Free Against Intellectual Monopoly by Michele Boldrin;David K. Levine Page A

most relevant respects the pornography
industry is similar to that of so called legitimate movies and recordings.
Producing and distributing a pornographic movie or magazine is technically
and economically no different from producing and distributing a legitimate
movie or magazine - so we can gain considerable insight into how those
industries might operate in the absence of copyright by examining the pornography industry. In an earlier era, with the large overhead of producing
movies and glossy magazines, the pornography industry operated much
as the legitimate industry operates. However, the tenuous legal status of
the industry has made it difficult for it to use copyright laws to inhibit
competition, and so as technology has changed, pornography has become a
cottage industry with many competing small-scale producers. It is perhaps
not so difficult to imagine that in the absence of copyright, the legitimate
industry would have been forced to adopt the same model, so we may see
the current stage of the pornography industry as a model of the legitimate
industry without copyright.

    If we turn the clock back to the 1960s, when the legal pornography industry first became widespread in the United States, we find that publishing
costs were high and a few giants, most notably Playboy and Penthouse, dominated the industry. However, unlike the legitimate industry, these large
monopolists were not able to inhibit entry through the manipulation of the
legal system, the abuse of copyright law, or political favoritism. The consequence has been that, as technology has changed, there have been frequent
entries and constant innovation in this industry. Still, as long as the main
technology for the reproduction and distribution of pornographic materials
consisted of glossy magazines and movies circulating through the chain of
X-rated movie theaters, the threat of competition and imitation was weak,
and the big houses thrived.
    All through the 1980s and then, at a much faster pace, the 1990s, technologies such as videotapes and the Internet became available and were
quickly adopted. Indeed, it is arguable that the replication and distribution
of pornographic materials was one of the reasons for the early explosive
growth of the Internet between 1994 and 1999. The thousands of Internet
sites distributing pornographic materials around the globe are, most of
the time, imitators of the main initial producers, most often in violation
of copyrights and licensing restrictions. Online pornographers are usually
among the first to exploit new technologies - from video streaming and
fee-based subscriptions to pop-up ads and electronic billing. Their bold
experimentation has helped make porn one of the most profitable online
industries, and their ideas have spread to other legitimate companies and
become the source of many successful and highly valuable imitations.
    Notice that if intellectual monopoly were a necessary requisite for sustained innovation, the circumstances we are describing should have brought
the porn industry to a commercial standstill, halted innovation, and greatly
reduced the amount of pornographic materials available to consumers. We are all well aware that exactly the opposite has happened. The consequence
of the tremendous reduction in the cost of copying and redistributing visual
materials, and the advent of peer-to-peer networks, has not brought about
any reduction in the quantity of new pornography available to consumers -
indeed, it seems to have expanded considerably - nor are we aware of complaints about a reduction in quality. There has, however, been an extremely
adverse impact on the monopolies that originally dominated the industry -
with Penthouse filing for Chapter 11 protection, and Playboyand Hustler dramatically losing profitability and market share. When we wrote this section,
during a visit to Hong Kong in March 2004, the local newspapers announced
the shutting down of