The FINANCIAL — Owners of video and audio shops in Georgia are calling for the introduction of a fee for downloading from the internet. Businessmen claim that the number of customers has reduced by 15-20 times during last 3 years. “From 100% of customers only 5% are left,” Aka Khukashvili, Founder and Manager of video and audio shop GURU, told The FINANCIAL. Meanwhile Alexa.com global provider of information on website traffic rates avoe.ge as the top Georgian music and video download website offering pirate files.
Avoe.ge is one of the most popular websites owned by Caucasus Online, company the minor shareholders of which are EBRD and other financial institutions. According to top.ge local Georgian rating website associated with Caucasus Online, avoe.ge has 50 000 visitors daily. Company also operates another pirate download website gol.ge with daily traffic 21.000.
“Only a minority of our original customers are able to pay the extra money for music or movies. If the total economical environment improves then people will again start paying for the pleasure. There are lots of foreign international sites from which downloading costs money. Accordingly this is an irreversible process,” says Revaz Alapishvili, Director of audio and video shop Meloman.
“The new internet trend has stolen not only the customers of CD and DVD shops but also radio listeners. In total the number of radio listeners has reduced because of the reason that you can find any music, any singer, on the internet and download them free of charge. Fans of any music direction are able to create albums by themselves by downloading songs from the internet. The internet is also becoming accessible for more and more people, accelerating the problem for radios stations, CD and DVD shops. The whole musical programme of radio stations is available from the internet in mp3 format,” Revaz Kakulia, Manager of Radio station Fortuna+, one of the leading Georgian Radio Stations, notes.
Kakulia remembers the time three or four years ago when people listened to the radio just for the music. “As well as this there was a lot of local music that we had the exclusive rights to, by launching their songs we managed to boost our listener rates. Today radio stations are not able to attract listeners with only music, as this music is already accessible on the internet. Over the last several months we have been focusing on creating new transmissions. It’s hard for me to advise CD and DVD sellers though on how to survive as they are in a different position.”
“One of the main advantages of the radio is the launch of potential hits. We can foresee which songs will become future hits and so play them frequently. For several months this song will not yet be accessible by the internet. The second thing that helps us to attract listeners is newly introduced itineraries: quizzes, requests. If before request shows lasted for only an hour today they take up four hours of radio air,” Kakulia declares.
Alapishvili, Meloman, notes that the latest versions of CD and DVD disks are in Blu-Ray format. The total space of such a disc is 40 gigabits. Formerly DVDs were 4-7 gigabits. If on a previous disc’s format you were able to record 15 movies, currently on Blu-Ray you can keep 150 films.
“This is an extra pointer toward a depressing future for CD and DVD shops. For our customers it shouldn’t be a problem to buy DVD discs with good quality film on them and to watch them on plasma TVs. I can’t even imagine any businesses opening shops in this sphere after so many have closed down. I have spent such a long time here and won’t be able to find any alternative work for myself. I’ll try to keep this shop going for as long as possible until I go bankrupt,” Alapishvili says.
“You can find a certain category of keen fans that are in to listening only to quality music and will never be satisfied with mp3 records but this number is about 0.5%. Nowadays the masses are still going out to the markets and buying pirate CDs and cassettes,” Kakulia, Radio Fortuna+, notes.
Video and Audio shop Meloman is cooperating with Georgian record studios and they supply them with local and foreign music.
Before the August war GURU imported goods from Russia. Later they started looking for alternative ways and now import goods from Ukraine, Turkey, Germany and Holland. GURU has a 15-35% benefit margin. CD discs cost GEL 10-12 and DVDs from GEL 15 to GEL 25.
“My benefit from one CD or DVD that costs GEL 20-25 is 25%. You can find a smaller number of licensed CDs in Georgia nowadays. It is possible though to sign an agreement with the company Sony Music and start supplying the whole of post soviet countries with licensed music instead,” Alapishvili notes.
