The Knockoff Economy (7 page)

Were it not for Mr. Ghesquiere’s fame and Mr. Wong’s obscurity—were it not, indeed, for the recent examples of plagiarism in publishing and the continuing debate in the music and art worlds about sampling and ownership—this latest instance of copying might not merit special attention. After all, copying is part of the history of fashion…. Today, under the postmodern rubric of “referencing,” copying flourishes so openly that nobody bothers to question it. And the practice isn’t confined to the low end of the business, to knockoff kings like Allen B. Schwartz of ABS and Victor Costa. Tom Ford, Marc Jacobs and Miuccia Prada have all dipped into other designers’ wells.
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None of this gainsays the fact that designers sometimes bridle when they believe they have been knocked off a bit too blatantly. Certainly Dana Foley and Anna Corinna did. On rare occasions, designers even sue one another. In 1994 Yves Saint Laurent sued Ralph Lauren in a French commercial court
for copying a YSL design.
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Saint Laurent’s successful lawsuit took place in Europe, where copyright laws are, as Maurice Rentner long ago pointed out, far more protective of fashion designs. (And of course, the revered French designer prevailed and the parvenu American lost—a result Ralph Lauren later called “totally ludicrous”).
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Whatever the rules in France, however, in the United States the law is different. Fashion designs are, for better or for worse, “free as the air to common use.”
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To appreciate how striking the phenomenon of fashion copying is, think back again to the monopoly theory of innovation. The monopoly theory holds that copying is a grave threat to creativity. If a creator knows her creation will be freely copied by others, she will not invest in creation in the first place. Legal rights that give the creator a monopoly over who can make a copy are, consequently, essential. How then does the fashion industry remain so creative despite such extensive copying?

The answer turns on the unusual economics of fashion, and draws on a tradition of thinking about fashion that goes back at least to Thorstein Veblen’s landmark work of social criticism,
Theory of the Leisure Class.
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For Veblen, much of social life turned on status, and the ways that many of us try to achieve and signal status to one other.

Status is certainly central to fashion. And in fashion, status can be signaled by expensive labels and materials. But it is also signaled by trends—specifically, by being on the leading edge of, rather than a late-comer to, a hot trend. Thinking about fashion as an industry driven by trends, and by people trying to acquire or keep status by discovering the new trends and discarding the old, can help explain why imitation in fashion is not especially harmful to innovation. Indeed, as we will explain, free and easy copying benefits the fashion industry more than it harms it.

People buy clothing for many reasons. The most basic is entirely practical—to cover our bodies and to stay warm. But of course even the simplest clothing can do that. So why will a woman spend thousands of dollars on
a Balenciaga cocktail dress? Why will a man shell out thousands of dollars for a Thorn Browne suit? These sorts of purchases are driven by the desire for expression and status.
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Clothing is very personal, and it sends signals about the wearer, whether intended or not. Those signals are socially complex and context-dependent—in Los Angeles, the guy at the valet stand parking the Aston Martin is often wearing a tie, and the studio mogul who owns it a baseball cap. But the signaling features of clothing are omnipresent.

Put in economic terms, most kinds of clothing function as “positional goods.” The
Economist
magazine helpfully defines positional goods as

things that the Joneses buy. Some things are bought for their intrinsic usefulness, for instance, a hammer or a washing machine. Positional goods are bought because of what they say about the person who buys them. They are a way for a person to establish or signal their status relative to people who do not own them: fast cars, holidays in the most fashionable resorts, clothes from trendy designers.
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Positional goods purchases, in other words, are made based largely on the status the good is expected to convey. As a result, these purchases are interdependent. What we buy is partially a function of what others buy. Like parimutuel betting at the racetrack, the status payoff depends on the actions of others, actions that are not entirely predictable at the time of purchase. Fashion’s positional nature is very powerful, and a consumer’s attraction to a new design is often triggered not just by beauty or fit, but also by the status associations created by the producer’s trademark, by stylish advertising, by seeing the garment worn by a famous actress or model, by a clotheshorse acquaintance, or even by a stylish stranger on the street.

The positionality of a fashion good is often two-sided, however. A trendy new design is most coveted when enough people possess it to signal that it
is desired, but its value diminishes if every person on the street owns it. Nothing about the design itself has changed, except for its ability to distinguish its owner from the crowd. For fashion goods, in short, exclusivity is a large part of the appeal.
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Perceptions of beauty matter, of course. But these perceptions are not wholly divorced from perceptions of exclusivity. As Jean Cocteau astutely noted some 50 years ago, “Art produces ugly things which frequently become more beautiful with time. Fashion, on the other hand, produces beautiful things which always become ugly with time.”
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In short, consumers are drawn to a particular dress from Lanvin or a men’s jacket from John Varvatos in part because stylish people have it and unstylish ones do not. The dress or the jacket will be coveted so long as it enables its wearer to stand out from the masses but fit in with his or her particular crowd. Many historical and sociological studies of fashion argue that this distinguishing quality is central. Fashion is “a vehicle which marks distinctions and displays group membership or individuality.”
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Consequently, as fashionable styles diffuse to a broader clientele their prestige diminishes. The style in question becomes unstylish, and eventually fades away.

