Knock-Off’s Bad. Article Long.

 

A couple of months ago, we announced we were no longer accepting advertising from Penguin Magic.  This was a financially difficult decision but not a philosophically difficult choice.  We objected and still object to Penguin Magic selling products that are “knock-offs” or direct copies of tricks invented by others. 

 

The effect that caused us to make the decision was the Magic Makers’ version of Badlands Bob.  George Robinson, Jr. owns the rights to the effect and sells it for $45.00.  We have purchased the effect at this price and based on our audience reaction; we believe it is a fair price.  The effect is stunning, the props can be examined closely before and after the trick and the workmanship of the props makes $45.00 a reasonable and fair price.  Not too much, not too little.

 

You can buy the same effect from Penguin Magic for a mere $12.95 as the Obedient Die.  We cannot say definitively that the method is identical to that used in Boblands Bob but based on emails with Penguin Magic (“Penguin”) and Viking Manufacturing (“Viking”); we believe it is the same.

 

Penguin is able to price the effect so much lower than Viking precisely because it did not expend the time or resources necessary to invent, perfect and develop a method of producing the effect.  Badlands Bob made the Obedient Die marketable.  Viking and its predecessors in marketing rights, expended the time, crafted the advertisements, placed the ads, promoted the effect at conventions and stood behind it as began emerge as a marketable effect.  Viking also took on the considerable risk that all of its investment in the trick would be for naught if magicians did not buy it. 

 

Ask any magic inventor whether every effect produced is marketable and a success.  For every Color Monte, there must be 20 to 25 packet tricks that still sit on dealers’ shelves.  They move only when pushed out of the way to get to the “hot trick.”  Ask yourself as well.  Have you come up with a move, a trick, a flourish, a routine that you thought was marketable?  How often have your instincts proven accurate? 

 


 

A couple of months ago, we announced we were no longer accepting advertising from Penguin Magic.  This was a financially difficult decision but not a philosophically difficult choice.  We objected and still object to Penguin Magic selling products that are “knock-offs” or direct copies of tricks invented by others. 

 

The effect that caused us to make the decision was the Magic Makers’ version of Badlands Bob.  George Robinson, Jr. owns the rights to the effect and sells it for $45.00.  We have purchased the effect at this price and based on our audience reaction; we believe it is a fair price.  The effect is stunning, the props can be examined closely before and after the trick and the workmanship of the props makes $45.00 a reasonable and fair price.  Not too much, not too little.

 

You can buy the same effect from Penguin Magic for a mere $12.95 as the Obedient Die.  We cannot say definitively that the method is identical to that used in Boblands Bob but based on emails with Penguin Magic (“Penguin”) and Viking Manufacturing (“Viking”); we believe it is the same.

 

Penguin is able to price the effect so much lower than Viking precisely because it did not expend the time or resources necessary to invent, perfect and develop a method of producing the effect.  Badlands Bob made the Obedient Die marketable.  Viking and its predecessors in marketing rights, expended the time, crafted the advertisements, placed the ads, promoted the effect at conventions and stood behind it as began emerge as a marketable effect.  Viking also took on the considerable risk that all of its investment in the trick would be for naught if magicians did not buy it. 

 

Ask any magic inventor whether every effect produced is marketable and a success.  For every Color Monte, there must be 20 to 25 packet tricks that still sit on dealers’ shelves.  They move only when pushed out of the way to get to the “hot trick.”  Ask yourself as well.  Have you come up with a move, a trick, a flourish, a routine that you thought was marketable?  How often have your instincts proven accurate? 

 

Obedient Die – Knock-Off?

We asked Penguin to stop selling the knock-off of Badlands Bob.  The company refused and claimed it had rights superior to Viking.  This is a claim that does not seem to make sense.  Assume that they had purchased the rights to Badlands Bob, why not call it by that name?  Why would Mr. Robinson at Viking pay the elderly inventor of the effect for the manufacturing and marketing rights of an effect he could purchase from Penguin at retail and still price at $45.00 for a profit? 