Several years ago there was a trial about importing licensed music records from the USA where a cassette should have cost GEL 7. Meanwhile the CD cost the same price and so that business became bankrupt.
Alapishvili declares that the main customers of his shop were people from the middle classes that are now not able to pay even GEL 7 for a cassette especially during the time of the big alternative of CD and DVD products on the local market.
“From the end of the 90s we had a shop in the Georgian Trading Centre (GTC), on Rustaveli Avenue and still have one more branch in the cinema Amirani. We opened GURU in February of 2007. In Amirani the name of our branch is Music Center. I have been present in this business for 8-9 years already,” Khukhashvili, GURU, says.
Khukhashvili remembers that the CD and DVD business had several stages of problems. “In the case of CDs people were paying for 10 songs. Meanwhile after the entrance of the mp3 on our market and with CDs with space for over 200 songs, business started to decline. Enlargement of the disc’s space shortened the number of sales. Instead of 10 discs we were selling only one.”
At present the owners of audio and video shops, as well as manager of the radio station Fortuna+ think that the effect of the internet on their business can be reduced in the case of stating a fee for downloading from the internet.
“It would be favourable for us if on web pages where movies and music are uploaded illegally, owners of legal shops could sue them in court or impose some fee. The minority of our customers may not even know where the music shop is located. I think that these people can reach an agreement and solve the problem without harming any sides,” Kakulia says.
Alapishvili says that he doesn’t think that the owners of free downloading movies sites should be punished. “I would just tell them to introduce fees. Such web pages have already gathered a large number of customers and I think that it’s the right time for them to start imposing fees for downloading,” he says.
“To solve the problem of competition between the internet and various businesses there should be imposed a fee for the downloading of films and music. Although part of this fee should go in to the hands of the filmmakers,” Khukhashvili, GURU, says.
“The sales of computer games in our shop occupy 75% of total sales. The huge demand for computer games is connected with difficulties that people face while trying to download and install them. We can’t say the same for movies and music. If downloading movies and music would be connected with the same difficulties as with computer games, our business would be in a much better condition. I’m not saying that downloading films or music from the internet should be completely forbidden though. From free web pages movies are downloaded by people that were previously our customers. People should have to pay for this privilege. That would in fact restore our business,” Khukhashvili declares.
“The question is how much should a web page impose for downloading movies or music. How much should the downloading of movies from the internet cost, which on DVD costs GEL 25. If people switch to buying DVDs rather than downloading than web pages will free their service again. That’s why I don’t think that the owners of these web pages will make the concession in the first place,” Kakulia presumes.
“The owners of web pages might also say that this is their business which has already become a success. They have attracted customers and advertisers,” Kakulia added.
After local cinema’s decision to dub movies in Georgian GURU started receiving new films on DVDs earlier than they appeared in cinemas. “The reason is that it took our cinemas a longer time to dub movies. As for DVDs we received them already dubbed in Russian. When Georgian cinemas were launching movies dubbed in Russian we never managed to get DVDs earlier them,” Khukhashvili says.
Khukhashvili thinks that the fact that on the internet movies are uploaded earlier than their first night performances in cinemas is a crime. “We can allow the selling of DVDs before their première in cinemas because we get them legally. I don’t think that a DVD selling shop will steal the customers of cinemas. Until the showing of Georgian films is finished in cinema houses DVD sellers do not have the right to start selling them in their shops,” he notes.
The shop Meloman receives DVDs from private persons who are some of the first in getting new films’ footage.
“We never start selling newly entered movies before their official first night performance in cinemas. Cinemas are spending lots of money on buying a movie and we are trying to support them,” Alapishvili says.
“If I am trying to sustain cinemas, why can’t internet providers sustain DVD and CD seller shops? The shop Movies and Music was the property of studio Tbilisi but they stopped working two years ago when all such shops had large problems connected with high fees for rent,” says Alapishvili, Meloman.
Written By Madona Gasanova
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