Why anti-piracy ads just make more pirates

Adam: [00:00:25] Hello and welcome to Comedian versus Economist. We demystify the world of money and help you get a handle on the bigger picture. My name's Adam and we're joined, as always, by my little older brother and real life economist Thomas. Hi, Thomas. 

Thomas: [00:00:40] Good, Adam. How are we going? 

Adam: [00:00:41] Doing very well, thank you. Thomas. Cracking show. So let's get straight into it. It looks like everything is now moving to the metaverse. Even recessions, at least. Meta has blamed macro conditions for being hugely unpopular with people. Thomas, I've got a joke. Right. Why are American chickens immune from inflation? Why? Because they're flightless birds, so they can't go up. Also because Costco controls the entire supply chain in the US. Could they? You wouldn't steal a car. Anti-Piracy ads from the early 2000 actually are responsible for increased movie piracy and like a crowd getting behind a fast bowler coming in off the long run up. The US share market was gearing up for a week. But once again, the US Fed played the forward defensive and raised rates. Thomas What did we learn from the US rate hikes last week? Yeah. 

Thomas: [00:01:43] Well, it was big. So, I mean, right to sue heading up everywhere in the world. As we flagged last week, we're expecting 25 from the RBA. We got that. We also got 75 basis points from the Fed and markets didn't like that. The Nasdaq closed down 3.4% at the end of the day. They're a bit surprised. The interesting thing about it, though, is like the 75 basis points that was fully expected and priced in. What wasn't expected was how hawkish Fed Chair Jerome Powell was going to come out sounding in his press conference after the rate hike. 

Adam: [00:02:21] I'm still getting my head around which one's hawkish and which ones? Dovish. In fact, I think I might flag this for a future episode where we just break down some of this jargon that's flying around at the moment, because I know I should know hawkish and dovish, but I don't. I, I don't know why we need both. I mean, obviously, one is the opposite of the other, but yeah. 

Thomas: [00:02:42] Yeah. Really hawkish means you're more inclined to raise rates. Dovish means less inclined to raise rates. More inclined to cut rates is a better way to go. 

Adam: [00:02:52] It means you are just running away. 

Thomas: [00:02:55] Yeah, but it's sort of another classic case in the week, like stocks were rising through the week on the sort of growing confidence that the pivot might be coming is another piece of jargon that, you know, at some point there's going to be a pivot where the Fed goes, okay, we're done hiking, we're going to move towards cutting. And markets were starting to think that that was maybe closer than expected, I think because the Fed had flagged that the pace of hikes was probably going to slow from after this meeting, that this might be the last 75 basis point height. Hmm. And worth remembering, like we've had in the past 30 years, there have been 575 basis point hikes. Four of them have happened in the past six months. 

Adam: [00:03:35] Yeah, well, one was the other one was. It was like some big cataclysmic event that triggered that one, too. 

Thomas: [00:03:42] I don't know, actually. Good question. Yeah, the look went up, the research team, and. 

Adam: [00:03:48] I said this was interesting, too. The thing I heard was interesting was like, there's no there's not necessarily we go up and then we stop and then we start going back down. Like they can just hold rates as well, you know, for a while they're just going to go because like I have heard this term pivot and that makes it sound very much like we got to the top and now we're going back down again or we've turned around, we've, we've done a pirouette or twirl at the end of the runway and now we're walking back off it. Fashion Week. Yeah, but then came to like this week. I'm like, there's no guarantee they're just going to not just stop for a while either and rates will just sit where they are. 

Thomas: [00:04:29] Yeah, yeah, yeah, yeah. I mean, I guess that's the dream scenario is that the Fed raises rates to the exact right level and then just leaves it there and the economy just kicks along pretty high for a while. That's that. 

Adam: [00:04:42] As they say that it's time in the market is much better than timing the market so yeah not. 

Thomas: [00:04:51] Normally in the context of monetary policy. 

Adam: [00:04:55] So far that's very good. So far it. 

Thomas: [00:04:59] Sort of made the point which was that yes, we're this is probably the end of 75, but we're not done yet. There's still a way to go. There is some ground to cover with interest rates before we get to a level that is sufficiently restrictive. You're saying there's no sense that inflation is coming down over tables of the last 12 months of readings? There's really no pattern there. We're exactly where we were a year ago. Right. Yeah. So we. Really saying, like just blowing out, blowing the idea that there might be cuts coming totally out of the water, saying, yeah, we're not we're not at a restrictive level given, you know, we're not even the handbrake is not even on yet and we're not seeing any indications in the inflation data that rates are coming down.