 

The problem with these questions and the problem with Penguin’s claim of ownership of rights is that the offending trick is manufactured by a third party and not Penguin.  Magic Makers of Carson City, Nevada manufacturers and wholesales the Badlands Bob knock-off to dealers on the internet, such as Penguin, or your local brick and mortar shop. 

 

When we had a small (very small) email magic business, we purchased effects from Rob Stiff owner of what became Magic Makers.  At the time, Mr. Stiff had his operation in Orlando, Florida and featured mostly brass magic.  Mr. Stiff said in response to the question, how do you come up with all of these ideas for tricks, that he sees what is selling and has individuals in the area that can copy it cost-efficiently.

 

It is a testimony to our ignorance that we were first made aware of the counterfeiting when Mr. Stiff admitted the source of his “inventions.”  We immediately stopped buying from Mr. Stiff and still have considerable inventory in our basement from our mistake.  (Don’t bother asking for it, we’re not selling them for any reason).

 

Penguin carries many of Mr. Stiff’s effects and the common themes running through the effects are: 1) they are well-made; 2) they are clever and marketable; and, 3) they were invented by entities other than Penguin or Magic Makers.    

 

Fun Incorporated has long wholesaled their Magic Coloring Book to dealers.  A while back, we spoke with Graham and Katherine Putnam, owners of the magic wholesaler.  He had great pride in the Magic Coloring Book and showed how they printed, assembled and bound each book in their Chicago-land factory.  The process was labor and time intensive but turned out a perfectly bound Magic Coloring book each time.  Those books produced with flaws that might limit their useful life, were destroyed. 

 

Real Magic Coloring Book

Mr. Stiff and Magic Makers seized upon the idea of producing a Magic Coloring Book for wholesale distribution.  Again, because they were not limited by the investment of capital and time in creating the product or making a market for it, they could price the trick far below Fun Incorporated.

 

We mentioned at the outset that refusing Penguin’s advertising was an expensive decision but not philosophically difficult.  Penguin pays the websites that refer business approximately ten percent of the price paid by a customer.  No one gets rich off of Penguin advertising alone but it is a considerable source of income if the referring site has a high-visitor/hit count.  We were lucky that Inside Magic seemed to attract not only high numbers of visitors but also visitors willing to buy from Penguin. 

 

We hope Penguin will come back into the fold so that we can again do business with them.  Unfortunately, now it seems Penguin may be pulling other companies to their way of sales and marketing.  They are, after all, an apparently profitable concern.  Their ads can be found on hundreds of magic websites and their positioning with Google in both the paid Ad Words program (that’s the box of three or four websites with titles that seem responsive to either your search or the content of the web page you are reading), and the Google listings is the envy of many magic websites. 

 

In much the same way Mr. Stiff can offer his dealers a proven line of magic for sale, Penguin can offer affiliates carrying its ads, or magic businesses hoping to develop an international clientele, a proven method of selling magic.  The cost of advertising requires a tremendous volume of sales and those sales must come at a price point that allows the seller to cover its costs and make a profit but still be able to undercut anyone else intent on entering the marketplace.  To drive the cost down but increase the volume of sales, Penguin and other similarly situated marketers must take proven, marketable magic and squeeze out the costs associated with risk, innovation, trial-and-error, and reward for the inventor’s contribution to our art.

 

A trick that won’t sell will not only fail to make money for the mass-marketer but it will actually cause it to lose.  A trick that takes up space in an email ad, on the front page (the most visible and coveted portion of the website), and in inventory space; keeps other profitable tricks from being exposed to potential buyers. 

 

Not Real Magic Coloring Book

The best way to ensure the profitability of each trick offered through the mammoth network of affiliate sites, home page displays and email solicitations, is to stock only proven, profitable effects. If you can find the effects that not only have a track record of high sales volumes, low material costs, and appropriate weight and size for mailing, you have a winning line-up.  Any shop-owner can determine which tricks have the right size and weight for mailing.  Similarly, a cursory examination of the props will tell the seller whether the material and labor costs will be prohibitively expensive if produced on a grand scale. But the rub is finding the effect that will be a proven seller. 

