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 @ 10:53am

    Re: 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?

    Sure. The business of business. Ideas are freely copyable. Business models (until recently) are freely copyable.

    Yet, execution is what matters. You can copy any business idea you want, but there's a lot more to being successful than just copying. And that applies to content as well.

    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?

    Well, traditional ad revenue may disappear, but alternatives will be created. Trust me. If there's demand for a product, someone will come up with a business model for it. It may be different than what you see today, but there will be a business model.

    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.

    No magic involved at all. Just because *you* can't see a way to make money, doesn't mean that no money can be made. It just means it's not an industry you should be in.

    With movies, again (as I stated above), it's quite easy to come up with business models to make lots of money, even if the content is freely shared.

    You just have to recognize that watching movies is often a social experience, and you need to make it a BETTER social experience. Make it an experience that people WANT to GO OUT and see with their friends in a nice place, rather than staying in. Focus on the overall experience.

    Then, offer additional incentives. There could be post-movie discussion groups. Or perhaps actors in the movie might show up at some screenings. Or as you're leaving the theater your can buy a DVD of the movie with extra features. It goes on and on and on. There are many, many, many business models that begin to come out of it when you stop thinking of it as "the movie business" and start thinking of it as "the entertainment business."

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