Tuesday, May 17, 2005

On wine and filesharing

I love music and I love wine. That's why I've been pondering the similarities between the wine direct shipment controversy and the whole P2P filesharing hullabaloo. Both of these things are controversies for the exact same reason: the internet fucks with distributors and distributors don't like that.

First music. U.S. Copyright law exists to promote the progress of art. That is, we give an economic incentive to artists by granting them monopolies on their art for limited times, which hopefully induces them to make more art. But, see, artists are kind of single minded individuals. The economic incentive theory only works if in fact artists want to sell their art for money. Most artists would rather make their art then spend time trying to sell it. In economics this is called a transaction cost. Traditionally, the transaction costs associated with producing and marketing music have been high. That's why most of the time copyright only indirectly benefits the artist. They can assign their copyright to a middleman (e.g., record label who then gives a cut to the distributor) in exchange for the middleman doing all the boring marketing stuff. All is well in the world. Record labels and distributors become rich and powerful. Musicians do not, but they still make their records because what else are you going to do? Along comes the internet. This fucks everything up because suddenly transaction costs are reduced dramatically. Huge paradigm shift which sends the record industry reeling. The middlemen are suddenly obsolete, or at least their role is dramatically altered. Their only recourse is to lobby for copyright laws that can force us all to keep the status quo. Lucky for them they have the force of the Constitution Art. I, sec. 8, cl. 8 (the copyright clause) to help them along.

Same shit with the wine industry. We can think of small wine producers as artisans much more interested in making good wine than doing all that boring marketing shit. But, they gotta sell their wine. Enter the distributors. Both large and small winemakers were entirely dependent on distributors to get their wine in the hands of consumers. Distributors became big and powerful. But, enter the internet. Suddenly transaction costs for getting wine to consumers drop. Small wineries can market their wine and ship directly to consumers with ease. Distributors freak out. They lobby states to prohibit direct shipment of wine, couching their reasons in terms of harm to minors. Lucky for them, they have the force of the 21st Amendment to help them along. But, at least here, the Supremes have said that the Dormant Commerce Clause trumps the 21st amendment. However, the Dormant Commerce Clause only means that whatever action states take to regulate alcohol can't be discriminatory. That means if they allow direct shipment by instate wineries, they also have to allow direct shipment by out of state wineries. Of course they could always prohibit direct shipment completely, and only allow wine to be sold through distributors. What do you think the distributors are going to lobby for?

On second thought, I'm not so sure I'll be sending wine to Virginia any time soon.


Blogger Crapartist said...

Why is the relationship between the law and people's motivations so heterodox? It seems like many laws, presumably created for given reasons, are flagrantly used by people for personal gains. Should we not stamp that shit out? If we did, would it bring the whole economy down around our ears?

8:37 PM  
Blogger great sandwich! said...

The law is made by politicians. Except for common law--which is made by activist judges :)

In the case of copyright law, it is literally written by corporations and Congress just takes it as is!

7:41 AM  

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