Thursday, February 24, 2011

How media manage parallel importation

Parallel importation is the importation of non-counterfeit product from another country without the permission of the intellectual property of the owner. According to the online encyclopedia, Wikipedia parallel import often run alongside legally produced products/services in the market causing negative effects. Grossman and Lai (2000) parallel trade occurs when a good protected by a patent copyright, or trademark, having been legally purchased in one country, is exported to another without the authorization of the local owner of the intellectual property right in the importing.
Often parallel importation arises when manufacturers produce different products for different markets causing difference in price. This coupled with technological advancement causes the same produce to be illegally imported from the country with cheaper price to another buoyed by profit motives.
Ahmadi and Yang (2000) write that proponents of parallel importation advocate for it for free flow of information and customers getting competitive prices for products and services in the market. Contrary, some scholars admonishing the practice as imbalance between western (information rich) and third world (information poor) in media imperialism by dominance of the latter  culture. (Ochieng, 1992[i], Ahuja and Chhabra, 2003). Discussed by UNESCO[ii] against agencies like Associated Press, United Press International, Reuters and Agency Pressed Franc amongst others whose ‘influence is enormous because ‘communication products, language, popular culture, and of course news in all parts of the world (by passing local media) from west’[iii] Ahuja and Chhabra (2003:90). This skewed reporting is seen as if ‘the western correspondents are not reporting the third world states in proper light’  Ochieng’ (1992:7).
The following are some of the challenges caused by parallel importation in media. In this paper I later look at how media managers can manage these challenges.
Challenges of Parallel Importation
The major challenge of parallel importation, and currently felt in the Kenyan print media, is the increase of price on paper due to poor government regulation and the fall of Webuye Pan Paper, a major producer of the county’s paper. This challenge has caused the cover head price of the newspaper to increase by Ksh. 5.  The government’s 25% interest rate in the backdrop of Egypt through COMESA 10% import, and Tanzania and Uganda’s 0% rate has brought worries of parallel importation of paper in Kenya. Paper converters have requested government to reduce the import rate by 10%. Otini (2011: 9).
Secondly, parallel importation has a negative effect on the viewership of electronic media which ‘for commercial television and radio, advertising is the lifeblood of the industry. What concerns advertisers using the media is reaching the target audience’ O’sullivan, Dutton and Rayner (2003:146). When a TV programme like soap opera is shown in sequences to maximize on advertisement to an already saturated audience, then this will translate to low viewership and revenue.
Tied to this second point is the challenge of program regulation and economies partly caused by parallel importation to mangers conscious of audience rating. A mass market already saturated with parallel import can cause TV and Radio program to go tabloid. Langer (1997) notes the pressure to reschedule important programs like news for more  popular programs like soap opera which focus more on personalities, human interest stories and entertainment.iv This causes tabloidization of the TV excludes more  serious and important stories.
Parallel imports often damage the reputation of media houses since when bought in illegal grey markets they lack warranties making any fault to be associated with the organization. A manager of music production house or a cable TV provider will not be able to control negative effects on illegal products brought by faulty CDs and poor connection illegally done.
Multinational media house like Times Warner, 20th Century Fox, and BBC amongst others as source of parallel imports causes challenge to local producers who try to sell their products and services to their country’s media houses. Independence here means autonomy and freedom from external constraints….it’s most often seen as meaning not unde3r the direct control of large organizations, be that commercial or state’ O’Sullivan, Dutton & Rayner (2003:154). Flooded with cheap programs from abroad locally produced programs at expensive rate kills their local's aesthetic against their western counterparts’ i.e. Cobra Squad.
The difference of political and social beliefs across countries causes a major challenge in controlling parallel imports against the backdrop of sovereignty. Communist countries where information shared make it hard to curb parallel imports which can be daunting. Closer home, the 0% rate on paper from Tanzania and Uganda compared to Kenyan can be hard Otini (2011:9)
Tied to the point above is the culture of impunity and corruption which has caused offenders of copyright law like pirates and facilitated by ease of bypassing bureaucracy for illegal non-counterfeit products and services to go about their trade easily.
Lastly, technological challenges have made parallel imports to be easy to acquire especially with the advancement of ICT. Although allowing free of information ‘however, it may prove to be virtually impossible to scrutinize and regulate the constant stream of new material being supplied on a daily and growing basis’ O’Sullivan, Dutton & Rayner (2008: 155). Additionally, the technological advancement of the West is causing their multinational media houses with local agents to reproduce local contents easily and cheaply against local media. Under this Ochieng’(1992:109) notes that it ‘is an impossibility where it’s supposed practitioners themselves as a whole have no skills for and awareness of the kind of journalism and other production activities that would be responsive to social needs’
Managing challenges of parallel importation
Media managers through the help of regulation bodies like Communication Commission of Kenya, CCK making media houses and practitioners to regulate the environment. Equally the Music Copyright Society of Kenya, MCSK, tries in controlling the piracy reducing to some extend the effect of parallel importation.
Media mangers should provide warranties and after sales services on their products and services to their customers. This will discourage the customers to but grey products and services to get the benefit warranties.
Cable TV providers manage parallel importation by encrypting of satellite TV to avoid scramming of their services for sale across the border. This showing in specific areas avoids scramming of the channels.
Equally, to a market already saturated with parallel imports, radio and TV manager can bank on this to help capture a market not fully catered by these imports. A good example is the explosion of Bollywood movies which has KTN starting Bollywood soap opera and The Star have a full page for Asian scene with celebrity gossip, movie and music review targeting the Kenyan Asian community.
Fourie (2007:363) highlights concentration, convergence and liberalization as some of the measures cutting across the media sphere against parallel importation.v
Concentration is when means of production in market sectors is owned by fewer but economically larger groups cutting across the media sphere controlling the effect of parallel importation to control a sphere where a media house can have a leeway. Fourie (2007) gives example of American Online which affected by internet and piracy merged with Time Warner to supplement the former cable customer and its speed of internet and television services.
Convergence is the coming together ICTS and traditional media for diversity and beat parallel imports at their game by providing cheaper products and services easily to the market. This creates new way for production, distributions and increase market.
Liberalization is a state intervention to expand the number of players in the market apart from state run media house. This increases market competition bringing diversity and lowering price discouraging customers to opt for parallel imports.

[i] Philip Ochieng’, a Kenyan journalist in his book I Accuse the Press adds control by absentee owners of press and political elites, dearth of technological ‘know how for journalists, and government and self censorship as other challenges of the media.
[ii] This difference brought the New World Information Order by UNESCO between 1978-89 to promote free flow of information and address imbalances by improving the capacity of all countries to communicate. This gave the muse to Philip Ochieng’s book.
[iii] I expound this effect of parallel importation on local production later.
iv This has seen Citizen TV to feature Afro-Cinema from Nollywood and KTN to feature a Bollywood soap opera recently.
vFourie on Globalization, ICT and Media adds privatization, internationalization and Commercialization as how media reacts to this effect. This three, according to me, have no bearing to parallel importation.

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