A Lack Of Scarcity Has (Almost) Nothing To Do With Piracy

from the misunderstanding-the-premise dept

Took a week off from my series concerning the economics of abundance, but wanted to jump right back into it this week. I started out with a discussion on how the number zero seems to screw up otherwise sensible people when it comes to economics, and followed that up with a post on the economics of abundance is not a moral issue. I had planned to move on to more about the actual economics, but the responses have delayed that for at least a little while.

Some of the complaints about the last piece highlighted one aspect that perhaps I had not made clear: unauthorized downloads, "piracy" or "stealing content" (if you want to use those phrases) have almost nothing to do with this discussion. People criticizing the posts on this topic keep going back to the idea that this is all some big defense of such practices when nothing is further from the truth. This series is very much written from the perspective of the producer of content, not the consumer. That is, we're trying to make clear the basic economics so that the producer of the content can use that to his or her advantage. So, the lack of scarcity we're talking about is based on the fundamental nature of the content: that it has zero marginal cost to make a new copy once the original is made. That's a simple fact that has nothing to do with whether or not people are making unauthorized copies. That nature of the content is fundamental. So everything that we're saying here applies just as much to content if there were no "piracy" at all. If there were an industry where there was a lack of scarcity, but no piracy, the information here would apply just the same.

Now, I do say "almost" nothing to do with piracy. The way that unauthorized copies play into this discussion is in the realization that they're a fact of the marketplace. That is, they're helping to accelerate the impact of that lack of scarcity, and only helps to highlight why the producers of content need to pay attention and make changes sooner, rather than later. Many of the recent actions taken by organizations like the RIAA, the MPAA and the BSA represent a fundamental misunderstanding of this fact. They believe two things that are absolutely wrong. First, that the lack of scarcity is only due to piracy and, second, that there's some way to really stop piracy. Both of these things are wrong. The lack of scarcity is due to the fact that the content has zero marginal cost -- which is true no matter what, and unauthorized copies are always going to be an issue. So, based on that, why not try to understand what happens when you have a lack of scarcity and how to profit from it, rather than fighting the obvious trend?

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    Mike (profile), 29 Nov 2006 @ 5:27pm

    Re: things that are wrong...are not

    Lack of scarcity IS only due to piracy. Content producers have a constitutional right to use their product as they see fit for a limited time, and many use the right to create scarcity to drive up the price of their works.

    Okay, let's try this one more time. The WHOLE POINT of these posts is to show that there is benefit in embracing the lack of scarcity, rather than trying to set up artificial scarcity.

    It's from the producer's side, not the consumer's side. It makes no difference what the law is. The point is that anyone who tries to keep using the existing system will find themselves in trouble when others develop business models that are based on the lack of scarcity. It has NOTHING to do with changing the laws or getting rid of copyrights or anything like that that you seem to suggest this is about.

    This has worked, more or less, in this country for 200 years.

    And the point is that it won't work much longer. That's because of the fundamental nature of the lack of scarcity. People will figure out business models that embrace it (some have already) and those that continue with artificial scarcity will find themselves in trouble.

    This has nothing to do with piracy. Why do you keep bringing it back to that point?

    Stop? Probably not. Get under control again? Yes, that's possible. Allowing John Doe suits based on IP addresses will kill the public brand of piracy that is rampant on P2P and Usenet if done in enough quantity.

    Again, this doesn't matter to the core argument, but what do you consider "enough quantity"? The 10s of thousands of lawsuits already aren't enough? So far, they've only increased the about of unauthorized copying out there. That's getting it under control? Please.

    The alternative is destruction of the entire copyright system, which would hurt everyone.

    There are two big assumptions in there, and I'd argue both are wrong. There are many alternatives, and not all involve the destruction of the entire copyright system, but recognizing that it does you less good to use it. The second huge assumption is that it would "hurt everyone" and there's empirical evidence that that's simply not true.

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