Predictions

by Mike Masnick


Filed Under:
guilds, history, lobbying, protectionism

Companies:
mpaa, riaa



How The RIAA & MPAA Are Like The Anti-Innovation German Weavers' Guild Of The 16th Century

from the protectionism,-not-innovation dept

Five years ago, we wrote a post comparing the RIAA (and the MPAA) to 17th century French buttonmakers, who used their guild to go absolutely crazy in blocking a horrifying new innovation: cloth buttons, which could be made by weavers, without making use of the members of the buttonmakers guilt. The story came from Robert L. Heilbroner's book The Worldly Philosophers (an all around excellent book if you want to learn some of the basics of the history of economics).
"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."
I think the parallels to the RIAA and the MPAA are pretty self-evident. Freaking out about others entering the market? Check. Running to the government and demanding protections? Check. Expecting others to get permission to innovate? Check. Able to get government-sanctioned fines levied on those new players? Check. Feeling totally entitled to violate the property rights of others to "find" evidence of "subversive goods"? Check.

It seems this comparison between the RIAA/MPAA and protectionist, anti-innovation guilds of that era has occurred to others as well. In a recent episode of the Planet Money podcast, host Adam Davidson does a "deep dive" into the economics of a 16th century German weavers' guild and discovers the same patterns. Collusion in the guild to keep out innovation, to artificially limit the market, to keep wages of employees down and, most importantly, the first response to any competitive threat is to run to the government and lobby for greater protections.

The comparison to the RIAA and MPAA is so obvious that Adam Davidson calls it out pretty early on in the discussion, noting that these "guilds" don't seem all that different from those two groups today. Of course, given that they're both built on copyright law, which originally was designed as a protectionist tool for a similar publishers guild, perhaps the similarities aren't too surprising.

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  1. identicon
    Anonymous Coward, 2 Apr 2012 @ 12:31pm

    It's all about the mercantilism

    See, what's funny about this isn't that the *AA's are using 17th century business models -- what's funny is that they're stuck using those business models because they're still using 17th century economic theory.

    The notion that we need guilds to protect the workers in an industry? Check. The notion that we need government-enforced protections for those guilds? Check. Attempts by those guilds to monopolize markets and enforce balance-of-trade restrictions? Check. A focus on a physical product rather than adding value through a process? Yup. It's official, folks...what we're looking at here is mercantilism.

    The fundamental assumption of this way of economic thinking is that the amount of wealth in the world is a constant. You can move it around, but you can't generate new wealth. If you take this assumption as a given, then a logical conclusion is that anyone who provides an alternative to your product is costing you a sale. Every time you purchase a cloth button, the button-makers lose a sale; every time somebody pirates a movie, that counts as a lost sale to the movie studio. Sound familiar?

    Anyway, mercantilism has been pretty thoroughly debunked over the last 300 years or so -- it's been long enough that a lot of the fundamental works are actually in the public domain. What's absurd is that the MPAA and RIAA still seem to be using this theory as a basis for their policies.

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