Adam: [00:05:42] So and they're saying, oh what from the markets. What they're seriously oh. Yeah well you're. 

Thomas: [00:05:58] Right seriously then three and a half percent on the day in the Nasdaq. Yeah, right. Yeah. So yeah, markets had really, you know, pinned a lot of hope on the idea that was going to happen. Yeah. But it's I mean, is. 

Adam: [00:06:09] The lag, though, isn't there? This is the big hidden thing. So they might say, ah, yeah, look, we're still where we were, but also we've raised rates really quickly. So if you do it that like it's not going to turn around that quick either. You've got to, you've got to wait for all this to play out right. Mhm. 

Thomas: [00:06:28] Yeah. That's right. That's right. But it did have something, something really interesting to say about the lags which have a listen to this. 

Audio Clip: [00:06:34] Remembering of course that you know, if we were to over tighten, we could then use our tools strongly to support the economy. Whereas if we don't get inflation under control because we don't tighten enough, now we're in a situation where inflation will become entrenched and the costs, the employment costs in particular will be much higher potentially. 

Thomas: [00:06:56] Yeah. So what do you think, though? So even though he doesn't know where the long the lags take and how much the policy hikes are going to affect the economy, and when it's he seems to be saying his preference is to crash the economy and fix it later, then let inflation get entrenched and out of hand. Right. And that I think that was a really big red flag for markets and markets. We think we might be able to avoid recession and we might pivot earlier than expected. Powers, lighten up. I'm willing to crash the economy because I can fix it later. I could have got tools to fix it later. So I'm willing to just I'm willing to err on the side of crashing the economy now more than I am willing to err on the side of letting inflation get entrenched and out of hand. 

Adam: [00:07:41] So that's the same approach that my father in law takes to helping me with home renovations. But we're trying to put some poor NZ on the skirting board the other day. I like it is like hammering in the quarter ends and it just smashed a hole in the going boys. Don't worry, we'll patch that up later. But like, we're just kind of. We're fixing one problem, but we're creating another one. Yeah. Yeah, right. And how do we feel about that approach? I mean, how does the market body didn't like it much markets. 

Thomas: [00:08:13] The markets went. 

Adam: [00:08:14] Oh again again. So yeah, I only have two sentiments. Markets I have. Oh what three. It's a bit like that. 

Thomas: [00:08:31] But I think, I mean, I think it's interesting, like you look at the, look at what the bull case in the bear case for markets is over the next six months, 6 to 12 months, the bull case is that we don't crash the economy and things are sort of okay. And we engineer a soft landing. We have that narrow, narrow road to victory and we walk that. And stocks just keep climbing that wall of worry higher and higher and just sort of drift higher from here. All right. That's the bull case. 

Adam: [00:09:05] And we get more and more jargon, like narrow paths and walls of worry. Yeah, yeah, yeah. 

Thomas: [00:09:10] Again, we've got to create, like a central bank finance analyst. Let me have to create work for ourselves, trade jargon, and then create a podcast explaining what the year means. 

Adam: [00:09:21] All right. And what's the bear case? 

Thomas: [00:09:23] The bear case is that the Fed breaks something or the RBA breaks something and they hike it till they break it. What it is, we don't know. Like a couple of weeks ago it was the UK pension system that almost broke. You know, if the UK pension system breaks, that's bigger than Bear Stearns collapsing in the US. And I think you'll. 

Adam: [00:09:43] Find it's bigger than Ben Hur is the. It's just saying no. Not anymore. Bigger than best. So. 

Thomas: [00:09:58] Yeah, like me. You know, the U.K. pension system collapsed. That's. That's a global shock. Like, that's not a American shock that gets exported. That slack move. Yeah. I mean, it's massive. It's massive. But we got very close to that. We're going to keep having things like that on the radar come up. There's going to be a lot of break points. We're going to have to sort of step around with a central bank, you know, the Fed that's willing to break stuff saying that like they're willing to break stuff. So the bear case is that something breaks, something massive happens and the US falls out of the economy. And you look at, like probabilistically, you know, where the distribution lies. That wall of worry case seems to be like, Yeah, what are you going to get over the next 12 months? Maybe 10%, maybe, you know, optimistically, 10% growth in markets if the US falls out of the economy in the UK pension market collapse. And then what are you looking at? Like, you know, potentially like it's a bear market, it's like 20, 30, 40% falls in equities. So you're looking at the balance of risks in that scenario. And that's what I think is sort of interesting in this in what Jerome Powell is saying is that you're saying that for me, it shifts the balance of risks. We now skirting much closer to breaking something and a willingness to break something, which then seems to shift the balance of probabilities, shift the distribution of outcomes in my mind. 

