I was reading the Today newspaper dated 27th November and there I read a published letter by a person on one method of ending rampant piracy of music, movies and computer softwares.

He was saying that no matter how tough the enforcement of the piracy law is, piracy will not go away easily. Well, in Economics term there is such a thing called demand for such pirated goods due to the cheap prices offered relative to the original products. And when there is a demand for such products, there will be people willing to take the risks (in this case fines and jail terms) to supply these products to earn profits.

The average guy down the street will feel that they are being ripped off by the huge companies for charging a very high price for their products and will resort to pirated goods to offset the high costs.

As such, the author suggested using the Big Mac type of pricing for these products to make them more affordable for the average person in different countries. When original products are more affordable for a significant majority of the population, people will be more inclined to buy original products thus lowering the piracy rate. Of course this have to be coupled with education on respecting intellectual property, but the current tactic of using only education and law enforcement is not very effective because it doesn’t deal with the affordability aspect of the problem.

The author goes on to continue giving example of how the Big Mac is priced differently in different countries although it is supposed to be the same size and have the same ingredients. For example the Big Mac costs S$3.60 in Singapore but across the Causeway in Malaysia it costs only S$2.40. In the US, it is S$4.70 while in Switzerland, it is S$8.20.

The Economist magazine also has a Big Mac index to measure the different prices of Big Mac around the world. It is based on the economic theory of Purchasing Power Parity (PPP) to see how a certain amount of money can buy different amounts of goods in different countries. But their main function of the Economist’s index is to measure how a certain currency is undervalued or overvalued. It takes the US dollar as a benchmark to compare the Big Mac prices and it found that certain Asian currencies are undervalued by as much as 40-50%.

Source: http://www.economist.com/markets/indicators/displaystory.cfm?story_id=8649005
Continuing on, what the author suggest is pretty much feasible. If McDonalds can do it worldwide and charge a different rate for the same product (Big Mac), why can’t the music, video and computer software companies implement the same thing?

They can charge different prices for the same product in different countries thereby making their products affordable for the masses. Then, they can all stop bitching about rampant piracy cutting their margins.

I believe this is a very reasonable idea to be adopted. Price Discrimination as they may call in Economics where producers charge different prices for the same product. Companies practise it all the time. But why can’t they use it for this purpose. Book producers do it by charging a cheaper price for text books for sale in Asian markets but a higher price in European markets. At the back of the book you see a small note: For sale in Asian markets only.

Well, Economics text books say: For Price Discrimination to occur, the supplier must have monopoly power, there must be a segmentation of the market, resale of the product must not be possible and the demand elasticity of the product must be different.

In this sense, the music, video and computer software industry satisfies all these 4 conditions.

In fact, by using this method, the producers will be able to increase revenue and profits. Although the producers will earn less for every product sold, but because the product is price elastic in Asian markets (Asians are very price conscious and will buy the cheaper alternative [also dependent on level of respect of intellectual property]), the overall decrease in prices will result in a more than proportionate increase in products sold. And as a result profits will increase. To make profits for the companies even bigger, they can further price discriminate internally within a country. They can charge consumers a lower rate. Companies and government that uses the products for commercial purposes meanwhile can be charged a higher rate.

I am very puzzled while such a simple idea cannot be implemented by these huge companies. Why can’t they work with the free market and undertake policies accordingly? Instead they are focusing all their efforts in bitching to governments to enforce piracy laws etc.

Record companies themselves are passionate about price discrimination. In fact they are pushing to practise price discrimination in the online music trade world. As we all know, Apple’s iTunes Music Store charges US$0.99 for a single download of song. However, record companies are pushing for flexible pricing. It wants iTunes Music Store to charge newer songs at a higher price and catalogue materials for less.

Source: http://www.engadget.com/2006/04/21/apples-itunes-pricing-to-stay-at-99-cents/

Why want to price discriminate in the US but not in Asian markets? Even for the 99cents a download, it is pretty much expensive for the average Asian consumers.

Take for example the average music CD price. In Malaysia, the average music CD costs RM40. In Singapore, it is around S$20 while in the US it is around US$10.

