Economics of Stand-up Comedy

Patent and copyrights are supposed to reward successful creators, thereby encouraging more creation. Without these protections, many fear, creations would be stolen before they were profitable, resulting in less creation. Here is an example where the market creates its own rules to limit creative theft:

In this paper, we analyze how stand-up comedians protect their jokes using a system of social norms. Intellectual property law has never protected comedians effectively against theft. Initially, jokes were virtually in the public domain, and comedians invested little in creating new ones. In the last half century, however, comedians have developed a system of IP norms. This system serves as a stand-in for formal law. It regulates issues such as authorship, ownership, transfer of rights, exceptions to informal ownership claims and the imposition of sanctions on norms violators. Under the norms system, the level of investment in original material has increased substantially. We detail these norms, which often diverge from copyright law's defaults. Our description is based on interviews with comedians, snippets of which we include throughout the paper.

Our study has implications for intellectual property theory and policy. First, its suggests that the lack of legal protection for intellectual labor does not entail a market failure by necessity, as social norms may induce creativity. Second, it suggests that the rules governing a particular creative practice affect not only how much material is created, but also its kind. Third, we suggest that comedians' IP norms system emerged over the past half century as technological change increased the benefit of having property rights in jokes and concomitantly reduced the costs of enforcing those rights. Fourth, we note that stand-up's norms system recognizes only a limited set of forms of ownership and transfer. We suggest that the system's crude rights structure is driven by the fact that effective enforcement requires that ownership be clear to the community. Lastly, social norms offer a way to regulate creative practices that do not sit well within IP law's one-size-fits-all mold. They do so, moreover, without imposing on society the costs of disuniformity in the formal law, including legal complexity and industry-driven lobbying.

Here is a perfect example.