Spellbound, Distractions Distort

"Call it the curse of Hogwarts. It turns out that -- at least for some in the wizarding world -- it's tough to make money out of magic. Harry Potter has fans clamoring in excitement as the seventh and last book in J.K. Rowling's hit series, Harry Potter and the Deathly Hallows, lands worldwide on July 21. With the fifth movie due out in weeks and the recent announcement of an Orlando theme-park attraction that could cost half a billion dollars, Pottermania is at an all-time high.

"But what should be a pot of gold for Harry's business partners is turning into an empty cauldron for many of them. The most successful literary brand in recent history has made its author a billionaire, but others have not fared so well. Retailers, spellbound by the chance to reach millions of Potter-obsessed customers, are cost-cutting for market share to the point where many stand to lose money. For book publishers, the tsunami distorts results in Potter release years, creating wild share-price swings and a distraction from other parts of the business. Even Warner Bros. Entertainment Inc., which has made billions off the Harry Potter movies, saw sales and profits drop last year and in the first quarter without a fresh Potter offering in the mix.

"For booksellers, the source of the pain is mammoth retailers like Amazon.com, Wal-Mart, and Britain's ASDA chain, which have slashed prices by 50% to woo fans. 'It's like being in the trenches with the bullets flying over you,' says Sonia Benster, owner of The Children's Bookshop in Huddersfield, England. Amazon.com CEO Jeff Bezos concedes that the company won't make a profit from the new Potter book. But he told shareholders that it has racked up more than 1 million pre-orders so far--and, Amazon hopes, plenty of new customers who will buy other books. Because of such struggles for a piece of the Potter pie, notes Simon Fox of Britain's HMV Group PLC, owner of the Waterstone's book chain, it's 'hard to make money.'"

(“The Twisted Economics Of Harry Potter; The wizard brings both profit and pain to his business partners.” By Diane Brady, with Kerry Capell in London, Joshua Vittor in New York. Business Week: July 02, 2007. , Iss. 4041; pg. 38)

IMAGINE if we did not fall into the masses and ride the wave of mania... Would we be better off outside of the mainstream, swept up in the confounding of revenue and profit? What is "better off," and for how long?

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