Piracy has no place in a free market
Jerry Kirkpatrick wrote an article titled “The Market Function of Piracy” and posted it at his blog and at the Ludwig von Mises Institute. In it, he argues that pirating copyrighted products brings a marketing benefit to the sellers of those products. He compares pirated copies to “free examples” and tries to explain how those samples can help to increase knowledge and interest. He also states on his site that he believes in laissez-faire capitalism (for economic and moral reasons) and that his interest is in applying them. I think that his positions on the “market function” of stealing property is not consistent with his stance on capitalism, and I’ll explain why. It might be easier to start by explaining what some of the terms in question mean.
A free market is a market where individuals can sell or purchase products only by mutual, voluntary consent. The “free” in “free market” means that all people are free to exercise their own judgment, and that no individual has the right to force another individual to do something without his consent. A seller offers a product for a price that he chooses, and a potential buyer’s only options are to meet the seller’s price or walk away. In a free market, no individual may be forced to do anything against his own will.
Piracy is a term usually used to identify the theft of intellectual property. For example, if you download or upload a movie or song illegally on a p2p network, you’re “pirating” that product. Piracy is stealing.
Just looking at what these two terms mean, it’s obvious that the two can’t go together. Theft has no place in a free market. A free market depends on individuals being free to set their own prices for their own property, and piracy is the theft of someone’s property without their consent. A “pirate” does not want to meet the creator’s terms for the products they want, so they take it and run.
So how do people get around these obvious contradictions? Based on what I’ve read from Kirkpatrick’s article and others, I’d say that most people seem to change the definition of “piracy” to something that boils down to “a harmless act of sharing movies and music between a small minority of people.” Some people believe that it is harmless because the creators of the music and movies never had the right to own them, while others believe that it is harmless because it doesn’t really cause the creators to lose any money. And some in the latter group, like Kirkpatrick, believe that the piracy might even be beneficial to the creators. He wrote:
The pirated product functions as a free sample that the innovator does not have to fund.
Treating a stolen copy of a product as a “free sample” ignores the owner’s right to that product. A free sample is a product that is offered voluntarily by someone, while a stolen copy of a product is a copy of a product that was taken from the owner involuntarily. Kirkpatrick may be trying to get around this by claiming that the stolen copy “functions” as a free sample, but his wording does not change the fact that it is a a stolen copy that was taken without permission from the owner by means of force. I think that a requirement for any advocate of laissez-faire capitalism (which I consider myself) is a zero-tolerance policy on theft.
He also wrote (emphasis mine):
Knock-offs are pirated products. Because they are usually cheaper than the original, knock-offs tend to appeal to a more price-conscious segment of the market; that is, the buyers of pirated products are probably not legitimate prospects for the innovative new product, either because they cannot afford, or do not want to pay, the higher price. Message to the innovative marketer? Either drop the price of the new product or produce a cheaper version—or be the first to exploit a new technology, something the movie and recording industries chose not to do.[2] Many, including these two industries, would rather sue than practice good marketing.
I’ll see if I can explain this correctly: People steal movies and music because they want the product without paying for it. Who is to blame? The music and movie industry, because they didn’t market their product to the pirate segment of the population properly. This segment offers a unique marketing challenge in that if they don’t like your terms they’ll take your product anyway, but hey, that’s the industry’s problem. The industry needs to reach out to these thieves to persuade them to purchase the product legally.
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[…] I’ve written this before, but that’s where the “free” in “free market” comes from. All parties are free to exercise their own judgement without being coerced into any deal. […]