The Copyright Industry Does Not and Cannot Compete in a Free Market

August 17, 2010 on 7:56 pm | In Copyright, Intellectual Property, Law, Logic, Movies, Politics | 3 Comments

I’ve been meaning to write up a post about how the copyright industry lacks the ability to compete in a free and open market. What finally got me off my butt and write this post is the most amazing real-world example I could ever imagine.

U2′s manager Paul McGuinness asked Apple boss Steve Jobs to create a business model for the music industry:

Steve is the guy who has always magically known what the consumer wants before the consumer even knows it. I wish he would put that great mind and that great corporation of his to work devising a model that finally allows artists and creators to get properly rewarded for their work. Maybe he’s working on it right now. I hope so.

Paul McGuinness has been in the music industry nearly his entire life. But he cannot figure out a way to make money from it? Heck, it’s even worse than that. According to McGuinness, no one in the music industry knows how to make money running a business. Does that make any sense at all?

Unfortunately, it makes perfect sense.

Most people think that copyright is a property right. It is not.

Copyright is a government granted monopoly. The government grants monopolies over music, movies, photographs, etc., and then middlemen make money off of them. That’s how Paul McGuinness makes his money. Acting as a middleman between U2 and its fans.

Every time the copyright industry is faced with competition, they sue. If they cannot sue, they have laws passed so they can sue. If they cannot have federal laws passed to suit their needs, they have state laws passed instead. If they can’t get a government to pass the laws they want, they have treaties enacted which force all governments to pass the laws they want.

What I described above has happened countless times in the history of copyright. For a great example we have to travel back into time to when the player piano was first introduced. Back then the monopoly granted by copyright did not cover performances, only published sheet music.

So anyone could play any song he or she wanted without paying a dime. The music industry made money selling sheet music to musicians.

The player piano eliminated both paying for published sheet music and eliminated the musician who would have bought the sheet music.

So, as I said, the music industry of the 1800s sued. They lost because, as I said, copyright did not cover performances.

So the music industry went to Congress and had copyright laws changed to cover performances. So when the music industry sued again, they won. Of course they won. They always win.

I have to stress, the player piano was perfectly legal. The music industry could have competed with it just like restaurants compete with each other all the time. They could have advertised the fact that music played by real musicians constitutes a better product. That full bands are better than a mere piano. Etc.

However, at no point does the copyright industry ever simply roll up its sleeves to compete in a free market. Their “solution” to legal competition was and is to make the competition illegal. That’s why the music and movie industries have no problem suing their customers. The copyright industry doesn’t really have customers. They have tolls which we, by law, are required to pay under certain circumstances. When competition is created via new technology, they have new tolls added to the new technology. That’s a completely different mindset from someone running a business such as a restaurant.

So when I hear about someone who lived off the teet of copyright for his entire life, but who’s unable to come up with a business model that works in a free market, I’m not surprised at all. People like Paul McGuinness are not businessmen. They’re middlemen who live off what the government grants them. They never create. They never innovate. They merely take their cut. When their cut gets too small, they blame everyone but themselves. They even go as far as to sue their own customers or demand to have them kicked off the internet. As if that would magically make them start paying the old tolls again. People like McGuinness think this way because they don’t understand how businesses or markets work. And because they know of no other way.

Update:

Read this article to learn how copyright has caused ebook distribution to become the “epitome of inefficiency.” Which is supposed to be the opposite of what happens in a capitalist system.

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