Against Intellectual Monopoly

seven days, $1.99
per book delivered in two days, and $2.99 per book delivered in one day.
So, some consumers at least are willing to pay $1 extra to have a book
delivered twenty-four hours sooner. This is obviously a substantial firstmover advantage.
    Indeed, for books, we do find that up-front profits are typically the most
important. Eric Flint reports that the "standard experience is that 80% of
a book's sales happens in the first three months."13 In the same page he
also provides, among other things, the following data for his own novel
cowritten with David Drake, Oblique Approach:

    Our own data on a much broader base of fiction novels shows a decrease
in sales over the initial four months of roughly a factor of six. 14 The book
industry, at least for paperback novels, is an industry in which the cost
of creation is relatively small. Flint reports that the "average paperback
sells, traditionally, about 15,000 copies" which, with a royalty of $2 per
copy, would work out to about $30,000, also consistent with our broader
database.
    In the case of recorded music, we have the benefit of a natural experiment.
Prior to 1999, recorded music was effectively protected by copyright law
and technology. With the ability of computers to rip tracks from CDs and
convert them into MP3 format, the advent of the peer-to-peer network
Napster in May 1999 effectively eliminated copyright for music - so much
so that the complete elimination of intellectual monopoly is now sometimes called "Napsterization." The impact of Napsterization on CD sales has been
studied by Stan Liebowitz of the University of Texas. According to Liebowitz,
Napsterization had little or no impact on CD sales through the end of 2001.
In 2002, a decline in CD sales that began in 2001 became more severe, and
Liebowitz estimates that in the long-run sales will fall by 20 percent.15

Complementary Sales
    Another first-mover advantage, for creative works especially, is the welldocumented and strong preference for originals, signed copies, and early
versions that are in scarce supply over more widely available versions. Perhaps one of the most striking examples of the phenomenon is that of the
J. Paul Getty Museum, in Los Angeles. The Getty bought, at astronomical
prices, a large number of very good forgeries of famous works of art. These
forgeries were sufficiently good that the experts of the museum believed that
they were originals. However, additional subtle evidence and refined scientific testing established that indeed the works were fraudulent. Of course,
from the functional point of view the works were unchanged - from the
viewers perspective, the painting still looked exactly the same. But the market price, once the works were clearly established as unoriginal, plummeted
by orders of magnitude. Similarly, authorized copies of a variety of fashion products, distinguishable from the original at most by the presence or
absence of a label, sell for a vastly lower price than the original. So, while
works of art may be currently protected by copyright, it is hard to make the
case that there is any need to do so.
    The preference for originals, signed or autographed copies, and so forth,
is just a special example of a more general phenomenon: the complementary
sale. That is, a creation, while not terribly scarce in some markets, is often
quite scarce in other markets, and the innovator, by virtue of being the
innovator, can generally command a premium for her services in areas
not directly related to her idea. Examples of this abound. In music, live
performances will remain scarce, no matter the price of electronic copies.
Movies will be produced as long as first-run theatrical profits are sufficient
to cover production costs, and no matter how many copies are given away
over the Internet for free. Books will continue to be produced as long as
initial hardcover sales are sufficient to cover production costs. Substantial
money is to be earned by authors or inventors by going on the talk-show
circuit. Even T-shirts signed by a famous author may be enough to pay
for the opportunity cost of his labor in producing a great literary work -
amazingly enough, a number of small online comic strips have found it a
profitable business model to give their strip away for free and sell T-shirts.

    Activities more mundane than great literarywork may also suffice to make
lots of money from complementary sales, as the Spanish soccer