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In recent years, the economics of pop music have been upended. The market for CDs has collapsed, and not even the rise of legal downloading can offset the damage to record companies. Meanwhile, demand for live performances has rocketed...

Back in 2003, we mentioned an article that compared the entertainment industry to the fashion industry, noting that even though there was no intellectual property protections over clothing design and copying was rampant, the fashion industry was thriving. This shouldn't come as a surprise, really. After all, without the artificial protectionism, the fashion designers are forced to continually compete by continually innovating and always trying to come out with the latest and greatest design. Even though others copy, there's tremendous value in being the first, or being the "big name" in the industry. The article included this fantastic quote: "Ideas arise, evolve through collaboration, gain currency through exposure, mutate in new directions, and diffuse through imitation. The constant borrowing, repurposing, and transformation of prior work are as integral to creativity in music and film as they are to fashion." In 2005, the NY Times wrote a similar article, but warned that the fashion industry was moving in the wrong direction, as lazy designers who didn't want to compete and wanted to rest on their laurels had started pushing for new intellectual property over their designs. Late last year, the calls for such protectionism grew even stronger -- though, the reasoning doesn't make any sense. The entire point of intellectual property protections is to create incentives for a market. If that market is already thriving, why do you need to add new incentives? The real reason is that it's not to provide incentives. It's a way for successful players to keep making money without continuing to innovate -- which is simply bad for society.

The NY Times is taking another look at this issue, this time in a piece written by well-known economist Hal Varian, who points to a recent study that doesn't just note that the fashion industry has thrived without intellectual property protection, but notes that a big part of the reason it has thrived is because of the lack of IP. In other words, if those pushing for those new IP rights get them, the end result will likely be harmful to the overall fashion industry. Again, this shouldn't be surprising, as removing protectionist policies tends to increase competition and the size of the addressable market, but it's certainly a good example to point to when people insist that things like the music industry wouldn't exist without copyright protection.

If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today... A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose.

Now that they be giants?

Protection for software patents and other intellectual property is essential to maintaining the incentives that encourage and underwrite technological breakthroughs. In every industry, patents provide the legal foundation for innovation. The ensuing legal disputes may be messy, but protection is no less necessary, even so.

So where would Billy-G be today if (for example) IBM owned it all?

So the reasoning goes that Intellectual Monopoly (which the apologists call Intellectual Property) would be the same. Left undefended by law, IM wouldn't be upgraded by private capital. And this is used as defence for patent and copyright law.
This is where the analogy falls apart. The problem with this is that while undefended property will likely be stolen or damaged, you can't actually 'steal' or 'damage' an idea. While a single plot of land can be owned by only one at a time, an idea can be shared with everyone, and no one is deprived of the idea.
In fact, mankind progresses by sharing ideas. Ideas build on those that came before. We could not build the automobile until the wheel was invented. We could not build the automobile until the blacksmith learned their trade. We could not build the automobile until we harnessed the energy in oil. In short: there were thousands of incremental steps over many generations before the automobile was made. Without all the ideas and inventions that came before, there would be no automobile today.

Patents are a monopoly. A monopoly means that you have no competition. In most places in the world, patents are good for about 20yrs at this point. That means that for 20yrs no one else except you can make use of your idea.

Not only can no one produce your idea, no one can improve on it. This means that for the duration of the patent the public must rely on one entity to improve on this idea. This has the net effect of artificially slowing the rate of innovation. This means that ideas are most valuable when they can be freely shared and expanded on by others.

So we have a situation where protecting physical property increases it's value while creating intellectual monopolies decreases their value.