When you buy into a product, you're not just buying into the physical materials that go into that product, you're buying into the company, service, development, and employees behind that product. So, you, the owner of Company A, have choices when you enter the business. Just after you enter the business, you hire a development team of 15 people for a product
line. Once you have a product to sell, you have another 10-20 people in marketing, 5-6 in customer service, and 30-50 in manufacturing. Let's not forget that technology costs money too, so including just the people on your development team plus "stuff," you have a weekly development budget of say $20,000/wk (and we'll say your generous, but not wealthy, giving your engineers and product development managers about $55k/yr).
So you've got roughly a million dollars a year tied up in development, which I'll admit, ignores "luxuries" like dental and health insurance, which employers also have to pay. So before you even have a product, you've got a lot of overhead, and you're still a relatively small company. Let's not forget that the molds, castings, and
PCB's for your first, second, third, and fourth prototypes will cost $40,000 each if you're lucky -- another set of costs not already calc'ed into the development overhead.
So optimistically, you've got, we'll say, $1,250,000 a year tied up and you're still not even mass producing or selling a product yet. You haven't even yet hired a guy to clean the bathrooms. (In case you're wondering, his name might be Derrick and he might be using that $30k/yr to feed his family. He also enjoys talking about biking and his two daughters each day when he walks through and empties the trash bins in the development lab.)
Just running your development lab for that single product
line you make is wildly expensive and until you're selling a real product, you've got a lot of money circling the drain if you end up developing something that doesn't pan out or takes an unexpectedly large amount of time to ship.
Thus, companies that are willing to
settle for not being the best, but possibly the cheapest, have an economic incentive to copy another manufacturer's products.
You can make a boatload of money because you can effectively skip through all of the hurdles of development. You don't need millions of dollars in development because you just have to make your product look a little
bit different and give a few people an impression you did the work on your own. Then you get to ship a product a lot sooner with a lot less overhead, and thusly get to undercut the original manufacturer by selling your copycat for less than their original
bit of brilliance. Better yet if you do that all while having an understaffed or nonexistent support staff.
All is good and well while you're raking in the dough, but economics are a zero-sum game. If you're winning, it's because someone is losing. You're offering a product that is almost a direct substitution to the original product and at a far lower price (after all, you don't have to recoup the development overhead costs). You're taking potential sales for their products and claiming them as your own. Therefore, it takes longer for the original manufacturer to recoup their overhead costs (and pay for health insurance for Derrick's daughters), and you reap the benefits.
You didn't benefit at their expense because you were genuinely innovative or provided fair competition -- because you were better than them. You did it by copying the sum of their development expertise and released their product under your name with a different
logo stamped onto to it and probably a poor customer service support structure to boot.
Copying a product that already exists serves only to harm the company that was genuinely invested in creating a product of their own. It's only different in semantics, but not in purpose, fairness, or morality than stealing a truckload of their products, stamping your name and serial numbers on them, and reselling them under your name. After all, the money they put into the development of that product is what you're benefiting from.
When you support a company that engages in what can lightly be referred to as unfair economic competition, you serve not only to encourage them to continue copying products pioneered by other companies, but also to drive the original manufacturers into financial ruin.
As was brought up in another thread, there are some fabulous GrandMA and Avolites consoles that have an overwhelming amount of development overhead that go into them. When you choose to
purchase a copycat of their product for a fraction of the cost, you willfully damage the sales of genuine GrandMA and Avolites products.
Now if you want to get into the deeper semantics, we can go as far as to say that this is why companies in the United States are losing to competition in China, and thusly are a contributing factor to why there are 15,000,000 unemployed Americans. Not all companies thriving on such copyright infringement are based out of the country, some of them (such as Blizzard) are based in the United States. That's all good and great, but such product development provides no forward thinking or innovation to the nation's manufacturing. They are an intellectual sidestep. First, you aren't advancing technology and making something remarkable -- you're copying something that already exists, stealing intellectual property. Second, when you extend the amount of time it takes for company to recoup its development costs for a product, you then extend the amount of time before they can move on to creating the next innovation.
For nearly 9,000 years, people were hunter-gathers. They followed the food. Their basis for living was staying near what they thrived upon. There was inherent value in what they did because just about anyone who worked provided skills and labor did so in way that kept people alive. When the goal is keeping people alive, there's a simple economic structure. You need food, so you trade with me for it because I gather food. You might or might not have currency, but maybe you have fur, pottery, furniture, or something else. When it comes to you and I trading, either you and I see value in what the other has or we don't. Regardless, you'll give what you need to stay alive because food keeps you alive longer than pottery does.
In the last 150 years or so, things changed. The economy was no longer based on one person going out and killing a wildebeast and bringing back to share with the village, it was based on the factory. As a factory owner, you don't want ingenuinity, people who are smart, or people who are invaluable, you want people who can follow directions. The exception is if you have a development team. The reason you don't want to hire people based on their skills but based on their ability to follow directions is because those people are expendable. You don't have to pay them much because you can replace them easily. If they get hit by a streetcar, the
big bus theory isn't violated, and you (the factory owner) still pass go and collect $200.
The factory worked really well for a good 100 years. Then things got shady. In the year of 2010, your best competitor is no longer on the other side of the world, they're a click away on Google. Being 2nd best is no longer good enough because if you don't have a reason for people to enter your store, they'll just buy what they need on Amazon. This is the reason
conventional book and CD stores failed. As such, the factory failed. There's limited economic success to be found by people who's primary asset is that they can follow directions and are easily replaced. In the global market, because the company with the best and most innovative products are the first hit on Google and they get the most business. Second best gets little to no recognition because first best is all that customers care about.
A company that chooses to copy the products of other companies therefore may get away with some economic successes for a short while, but ultimately they serve to unfairly harm their competitors and bottleneck and slow the progress of innovation within an industry. If China, Inc. under a worst case scenario were to grab the market share of GrandMA and Avolites, effectively putting them out of business, innovation stops -- it ceases to exist. China, Inc. succeeded by selling copycat products for cheap, but with GrandMA and Avolites gone, not only will they run out of new, innovative products to copy, but the industry as a whole will be damaged. China, Inc. has no intent, desire, or ability to innovate. They're just really good at copying other people's innovations and selling them as their own.
Then, things grind to a halt. Companies stop making breathtaking new products because the companies that did have gone bankrupt, and now people only replace things when they die. They don't buy a new lighting
system until their old one is inoperable. Whereas tons of money each year goes towards buying new products, not because the old ones don't work, but because the new ones are
better. With such unfair competition, truly innovative companies fail, copycat companies persevere on the successes of others, the economy stagnates, people stop buying new stuff, and then we enter the world's most depressing theme
park,
Recession Land.
The reason such worst case scenarios don't come true is because companies like
Martin, Avolites, GrandMA, Phillips,
ETC, and
Vari-Lite, the truly innovative geniuses of our industry in this decade, have loyal customers -- customers that will stick by them even when copies of their products can be purchased for half of the price. Also, the entire entertainment industry is a blip on the world's economic radar. If we went under, the ensuing depression among the world would be emotional but not economic. That is, unless you're Derrick, the guy who still has two daughters, no job, no health insurance, and not enough savings to keep the lights turned on.
(the
big bus theory states that for the sake of the company, it's best if you have your notes on a project organized such that anyone can take over at any
point for any, so should you get hit by a big bus, the company doesn't lose weeks or months of your work that no knows how to take over in your absence.)
