Sadia,

As a retired engineer and systems analyst, I consider a design file to be DATA rather than a program. The same data(design file) is manipulated by different programs – digitizing and internal to the sewing machine. The data(design file) without a program to manipulate it is useless. A program is required to generate the data(design) and manipulate it. The data(design) as a stand alone entity is useless.

Obviously, the design graphics and stitchouts are copyrighted. The problem is whether they are more like a program which has one set of regulations or a book, CD, or DVD with another. IMO, obviously not a legal interpretation, they are the second.

I think you are unnecessarily concerned about the resale of designs. You may recall in the ’80s and ’90s a company named Borland introduced a number of “Turbo” programming languages . What was unique at the time was they were far less expensive that other compilers then available; they could also be used “like a book” – i.e. as long as it was being used by only one person on a single computer at any time, it could be shared. This was very different from compilers which could be installed on only one machine at a time. Since the cost was so reasonable and the licensing agreement was so “friendly”, they sold very well. There was no need to pirate the software since an individual could reasonably purchase their own copy and all of the documentation.

I believe that digitizers need to remind people who obtain designs from other than an authorized source that they have no assurance of the validity of the file that they receive. Since there are programs that can readily manipulate design files, the unauthorized source may have edited or unintentially corrupted the design files. Digitizers should make it known that since they have no control over what the original purchaser might do to the files, they make no waranty other than to the original purchaser. In addition to the risk of corrupted design files, there is the risk of viruses and spyware when software is obtained from other than an authorized source.

I believe that increasing the costs of design files will increase the sharing of designs and result in the decreased sales which concerns you. I believe that the small digitizers have florished because they do sell at a far more reasonable cost than the large companies. This is due to both the sale of smaller sets (fewer designs), lower overhead, support-sales costs, and the graphics and characters licensing fees.

I know you understand what I mean but I will include a very simple contrived example for other readers. This example has arbitrary figures and assuming the design sets are is identical in composition and design quality but different in packaging and support:

100 people will purchase for $10 = $1000
45 people will purchase for $20 = $900
10 people will purchase for $50 = $500
5 people will purchase for $100 = $500

But the service expectations of those paying $100 is far greater than those paying $50 or $20 or $10.

$10 – service fee $2.00; $200 for fees for net of $800
$20 – service fee $3.00; $135 for fees for net of $765
$50 – service fee $6.00; $60 for fees for net of $440
$100 – service fee of $9.00; $45 for fees for net of $455
The profit is greater selling for $10.

But changing the service fee to:
$10 – service fee $3.00; $300 for fees for net of $700
$20 – service fee $4.00; $180 for fees for net of $720
$50 – service fee $7.00; $70 for fees for net of $430
$100 – service fee of $12.00; $60 for fees for net of $440
The profit is greater selling for $20.

Obviously, changing the number of people who purchase at a given price and the cost of creating the designs affect the profitability of the project.

It is also a very personal decision about how much income one expects to generate and how much one might net if they were involved in some other career verses a home based digitizing one. Pricing models that work for one may not work for others. Eventually compatible digitizers and customers find another.

I believe you are presenting a dismal future for independent digitizers based on this ruling which I do not believe to be the case. Because of the momentum that has been generated over the last couple of years, there is a significant number of customers who look first to independent digitizers because they are the innovators. They design for a niche market. The large companies cannot do so. I compare purchasing from independent digitizers verses large design companies to shopping for clothing at the boutique verses the department store. There is a need and also room for both.

By the way, I have seen some designs for which I would pay MORE per design from independent digitizers because the designs are unique, specialized and far superior (IMO) to those available from the major design houses.

Please don’t be so pessimistic. I believe things will work out well for all concerned – the digitizers, the designs houses, and the customers. I believe what has been most detrimental to machine embroidery by hobbiests and home based embroidery businesses has been the recent controversy.

CATHY
(PS Please pardon any typos; it is way past my bedtime, but I did want to respond to your posting tonight.)

Dear Cathy,
Please do excuse that I overlooked your post and did not respond. Thank you for your analysis, it is greatly appreciated. As far as presenting a dismal outlook, my friend, I don’t. I’m sorry if it came across as such. I believe and I hope and know that in the end all will be best but it is for the unknowing that I present all sides here. I think we can all survive anything as long as we have a positive outlook and if my blog entry came across as being otherwise…then my apologies please. It is however, a matter that is of extreme importance and instead of being on a roller coaster not knowing exactly what is correct, I think it is time that things were put in motion to match up to the future rather than wait for the future to bite us because we were not prepared. The question of what is ME designs, code or data is an ambiguous area and with the changing of times it is imperative that lawyers especially internet/copyright lawyers chalk out some type of answers. There is a fine line here between code and data and personally I would rather that all knew what the deal was rather than be frustrated.
My appreciation for your kind formula, it is quite interesting and good. It is actually the same formula that I use. 30 designs for $45= barely $1.50 per design… by the time figure in costs of webhosting, cc fees, machine/thread/stabilizer etc, and not to mention digitizing time….that $1.50 certainly does not go far..But then again, I’m not a Tacony or a Viking rather a single person business as are many others. Cost of living and cost of business expense demands that the return be at least $60,000 up to today’s standards….I don’t think we can find a home digitizer who can bring in that after expenses. Hence the reason why small business do not survive it very long. That is the risk we take. Nevertheless, I thank you and please excuse for my overlooking your post. Hugs, Sadia

Sadia,

I agree that the new capabilities in information technology are far greater than envisioned by the drafters of the current intellectual property laws. I personally believe that machine embroidery designs will eventually be considered to be comparable to songs and vidoes. I am not a music person so I do not know the law about restrictions of use on a purchased and downloaded individual song. I know the original CDs, DVDs and tapes are often resold. If a embroidery card or CD is similar, then it could also be sold. This involves hard media not just a file in cyberspace.