 

Eliminate the risk and doubt from the equation and the seller can focus on the variables that are more definite, easier to determine and quantify.  Taking another magician’s invention ? assuming it is a proven seller ? is the easiest method of helping to ensure a profit and to set price-points that will deter others from entering the market. 

 

Adam Smith, the Father of Capitalism, thought the free market would always right any commercial wrong.  The market will behave, if left alone, efficiently and correctly.  Correctly is defined according to the efficiencies of the market not a moral judgment.  A price of $500.00 for a glass of water will not hold up; just as the price of $1.00 for a two carat diamond will be forced upwards.

 

So what of the magic market?  If you ask mortar and brick shop owners, they will tell you the economics are against them.  Their overhead necessarily adds some set amount to the cost of every effect sold.  These shop owners could close their doors as many have done in the last few years.  They are not being selfish or greedy; just realistic.  Their labor has value that is not appreciated by our current marketplace.  The hours of lingering at your local magic shop, leaning on the counter and listening to the older magicians talk of days and performers gone by, are also of the past. 

 

Your counter is now a chat room or message board.  The older magicians are now made-up screen names.  The conversation is now open to thousands and not just the four or five that used to camp out at the shop.  Among those thousands engaged in your conversation will be folks like you, folks like the elder magicians, and folks you would never have been forced to meet at the neighborhood magic shop.  Instead of coffee and donuts and interesting magic conversation, you are exposed to sniping, name-calling, and, to quote a former Vice President, “the nattering nabobs of negativism.” 

 

Nattering Nabobs are never good; although it will be our Halloween Costume this year.

 

This must all mean the internet is the place where profits are to be made.  So what if it is impersonal and replete with the type of people you would cross the street to avoid?  Assume the “nattering nabobs” and the perverts and the deranged come with the territory, is it profitable territory? 

 

Most but not all magicians with stores on the internet will tell you there is no gold in those hills.  They can’t go back to the brick and mortar store sold lock, stock and barrel to another hopeful proprietor.  That store, and the way of life that made that store viable, is gone.  The entrepreneur entering the internet realm usually has neither the capital nor trove of unique magic necessary to make a virtual store profitable. 

 

The entry costs for internet businesses are low.  But that means they are low for everyone.  The cost of a dedicated server and access to high-speed pipes for data has dropped dramatically.  Our first system, for example, had about a tenth of the speed and a hundredth of the space, but cost three times as much.  An adequate store infrastructure can be had for about $100 per month.  The seller will need to add stock, advertising, web application development and modification, as well as the labor to watch over and tweak the system.  These costs are not unique to any one seller.  If you are selling lingerie or the Twentieth Century Bra Trick, the costs to get on-line are virtually equal.

 

Assuming we are just examining the magic market on the internet, the costs for all-comers remain equal.  If the costs are equal and the available supply of magic is equally accessible by all new stores, there is nothing to differentiate any seller in the market place.  Store X selling The Magic Coloring Book for $10.00 has little more to offer a buyer than Store Y selling the same book for the same price.  Neither store can afford to drop the price too far below the other for fear of squeezing out all profit and then squeezing out all chance to recover on the actual costs of running the business.  

 

The internet magic store can try to differentiate its wares by having a more sophisticated website, allowing for better interaction between the owners and the customers, and discounting prices ever so slightly.

 

In economics this model is pretty close to what is called “perfect competition.”  The barriers to entry are low, the goods and services offered are homogeneous across all vendors and the price point is held at an efficient amount by the aggregated price/cost ratios of the stores. 

 

Two variations can distort the perfect competition model: 1) a business that can increase the cost of entry or decrease the price point below a survivable amount for other; and, 2) something that differentiates one seller from all others.  The first method is just an example of the second.  Being big or pricing for less differentiate a vendor from all others and should effectively destroy the others’ viability. 

