Saturday, March 18, 2017

"The Battle to Protect IP" episode on eCommerce Fuel podcast

This link popped up on my radar this week:

It's for "The Battle to Protect Intellectual Property" episode on a podcast called eCommerce Fuel.
The link includes a transcript of the episode. Podcast host Andrew Youderian interviews Meredith Erin and Matt Snow, artists and owners of apparel companies who are battling counterfeiters.

This discussion of art theft covers some new territory: effect of "ePacket" shipping deal.... Impact of IP on US economy.... the need for Lobby efforts on behalf of artists/IP.
 I've highlighted some sections from the transcript below:
 WHAT IS  "ePacket"

"So, ePacket part... something US and China have built upon with each other as far as I understand it. But also another component of is the UPU, which is the postal union. The whole world basically is involved with and it helps set rates for shipping overseas.

The ePacket deal, the way it works is, China is given extremely cheap rates to ship into the US. It’s not a reciprocal deal, like, they can ship here for, I think it’s like less than $2 to ship here, like, a package. I can’t ship a package there for less than $2. Like, it starts around $13 and change, and that’s for a parcel I wanna say, under eight ounces. And then like, 8 to 10 ounces it’s like another, like, twenty something and change for me to ship.

So it’s not like it’s a reciprocal deal and I can ship as cheaply there as they can ship here. And in fact, they can ship here less expensively than I can ship around here. So, it would cost me more to ship a package to Phoenix than it would cost someone in China to ship a package to Phoenix, even though I’m only a few hundred miles from Phoenix.....

....So they have two competitive advantages just in terms of price, and there isn’t really anything to prevent them from sending subpar materials or sending subpar items over here made with subpar materials, that in a lot of cases can be dangerous. It’s not unheard of for a lot of these knockoffs to come over in ePacket from China and Hong Kong, reeking of formaldehyde and other chemical smells and stuff like that.

And that could pose significant danger especially if you’re buying children’s clothing. I mean, we have to make sure that all the materials that we use with the production of our shirts are CPSIA compliant to make sure that there’s nothing carcinogenic or otherwise toxic to, you know, small developing bodies, when we’re doing that stuff.

And so, I think if we reclassified the most prominent bad actors that are exploiting ePacket like China and Hong Kong, and force them…because right now, they’re classified as a developing country and I feel like at this point, they no longer qualify for that designation.

Impact of IP on US Economy 

...But the other problem is that, in order for us to have all the stuff that we have that makes our society function, you know, our law enforcement, our fire departments, our roads, our schools, we need a tax revenue. And we depend on sales tax, among other forms of tax to be able to fund all of the stuff that we rely on. And when goods are being sold into the US that aren’t being taxed, that’s revenue that states, the federal government, our local governments are losing out on.

I mean, it’s a kind of a domino effect when goods are counterfeited because it sounds like, well, it’s just our problem because our goods are being counterfeited, so we’re the ones that are being hurt. But it’s bigger than that, because when we lose sales of our products to somebody in China that’s selling a knockoff of like, Catnip Freakout, it’s not just that we’re losing that revenue and it’s not just that our reputation for our brand is suffering, we now have those sales, but we’re out, that we’re not spending money with our suppliers, the people that make our shipping materials, the people that make our manufacturing materials. We’re not able to spend as much with them because we’re being deprived of our revenue and our whole company is being deprived of that revenue. We’re not able to pay as much in taxes. We’re not able to hire as many employees.

And the same thing will happen to our suppliers, is that little bit less that we’re spending with then, it might be a drop in the bucket when it’s just our business, but it’s not just our business that’s experiencing this. And when thousands of businesses around the US are experiencing this, and we are all spending a little bit less with our vendors, and we’re all paying a little bit less in taxes, cumulatively, it affects the whole economy.

I think that a lot of people don’t understand how important intellectual property is to the US economy.

 People think it’s kind of a victimless crime to buy or sell counterfeit goods, but our economy is heavily dependent on it. It’s one of those things that really should be a source of national pride in the US. Something that we’re particularly good at is coming up with entertainment, and content, and inventions. You know, people import Hollywood content because it’s great. Other countries aren’t as great it as we are, so if we don’t protect that, we’re really endangering a big part of our economy.

Meredith: Yeah. I think that it’s hard for people to see the ripple effects that intellectual property crime has on the economy because it doesn’t directly affect them and maybe they don’t work at like a graphic design business sort of like we do or they don’t work at a movie production studio, so they don’t personally see, like, that it’s hurting the business they work for.

But cumulatively, you know, if the production studio isn’t making enough money on their movie because everyone’s buying bootlegs of it, and now they can’t afford to make more movies, now they can’t afford to hire more people, those more people can’t afford to go to your restaurant, they can’t afford to go on vacation at your hotel. It really does ripple out, it’s just that people don’t see it close up because they’re not necessarily working in those industries where they understand where the ripple is coming from.

Matt: And to that point, with regard to the IP, when you think about, okay, every Marvel movie, every big tent-pole blockbuster, it’s not just about box office sales. So there’s a lot of other stuff that goes into. It’s not just the IP that you think of when you think of IP because it affects everything that we kind of take for granted as the stuff that our lives are made up of. And I know that sounds very materialistic and capitalistic, but we do depend on all sorts of really random, seemingly innocuous things in our day to day lives, that I don’t think a lot of people realize that, like, intellectual property plays into all of it.

Untapped resource of Lobbyists

Meredith: I’ve talked to some of my reps here, both in our district where our businesses are based and also where we live, and kind of what they said to me is basically, you do need to hire a lobbyist. They didn’t say it in so many words, but that was the gist of what they were saying. There are a couple of reasons that you would want to have lobbyists working on this. First of all, they’re not as expensive as people assume. You know, they can be few thousand dollars a month, which I know sounds like a lot of money, but if you have a handful of small businesses paying for that, that’s not a whole lot of money to get something important done.

I think the advantage of working with a lobbyist is they have the expertise, they have the experience to get things done that we as small business owners don’t have, and they also have the hours to do it. We’re very busy running our business and we don’t have the hours to constantly be calling our lawmakers, visiting our lawmakers. We don’t have a personal relationship with those lawmakers. If we had a lobbyist working for us or a lobbying firm working for us, they would have those things built in. They would have the experience, they would have the relationships, and they would have the hours to devote to this, so that’s why I think that it’s something that will eventually be a necessity to really get some real change on this issue.

"We Can't Do This Work For Free"

No one is really keeping watch of how much money is being lost by US businesses because of this situation, but I think once the economy really starts to feel the pain, people are gonna start looking at where that money went. And by that point, I don’t even wanna think about, you know, how bad things could get before some action is taken. But I think eventually, something probably will have to be done because at the rate things are going, no creators are gonna make money off of what they’re doing if things continue. I mean, they’ve accelerated so drastically just in the last two years.

When you think about in the grand scheme of things how long the internet has even been around as we know it today and e-commerce has been around as we know it today, not that long in the grand scheme of things. And for things to have accelerated this drastically, this quickly, I do worry about where we’ll be in 5 or 10 years. And if creators can’t make money on their content, whether it’s us designing, you know, funny graphics for T-shirts and posters or whether it’s Taylor Swift creating albums. Like, we can’t just do this work for free. So, if you wanna have more albums from your favorite artists or more graphics from your favorite designers, those people do have to get paid and the danger is that they’re not going to be able to get paid enough to continue to do what they’re doing."

More on Combating Art Theft here:

More on  Freedom from Free Art:

More on How to Support indie artists:

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