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. identicon
    Infidel753, 16 Jan 2007 @ 5:10am

    Movies doomed to disappear?

    Has there ever been a successful business model in a situation where exact copies of the product were easily obtainable for free, by means over which the content producer had no control? Is there any reason to think this is possible?

    Even the advertising-based model of broadcast TV will be in real trouble once the capacity of the average home intenet connection gets high enough to allow TV shows to be swapped around as easily as music is now. There are already ways to avoid commercials while watching TV, but they are more of a nuisance than they're worth to a lot of people. What happens to advertising revenues when a commercial-free copy of a TV show is available on the internet within an hour of the original broadcast?

    Music won't disappear, of course -- there will always be people who put their own music on the internet just to get heard, not caring that there's no money in it (the musical equivalent of bloggers).

    But I don't see how movies can survive. In a few years, internet connections and hard drive size will be such that high-quality copies of movies can be swapped around like songs today. The production costs of something like Titanic or Lord of the Rings can probably never be brought low enough to make them profitable on the crumbs of revenue that would still remain then. Expecting the industry to "adapt to the changing market" under those conditions is like expecting a chef to figure out how to prepare a meal with no ingredients. Businessmen aren't magicians.

    And I don't see what can be done about it. The RIAA's tactics have not been effective at stopping file sharing, but what would be effective? Probably nothing.

    So in five or ten years, movies will just stop being made (aside from very low-budget productions). Business responds to incentives, and when it's no longer possible to make a profit on what you've been doing, that's a pretty strong incentive to go into another line of work.

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