 

This is where the knock-off or counterfeit raises its ugly head in our magic market on the internet.  Adam Smith (and Henry Ford) postulated that all companies in perfect competition strive to acquire a monopoly on the market.  Once there is only a few vendors left, all can set their prices and terms to a level the will provide tremendous profit.  

 

The small fish are no longer in the market to drag down prices in a vain attempt to gain some market share but really only ensuring their destruction.  The big fish, the sharks, correctly control the market place.  They establish the price points, the rules of transacting business, and even the method of competition. 

 

Adam Smith (and Henry Ford) both realized the monopoly position is a strong one but it is not a permanent one.  If there is only one company serving the consumers, that entity has a very stable and profitable position. 

 

Badlands Bob

We only find this type of scenario in government sanctioned monopolies like the old Bell System, your Gas Company, or 1970’s era cable television.  But where there are a small number of businesses looking to keep their profits coming by agreement or trusts, the volatility is greater than a market with only one company but still far less than a market with thousands of mom-and-pop stores anxious to sell. 

 

Eventually, though, competition will creep up to the doors of the large, few companies.  Their positions will become less viable as price wars erupt between the monopolists or due to an artificially set price by the government or some sort of unified consumer approach. 

 

We have a magic market on the internet that is presumably profitable for some and either not profitable or a loss-generator for most others.

 

Into this rather bleak scene comes magicians who have something new to offer.  Their inventions and adaptations, if profitable, can differentiate a magic store from another.  With that differentiation come increased sales, higher prices and, finally, profits.

 

Our system, it seems, deals with the inventor one of two ways: 1) rewards the inventor by signing an exclusive or semi-exclusive licensing agreement to sell the new product; or 2) stealing the innovative product, avoiding the cost of a license and keep the reward for the vendor. 

 

We spoke earlier about the Capitalist System always being self-correcting.  In fact, Adam Smith would say the system is always correct.  We said that label wasn’t a moral one, just a positive statement that defines the system.  Now we turn to the moral side. 

 

What the knock-off artists and the counterfeiters have done is pluck from the inventors and small businesses their pride and joy.  The few tricks invented by any individual magician cannot compare to the vast catalog most of the major internet stores sell from.  To the inventors, they are special not only because they differentiate them and their licensees from others and thereby give them a fighting chance in this competitive environment. 

 

They are also special because they are the inventors’ creations.  They care about the effects.  They have pride in the effects and have literally nursed an idea onto the drawing board, on to the work bench, back to the drawing board and back to the work bench. 

 

On a commercial level, the stealing of an effect is wrong because it is taking a vendor’s method of earning a profit.  It is anti-competitive.  But on a moral level, it is wrong because the idea does not belong to the knock-off artist.  This scenario is similar to the story of King David and Bathsheba in 2 Samuel 12:1-12.  David could have had any woman but wanted the wife of Uriah the Hittite. 

 

He had her, and had Uriah sent to his death in battle.  The prophet Nathan compares what David did to a rich man who takes a poor man’s only ewe lamb.  The poor man nursed the ewe lamb throughout its young life, cared for it when it was sick, fed it with a bottle and treated it like a member of the family.  Even though the rich man had many sheep, he decided to take the poor man’s ewe lamb, slaughtered it and served it to a visitor. 

 

David is outraged at the story and demands the rich man be imprisoned. Nathan tells David, he is the rich man of the story. 

 

The inventor’s ewe lamb is not just a commodity to be stolen from the small businessman, shoved into an internet-based market strategy, turned into the trick of the week, hit its commercial potential and finally considered by thousands as an “old trick.”  What knock-off artists do is wrong.  It is not right. 

 

Our hope is to not do business with those who would take or knock-off.  Taking away the sales volume will diminish the profit and will force some kind of change.  Hopefully, it will force a kind of change that values invention and innovation over instant gratification and thin profits.

 

Visit the page Tim Ellis and Sue Anne Webster have established to help fight counterfeiting and knock-offs by clicking here.

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