A great thing about American society is our ability to continue to attract attention and followers even after spectacular embarrassments. Aaron Burr as Vice President killed the former U.S. Treasury Secretary Alexander Hamilton, and he not only was allowed to serve out his term, he even attracted followers in an attempt to create a new country in Louisiana. Failed actors and musicians find new life on reality shows.

And authors who take a long-established economic principle like the Power Law and stretch it so far that it becomes the subject of ridicule and scorn are able to publish a new book taking an economic conceit already failing for the most part in society and suggest they have hit on the Gold Rush of the 21st Century. The fact that it is in fact fool’s gold won’t hurt the author, only those told to abandon existing profit streams for false ones.

I never found the Lost Dutchman’s Mine in years of searching as a kid, and only some creators will find gold pursuing Chris Anderson’s “free” model. Had I been willing to do another cross-country flight, I could be listening to him right now telling me how on Earth creators in this economy could all prosper from his wisdom, although he’s backed off of that wisdom recently.)

Note I don’t dismiss entirely the notion of making money from “free.” For as long as there has been commerce, there have been models involving giving something away in return for revenue someplace else, whether it be two-for-one sales, cheap razors for expensive blades, or watching over-the-air TV but tolerating commercials. Any entrepreneur should be free to pursue any business model he or she chooses, and we as consumers should feel free to accept or reject any business model.

The problem comes when we as consumers consume on our own terms. We reject the business model of, say, a videogame manufacturer, and obtain a copy of the game for “free,” instead of simply rejecting purchase. At this point, the one obtaining the game at the price point he or she accepts – no cost – is essentially extorting the producer of the game by saying they have no choice but to give the work away and pursue another approach, such as selling action figures of the characters in the game.

Will those taking those works without concern about compensation to the game developer actually buy those action figures? We don’t really know. Will the video game developer continue to have an economic rationale to produce those games, without knowing beforehand that there is any hope of a stable revenue stream? Quite possibly no.

That is the thrust of the first of this two-part series, the post on marginal costs. Here we have industries being forced into giving works away because technology enables people to evade payment.

Individuals, artists and industries certainly make mistakes in marketing and production. Newspapers years ago began giving away their works online, and now they are disappearing. Copyright infringement, I will confess, is but a small part of their problem. And while I love newspapers, and have even taken to purchasing subscriptions for friends and relatives to do my part to help sustain the industry, creative destruction is making itself known.

But we have the power within ourselves to preserve the creative output of songwriters, photographers, videogame developers, filmmakers, recording artists, illustrators and more. If we don’t like their business models we don’t have to pay for their works. But rationalizing the seizure of their works without their permission or compensation reduces the incentive for their creation without providing alternative revenue streams.

If we only want the free model, only support creators who pursue it. Watch Hulu. Download Creative Commons works. (I gather Professor Lessig has finally made “Remix” available for free after months of charging for it, you can print that out and read it on the beach this summer.) Embrace photos given away on Flickr. Watch true user-generated-content on YouTube.

If you think Anderson is right this time, prove it by supporting free models in the marketplace. But don’t tell me your infringement is morally acceptable while you wait for all creators to pursue this path.

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This entry was posted on Monday, May 11th, 2009 at 9:25 am by Patrick Ross and is filed under copyright opponents, creators, economy, internet, licensing, market forces, piracy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.