Free markets neither make saints of people, nor require a “new man” be developed in order for free markets to work. Free markets assume people are people, and govern themselves by declining oxygen to those who would exploit others. It is the way before the brigands, the state, and how the world operates anyway. You have an edge when you realize this.
In his autobiography, Frank Zappa complained of how “intellectual property rights” resulted in he being ripped off. A record pressing outfit would take an order for 2000 albums from the company that managed Zappa’s “intellectual property rights.” The record presser is told to press 4000, with the balance used as currency for all sorts of benefits. Zappa's royalties were half what they should be. So you need lawyers to get a contract, then lawyers to sue for breach of contract. Another version is when a record presser gets and order for 5000 and the record presser might earn $1 an album, the record company gets $3.00 from the stores for overhead (including Zappa’s 50 cent royalty) and profit, and the retailer gets say $6.00.
Well, the record pressing company actually presses 6000 copies, and 1000 at $2.00 each go to Vinny who has some stores he owns where he sells them for $6 too. The record presser and Vinny both do better by cutting the record label out of the deal. The alternative is a pressing company gets ahold of pirated master plates and presses extra on the sly. Either way, with intellectual property rights and its rationale as a sinecure for lawyers and not a benefit to artists, we end up with this kind of “black market” activity. (In the free trade “black” means good, with the state “black” mean bad.) But the essence of this activity is really the more rational and just way to do business, we we’ll see below.
But the present system of “intellectual property rights” is designed to maintain this chaotic milieu. If “intellectual property rights,” an oxymoron if ever there was one, was properly labelled, artists would object. And because of this “cheating” mentioned above by market actors, we taxpayers have to fork over money to pay the state to protect Bill Gates’ assets and “intellectual property rights.” We are taxed to fund chaos.
We see a better way in free markets. An artist comes to a presser and says I need 1000 copies for my market, what is my price? The presser says $1.00 each. The artist says very good, and sell all you want to anyone else for $1.05 each, and the 5 cents extra on all of the others you sell is mine. In this way the artist makes money on the market the artist knows, and makes a nickel on each record made for the market someone else knows. Everyone is retail at about $2.50, with little room to cheat. Of course there is no money for pointless overhead, such as under this system, there are no outrageous expenses (lawyer fees etc) to warrant going around this arrangement.
In time, artists may begin to have the presser be the distributor too, we we see with Amazon.com and Createspace.com.
It is an example of social conditioning that people ask “Why would the presser do this?” “How would you verify this?” People are socially conditioned to believe in a false dilemma: the state, or chaos. Both questions have one answer: because the presser wants more business. In a free market, it is reputation, not contract that matters. Breaking contracts may hurt your reputation, but it is reputation that makes or breaks you. The presser wants more business. The presser wants the most business, and the biggest artists. For the presser to “cheat” on his word, in the village that is the music industry, would ruin his reputation.
As we scan our economic landscape, we see Monsanto, Shell, zombie banks, cafe shooters, out of control education costs, autos of whimsical reliability, brutal health care, all protected by contracts. We are obliged to work with people we’d rather not, but have no choice, due largely to “intellectual property law.” If we had freedom of association, and not obligation under asymmetrical contracts, we would not have these odious provisioners of limited value. We’d have competition in goods and services based on reputation.
We do not know about these alternatives in USA because we have a government controlled press and no free markets. In places where free markets exist, these kinds of arrangements are common. And that is why such places as Hong Kong, although with a more diverse population than the United States and far less resources, polyglot and competing private companies issuing the currency, Hong Kong has a higher per capita income than its former master, the UK, and equal to USA without USA’s resources. Today only communism allows such freedom, capitalism has no version of Hong Kong. Very strange, but there you have it.
Because Steve Jobs was a brilliant free market thinker, he sorted out the problem of online downloads while the legal profession was using federal laws to sue 14 year old girls and unwed mothers. The lawyers actually dusted off a provision in the law which had not been used in our entire 220 year history: if an end user has a copy, they too can be prosecuted. What is it about scaring 14 year old girls (ooops, sorry, 12 year old girls) that so attracts intellectual property lawyers?