Assuming the average pay of the average worker is RM2000, S$2000 and US$2000 in the 3 countries, one will easily understand why piracy is more rampant in Malaysia and almost non-existent in the US. This is because to buy an average music CD, it costs 2% of the average Malaysian pay, 1% of the average Singaporean pay and 0.05% of the average American pay. You see, the proportion of income spent on music CD will be much higher in less developed countries. This is related to the Economist’s PPP because currencies of less-developed countries tend to be undervalued to the US dollar.

Big Mac is priced differently in different countries to make it more affordable for the average man. Yet, we have not heard of McDonalds complaining of low sales because it is not affordable.

Yes, it does not suffer from piracy situation, but it does have many local competitors who offer similar burgers at a cheaper rate.

Yes, I would agree that pirates sometimes can duplicate a product to such great quality that sometimes one cannot disseminate the differences of an original to a pirated product. But things can be further improved by educating the public on intellectual property. However, people will not resort to original products if the price difference is too massive.

One question for all of you to ponder: Why do book publishers rarely complain about piracy, in this case students photocopying their books? Because first the practise price discrimination according to regions and more importantly they offer value-added products. They offer more information on their websites, CDs with more programs, softwares, online tutoring, online mentoring, online marking and the list goes on.

Yes, I would agree that the cost of producing the goods will be similar although the selling price will be lower in most Asian countries. However one also has to consider that the cost of promoting a product will also be lower in Asian countries and the possible benefit of eradicating piracy in the long run.

In conclusion, by using the Big Mac style of pricing, products will be significantly affordable for the average man in different countries. With continuous education and campaigns on the need to support intellectual property and law enforcement by the police, I’m pretty sure more and more people will soon resort to buying original products and piracy rates will go down.

Technorati Tags: piracy, music, Economics, Big Mac, pricing, Purchasing Power Parity, price elastic, Asian, free market, Record companies, price discrimination

It is really disheartening to look at the latest universities ranking provided by Times. As an 18 year old, my focus is just on the top 20 universities in the world - to look at it and make a decision in 1 year time on which university I should go to.

Because it is the school holidays now, I have cut down on reading the newspapers from daily to every few days. And I did not realise that the universities ranking had been released. That was till I talked to a Malaysian friend in NUS (National University of Singapore) yesterday.

He told me about how NUS had dropped down the ranking from 19 to 33. And how Malaysian universities – UM, UKM, USM had dropped even further down the list. It’s so bad that now not a single Malaysian university is in the Top 200.

Looking forward to find out how bad the situation was, I hopped on to Lim Kit Siang’s (Malaysia’s opposition leader) blog to got a fuller picture from his post.

It’s really shocking to see the extent of mediocrity that Malaysian universities have come to. Reading the comments on the post is even more depressing. Skimming through only a few of the comments is enough to make me feel sorry for my own country.

I’m now in Singapore doing my A-level under the ASEAN scholarship. My exams are at the end of next year. Although I could have done Form 6 which is equally hard (mind you A-levels in Singapore is NOT easy, it is super hard), I feel really bad that my own home land is doing so bad.

Over here in Singapore, everyone is striving to be the best with talks of globalisation, competition, talent being the talk of the town (government, teachers, students etc) daily.

I can’t help but feel sorry about Malaysia’s universities. I knew from last year when I was doing my SPM that I will never ever set foot on a Malaysian university. And with the new ranking list out, it’s becoming real evident that entering Malaysian university is not really an option.

The brain drain is for REAL. Young people like me, we are going away. I’m already technically out of the country. I’m going to pursue an overseas education in US or UK or worse come to worse in Singapore. And whichever country that I study for my university I’ll stay there for a few years to work. Only after that I’ll consider coming back to Malaysia to work.

I’m still young. Years of patriotism lessons in schools had certainly had in impact on me. It has certainly instilled a sense of love for holding on to the Malaysian citizenship. Although I must say I’m ashamed to talk about my country’s state of education or politics whenever we have discussions in my school or hostel with Singaporeans or other fellow international students.
I don’t like to discriminate people, but what do you want me to tell others of our Government’s policies? Yea I know History text books will say it is like our safety net to ensure racial stability, but why are young Malaysians feeling left out in their own country?

