History Repeats Itself: How The RIAA Is Like 17th Century French Button-Makers

from the no,-seriously... dept

As regular readers know, I've been working through a series of posts on how economics works when scarcity is removed from some areas. I took a bit of a break over the holidays to catch up on some reading, and to do some further thinking on the subject (along with some interesting discussions with people about the topic). One of the books I picked up was one that I haven't read in well over a decade, but often recommend to others to read if they're interested in learning more about economics, but have no training at all in the subject. It's Robert L. Heilbroner's The Worldly Philosophers. Beyond giving readers a general overview of a variety of different economic theories, the book actually makes them all sound really interesting. It's a good book not necessarily because of the nitty gritty of economics (which it doesn't cover), but because it makes economics interesting, and gives people a good basis to then dig into actual economic theory and not find it boring and meaningless, but see it as a way to better understand what these "philosophers" were discussing.

Reading through an early chapter, though, it struck me how eerily a specific story Heilbroner told about France in 1666 matches up with what's happening today with the way the recording industry has reacted to innovations that have challenged their business models. Just two paragraphs highlight a couple of situations with striking similarities to the world today:
"The question has come up whether a guild master of the weaving industry should be allowed to try an innovation in his product. The verdict: 'If a cloth weaver intends to process a piece according to his own invention, he must not set it on the loom, but should obtain permission from the judges of the town to employ the number and length of threads that he desires, after the question has been considered by four of the oldest merchants and four of the oldest weavers of the guild.' One can imagine how many suggestions for change were tolerated.

Shortly after the matter of cloth weaving has been disposed of, the button makers guild raises a cry of outrage; the tailors are beginning to make buttons out of cloth, an unheard-of thing. The government, indignant that an innovation should threaten a settled industry, imposes a fine on the cloth-button makers. But the wardens of the button guild are not yet satisfied. They demand the right to search people's homes and wardrobes and fine and even arrest them on the streets if they are seen wearing these subversive goods."
Requiring permission to innovate? Feeling entitled to search others' property? Getting the power to act like law enforcement in order to fine or arrest those who are taking part in activities that challenge your business model? Don't these all sound quite familiar? Centuries from now (hopefully much, much sooner), the actions of the RIAA, MPAA and others that match those of the weavers and button-makers of 17th century France will seem just as ridiculous.

If you're looking to catch up on the posts in the series, I've listed them out below:

Economics Of Abundance Getting Some Well Deserved Attention
The Importance Of Zero In Destroying The Scarcity Myth Of Economics
The Economics Of Abundance Is Not A Moral Issue
A Lack Of Scarcity Has (Almost) Nothing To Do With Piracy
A Lack Of Scarcity Feeds The Long Tail By Increasing The Pie
Why The Lack Of Scarcity In Economics Is Getting More Important Now

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  1. icon
    Mike (profile), 16 Jan 2007 @ 1:36am



    You make some interesting points, but they're easily disproved. You've brainwashed yourself into believing a worldview that is false, and it will destroy your business a lot more than file sharing will.

    I am also a content producer. Of motion pictures. And online piracy has the potential to completely devastate my industry.

    This is false. Not responding to the changing market, which includes file sharing has the potential to completely devastate your industry. Sitting still and expecting old business models to keep working may devastate your industry. But, file sharing should not devastate your industry if the people in your industry actually understood the business you're in.

    Making a movie takes about two years from concept to completion. It takes hundreds of people working on it. And it takes literally millions of dollars to pull it off(well).

    This is a stupid argument. Just because you make something expensive, doesn't mean you deserve money for it. I could make a huge expensive machine, but if no one wants to buy it, then there's no market for it. Bringing up the cost to create is missing the issue.

    Take away the profit motive from movies and they're just done.

    You make a really bad assumption here. That online piracy kills the profit of movies.

    You really think that crappy downloads are killing the movie business? You are in the wrong business, my friend.

    The movie business is dying not because of online piracy, but because they forgot that they're in the *ENTERTAINMENT* business. Movies are a social experience. People want to go to the movies and have a good time. Unfortunately, the industry has made it a *BAD* experience. That's why people are turning to downloads. If the social experience of going out to the movies was as good as it should (and could) be, people wouldn't resort to downloads.

    There's plenty of profit to be made in the movie business. The fact that YOU can't find it says more about your ability in the market, rather than the state of the industry.

    What investor in his right mind is going to pony up millions of dollars and two years of his life to make something that some punk will then just rip off "because they can"?

    More bad assumptions. Remind me never to go into business with you.

    First, you again focus on the costs, which is the wrong thing to look at (and I'd suggest you look at some of the older posts we have on here about how movie making is getting much cheaper these days as reasons why Hollywood's arguments on this topic continue to be ridiculous).

    Second, a smart investor will still put up the money recognizing that s/he can use the free publicity of online distribution to encourage more people to go see it on the big screen with a good overall movie going experience.

    If people adopt the idea that just because they have the technical ability to download a movie without paying for it - that it's somehow their "right", then there just won't be any more movies. Period. At least not of the kind that anybody's going to actually want to watch.

    This is false for a number of reasons. I suggest you look at the research David Levine has done that shows that copyrights actually slow down creation of content, rather than encouraging it.

    Also, while there may be some people out there who claim that downloading is a "right," I disagree entirely. It is not a right. However, I think it's a bad business decision for anyone in the content industry not to allow it. Because what's going to happen is your competitors are going to figure out how to make money that way, and you and your stubbornness will find yourself in serious trouble.

    This has already happened in Hong Kong

    That's a huge generalization. There are plenty of reasons why the movie industry in Hong Kong is facing the challenges it is -- and one of them was its inability and unwillingness to change with the times.

    Markets change all the time. Those who are slow to adapt are the ones who die. Do you always blame the market shift for the troubles facing dinosaurs who can't adapt?

    I'm not asking for draconian measures or unfair business practices. I welcome actual competition! But outright theft of intellectual property is NOT the same thing as competition. Stopping somebody from downloading a copyrighted work should be recognized as the act of "the good guys" - they're trying to stop stealing after all, right?

    Well, first of all, you are misusing the word "theft." It is not theft in either the legal or common sense use of the word. The Supreme Court notes that it's "infringement" and, while illegal, an entirely different beast than theft.

    Theft involves loss. There is no loss in unauthorized downloads. You still own the original, which is completely different than theft.

    I'm not saying that stopping unauthorized downloads is "bad" or "good." I'm not making a moral judgment on this at all, because none is needed. I'm saying that not wasting efforts trying to stop downloads is going to be good for business for those who learn to embrace it, and find new avenues to profit.

    That you are unable to do so does not mean that no one is able to do so.

    I just don't see unfairness in trying to make sure people don't steal these products.

    Well, first, accusing them of "theft" is again wrong, but that's a separate issue.

    However, it's not that issue that's the problem. It's the use of gov't granted monopolies to close off an open market that should set the price, and gov't funded law enforcement to handle what should be civil contract disputes.

    Once again - the button-maker comparison doesn't work at all. Nobody is trying to stop people from using new technology to make competing films or music. All they're trying to do is stop them from stealing the films and music that other people have already made.

    It absolutely works. You've just misread it.

    The entertaiment industry is appealing to the gov't for gov't granted monopolies in order to protect their business model. When people come along and innovate new distribution methods, they go whining to the gov't to stop them, and ask to invade people's homes to see if they're using these new innovative technologies.

    It's quite similar.

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