Mr2001,
Your analogy to a loaf of bread represents a common fallacy in regards to intellectual property. Luckily, the courts haven’t fallen for it.
But let’s stick with it for a minute, and assume the town likes bread, so demand for loaves exists. The baker creates the supply (before the replicator). The baker prices the bread, not based on what it costs him (he wants to make money), but on the value of the bread to the town.
If the competing bakery on the other side of town burns down, even with no increase in cost to our baker, he can suddenly raise his price - because demand remains and supply has been cut - the value of his loaves increase.
When the competing bakery rebuilds, with twice the capacity, our baker must reduce his price - because demand remains and supply has increased - the value of his loaves decreases. If that value drops below his cost to produce the loaves, he can’t just raise his prices. If he can’t cut his costs, he has to go out of business.
Now let’s assume that the ingredients to make the bread are free. And just for fun, let’s assume our baker has invented (but not patented) the replicator. He now stops making bread, and takes his last loaf, puts in the replicator, and poof!, he has another loaf of bread. He puts it on his shelf, at no additional cost. He has no reason to change the price. That is, if he makes the same amount of bread, its all margin (and if he was profitable before, he is a whole lot more profitable)[sup]1[/sup].
But now his replicator secret is broken, and soon, everyone has a replicator. After they bought their last loaf, they replicate their own bread, and no one every comes back to the baker. And he goes out of the bakery business.
[At this point, the analogy fails since bread is a commodity and consumed when used.]
So the baker pursues his other passsion - sculpting granite. Over many months, he creates the most beautiful sculpture since Michelangelo’s David. He desparately needs money. Many people expressed to desire to have one of his sculptures in their gardens. Not just a big piece of granite, but one whose value is created by the skilled hands of our baker/sculpturer. But he recognized that if he sold the sculpture like he did the loaves of bread, someone would simply start replicating his sculpture, and he would again be out of business very quickly.
Luckily, he lives in a society based on laws, where contracts are enforceable. So he decides to sell his sculptures, but only to those patrons who agree to a contract that the sculpture must never be replicated (or replicated as much as they want, but he gets compensated for each copy). Without that agreement, he has no reason to create sculptures. He can capture the value in the marketplace.
But some unscrupulous sole violates his agreement, and replicates the statue, giving one to his friend. His friend replicates it 1000 times, and gives one to everyone he knows. They do the same, and soon, even Mr2001 has one. And now, our friend can’t sell his sculptures to anyone. He is out of business again.
In a single isolated case of replication, you can say that he lost a potential sale - which would be accurate. And perhaps he could even assume that it will happen 2% of the time, call it shrinkage. He may even decide that giving a few new ones away helps him create demand, which allows him to sell even more.[sup]2[/sup]
It is not the chunks of granite that he sells (the media), it is the form, the content, the composition, as well as his skills, craftsmanship, time, and effort. If he has no way to protect those items, he has no motivation to even create them.
And that is why this country protects intellectual property. When you take someone else’s intellectual property, you deprive them of the opportunity to capture the value of their investment.[sup]3[/sup]
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Notes
[sup]1[/sup] Even if the loaves of bread have no cost to him, they still have value. What you are stealing is that value. The market has simply determined the price. His cost basis, frankly, is none of your business. And if it had no value to you, you wouldn’t have bothered to replicate it (and if you wouldn’t have purchased it, your value is lower than the price).
[sup]2[/sup] Here you see where the decision between shrinkage and promotion is made by the baker/sculpture, not by the potential customer. Giving the decision to the consumer does not provide the incentive to create new material, or make it ethical, as you claim.
[sup]3[/sup] The concept of intellectual property affects a huge portion of our gross domestic product, as well as our exports. Your ideas on intellectual property are dangerous to our economy.
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The courts have no problem defining what you cannot. You are taking something of value from the rightful owner. You are stealing. Your “zero marginal cost” argument has no merit. Your promotional benefit argument is specious.