Adam: [00:11:23] Yeah. Interesting. The old saying rings true, doesn't it? Don't fight the Fed. That's, you know, everyone's like. Again, it was. Yeah, it was predictable. It was like these markets were rallying. Everyone's like, Yeah, good news is coming. And then the Fed came out now 75 basis points and no end in sight. And even when you know what once again. All right, Thomas, what's going on on Facebook? Who other than people are leaving? People leaving? 

Thomas: [00:11:54] Well, yeah, no, I think not. Not good things are happening at Facebook America. 

Adam: [00:11:58] Sorry. Yeah, not Facebook. 

Thomas: [00:12:00] Yeah. Met a had a shocker of a week last week, took a big leg down. It's now down 70% on its peak ten months ago. So yeah. So that said I love that if you bought Facebook back in 2015, you now are in the red. 

Adam: [00:12:17] Oh what? 

Thomas: [00:12:21] Yeah. So seven years of gains have been erased in ten months. 

Adam: [00:12:24] Wow. When was there? Do you know when their IPO was that 2015? That is. 

Thomas: [00:12:28] Not right. It was earlier than that wasn't it.

Adam: [00:12:31] Hmm. Maybe. I remember thinking at the time like when they IPO, I was like, oh, I should probably buy. And then I didn't. And then it went up and up and up and up and up. And I was like, I should have bought, but now look at me. Yeah. Winning. Good. So, the big question then, why are they, why are they down or why do they think they're doing well? 

Thomas: [00:12:53] So this is the interesting thing is they're like they're blaming macro and a lot of the big tech firms are all big tech's having a rough year. Google's down 40%. Amazon 45 snaps down 80%. And almost all of them are blaming macro, saying that the meta said the problem is the uncertain and uncertain and volatile macroeconomic landscape. Google blames the challenging macro climate. SNAP was blaming macro headwinds. 

Adam: [00:13:25] So it's a pretty soft target, though. I mean, macro can't kind of fight back of you know, it's hard for macro to defend itself against these accusations. Apple is doing all right. 

Thomas: [00:13:40] So Apple's doing all right. Yeah, Apple's doing it. I mean, I think it goes to show why you need to have a macro economic podcast and weekly schedule. 

Adam: [00:13:49] And why you should really tell your friends who don't have one where they might be able to find one, for example. Yeah. I mean, if, if Zuckerberg was listening to comedian versus economist, then he might understand more of the nuance in the macro market rather than just taking a sledgehammer to macro as a thing. Yeah, he clearly doesn't understand it. Could get it. Get a handle on the bigger picture. 

Thomas: [00:14:14] Yeah. No matter would probably be up 70% in these things. 

Adam: [00:14:19] Absolutely. 

Thomas: [00:14:20] So yeah. So they're blaming the macro thing. But yeah, it is a soft target. It's a bit of it and it is a little bit of a cop out. I mean, the interesting thing is like you're looking at so they're blaming ads is ads is the revenue. I mean, meta is an ad business and ads account for 98% of their revenue. And B, look and that sort of ad advertising revenue typically goes down when the economy is sluggish. But so far we haven't seen that. Play out in the data yet. So consumer spending in the US in particular is holding up yet 0.6% two months in a row now. So that's going okay. US GDP surprised to the upside in the last quarter 2.6 annualised. So that's stronger than expected and largely that's what we're seeing in sort of the key markets. The data is still coming in stronger than expected. Everyone's expecting things to slow, but we haven't seen that just yet. So there's sort of a little bit of. 

Adam: [00:15:14] A. 

Thomas: [00:15:15] Question mark over how true that macro story is. And the other one that sort of speaks against it is Apple is still killing it. So Apple's yeah, the earnings in this last report.

Adam: [00:15:26] They're not so dependent on advertising though. 

Thomas: [00:15:28] Is that true. 

Adam: [00:15:29] So you know matter and Google in particular. 

