Handbag piracy

An article in the Boston Globe talks about handbag piracy. A senior VP at Coach says that they seize about $50 million worth of counterfeits each year, about 3% of the total amount produced.

As with music, movies, and software, handbag piracy isn’t the huge problem that the manufacturers would have us believe. Here’s why:

- Very few of the people purchasing the knockoffs for $25 would purchase the originals at upwards of $300 apiece. Different audiences.

- Fake bags can function as free advertising for the real thing. If you’re seeing that cute Kate Spade bag everywhere, you might want to pop into Barney’s and get one.

- Knockoffs act as “gateway handbags”. Young women who buy fake Louis Vuitton bags on their just-out-of-college budget might be more inclined to buy the real thing as their income increases. As with many expensive goods and services, once you get a taste of luxury, the habit is difficult to break.

Related reading: Piracy is Progressive Taxation, and Other Thoughts on the Evolution of Online Distribution by Tim O’Reilly.