon 12 Nov 2007 at 9:52 pm

    The graphs and numerical illustrations do a fantastic job of illustrating those ecoconomic concepts that audio podcasts cannot really do. Great job! It was pretty funny actually, but informative at the same time!

  4. KatherineYangon 12 Nov 2007 at 11:02 pm

    Nice choice in podcast topic! I agree more with Tim that pirated DVDs come out earlier than the real ones, and although Michael makes a good point, good quality fake DVDs still come out earlier than reall DVDs. The bad ones are the ones you get a couple weeks after the movie.

    Personally, though, the only extra utility I get out of the real ones is the nice cover, but that's about it. Fake and real, as long as it plays the movie, I'm happy.

  5. robertwangon 18 Nov 2007 at 8:26 pm

    Nice podcast you two. =)

    Yeah, real DVDs tend to come out later since movies in the US don't really generate their revenue from DVD sales, they make their money from theater showings, so until the theaters stop showing their movies, companies have little incentive to produce the DVD (since that would provide competition for the theaters, which would lower revenue from theater tickets sold).

    As for Katherine's point on the nice cover, a lot of the fake DVDs are beginning to come with nice covers, which I suppose would eventually increase the utility of fake DVDs even more. =)

  6. Dana Yeonon 19 Nov 2007 at 10:06 am

    You guys did a wonderful job in your podcast! I really liked how you guys connected almost all of the economic principles we learned into one coherent real-life situation. Did you guys know that the fake DVDs' impact is so big upon movie producers that they have dispatched trained dogs that can detect fake DVDs with their superior olfactory senses?

  7. Rebecca Sungon 19 Nov 2007 at 6:43 pm

    Wow. Trained dogs with superior olfactory senses, that's impressive, but I think that people will always find a way to get around it; the fake DVDs are popular and people can profit it from it. I agree with Katherina about the nice cover adding extra utiliy to the real DVDs. Personally, I like the paper chapter listings and whatever else the real DVDs have in it too.

    Usually for fake DVDs, if you wait long enough, there's bound to be a good one. So, I guess it's about patience and delayed satisfication.

  8. Jessica Chiangon 20 Nov 2007 at 1:08 am

    Good job, guys! =) Haha wow. How would dogs smell DVDs? They don't exactly have a smell do they? Maybe it's just my human nose. Wow you guys actually calculated teh marginal utility/$ haha. Impressive. Personally, I wouldn't buy a real DVD because I basically just watch them once. Unless, you know, it was a really really good movie. Haha I'm such a stingy person.

  9. kevinhuangon 20 Nov 2007 at 7:14 pm

    I agree with jessica, most people watch dvd's once, so therefore i think if people took this into consideration, they would discover that they might actually prefer to buy the fake dvd that had a slightly lower price than the real dvd.