An Interview with a DVD-man

Rare is the dinner in an expat restaurant in Africa which is not (politely and quietly) interrupted by a DVD-man. They have a stock of DVD’s in their backpacks, and work their way through the restaurant giving you a chance to peruse their wares. You have to see the DVDs to believe them, they are made up of several pirated Hollywood movies, with many different versions, all on one disc, enclosed in a professional-looking full color envelope. They have titles like “Segal vs Chan”… a DVD full of Steve Segal and Jackie Chan movies. Another great title is “Superhero Schoolwork”, including Spiderman, Superman, and Wonderwoman (and all the sequels thereof). The DVD’s are billed as “50 in one”, though it requires some clever counting to find 50 movies on one disc. Typically, there are more like 12 movies on a DVD — in itself an impressive achievement of DVD mastering and compression-algorithm optimization.

Today, at lunch, I was talking about an idea with Steve for how how to coopt the media in Africa. At that instant, a DVD-man came up to the table to offer his wares. I took the chance to do some market research, to figure out how his business works to feed in some ground-based-reality into my scheme.

The young man is named Mohammed. He is alone now, his father was has last relative and he died in 2005. Years ago (perhaps 5 or so) he met a woman on the beach. She was an Indian, a visitor to Sierra Leone. She worked for a bank. They started talking about his school, and how to raise enough money for his school fees. She decided to “invest” in Mohammed by giving him a gift of 100,000 leones (in today’s currency, about USD 30). With that, he bought movies and started walking around after school selling them.

After Steve and I had talked to him a while, I asked him for the “financials” of his business. It should be noted, at the beginning of our conversation, he was reluctant to talk about his business, I suspect out of fear that we were investigating piracy. Here’s how it works out… the DVDs are available one at a time from a wholesaler for SLL 8000 per disc. He sells them for SLL 10000, for a profit of SLL 2000 per disc. Mohammed keeps a stock of around 50 discs right now (“51”, he proudly told me!). His inventory has gone as high as 81 discs. He started his business years ago with 25 discs, bought using the initial capital from his Indian benefactress.

Perhaps there is a discount for buying in bulk, but Mohammed didn’t mention it. I suspect he rarely has the capital to replenish his stock. Instead, Mohammed’s business model is just like any extremely small business: he constantly balances how much money he can take out of his business to pay for school fees with how much he needs to reinvest disc by disc to replenish his stocks. I found it interesting as well that he remembered his exact highest inventory with pride — for Mohammed, his inventory is his life’s savings. Can you imagine the risk and the burden of carrying your life’s savings on your back? What if they are stolen? What if the price of DVD’s collapses?

Steve bought a DVD, “Harrison Ford Mega Pack”. That’s SLL 2000 more profit for Mohammed, but not enough to pay this week’s school fees. Here’s hoping he sells some more discs today…

As an aside, Mohammed told us that you can buy DVD’s mastered and manufactured in Nigeria for only SLL 6000. Theoretically, you can sell them for SLL 10000, just like the ones that Mohammed sells, which come from China. But Mohammed says that the Nigerian discs are lower quality and though they offer double the profit, if you sell them to a customer and it does not play right, then you lose a customer. He prefers to sell the lower profit and higher quality merchandise from China.

Steve and I were thinking about it a bit, and it’s true: when you buy these DVD’s on the street, in the marketplace, or in a restaurant, it’s just a throw of the dice if it will work. On our travels, we’ve both bought DVD’s that didn’t play right. There are certain brands of pirated DVDs that look good, and in practice prove to be good. One brand that looks particularly good is “UPS”. The pirates just took the UPS logo and slapped it on their discs, and it works! It looks professional, and it turns out the pirates professional enough to pirate a logo as well as the content, make good discs! Mohammed is right; customers prefer the Chinese discs.

This is field economics at it’s best. What a great way to spend a Saturday afternoon in Freetown!

A message…

…from America, reaching out to every corner of the globe, into the hearts of those who have watched us struggle and fail to meet our potential over the last 8 years:

Yes We Can!

Like a drug-addled celebrity, we’ve hit rock bottom, and now we’re ready to turn our lives around and meet our potential.

Now, if you will excuse me, I’m going to go celebrate the near destruction of the English parliament. (Guy Falkes was clearly a democrat.) Another example of why England is backwards: normal people rejoice at the idea of blowing up their corrupt and greedy legislatures. Bonfire night is unfortunately apparently about celebrating that the plot was foiled!

Economic Meltdown in Iceland

Read this thread on a local geek social group in Leeds. That’s the voice of one scared girl, and perhaps the reality is not so bad. But just the fact that there is one Icelander who’s feeling that freaked out makes my heart go out to her.

I’ve suggested to her that one problem is translations, and that she could earn some hard currency by starting a blog with translations of the articles describing the meltdown and then putting a TipJoy widget on it. I’d pay to hear the voice of Iceland from inside, instead of mediated by the Mainstream Media.

Update: It’s up and running! Your new realtime feed of Iceland journalism, in a language a bit more accessible.

Why doesn’t this already exist?

Yesterday, I was walking in town and there was a nice guy playing a clarinet in front of North Face. I intentionally fumbled with my coins for a while so as to enjoy his music a bit. Then I paid him a tip and walked along, enjoying the clarinet as it faded behind me.

Why can’t I do that for the gigabytes of copyright violations I illegally download? (Note to RIAA lawyers: this is a hypothetical situation. No need to sue me. Thanks.)

Why doesn’t a website already exist where I can pay a tip into a tip jar?