Staying in Singapore undergoing their intense public education system definitely puts great stress on a young person. It is really hard work, hard work and hard work over here.

You can see students working so hard to chase success. You can sense the hunger and desire to be the best, to chase for glory. Everyone is in a race. You are either in it or left to rot at the sidelines of society.

I can certainly feel the heat of global competition over here, albeit with mostly Singaporeans. Recalling back my secondary days in Malaysia, I can barely feel all these heat.

Education and life in Malaysia, where is it heading?

Free Rice? Is there such a thing as a free lunch? Well not for us at least, but for millions of other poverty stricken people in the world, there are going to have free rice.

Ok, what am you talking about? How are they going to have free rice? Stop bullshitting.

I’M NOT! This is for real. This website - FreeRice.com gives out rice to poor people.

Well, I don’t believe a single shit that you say. Prove to me. This seems like one of those thousands of spam mail.

Basically the deal is like this. FreeRice.com is a website that allows users to improve their vocabulary by giving a word with 4 multiple choice answers for the user to choose. Like some sort of quiz-la.

The deal is, for every question that a user answers correctly, FreeRice.com will sponsor 10 grains of rice for the poor. Ain’t that cool?

But how can I be certain that the rice will really be sponsored and not just another scam?

Well, FreeRice.com is a sister site of Poverty.com, a world poverty site. It seems pretty legitimate and from the About pages of Poverty.com it states that it is run by a “private individual (John Breen) and has no political, religious, or corporate affiliation.”

OK, I found links to poverty.com from BBC and Washington Post website too. So I’m pretty sure what this guy is doing is for real. Else you can go burn in hell by eating up other people’s money.

Anyway, coming back to FreeRice.com it is actually an ingenious way of obtaining funding for the poor people. Users don’t need to pay a single cent. FreeRice.com generates its money from advertising by large corporations such as Fujitsu, American Express etc. The ads appear at the bottom of every vocab question.

This is a real clever and innovative trick to raise money. No solicitation of donations from the public. Kudos to FreeRice.com. Charities should really learn and make use of the free market to raise money too.

FreeRice.com really has a perfect attractive force to attract new visitors and frequent visitors to the site. You can really improve you vocab this way. Real good if you are preparing for you English, General Paper or SAT exams….

So whatcha waiting for? Hop on to FreeRice.com

Heya. I’m back again with Part 2 of my rocking scholars’ trip to ECP. For Part 1 of the trip, click here. Ok. maybe it’s just the 3 of us who had real fun coz we were photographing like crazy wit all our crazy shots.

kinda weird the way yao long jumps…lol

maybe my jump is weird too…

yao long! stop doing that to me. i still wanna live my life (oops, what life is there as a jc student in sg?)

tell u what…i’m very sure i’m gonna win the limbo king game…wanna challenge me?

i like this shot….walk to the light…lol (should have added the saint thingie on my head)

aiya….if only got a very plain background then this would have been a perfect portrait shot of me….

yao long n wern chia

again i like this pix….seems like we are really deep in meditation (or do we not?)

haha….the next time u go to ECP, try fitting into this small bowl…

that’s all folks for this time. i have another batch of photos from our trip to ECP. it’s a story of how we scaled 3 tall poles. the tallest pole being 10ft high? or probably higher…. n how the 3 of us managed to sit on top of the poles like we are at the top of the world.

Technorati Tags: ECP, jump, meditation

Argh! I’d just realised I have holiday homework….and lots of them. WTH?!?! Can’t the school let us off without holiday homework just like in Malaysia? At least we get our December holidays to ourselves.

One month had passed since the promos exam. And I find it very tough to do the holiday homework. I’ve forgotten so many things! HOW? HOW? HOW?

Screw it. I dun really have much choice. Gotta do it all….Have to pass it up to Council teachers by 28th December.  Screw holiday homework…..