Thomas: [00:15:32] But they're still very consumer facing. Yeah yeah yeah. Like they're not like yeah yeah they're not an infrastructure or commodities play. You know, they're still dealing with consumers and the high end consumer goods which you know, typically tend to not as they're not an essential. Hmm. But yeah. So I mean the other stat I love is Apple's got a market cap of 2.4 trillion. Yeah three years ago it was twice as valuable as better. It's now ten times as valuable. Wow, I should have bought Apple. 

Adam: [00:16:01] So this is Zuckerberg like so it's big things. The advertising revenues have fallen away and he's blaming macro conditions for that. Has he thought about taking a leaf out of Elon Musk's book and just yelling at and threatening advertisers to stay on his platform? 

Thomas: [00:16:22] Yeah, he's not quite the visionary. That. Elon Musk is. 

Adam: [00:16:29] I mean, he's like, is Twitter blaming the macro environment at the moment, too, or is Twitter just self-aware? Why have some other issues, such as laying off of its staff? Apparently, they've started hiring them back again. The latest update from the world of Twitter is that people who were laid off have now been hired and started hiring them back. Man, I saw an article. The BBC reached out to Twitter for a comment and found that the Twitter marketing department had all been laid off. And therefore unavailable. 

Thomas: [00:17:06] Yeah, all sorts of crazy going on it. Twitter and yeah. I mean, I think the thing that's really going on for the media is and I think probably snap as well, is the Apple's app tracking transparency policy, which came in a little while ago, not not that long ago. In the scheme of things. Which year stops? Stops apps tracking your movements across supply, across the US, only 16% of users agree to being tracked, which even I find like a kind of surprising number.

Adam: [00:17:39] Yeah, but that's. But that's just the portion of the population that just click.

Thomas: [00:17:42] Yes, right.

Adam: [00:17:43] Like I think you'll find, you know, if you look at fishing stats, there's probably around 16%. So, you know, like you could put something in front of it. I don't day someone pick a relative and you'd probably just click. Yes. So I think that's probably where that state comes from. Yeah, right. I don't have Facebook installed on my phone anymore, but sometimes I need to check the marketplace to buy something. So I have to install and I have to go through that process every time. And it just makes me laugh. It's like, come on, please go and just track it just a bit. It's really important. Okay. So what's the future for MIT? Are we talking kind of. Is there a risk that they won't survive? Is that where we're heading? 

Thomas: [00:18:29] So a lot of people, a lot of people are saying that. Yeah. Saying that the metaverse is where stocks go to die is. 

Adam: [00:18:36] Around at the moment. Right. 

Thomas: [00:18:38] But yeah, I mean, so I think, I think it is in trouble like and yeah. So, because they don't have that data, they don't, they can't target their ads as well as they used to. Yeah. Which makes the ads less valuable, which means that advertisers are willing, aren't willing to spend as much on them and actually are thinking, I'm afraid that that's having a big impact on small business. There was a survey of small e-commerce companies in America that showed that the cost of customer acquisition has gone up tenfold since Apple brought in their transparency policy. Now, because they don't, they don't have the ability to target prospective customers anymore. Yeah, right. So it's, it's that's yeah. So they're reducing their spending and I've got to take more of a scattergun approach. They can't directly target the ads as it's having an impact on momentum. It's also passed down the chain and the advertisers aren't having a great run with it as well. So, so that's the sort of they're in trouble with. But the interesting counterargument to that, which I read, which I thought was interesting, is saying that that the 80 that apple. App tracking transparency policy in blankets applies to everyone in the ecosystem and applies to all apps. Tick Tock, which is Facebook's big competitor, which is eating some of their lunch, but not as much as most people think. Tick Tock has some kind of workaround for 80, but we don't know what it is because it's sort of locked up in China. 

Adam: [00:20:06] Because it's developed in China. Yeah, right. Yeah. 

Thomas: [00:20:08] But somehow they're still getting around it, so they're not as affected. But that's probably not going to last. So Tiktok's probably going to get hit by that at some point. 

Adam: [00:20:17] I would like to know more detail about that too. Before I throw any weight behind that claim. But it's interesting. 

