Against Intellectual Monopoly

team Real
Madrid has repeatedly proved by covering the large salaries of the "galactic"
soccer stars who have played for the team (David Beckham, Michael Owen,
Raul Gonzalez, Ronaldo, Zinedine Zidane) through the sale of clothing
items bearing their names and numbers. Never mind if they never managed
to win any serious competition, either in Spain or in Europe, during their
galactic years: as innovators in the world-soccer circus they made plenty of
money, plentiful imitators notwithstanding.
    The greatest complementary sale of all is, of course, the sale of advertising.
Those who doubt the possibility of making a profit from giving a product
away for free would do well to look into the history of the radio and television
industry. How many people became fabulously wealthy from an industry
that for the first forty years of its existence had no choice but to provide its
product for free? It is argued, of course, that, in the absence of copyright,
people would simply redistribute the product with commercials removed. In
the absence of technical means such as encryption, this might be possible.
But, of course, there is nothing to prevent the creator from embedding
the advertisement as an integral part of the story. Product placements are
quite common in movies and television. If other advertising possibilities
diminish, these will become correspondingly more valuable. There is no
reason why this cannot extend to other works, such as books. In the old days,
a remarkably large share of written work embodied some kind of advertising
or another, as exemplified by Ludovico Ariosto's Orlando furioso.
    The first inscription there which meets the eye
Recites at length Lucretia Borgia's fame,
Whom Rome should place, for charms and chastity,
Above that wife who whilom bore her name.16
    Although Ian Fleming did not receive payment from Colt for equipping
his spy with a gun of that manufacture, after the books became popular, he
certainly could have made a profit by auctioning off the right to the James
Bond gun. In fact, the Bond movies (in which he did not use a .38 Colt
Police Positive) seem to have done exactly that."
    A similar possibility of complementary sales arises also in the market for
patentable ideas. The inventor naturally has established special expertise
in the ideas surrounding her invention. She will be in great demand as a
consultant by those who wish to make use of the idea. Would not Watt
have been in great demand from producers of steam engines even if he
had no patent? He would; in fact, that is pretty much what he did until 1798 - he acted as an engineering consultant for those who wanted to build
a steam engine. Indeed, the role of Boulton and Watt's patent was purely to
prevent others from assembling steam engines, as most parts were produced
by independent companies in any case. Would Transmeta have been willing
to hire Linus Torvalds at a substantial salary had he not started the Linux
project and written its first version? Despite having given his creation away
for free, and despite an apparent reluctance to profit from his fame, such
as by way of public appearances, Torvalds is nevertheless a millionaire
today.

    Ultimately, no academic work can do more than scratch the surface of
the first-mover advantage: it is limited only by human ingenuity, an area in
which academic economists have no special advantage. For example, profits
can be made by escrowing contingent orders in advance, through serials
and cliff-hangers, or even by selling tickets to a lottery involving innovation
as one outcome. Looking back over history, we see the ingenious methods
adopted by entrepreneurs in markets where indivisibilities have posed a
problem. In the medieval period, the need for convoys created a substantial
indivisibility for merchants that was overcome through the clever use of
contingent contracts. In modern times, Asian immigrants (among others)
have overcome the need for a minimum investment to start a small business
by organizing small lottery clubs.
Ideas of Uncertain Value
    Intellectual property supporters, such as Jack Valenti, former head of the
MPAA, become extremely agitated about the fact that many innovations
are risky. After all, it is bad enough that competitors should be allowed to
"steal" "your" creation. But if the original project is risky, they will only
choose to "steal" if you are successful: few illegal copies of such great flops
as the