The Piracy Paradox

July 22, 2008

Maybe some of you have heard about it… or already have read the paper… one more interesting argument in the never ending discussion about piracy…

There is a global industry that produces a huge variety of creative goods in markets larger than those for movies, books or music and does so without strong copyright protection. Competition, innovation, and investment, however, remain vibrant. That industry is fashion.

We all know the fashion industry is one of the most creative and innovative industries out there. So fashion firms show precisely the opposite behavior of that predicted by the standard theory of copyrights, which predict extensive copying will destroy the incentive for new innovation.

So why, when major content industries have increasingly powerful copyright protections for their products, does fashion design remain mostly unprotected – and economically successful?

This paradox is analyzed by Kal Raustiala and Christopher Sprigman in the article named: “THE PIRACY PARADOX: INNOVATION AND INTELLECTUAL PROPERTY IN FASHION DESIGN” in the Virgina Law Review.

They argue that the fashion industry counter-intuitively operates within a low-copyright equilibrium in which copying does not deter innovation and may actually promote it. The paper offers a model explaining how the fashion industry’s piracy paradox works, and how copying functions as an important element of and perhaps even a necessary predicate to the industry’s swift cycle of innovation.

The paper is quite long (92 pages), but you don`t have to read the whole paper to get the message. Piracy is an issue an industry can deal with under some circumstances…

At a conference of The New Yorker (May 2008 ) Kal Raustiala talked with Scott Hemphill and James Surowiecki about the effect pirated goods have on the fashion industry. See the video here or download the podcast on itunes.


One Response to “The Piracy Paradox”

  1. […] – bookmarked by 5 members originally found by jorgepereira on 2008-09-24 The Piracy Paradox – bookmarked by 6 members […]

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