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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  1. identicon
    Reed, 30 Nov 2006 @ 12:32am

    Re: things that are wrong...are not

    "Lack of scarcity IS only due to piracy."

    I would disagree here. Scarcity simply doesn't exist in the digital world.

    "many use the right to create scarcity to drive up the price of their works"

    During the Great Deppression millions of tons of food were dumped in order to try to shore up the commodities market. This of course was happening while many people went hungry, is this really the system you are advocating for?

    "But now there exists a culture that sees breaking these laws as OK, and there is method, called the Internet, that makes people believe that they can do so with impunity."

    You sound like some old guy complaining about Rock and Roll. Sure it is different, but hey it is the future so get used to it.

    "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."

    John Doe suits on IP addresses.... Why don't we just start searching everyones house and arresting them for anything we find?

    Are you really trying to say that the Internet is destroying the way America does business? Is this the same kind of destruction that electricity or the car brought...? If you are advocating protecting the horse whip makers (Media Moguls) and forcing us to use horse drawn carriages (DRM) then I think you are just a little out of touch with wants and needs of the 21st century.

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