Porn stars aren’t paid nearly as well as mainstream celebrities—even the most famous ones. Given the size and stigma of the market, one would expect porn salaries to be higher to encourage actors to enter that market. As it turns out, this discrepancy has little to do with the way the porn industry operates and everything do with monopolies created by copyright protection.
A basic tenant of political economics is that countries with high rates of economic growth tend to have “good” (i.e. growth promoting) political institutions compared to poorer nations, which have “bad” (i.e. growth inhibiting) institutions. Of these institutions, property rights are arguably the most important, with copyright playing a central role in encouraging innovation in industries that would otherwise have a hard time making profits. Innovation equals technological change and voila—we all have more goods and services.
In recent years there has been an outcry from the film industry over copyright infringements created by peer-to-peer networks. The objection is that without proper protection of property rights there will be little incentive for innovation and that the output in that industry will surely be diminished—if not in volume at least in quality. The irony of course is that the technology behind peer-to-peer networks was generated by an industry that has had almost no protection from copyright violation and one that is showing no signs of slowing down – the porn industry.
A counterargument put forth by Michele Boldrin and David K. Levine in their book “Against Intellectual Monopoly,” however, suggests that copyright laws in entertainment artificially inflate Hollywood actors’ worth in relation to their skills.
Consider this: in an efficient market workers should be paid a wage that is close to the opportunity cost of their time – the money they would be earning if they chose to work in an alternative occupation. In the last season of Two and Half Men, Charlie Sheen was paid close to two million dollars per episode. I’m not sure what Charlie Sheen’s best alternative occupation is, frankly , but it is hard to argue that this amount is an accurate reflection of the opportunity cost of his time.
In other words, would Charlie Sheen not have entered the occupation of TV celebrity had he anticipated a salary of only one million dollars per episode?
So the argument is that copyright protection in Hollywood has created an artificial monopoly that keep wages in that sector high at the expense of individual consumers, unlike in porn which benefits from few copyright protections thanks to its dubious social status. The socially optimal policy, then, would be to eliminate the copyright for Hollywood which, if we have anything to learn from the porn industry, should reduce the end cost to consumers without limiting the supply of the films to the market.
I’m not sure I totally buy this argument. It seems to me that the range of skills required by mainstream actors is much wider than the range of skills required by actors in porn. The low wages of the top porn star salaries could reflect the fact that any one of them could be substituted by another actor with a similar “skill set.” Not only that but individual films are almost perfect substitutes for each other – there are few blockbuster porn films.
But then again, what do I know? The statistics say that one in three visitors per month visiting adult sites are women and that 9.4 million women visit porn sites every month. It just so happens that I am not one of them.
Thank you to Micheal Margolis and Brooks Kaiser for remembering that I like (to talk about) porn and sending me this research.