Why Do We Pay for Netflix?

One of the most common arguments one hears from proponents of Intellectual Property laws, besides the claim that creators have a “right” to a legal monopoly over the fruits of their labor, is that IP laws are a necessary evil without which creators would have little incentive to create.  A professor of mine once told me that IP is necessary because we no longer have an aristocracy to patronize the arts (Catholic university professors are always primitivists of some kind).  What are we to make of this argument, that IP is the only way to incentivize creativity?

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Of course, it is always helpful to point out that IP did not exist until very recently in human history, and creators (including artists, inventors, programmers, designers, pharmaceutical companies, cooks, etc.) have always done reasonably well.  Certainly IP does not guarantee success, as the sad histories of impoverished artists of the 19th and 20th centuries should indicate.  But, that was then, and this is now.  Things may have changed.

You should see the looks on the faces of my fellow filmmakers when I tell them that since a film is an abstract idea in the mind assembled from a specific arrangement of light and sound waves and therefore infinitely reproducible and therefore non-scarce and therefore not legitimate property, and that this means one has no right to a legal monopoly over a film’s copying, reproduction, dissemination, or revenue.  They are baffled that I, a starving artist like themselves, should sell myself out in such a manner.  “How will you make money, then?”  I respond with another, somewhat cheeky question.  “Why do people pay for Netflix?”

This is a common issue one faces when discussing the ideas of liberty with people.  They are so used to the way things are and always have been that they cannot imagine it being any different.  Probably the most oft-parodied and widely mocked iteration of this impulsive fear of the unknown is that time-honored question, “But without government, who would build the roads?”  (On the internet we call this the “Muh Roads” argument)

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Libertarians love to mock this question, but it is a legitimate fear that many people have.  Despite all the evidence to the contrary, many people still cannot just trust that the market will allocate resources efficiently to as many people as possible.  Of course, the market is always surprising us.  When Napster threatened the music industry’s monopoly on the dissemination of music, the IP evangelists asked the State to intervene because, of course, without control of the distribution of their product how could they possibly make money?  Napster was shut down, but Pandora’s box was opened.  Positively NOBODY pays for music anymore.  Services like Spotify and Pandora distribute free music to everyone, every song is uploaded to YouTube.  Who even bothers with iTunes anymore?  $1.99 for a song?  Preposterous!

And yet amazingly, the music industry did not collapse.  They simply had to adapt to innovation just like every industry does.  Now artists make most of their money from live shows.  This is competition.  This is the free market at work.  Have you noticed how much better and more artistic popular music has gotten in the last ten years?  That’s because in order to make money off of concerts, you have to be really really good.  The rising importance of live music also grants more autonomy to the musicians, rather than control to the studios and marketers, and the artists can therefore be more true to their artistic vision.

Which brings us back to: WHY DO WE PAY FOR NETFLIX?

To be honest, I don’t really have an answer, but follow me here.  Unless one actually works in the entertainment industry (i.e., must be sensitive about “stealing” people’s ideas), IP is dead.  Despite the studios’ efforts to destroy unauthorized copies of their products, for the average person, there is no especially logical reason to ever pay to watch a movie or TV show again.  Case in point: a great software called PopcornTime.  PopcornTime is a vaguely illegal torrenting service which offers copies of films and TV shows for absolutely free.  All one need to do is download the file.  Because PopcornTime is peer-to-peer and (obviously) doesn’t have contracts with studios and filmmakers the way Netflix does, virtually every movie or TV show you could possibly want has been uploaded.  And if PopcornTime doesn’t have what you’re looking for, some other equivalent service will.  If you know what you’re doing you can hunt down the individual torrents yourself.  So the question remains, why on earth do people still pay for Netflix?

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Almost everyone I know who uses PopcornTime also uses Netflix (myself among them).  I know for me personally, I prefer to watch movies and TV shows on a large screen and not on my laptop or desktop computer.  However, all I would need to make PopcornTime play on my television is an HDMI cord.  Maybe it’s because the internet seems to work faster on Netflix than on PopcornTime, though certainly this is a problem time and innovation will erase.  This issue raises the question, why does anybody pay to go to the movies still?  Why do I still find myself buying DVDs and Blu-rays?  What exactly are they selling me that torrents aren’t?

You see, there is much more to a product than the product itself (in the case of movies, an arrangement of light and sound).  There is the experience of the product on the part of the consumer, brand recognition, etc.  The destruction of IP affects none of these auxiliary properties of any creative product (and, according to my recent examination of conscience, I am inclined to believe that these things may be more important than the product itself as far as the price system is concerned).  When I go to the drug store, I am always more inclined to buy the name brand drug instead of the generic, even though the generic is the exact same concoction at a lower price.  When I’m driving through the boonies, I’m more inclined to go to Shell or Chevron than Smokey Joe’s Gas Barn.  I will always drink bottled water instead of filtered tap.  Why?  I haven’t the foggiest.  It’s probably irrational, but profits care not for my lack of self-awareness.

My point in all of this is: to all proponents of IP and all fearful artists – stop worrying.  You will not be penniless.  If you are creating something good, someone will value it and pay you for it.  The market will not leave you destitute.  It is up to you, not the consumer, either to make your product scarce or to offer some premium experience that the knock-offs and the remixes cannot.  Stop expecting the State to come along and do your job for you.  Not to fear.  The world will be freer, and you will be a better artist for it.

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