Thomas: [00:20:23] All the apps are dealing with the same policy and they're all struggling with it. Facebook is best positioned to deal with it and find new ways to develop targeted ads. And so they're throwing a lot of money at artificial intelligence at the moment to find ways to match ads to their customers. Right. They've got their pockets deep enough that they're probably going to win that race. Yeah, it's probably going to develop the best systems for developing and delivering targeted ads without that tracking data. And that's the race that all apps are in at the moment. Tick tock and everyone. Hmm. But Facebook's probably going to win that race. You would think they've got the most money and they've got a head start. And they've had that. They've had it easy for a while because Apple has been allowing them to track. But without that, that it's just a new game and there's just a reset. Hmm. But they're probably the same guys saying, no, that's their moat. They're going to they're going to develop the best track. They're going to develop the best matching system. And that will that will serve them as a moat and and and be be very expensive to develop similar kind of matching systems. Yeah, the Facebook's probably going to come up with over the next 12 months. 

Adam: [00:21:32] Yeah, right. Because I've got I got to admit that I think a pop up on every website you visit asking you to accept cookies might not be the might not be the end game for us. So I think we surely we can do better as a as an Internet digital society than this stupid pop up that comes on every website I visit saying, Do you want to accept all these tracking cookies? Um, of course. We're all individuals like the end user licencing agreement. You just you just accept and move on. 

Thomas: [00:22:02] I don't even know what cookies are. 

Adam: [00:22:05] Yummy. Thomas. They're yummy. All right, well, you can, of course, find this across all of Metters platforms, Instagram and Facebook at CV podcast, though maybe we'll have to broaden their horizons. Mastodon, I believe, is the new one of choice. That's the new Twitter. I spent 3 minutes with it and it was already two two. The barrier to entry was to say, What server do you want to join? I'm not. I'm out on that. All right. Before we get to the break, Thomas, I just got a couple of listener emails that came through during the week. Last week we were talking about Toyota's chip shortage and how they were going to start going old school and giving out physical keys instead of smart keys. Alan, send us an email at cve@equitymates.com. Hey, just gave us some cocky explanations, a bit of an explainer. And I think he's filled in the missing piece because you and I were arguing, or maybe at least not seeing eye to eye on the need for a chip and the key. And he's explaining it. So there's a physical key, which is the one that you stick in and turn the barrel. That's the old school model. Then there's the Immobiliser, which is a chip that's built into the key as well. And so you can turn the key in the barrel. But if the IMMOBILISER is not present and not really close, it does work over wifi then that's the bit that won't that I think you were talking about last week where I was getting a bit confused. So it's that immobiliser that that's needed because I was getting confused because my car doesn't have a barrel, it doesn't have a key at all, it's just got a fob and that fob has to be closed before the car will start with the little button that says start the car. So yeah, so there you go. So thank you, Alan, for clearing that up. I think the Immobiliser might have been the missing piece of that puzzle. Does that help you too, Thomas? 

Thomas: [00:23:52] Yeah, yeah, that's good. Cheers, Alan. You share that? 

Adam: [00:23:54] Nice one. And Hugh also said this message. Hugh said that the chip shortage is linked to a podcast, which we'll actually link as well. If you head over to our Instagram page and link look in the bio, there's a link to our link tree, which you'll find hopefully by the time this comes to air. So maybe that the chip shortage is a hangover effect from overreactions during COVID. Did you get across this time? Hmm. 

Thomas: [00:24:23] You had to listen to the podcast. It was a good one from the crew at Anderson. How is it? Yeah, talking about like a lot of the auto auto manufacturers can cancel a lot of orders for chip chips because I thought the man was going to collapse at the same time as demand from consumer manufacturers exploded. And there was that sort of switching that happened. Mm hmm. Yeah. And that's part of the story. I mean, the interesting thing I learnt from it was that auto manufacturers are well down the list of priorities for chip producers because they just don't consume anywhere near the quantities of, like, high tech companies. 

Adam: [00:25:04] Yeah. Okay. 

Thomas: [00:25:05] So, yeah. So that's sort of part of why they still are more stuck than, you know, hearing so much about consumer electronics. You're hearing it about autos. 

Adam: [00:25:13] Hmm. It's very, very hard to turn your phone on with an old school key. Yeah. Yeah. And don't have as many options for starting your phone as you do with your car. 

Thomas: [00:25:25] That's true. Yeah. Maybe see an immobiliser, though. 

Adam: [00:25:30] Yeah. 

