Piracy Paradox

James Surowiecki, author of the “The Wisdom of Crowds”, discusses the “Piracy Paradox” in the September 24th issue of The New Yorker:

The paradox stems from the basic dilemma that underpins the economics of fashion: for the industry to keep growing, customers must like this year’s designs, but they must also become dissatisfied with them, so that they’ll buy next year’s. Many other consumer businesses face a similar problem, but fashion—unlike, say, the technology industry—can’t rely on improvements in power and performance to make old products obsolete. Raustiala and Sprigman argue persuasively that, in fashion, it’s copying that serves this function, bringing about what they call “induced obsolescence.” Copying enables designs and styles to move quickly from early adopters to the masses. And since no one cool wants to keep wearing something after everybody else is wearing it, the copying of designs helps fuel the incessant demand for something new.

Surowiecki’s argument specifically addresses clothing fashions but it likely has implication for any industry that sells at least in part on fashion. By devaluing this year’s fashions next year’s becomes that much more attractive.

If automobile designs were pirated would the automobile manufactures be able to entice consumers to upgrade more frequently? Would this give downscale buyers access to cheaper better cars?

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