Industry Structure and Shoppingnorms

In my previous post, I suggested that Raustiala and Sprigman raise some very interestng issues about the structure of the fashion industry. Randy Picker asked similar questions about the industry's copying practices. I'd like to circle back to those questions, by way of a little speculation about copynorms.

Raustiala and Sprigman cite a very interesting paper by Fauchart and von Hippel on norms among haute cuisine French chefs. That paper observes that norms of attribution and originality among chefs sustain a level of innovation in recipes even in the absence of formal IP protections. One way of reading The Piracy Paradox is as claiming that norms also sustain an innovation-rewarding system in the fashion industry, again without reliance on formal IP protections.

The difference, or perhaps a prominent difference, between these two examples is that the fashion case, the norms are more generally those of the industry's customers, rather than its participants. I don't take Raustiala and Sprigman to say that there are anti-copying norms among designers, or at least not any such norms that are widely-enough enforced to prevent a systematic practice of knock-offs and imitation. Instead, it is the shape of buyers' desires for fashionability that rewards both innovators and copyists.

Put crudely, the ultra-fashionable among us buy the novel clothes; the only moderately fashionable buy the knock-offs. The fashion elite rebel against the hoi polloi's tastes, shunning those styles they themselves had embraced only recently. Now that last week's style is so last week, the elites demand something new, and the cycle of life begins again. The fashion industry, through its practice of extensive copying, enables the rabble to chase the well-dressed with astonishing speed, leading to greater turnover, rapid fashion-cycling, and greater profits.

This analysis leads, however, to a really truly central question that Raustiala and Sprigman pose: Why don't firms copy their own designs and internalize the profits themselves? They note that some firms do in fact do so, through so-called "bridge lines" (e.g. Emporio Armani) but that most firms do not. Ultimately, they leave it as an "interesting question for further research."

Without trying to answer that question with any rigor, let me note a few shoppingnorms that may provide some clues to it. First, finding a good knockoff version of a more famous, more expensive item can be a real shopping accomplishment. It indicates that you have both the eye to spot a real fashion gem, and the good sense to find it for less. Second, if you buy the original of an item that has been knocked off, you also have done well; you have the taste not to settle for an inferior imitation.

Both of these effects, however, are attenuate if the knockoff comes from the same designer as the original. If you buy the knockoff, then your shopping skill no longer involves the cleverness to know where to look for good imitations; you just asked the designer, in effect, for "the same, but cheaper." And if you buy the original, it's almost as though the designer has stabbed you in the back by making the knockoff. I wouldn't say that these effects entirely prevent self-appropriation, but they probably do cut into it. It's hard to give exclusivity with one hand and take it away with the other, hard enough that it takes some very adept brand juggling.

The really interesting question is the extent to which these and similar norms are exogenous. How much control does the fashion industry exercise over the norms of its customers? Or, to flip the question on its head, how much of the structure of the fashion industry is actually determined by the shoppingnorms and IP regimes with which it lives.

As an example, to some extent the growth of heavily-branded clothing could be seen as an industry response to the better protection it can obtain through trademark (I'm thinking, e.g., of the hideous Burberry plaid). But this approach can have unfortunate shoppingnorm consequences for designers who rely on it (e.g. Burberry's appropriation by chavs). Thus, shoppingnorms can create interesting pushbacks against particular IP strategies. I'd be interested to see further follow-on analysis of whether the fashion industry is the cart or the horse.