Saturday, December 4, 2010

IPR and Competition

A premise is small biz are innovators and large biz are conservators (following Drucker); small introduces innovation, subsequent iterations routinize and commoditize, and eventually conservators (big biz) "steal" the idea, apply the economies of scale (manufacturing, logistics, finance) to the item, and make material goods and services available to the widest possible demographics.  Innovators bring out (relatively) few, poor, expensive, and slow...  but desirable by enough people to launch...  conservators apply econ of scale and make the innovators product more better cheaper faster.  The free market at once introduces what is needed and gets the price down to where everyone has access to material goods and services, a symbiotic relationship between the innovator and conservator.  See the cell phone, 1980-2010.

This process generates division of labor, a real source of well being (following Dr. North, contra Bakhunin.)

If I contribute anything to the discussion, it is what people in small business commonly think:  if someone "knocks off" my design, necessarily they are using 2nd rate factories, selling to 2nd rate customers...  literally none of my business.  My first rate customers are not interested in 2nd rate product.  I find 2nd rate customers not worth serving.  IPR solves a problem that does not exist, in relation to shoddy knock-offs.

Along these lines, when a conservator makes an excellent knock-off of my idea, and lowers the price through superior econ of scale, here again someone is using their factories, capital, etc, to reach customers I never could.  Where is the theft?  Where is the violation of my rights?

Marketing is the key to business, not control.  In essence, my relationship, the degree to which I listen (oboedire) or obey, my customers.  That is marketing, that is what makes or breaks me.  My customers judge me and then tell me how I might best serve them.  I redesign accordingly, if I want a raise.

Now, should my product get to the point, after years of profitably iterations on my part, where a conservator has done the multimillion dollar harvard phd market studies necessary to warrant knocking off my product, lowering the cost, and making my product available to everyone, then I can simply do an IPO, raise the money to be the conservator, and become my conservators competitor.  See Apple IPO 1980, vs IBM.

IPR solves a problem that does not exist, IPR inhibits justice in the distribution of goods and service.  It keeps the pie small, leaves wants and needs unavailable or nonexistent.


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