If a downloaded song cannot be resold, then a downloaded design could not.

I would estimate the resale value of a design to be 10-20% of the original cost. A $100 design card might sell for $10-$20. A $25 design set might sell for $2.50-$5; it does not seem economically feasible to resell lower cost sets on Ebay (one of our least favorite places in the ME world LOL).A $5 individual design might sell for 50c or $1; why take the risk of purchasing a “used” design set.

The net costs of the individual designs is a little more on the design set CDs and the typical downloadable design sets since the CDs generally contain far more designs than the downloadable sets. The overhead of creating the CDs, printed documentation, packaging, and physical marketing and delivery require much larger design counts in a set. The user probably does not use any where near all of the designs in a large set. That is one reason I was glad to find the independent digitizers and online sales. I could have a greater variety of designs in downloadable sets.

For the time being, digitizers could take the approach to sell and price physical media expecting it to be resold and not have a download option. Alternately, they could continue to sell smaller sets and hope to make the money in volume.

Quite frankly, I cannot imagine selling any of the sets I have purchased. I do admit to being disappointed by some. I am most frustrated when a digitizer does not maintain the same quality of digitizing consistently.

Machine embroidery is not an inexpensive hobby. I know hobbiests certainly understand the expense once they have gotten into it. Unfortunately, many do not realize this before they did so – I certainly did not.

I know there is a lot of expense involves in maintaining a website. That is one reason I really like to see the smaller volume digitizers utilizing the webmalls rather than giving up completely. Some wonderful digitizers sell exclusively through the webmalls.

For some people, being able to work from home is a great opportunity. Whatever income they generate is helpful to their family. Other individuals have to justify making digitizing their career because they have other employment opportunities and thus have different expectations and need to generate a much larger income from their digitizing. The truly lucky ones are those who have other opportunities but choose to design and digitize because they love to do so. I appreciate them all as all I want to do is sew!

Do you happen to know the statistics on the number of embroidery machines sold and the number of online purchasers? I have never seen anything on this.

On a totally other topic, do you know if Cactus Punch has been sold? I received the enewsletter and did not quite understand what has happened.

CATHY

Dear Cathy,
Again, my thanks for your extremely good points. Music songs downloaded cannot be resold as they are considered to be IPs. Although I’m not sure where the border line is on downloaded songs burned to a CD and then sold….again, the laws need to be precise and more detailed, hence my comment about the future staring us in the face and it really is now, LOL.
My friend, ME is certainly by no means an inexpensive hobby, that is why the attraction of those not affiliated with it in selling bootlegged copies of ME designs. Another area where education of what it all involves is so much necessary. I cringe when I see individuals proposing elaborate tools and supplies to new comers or to those not knowing any better…for the sake of bettering their individual business and or the business of a friend.
As far as the market is concerned, it is saturated with ME designs, there are millions out there. A commercial digitizer can create anywhere from 5 to 10 designs daily, that is about 25 to 50 designs a week! LOL. No way can a home digitizer compete with that. Nay, I take that back….the introduction of new softwares has introduced many to the market and thus the over supply of ME designs as compared to demand. Many of the home digitizers believe in quality and not quantity. Moreover, it is the home digitizers that have pushed the limits of their excellence in turning the commercial houses to sell at a lower cost and also individual designs which unfortunately was not available until just recently. As far as statistics are concerned regarding sales of ME machines….comparing from five years ago…extremely poor and the same in ME designs. The simplest way that I deduce this is by the introduction of new and better machines and new designs every hour. Look at the turnaround especially amongst the Home digitizers. Very few are still creating excellence since the past seven years. Many who could have been excellent have dropped out as they could not keep up with the expenses involved. Question why those in the commercial market are looking to enter the home market…because no one is buying from the commerical houses, even though their ME designs are excellent. To me this is a business and I treat it as a business, with excellence in every design created. It is my name and my reputation. True working from home is a great way to do business so why is it that my dh and family for the past several years have not seen me make it to bed on time with the rest of them or attend a function because I had a deadline… I know it is my doing but it is also our income and it is our lifeline. My family understands that and respect and support it and I’m grateful for that.
Cathy, the past several weeks, I have pondered over several scenarios and one of the reasons why I started this blog. To educate the ME world especially newcomers and to give ideas (series of Power of One) to so many who are starting to feel frustrated by the misinformation and misunderstanding spread about by those who themselves have no idea.
Not sure about the information on Cactus Punch being sold. I’m not sure about the newsletter as I have not as yet received mine. Will keep an eye. Hugs, Sadia