Sam Vaknin’s Psychology, Philosophy, Economics and Foreign Affairs Web SitesThree years ago I published a book of short stories in Israel. The publishing house belongs to Israels leading (and exceedingly wealthy) newspaper. I signed a contract which stated that I am entitled to receive 8% of the income from the sales of the book after commissions payable to distributors, shops, etc. A few months later, I won the coveted Prize of the Ministry of Education (for short prose).
The prize money (a few thousand DMs) was snatched by the publishing house on the legal grounds that all the money generated by the book belongs to them because they own the copyright. In the mythology generated by capitalism to pacify the masses, the myth of intellectual property stands out. It goes like this : if the rights to intellectual property were not defined and enforced, commercial entrepreneurs would not have taken on the risks associated with publishing books, recording records and preparing multimedia products.
As a result, creative people will have suffered because they will have found no way to make their works accessible to the public. Ultimately, it is the public which pays the price of piracy, goes the refrain. But this is factually untrue. In the USA there is a very limited group of authors who actually live by their pen. Only select musicians eke out a living from their noisy vocation (most of them rock stars who own their labels George Michael had to fight Sony to do just that) and very few actors come close to deriving subsistence level income from their profession.
All these can no longer be thought of as mostly creative people. Forced to defend thie intellectual property rights and the interests of Big Money, Madonna, Michael Jackson, Schwarzenegger and Grisham are businessmen at least as much as they are artists. Economically and rationally, we should expect that the costlier a work of art is to produce and the narrower its market the more its intellectual property rights will be emphasized. Consider a publishing house.
A book which costs 50,000 DM to produce with a potential audience of 1000 purchasers (certain academic texts are like this) would have to be priced at a a minimum of 100 DM to recoup only the direct costs. If illegally copied (thereby shrinking the potential market some people will prefer to buy the cheaper illegal copies) its price would have to go up prohibitively, thus driving out potential buyers. The story is different if a book costs 10,000 DM to produce and is priced at 20 DM a copy with a potential readership of 1,000,000 readers.
Piracy (illegal copying) will in this case have been more readily tolerated as a marginal phenomenon. This is the theory. But the facts are tellingly different. The less the cost of production (brought down by digital technologies) the fiercer the battle against piracy. The bigger the market the more pressure is applied to clamp down on the samizdat entrepreneurs. Governments, from China to Macedonia, are introducing intellectual property laws (under pressure from rich world countries) and enforcing them belatedly.
But where one factory is closed on shore (as has been the case in mainland China) two sprout off shore (as is the case in Hong Kong and in Bulgaria). But this defies logic : the market today is huge, the costs of production and lower (with the exception of the music and film industries), the marketing channels more numerous (half of the income of movie studios emanates from video cassette sales), the speedy recouping of the investment virtually guaranteed.
Moreover, piracy thrives in very poor markets in which the population would anyhow not have paid the legal price. The illegal product is inferior to the legal copy (it comes with no literature, warranties or support). So why should the big manufacturers, publishing houses, record companies, software companies and fashion houses worry ? The answer lurks in history. Intellectual property is a relatively new notion. In the near past, no one considered knowledge or the fruits of creativity (art, design) as patentable, or as someone “property.
