Comments on: Paternalism and the iPod, Part Trois http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/ Academic commentary on law, business, economics and more Sat, 13 Mar 2010 20:12:46 -0800 http://wordpress.org/?v=2.8.5 hourly 1 By: TRUTH ON THE MARKET » Using Antitrust to Tax Consumers is a Bad Idea Even If You Really, Really Want “True” Interoperability http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/comment-page-1/#comment-68319 TRUTH ON THE MARKET » Using Antitrust to Tax Consumers is a Bad Idea Even If You Really, Really Want “True” Interoperability Fri, 09 Feb 2007 19:56:56 +0000 http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/#comment-68319 [...] Everybody seems to have some advice for how Apple’s business model, which is fine, and there are certainly a ton of interesting economic issues about interoperability, standards, and competition to discuss here. But I’m not sure what about the Norwegian / European approach is worth celebrating here from an antitrust perspective. As I’ve written here before, the discussion of antitrust issues surrounding the Apple have been heavy on buzzwords and light on deference to the competitive process that has generated obvious and tangible consumer benefits thus far: What I find puzzling is that the regulatory-speak has focused so much on these buzzwords and speculative theoretical effects and so little on consumer welfare. Let’s keep in mind that Apple’s success, and the benefits that have accrued to consumers because of it, derives precisely from their business model of integrating iPod and iTunes. [...] [...] Everybody seems to have some advice for how Apple’s business model, which is fine, and there are certainly a ton of interesting economic issues about interoperability, standards, and competition to discuss here. But I’m not sure what about the Norwegian / European approach is worth celebrating here from an antitrust perspective. As I’ve written here before, the discussion of antitrust issues surrounding the Apple have been heavy on buzzwords and light on deference to the competitive process that has generated obvious and tangible consumer benefits thus far: What I find puzzling is that the regulatory-speak has focused so much on these buzzwords and speculative theoretical effects and so little on consumer welfare. Let’s keep in mind that Apple’s success, and the benefits that have accrued to consumers because of it, derives precisely from their business model of integrating iPod and iTunes. [...]

]]> By: TRUTH ON THE MARKET » Barnett on Antitrust, IP, and Apple at the GMU Antitrust Symposium http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/comment-page-1/#comment-16530 TRUTH ON THE MARKET » Barnett on Antitrust, IP, and Apple at the GMU Antitrust Symposium Thu, 14 Sep 2006 20:31:38 +0000 http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/#comment-16530 [...] Barnett moves from the historical rise of the iPod to the more recent antitrust attacks we have discussed here at TOTM, e.g. here, and here. Barnett discusses a number of theories raised against Apple. For instance, in response to the most frequently raised theory that consumers are “locked in” to buying songs only from iTunes and pay too high a price for those songs, Barnett writes: “There are two problems with this theory. First, consumers can upload other formats (CD-ROMs and MP3 files) to Apples’s devices, so they do not have to buy from iTunes. And while it is true that Apple’s DRM software ensures that the first recording of a song downloaded from iTunes can only play on an Apple device, consumers can re-record an iTunes song in an MP3 format and play it on other devices; in sum, it is hardly clear that they are locked in. Second, it appears that Apple has been depressing per-song prices, not raising them.” [...] [...] Barnett moves from the historical rise of the iPod to the more recent antitrust attacks we have discussed here at TOTM, e.g. here, and here. Barnett discusses a number of theories raised against Apple. For instance, in response to the most frequently raised theory that consumers are “locked in” to buying songs only from iTunes and pay too high a price for those songs, Barnett writes: “There are two problems with this theory. First, consumers can upload other formats (CD-ROMs and MP3 files) to Apples’s devices, so they do not have to buy from iTunes. And while it is true that Apple’s DRM software ensures that the first recording of a song downloaded from iTunes can only play on an Apple device, consumers can re-record an iTunes song in an MP3 format and play it on other devices; in sum, it is hardly clear that they are locked in. Second, it appears that Apple has been depressing per-song prices, not raising them.” [...]

]]> By: TRUTH ON THE MARKET » Economists’ Indifference, Straw Men, and the Costs of Regulating Inequality http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/comment-page-1/#comment-11986 TRUTH ON THE MARKET » Economists’ Indifference, Straw Men, and the Costs of Regulating Inequality Wed, 09 Aug 2006 21:13:12 +0000 http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/#comment-11986 [...] I’ve been going back and forth with Frank Pasquale both at Madisonian and Jurisdynamics about economics, consumer welfare, the costs of inequality (and regulating it), and the ability of economics to provide useful insights where “social goods” are involved. At Jurisdynamics, Frank responds to my post on Apple’s business practices by asserting that my tunnel vision focus on consumer welfare ignores important justifications for government intervention like excessive vertical integration. While I argue that the economic literature universally accepts the notion that vertical integration, in most instances, is a procompetitive practice, Frank eloquently refuses to engage in the discussion on economic terms because those terms are not sufficiently “humanistic” (anecdotally citing this guy’s refusal to express his ideas in Rawlsian terms to a group of graduate students) and then levels this attack on economic analysis: I have no doubt that the Chicago School of economic analysis has made fundamental contributions to our understanding of “brick and mortar” goods, coffee and coffemakers, M&M’s and toothpaste. But in the realm of culture, we need a richer, more humanistic analysis. We cannot simply try to maximize “consumer welfare.” [...] [...] I’ve been going back and forth with Frank Pasquale both at Madisonian and Jurisdynamics about economics, consumer welfare, the costs of inequality (and regulating it), and the ability of economics to provide useful insights where “social goods” are involved. At Jurisdynamics, Frank responds to my post on Apple’s business practices by asserting that my tunnel vision focus on consumer welfare ignores important justifications for government intervention like excessive vertical integration. While I argue that the economic literature universally accepts the notion that vertical integration, in most instances, is a procompetitive practice, Frank eloquently refuses to engage in the discussion on economic terms because those terms are not sufficiently “humanistic” (anecdotally citing this guy’s refusal to express his ideas in Rawlsian terms to a group of graduate students) and then levels this attack on economic analysis: I have no doubt that the Chicago School of economic analysis has made fundamental contributions to our understanding of “brick and mortar” goods, coffee and coffemakers, M&M’s and toothpaste. But in the realm of culture, we need a richer, more humanistic analysis. We cannot simply try to maximize “consumer welfare.” [...]

]]> By: Chris http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/comment-page-1/#comment-11573 Chris Fri, 04 Aug 2006 23:26:07 +0000 http://www.truthonthemarket.com/2006/08/04/paternalism-and-the-ipod-part-trois/#comment-11573 Consumers, generally, do not like proprietary technologies - if MS and other entrants start to provide attractive products Apple will need to either unbundle i-Tunes or face the consequences (which I think is what you were saying anyway). The market works and the tie that opponents of Apple have been theorizing about have existed for ages - LPs, tape cassettes, 8-tracks, CDs etc have all had to overcome existing investments in music, yet all have overcome them (to varying degrees). So when a product comes whose benefits outweigh that investment people will switch. Consumers, generally, do not like proprietary technologies – if MS and other entrants start to provide attractive products Apple will need to either unbundle i-Tunes or face the consequences (which I think is what you were saying anyway).

The market works and the tie that opponents of Apple have been theorizing about have existed for ages – LPs, tape cassettes, 8-tracks, CDs etc have all had to overcome existing investments in music, yet all have overcome them (to varying degrees). So when a product comes whose benefits outweigh that investment people will switch.

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