Thomas: [00:25:31] But the other thing I learnt from that podcast, which is interesting, is that semiconductor production is incredibly water intensive. So when Taiwan had a drought last year, it sort of impacted water production. And then in some regions of weather, in the regions where the Taiwan semiconductors have their big factories, they consume 10% of the local water. Wow. So, yeah. So if there's a drought and more climate change, that's going to impact semiconductor production. Yeah. Really? Yeah, definitely. The three cheers for that is so that link. Those are really interesting podcasts. 

Adam: [00:26:03] Yeah, that's fine. All right. Let's grab a break here, grab a quick word from this week's sponsor and be back with more comedian versus economist right after this. Welcome back here on Canadian versus Economist. You can, of course, send us an email at cve@equitymates.com or as I said, get us on Facebook and Instagram at CV podcast. We'd also love it if you would leave us a rating or a review. I get that wherever you listen to your podcast, that would help us out enormously. Why don't you do it now while you listen to the rest of the show? Thomas, what's happening with Costco and their chickens? 

Thomas: [00:26:37] Yeah. So chicken prices are stable. So been a few articles recently saying like, why are chicken prices the rotisserie chicken in Costco? They haven't changed since they were introduced in 2000. Right, the year 2000. So they came in at 4.99, 2000. This deal. 4.9. 

Adam: [00:26:57] Yeah, yeah, yeah. 

Thomas: [00:26:59] All right. I don't like how they duck. Inflation, how. 

Adam: [00:27:03] They do it. Uh, yeah. All right. 

Thomas: [00:27:08] So they got that. And not only that, they got their hot dog combo in the food court. Costco's in America, have a food court and I've learnt you get a hot dog and a 20, 20 ounce Pepsi for $1.50. All of that hasn't changed in 30 years. 

Adam: [00:27:25] That's amazing. 

Thomas: [00:27:26] Not only that, the Pepsi hack comes with unlimited refills. 

Adam: [00:27:32] Cause it does. Uh, yeah. Really? 

Thomas: [00:27:35] You got to have a responsible service of a sugar licence or something. Know unlimited refills of Pepsi. 

Adam: [00:27:42] Yeah. I mean, 20 ounces should be enough for most people, I would think, without the need to go and refill your 20 ounces. What? What's 20 ounces? Why? Even why even specify the outage on the ad like you've just got you've got unlimited access to Pepsi. That should be the selling point. Now you get a 20 ounce Pepsi with unlimited refills. It doesn't matter. The initial size is of no consequence whatsoever. I saw this article and I thought, I wonder whether they've managed to keep prices for chickens low because I know Costco is in Australia as well now. Oh they are so yeah. I head up the coast go Australia website. Do you know what rotisserie chicken at Costco Australia costs? 

Thomas: [00:28:27] Thomas Nye. How much? 

Adam: [00:28:28] 6.99. Oh, which seem pretty reasonable. There's a catch. Hmm. Minimum order of 20 chickens. Would say you can get a cooked rotisserie chicken at Costco Australia for $6 nine, but you have to order a minimum of 20 chickens. The thing I love most about it though is that I had look on that Costco website and it said that, you know, the bottom, they try and sell you other things. It was like frequently buying together with other people to buy 20 chickens, apparently. Also buying a smart creative craft station for $209 and want heritage water rowing machines for 1190 $9. And. Frequently also bought together with 20 rotisserie chickens is a Tutsi group top grain leather sofa for 1799.99. So there's even reviews. Of the chickens, the 20 chicken purchase ones, five star reviews from several. It is, though, organising a feed for the rowing club and they were able to save $60 compared with normal supermarket chickens where they would have paid well over $200. Which does explain why the heritage water rowing machine is frequently purchased with 20 rotisserie chickens. It's good. Oh, you're rowing needs Costco. Oh. Wow. Anyway, I just. It was it was the, the rotisserie chicken website of Costco in Australia was the website that just kept on giving the more I read it. Wow, that's great. Yeah. Anyway, so, so back to back to the US and for 99 for a chicken jemmy, you can just buy the one. Um, so this is, this is just like a, this is just a marketing thing. 

Thomas: [00:30:41] I think so. Yeah. So if the chicken had kept pace with inflation, they'd be selling for 8.31 today. But so they're underpriced. So yeah, but Costco, this seems to be there's a bit of a game going there and they're what they call a loss leader. So they are super cheap to get people in the stores because once the people there you're not just buying one chicken. 

Adam: [00:31:06] It's a minimum of 20 series you're Australia. 