Jobs cared not a whit for intellectual property rights, except to the end that their tedious existence is something one must play against (and certainly, Jobs too has an army of IP lawyers, to counter all the other armies of IP lawyers. When a second lawyer moves to a small town, legal billings soar, peaceable people become enemies, families atomize.)
Jobs solved the problem both the customers and artists were experiencing: downloading a clean version of a song, easily and quickly, as a free market transaction. When I go to iTunes to buy a song, I am paying 99 cents for the convenience of buying a song to play on my machine, which I bought from Apple, because it makes all of the benefits of the internet very easy to access.
The fact that itunes gives some money to the song “owners” is of no concern to me, I am just happy with the system that delivers me this convenience. The system they developed and own costs something, but here again, it is worth 99 cents a pop to me. Jobs pays artists so he can have something on offer to download. I pay Jobs because he offers what I want at a price that I am willing to pay. While RealNetworks puzzled over the role of intellectual property rights and how to game the system by parking disgraced politicians for government contract money, Jobs was designing what was needed, without a thought of IPR.
The internet has introduced nothing new to our lives. It has only made communication and research easier, faster and cheaper. That is a difference in scale, not kind. We had communication and research before the internet. The expansion of scale is huge, but if you think it has done anything else, stop and reflect. Billions have been wasted by people who have a hypothesis that the internet is more than that, and they proceed to destruction without first testing the hypothesis, which costs nothing to do. Especially now that we have the internet.
The reason I make this point is what Jobs did is nothing new. He just applied what he already knew about free markets to something that was nothing new, communication and research, the internet. While the venal lawyers representing artists and their “intellectual property rights” where negotiating “royalty payments” Jobs was negotiating a price at which artists would flock to him with their work. Intellectual property rights or no: no songs, no ipod sales.
On the other hand, intellectual property rights or no: best artists, more ipod sales. With the internet, all artists do better by going to Apple iTunes (and now books, etc.) While the lawyers bill for fantastical sums to the artists for providing completely illusory services, Jobs is making countless unknowns rich and famous. Lawyers depending on the argument post hoc ergo propter hoc. The sun rose because the cock crowed. Maybe, just maybe, artists would have gotten the same deal from Jobs without the lawyers.
Well, we know this is possible, because it happens all the time. Countless artists work directly with Apple, no lawyers needed. And they get the same deal, without the billings. Both Prince and publishing's version of Prince, Seth Godin, have abandoned traditional publishing and IPR model, although they game it, as we are all obliged to do.
Let’s pick something else to whimsically name “intellectual property rights.” Let say color falls into that legal boundary. Let’s say the people who think up new colors (there are such people) can patent such things. Then we’d need companies contracted to control the distribution of the colors. Home Depot and other companies would have to pay a royalty for using the color. Not only would this be more paperwork for Home Depot, the color distributor too would need a staff to process all of the billings on color. The end-user is paying for all of this. Plus, tax revenue would flow to the state employees who are tasked with enforcing “intellectual property rights,” because with this pointless overhead, some people would cheat to get to a more rational price in a black market. Nice!
No, there is no patent regime for thinking up color. But color is extremely important in so many ways. In every art supply store there is a display for Pantone Color Matching System. With color so important, and a free market in color, some people make money solving the problem of achieving reliable color in production, without any intellectual property laws. And, while in the USA markets of limited freedom we have mere displays of color options in stores, in Hong Kong there are entire stores devoted just to color.
While a store devoted to color thrives in a Hong Kong, we in USA instead get war. It is a choice we have made. In the United Soviets of America WalMart thrives, in Hong Kong it failed spectacularly, no amount of money could sustain it. In relatively free markets businesses built on exploitation fail for lack of oxygen. Progressives claim to love color and art, and spurn Walmart. But progressives would never permit free markets, or do without regulators. For the support of the progressives, we have Walmart and war. Any change and they would lose their sinecure. As long as NPR is touting the Occupy Movement, they have their easy listening.
We are socially conditioned ot accept this madness. Steve Jobs had no use for intellectual property rights, but he understood the lethal violence the state brings on those who refuse to submit. There is no need to die for freedom. Simply look at how the game is played, and adjust accordingly.
Feel free to forward this by email to three of your friends.
2 comments:
Glen,
You included a link to an attorney in your comment, if you want info on an attorney, contact that attorney.
John
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