IPA - Collusion Illusion


	Search Articles by Author


	Search Articles by Content

Collusion Illusion

by Brad Holland

Who do you antitrust? On May 4, a stock house advocate warned that "the notion of raising stock prices or other points made by Mr. Holland [may violate antitrust law]." He added, "certain entities in this industry (read: stock houses) could sue for TRIPLE DAMAGES if indeed they could prove evidence of [collusion or price fixing]."

Let me respond.

I don’t pretend to be dispensing legal advice. I doubt that anyone thinks I am. But I’ve been consulting lawyers for 18 months, and here’s how the antitrust rules have been explained to me:

1. If I collude with other artists to raise prices, that’s against the law.
2. If I raise my own prices, it’s not.
3. If I express my opinions about pricing, I’ve exercised my right to free speech under the First Amendment.

My lawyer says the issue turns on whether we’re engaged in individual expression or collective action. In the marketplace of goods and services, we’re each free to do what we want with our work. In the marketplace of ideas, we’re free to express our opinions.

In articles I’ve repeatedly made this point. You can find one example in the Graphic Artists Guild News dated NOV/DEC 1998. There I wrote:

"Federal antitrust law forbids us to take any collective action against stock houses. As independent contractors, we can’t band together to strike them for higher fees, lower commissions, or better terms. They could sue us if we tried."

I don’t see how I could make this more clear. But if I’ve failed to make the point frequently enough, I welcome the opportunity to reassert it.

W H Y Y O U R " A G E N T " C A N S U E Y O U
Now let me respond to some of his other observations about antitrust law.
1. He quotes an economist as saying, "I have never seen a more perfect competitive model than I’ve seen in illustration." He says this in an ironic aside. But I don’t find the remark ironic. I agree with it.

Traditionally, illustration has been a "model" of classical competition. Each of us was a craftsman. Each of us competed with the other to do the best work he could do. Each of us tried to get as much as he could for his work. Since our goods and services are inessential, we could hardly compel clients to pay more for an illustration than the market would bear. Indeed, competition in illustration has worked so perfectly that prices now lag 40 years behind inflation. One might argue that as a model for competition, that's too "perfect".

2. He says, "the purpose of antitrust law [is] to encourage competition to a) reduce fees, and b) increase productivity." From this, one might conclude that stock houses are performing a mandated public service by driving down prices.

But as I understand it, competition was designated the engine of antitrust law because legislators knew the government was inadequate to the task of regulating broad-based commerce. They assumed that businessmen would act prudently over time and not make detrimental business decisions. And they assumed that enlightened self-interest could be relied on to keep markets in line better than the heavy hand of government.

Let’s take an example: I have a new idea for a car company. I won’t manufacture cars. I’ll go to my competitors and talk them out of their surplus. Then I’ll charge them a "production fee" to warehouse and market the inventory. Having got the cars for nothing, I can now sell them for anything. This would give me a great competitive advantage over the companies that gave me the cars. Of course, sensible competitors would reject the deal. And legislators who wrote antitrust law presumed they would.

They hadn’t met illustrators.

3. Most illustrators graduate from art school having studied little art and no business. We may each want to make money, but most of us are driven by less rational motives: ego, insecurity, the lure of art itself, and the desire for recognition. These irrational factors complicate the simple calculus of antitrust law.

In the case of stock, bad business sense exposes artists to the kind of confusion stock houses foster. Stock houses present themselves to artists as agents. Then they offer themselves to clients as an alternative to artists. Nowhere do stock houses give us straight talk about competition. Nowhere on their contract is there a warning label that says, "The work you give us may be used against you." Nowhere do they warn that if two of us get together to demand higher fees, they "could sue for TRIPLE DAMAGES."
One of the objectives of the growing debate over stock has been to clarify this issue. Freelancers need to understand who represents them as an agency and who is out to take their clients. So for the record:

a. It’s not your agent’s job to see that prices are kept low for the consumer.
Antitrust law presumes your competitor will handle that.
b. Your agent won’t sue you under antitrust law if you talk about raising your
fees. That’s what your competitor might try.

Your agent’s job is to get the most he can for your work. If it was his job to "reduce fees," he would be the consumer’s agent, not yours.

Until now, the defenders of stock houses have been complicit in the fantasy that your stock house "represents" you. Now, with the ominous warning about collusion, one of them has shown us that a stock house is your rival. That may not be news to critics. But finally, a stock house defender has confirmed it. That’s a start. Next, maybe one of them will give us a GOOD reason for why freelancers should give their work to such aggressive rivals.

4. For all the saber rattling, I doubt that stock houses fear collusion. They know artists couldn’t collude to go to a restaurant. We lack the organs of collusion. We don’t have an effective freelancers’ organization, a newsletter, or an industry web-site. The grassroots efforts that have sprung up within the last years to discuss these issues do not prove collusion. Instead, they prove that individual business people are trying to understand and adapt to changes that are occurring in our cottage industry. Simultaneous expressions of common sense do not require orchestration.

5. However obvious the difference between a large corporate "entity" (with tens of thousands of pictures acquired on consignment) and a freelance illustrator, antitrust law considers them equals. This alone guarantees stock houses an advantage in the marketplace. How many of us can get free pictures to sell? How many of us can spend tens of thousands of dollars on lawyers, ads, and public relations campaigns? Stock houses can do this because they sell cheap and concentrate profits. If they had to produce or pay for the goods they market, it would raise their costs and dull their competitive edge. That’s why I doubt they fear collusion. I think they fear a level playing field.
5. Stock houses will keep selling art cheap as long as artists keep giving them art free. But they’re vulnerable to the kind of market pressures that antitrust law presumes we, their competitors, will apply.

We need to get over the romantic notion that we’re better artists for being bad businessmen. In the past, bad business decisions didn’t endanger us. Our easy-going competitive environment forgave us our foibles. In over 30 years, I’ve never heard of one artist suing others for "collusion". But in the aggressive new world of discount illustration houses, anything less than good business sense puts individual craftsmen at a disadvantage. With "entities" ready to pounce on any weakness, we can’t afford to be careless about our business affairs any longer.