Thomas: [00:31:11] Can you buy one cheaper? It's just the price is in the 20. 

Adam: [00:31:17] Oh, yeah. I'm not sure. All right. I'll have to do more research. Research yet? So you look at the. 

Thomas: [00:31:29] I saw a map of where the chickens are placed in your average Costco. And you've got to walk through 60% of the store to get the chicken and then get to the cashier and out. Right. So they make you, they make you go through a lot of stuff to get there. So that's part of it. You get people in the door and then there's what they call value signalling. They're saying it's a sort of a branding thing. It reinforces the idea that Costco is good and has good deals. They're saying that consumers then associate Costco with fairness and benevolence. 

Adam: [00:32:05] I guess it's. Like if you keep going and getting a chicken, you know, you can always go there and get one for five bucks and that never changes. Then I guess you do. You kind of go, Wow, that's good. And they're good. Costco, they never, never jack up their prices. 

Thomas: [00:32:21] Yeah, but it's not benevolence. They're doing it out of. It's marketing. 

Adam: [00:32:26] Ploy. Right? Like it's. 

Thomas: [00:32:27] No benevolence. 

Adam: [00:32:30] Hey, potato, potato store I love. 

Thomas: [00:32:34] But I remember like back when I was living in Sydney, there was a cyclone in Queensland, Cyclone Yasi or something which then led to a banana shortage. Yeah, I remember the banana shortage. Anyway, there was this. And the price of bananas went up to like $15 a kilogram or something. Yeah. This fruit and veg place in Randwick came out and said There is no banana shortage, it's just a conspiracy between the cheap food duopoly and Big Banana. [00:33:05][30.4]

Adam: [00:33:06] And a big banana or the big banana. Because it's. So. 

Thomas: [00:33:17] Yeah. So there is no thing and you're saying like and I'm not, I'm not, I'm refusing to increase the prices of my bananas. Bananas should be cheap and they're going to stay cheap. All right. So this guy and then got like a massive amount of press go like I interviewed or everywhere and then had like a queue of cars outside the grocer where like a couple of hundred metres long because everyone was coming to get the cheap bananas. Everyone was outraged that they had to pay. Yeah.  Adam: [00:33:43] Yeah, right. 

Thomas: [00:33:44] $15 a banana. But I think in the end, it just turned out he was just losing. He was just like, I'm going to get a massive amount of free publicity here by selling cheap bananas. Yeah. Genius. Genius. He would have. He would have slayed it, like, sold so much. 

Adam: [00:33:59] I. This is. And this is the thing, right? You're. We're sitting here going, wow, what a genius. Like, you know, just because Costco's a massive conglomerate, why is there any less genius? 

Thomas: [00:34:11] Yeah. Yeah, I think. I think the thing that's that's that's a bit tricky is that, like, there's this concept of predatory pricing, right? Which is where you do like what they're doing here. You sort of undersell some things and you do it because you've got the size to do it. So like if you're a small IGA or something, you might not be able to lose lead on your chicken because you just can't, you just can't take that hit. The Costco is taking a hit on these chickens in order to get all the other things through the store. They're able to do that partly because of their size. And if they're able to do that because of their size, that kills your smaller competitors, which concentrates the market in a smaller number of players, and then you eventually end up with a monopoly. So like the see would look at something like we would potentially look at something like this and go like, Ah, this is going to create a monopoly if we let this go on and we need to sort of get involved if someone complains and this predatory pricing. But it's also it's like for what it is, it's hard to define and you know, what's predatory pricing and what's just legitimate sales and getting people through the door and marketing saying, you. 

Adam: [00:35:20] Know, the local IGA is certainly the ones around here. I just don't think they've got the floorspace either to stock a top grain leather sofa. or A water or a rowing machine to bring in those high margin products people like to buy where they buy chickens. All right. Finally on the show, Thomas, you wouldn't steal a car, or would you? 

Thomas: [00:35:50] Personally. Yeah.

  Adam: [00:35:56] Of course. Referencing the anti-piracy ads from the early 2000. New information about those ads recently. What's going on? 

Thomas: [00:36:03] On? Yeah. Yeah. It turns out they didn't work. 

Adam: [00:36:06] So they're the. I could have told you that in the early 2000. Yeah. 