It’s hard and annoying to rent movies. I went to my corner store, and got a grilling about residency — which is incredibly difficult to prove as a visitor in the UK. Then the DVD didn’t play right on my laptop because I reinstalled Windows XP without the special install disk from IBM, so I lost the right to play DVDs on my own machine (but this same machine runs VLC to decode Xvid movies just fine). Then I forgot to return the DVD that didn’t play right on time, so I got a fine for a DVD I never could see!

I resolved then and there to never rent a DVD again, as long as I live. I’ll just go back to what I used to (hypothetically) do, which was download pirated movies. I’d like to pay for them, but I can’t. Why can’t I? I just don’t understand why I can’t pay somone. There’s lots of people in my life I don’t want to pay, who I have to pay (hello Yorkshire Water Company, are you listening!?!). Why can’t I pay the studio when I get their content via a distribution channel they don’t even have to pay for?

In my dream world, here’s how it works:

Someone sets up a website called There’s a form on the front page, that says, “your paypal name? how much? URL of the content? tip!”. The URLs have to be from a small list of sources the site operator wants to trust as catalogs of copyrighted content. I’d make it IMDB for movies, FreeDB for music, and Registered Commons for Creative Commons stuff. You click on “pay by paypal”. If your paypal account is not linked to a bank account, it says, “warning, you’re stupid and will be paying some of your tip to Visa instead of to the artist. Continue?” Then the payment goes through. You get a receipt with a “tip transaction number”. There’s lots of scary leagalese that says that you are making a gift to the website operator, and that they don’t have any responsibility if the money never gets to the right place, but that they will try to check claimants well, but no promises.

The website operator has a nightly job harvesting all the tip money and rolling it into a paypal money market account. It also posts a full accounting, publicly, of the transactions for the day, week, month. It updates the “top grossing” web page, or whatever other fascinating stats he wants to post. Because he’d be committed to running the site with maximum transparency in order to earn and maintain trust, anyone could calculate the stats that he doesn’t bother to list.

There is a UI for content owners to come collect their tips. They have to submit a PDF’d scan of their declaration binding their copyright ownership to their paypal name. The website admin reads the PDF and decides if it’s valid for the given work and if so, posts it in the system with an expiration date. The content owner is able to collect tips as often as they want into their paypal account (they will discover that they have to link it, or else they pay huge fees to get paypal to send them a check). Like everything else about the system, this is radically transparent: the PDF declaration is linked with the outbound transactions, so that tippers can see who’s coming to pick up the money they left.

As the site gets more popular the load of reviewing the declarations and investigating if they are real or fake will be unbearable for the operator, and he’ll put in place a crowd-sourcing model, where people vote up correct declarations an vote down false ones. The operator then needs only check the top declarations to see if he’s willing to put his credibility on the line by approving them for making withdrawals.

The operator of the website does this out of the goodness of his heart, though he also takes tips if they come for him. He also earns interest on the tips waiting to be collected by the copyright owner. Finally, he has the right to collect tips that have been waiting for a content owner to show up for too long — and because of his radical transparency, everyone can see which tips are about to get claimed by the operator. Tippers cannot be refunded (didn’t you read the scary disclaimer, moron?). But if they are really up in arms about their tip being claimed by the operator, they should just contact the copyright holder and make sure the copyright owner comes and collected the tip. That’s their only recourse, and it’s good enough.

Whoever does this first will eventually get sued. He’ll post a notice saying he is afraid he’ll lose his house, it will all be very dramatic, and people will contribute to his legal defense, etc, etc, etc. These stories all follow the same stupid story arc. In the end, he will in fact lose his house, and he’ll be bitter and not try again, but someone else will. They too will get sued, and after a few more cycles, there will be one or two trusted tip-jar websites that stay up and don’t get sued. And the world will be a better place.

If you take this idea and are one of the guys who get sued and loses his house, sorry. But don’t say I didn’t warn you. If you take this idea and it takes off, please just send me a bottle of scotch. Thanks.

Update: I actually got around to doing my research on this, and I discovered a Y-combinator startup named TipJoy. Nifty. Give me a tip:

Big Mining Machines

The Long Now foundation took a field trip recently. The pictures are cool, as is the irony that they went to a trade show held once every four years. Miners have a time scale closer to the Long Now’s.

What does it mean that mining is a slowly changing industry? The economics of extractive industries push them that direction (capital investment is only warranted by a positive outlook in the commodity price). But workplace safety, which is a special case of universal human rights, demands that industries take advantage of the best available technology as fast as possible. This is an interesting story of the tension between capitalism and social welfare. If a mining regulator pushes an industry too much it will give up and move elsewhere. And apparently the mining industry is especially prone to regulatory capture an euphemism for corruption I especially like (like as in hate; in newspeak up is down, enslaved is free and corruption is regulatory capture).

I especially liked the observation by the Long Now guys that robotic technologies were notably absent from the mining technology convention. Something’s not working right here, either the regulation or the financial incentives for acting humanely towards your workers, or more likely both (as they are densely interrelated).

The Market Goes “Underground”

Here’s a lesson about social policies, politics and economics. In Gaza, tunnels used for smuggling goods have become the major supply line, and an industry in themselves. The market will provide, it will always provide. The question is, how do you use the power of the market to get the other results you want?

In this case, it is pretty clear to me that be blockading Gaza on the Israeli border, the Israeli authorities have lost their capacity to control smuggling, not to mention lost tons of tax revenue and economic activity for Israeli businessmen. Clearly, Not Plan A.