October 14, 2007

The New Chicago School: Norms [6:20 pm]

Do magicians “own” their tricks?

For the fashion industry, a lack of intellectual property protection may not be a problem: The trickle-down of high-end fashion helps create obsolescence and the demand for more high-end fashion. But chefs and conjurers need a little help protecting their ideas. Lacking legal protection, they resort to professional norms.

Loshin describes the magicians norms, which encourage the selective sharing of techniques, limit copying unless a technique has been widely distributed, and credit the rediscoverer of a long-dormant technique with the same rights as the tricks inventor. Economists Emmanuelle Fauchart and Eric von Hippel report very similar norms for the sharing of recipes among French chefs.

In both cases, the norms are enforced through social pressure that can be very powerful.

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The Tip Economy [6:02 pm]

Radiohead’s Warm Glow - New York Times

I didn’t pay anything to download Radiohead’s “In Rainbows” last Wednesday. When the checkout page on the band’s Web site allowed me to type in whatever price I wanted, I put 0.00, the lowest I could go. My economist friends say this makes me a rational being.

Apparently not everybody is this lucid, at least not in matters related to their favorite British rock band. After Radiohead announced it would allow fans to download its album for whatever price they chose, about a third of the first million or so downloads paid nothing, according to a British survey. But many paid more than $20. The average price was about $8. That is, people paid for something they could get for free.

[...] Today, music lovers are left but two options: pay list price for an album, or perform what a fan might call a free download and a record company would call theft. Radiohead’s experiment suggests a third way out: let fans pay what they want and give them lots of touchy-feely reasons to want to give as much money as they can.

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