Thomas: [00:36:13] When I saw some behavioural economists at the ESC School of Management in France, I did a study on it and tried to look at why they worked and why that didn't work. What they found is that it didn't work. And so a couple of reasons for that. One is that more arguments are not better, that weak arguments dilute strong ones. So the sort of anti anti-piracy campaigns around the 2000s were didn't have a sort of a clear argument for why it was wrong. They had a sort of a number of arguments and a number of sort of lines of attack that they were running. And what they found is that more is not better. Yeah, but if you give consumers more arguments, it just dilutes the strength of your good arguments. And, you know, you aren't more convincing. Hmm. So, like, three, three points isn't as strong as one really good point of what they're saying, which I thought was interesting, is sort of just true of humans. If you've got one good argument, stick with that line. 

Adam: [00:37:19] Though. The analogy was always a problem for me. Like it was like you wouldn't steal a car. Hmm. It didn't match because you couldn't make a copy of a car and then give, like, give the copy or keep a copy, and your friend gets a copy and your mum gets a copy. And so there was this whole, the whole angle of stealing. It didn't feel like stealing. 

Thomas: [00:37:38] Yeah, they didn't. They didn't do well to convey why pirate were stealing something. And that was the point. A lot of people didn't really think it was stealing. 

Adam: [00:37:48] I actually misheard it at first. What about the first time I heard it? I actually thought it was a challenge because I thought they said you couldn't steal a television and oh, look, I just got to apologise to my neighbours. His TV was inexplicably missing around the top of the cafe because I heard you couldn't steal a television as I watched it because I could. Oh, I think the other problem was that the warning was at the start, like, as you didn't know whether the movie was any good yet, so you didn't know whether you wanted to rip them off or not to sort of ignore it and see. So, you know, you came to get to the movie I to play it at the end. And in the end of the movie, the movie finishes or just before the final climactic scene. 

Thomas: [00:38:31] You just just. 

Adam: [00:38:32] Take a short break here. Just before the finals, they'd just let you know if you were doing this film, I'd steal it. 

Thomas: [00:38:39] The other thing they found is that you didn't. Not only did it not discourage stealing like stealing in air quotes, but it actually encouraged more piracy because it's what they're saying is it normalised the idea of pirating content. Right. The people who, you know, a lot of people would have seen it would never even occur to them that you could pirate it, that there were pirate copies of movies out there. Yeah. They were like, Oh, really? Like, there's people who are pirating this stuff. Come on, why am I paying? 

Adam: [00:39:11] Yeah, you really got to really, really put it right in front of people. And I like it. Yeah, because it was back in the days of the video stores, they would have gone to the video store, you would have hi shout out to the younger listeners who are like, What are they talking about? You went to the video store and you hid a DVD and you took it home if you really liked it. Your option to keep that DVD was to go and buy it. Like that would have been your next step, if you like. I love that movie so much. I just want to have a copy of it. You'd go to Big W or somewhere and you'd buy it. Whereas if the first thing you see when you play the rented copy is you wouldn't steal a car and blah blah blah. Don't pirate DVDs. Yeah, you're right. You go up, there's pirating. Well, I should look at that before I go and spend 24, 99 on a copy of White Men Can't Jump. Yeah but yeah. So yeah. 

Thomas: [00:40:04] That's right. Yeah. So yeah. So apparently that's why it made it worse. That, that whole ad. Hmm. 

Adam: [00:40:09] Yeah. It stands to reason. The funniest thing of all was that it turns out the soundtrack on ``You wouldn't steal a car piracy campaign was actually stolen. Yeah. Yeah. So there was a Dutch artist, a Dutch electro music artist. He made this thing for like a small batch of movies and then it got rolled out with some I think it was Lord of the Rings, maybe. 

Thomas: [00:40:38] The Harry Potter. 

Adam: [00:40:39] Harry Potter.

Thomas: [00:40:40] He made it and then gave it to, like the Dutch music industry body or rights management thing or something. Yeah. And then they gave it to Hollywood. Brilliant. And, but then never paid him on the other side. [00:40:53][13.2]

Adam: [00:40:53] Yeah. 

Thomas: [00:40:54] And so Hollywood was like, oh, my mate just made me a copy. And I thought, oh, there are. I could use it. 

Adam: [00:41:02] So the anti-piracy ad was using pirated music. That's a nice but British art, I reckon. All right. Let's leave it there. Thank you so much for tuning in. As I say, if you could write and review the show wherever you're wherever you hear it, that'll be much, much, much appreciated. But for us, it's bye for now.