This is the fashion cycle. New designs catch on, become trends, spread, become overexposed, and die. And then a new design appears, a new trend ignites, and the process repeats.

Fashion never stops, but it never goes anywhere either. Whether the fashion cycle is a good thing or a bad thing in its own right is an interesting question, but not the focus of our story here. It is fair to say, however, that fashion is routinely pilloried by intellectuals who view it as capricious, exclusionary, and socially wasteful. The rapid rise and fall of trends has been called “a symptom of intellectual, emotional, and cultural immaturity.”
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French cultural critic Jean Baudrillard went so far as to declare fashion “immoral.”
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Other commentators, however, have celebrated fashion designers as artists on par with any painter or composer. Indeed, this is one of the arguments used by advocates of copyright protection—that fashion ought to be treated like other great art forms.

For most of us, though, the fashion cycle is not a subject of great debate. It is just a fact of life; perhaps even an entertaining one that allows us to enjoy new clothes and occasionally scratch our heads at old photographs. Whatever its social meaning or ethical value, the fashion cycle is clearly a
central feature of the apparel industry. Styles come and then they go. Soon after, many of us wonder what we were thinking.

An example of this ascent and descent is the Ugg, a sheepskin boot originating in Australia. Uggs, which date back to the 1930s, had sold steadily for years but became a must-have fashion item for many young women in 2003 and 2004. The style was then widely copied and gained broad distribution.
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But soon a backlash began, with writers calling the shapeless and fuzzy Ugg a “human rights violation” and urging the fashion-conscious to give them up.
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By 2005, the Ugg trend was, at least in some quarters, declared to be over.

In a 2006
New Yorker
article about Los Angeles, writer Tad Friend described a telling story of the rise and fall of the Ugg. A local news helicopter was searching for actress Lindsay Lohan following a minor car crash on Robertson Boulevard, in which she was involved. The news dispatcher, Beth Shilliday, radios the chopper pilot:

“I know it’s a long shot, but check the street for a skinny, movie-star looking woman. Channel 2 says she and her assistant ran into an antiques store across the way.” [The pilot] panned down Robertson toward the Ivy [a West Hollywood bistro frequented by the L.A. celebrities]. “Problem is, every girl on the street kind of fits the profile. How’s this?” He zoomed in on a Lohanish figure in dark glasses. “She’s wearing Uggs,” Shilliday pointed out. “Those are so last year, couldn’t be her.”
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One might quibble with the details of when (and, for diehard Uggs fans, even if) Uggs lost their cool.
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Nonetheless, Uggs illustrate a basic point about fashion: the ruthless nature of the fashion cycle. In the fashion world, success can lead to the rapid diffusion of a design. But rapid diffusion typically dooms a design to decline and ultimately to death. Debut, diffusion, decline, death: that is the fashion cycle in a nutshell.

That styles rise and fall is of course not a new observation. Before Cocteau wrote his wonderful apercu about fashion and beauty, sociologist Georg Simmel noted the same process: “As fashion spreads, it gradually goes to its doom. The distinctiveness which in the early stages of a set fashion assures for it a certain distribution is destroyed as the fashion spreads, and as this element wanes, the fashion also is bound to die.”
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Even earlier than this, Shakespeare declared in
Much Ado About Nothing
that “the fashion wears out more apparel than the man.”

What Cocteau, Simmel, and Shakespeare noticed was not merely the rise and fall of apparel designs. Instead, they highlighted the fact that
the rise actually led to the fall.
The fall was not merely inevitable, in the sense of a ball thrown into the air that gradually succumbs to gravity. They drew a causal connection: as fashion spreads, its distinctiveness is destroyed. That in turn destroys much of its value.

Of course, not everyone seeks distinctiveness in fashion. Just look at America’s political class: for the men, an orange or purple tie is a mark of outright zaniness, and the women largely hew to pantsuits that look more like armor than fashion. But for the class of fashion early adopters, things are different. These early adopters seek to stand out, whereas the next tier of buyers seeks to “flock” to the trend.
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As the flockers flock, the early adopters flee.

Again, the basics of the fashion cycle are well known. What has not been appreciated, however, is the crucial way that the fashion cycle interacts with the freedom to copy.
Legal rules that permit copying accelerate the diffusion of styles
. More rapid diffusion, in turn, leads to more rapid decline. And the more rapid the decline, the faster and more intense is the appetite for new designs. As they are copied, these new designs in turn spark the creation of new trends—and, as a consequence, new sales.

Copying, in short, is the fuel that drives the fashion cycle faster. It is essential to both the trend-making and trend-destruction processes. Copying speeds up the creative process, spurring designers to create anew in an effort to stay ahead of the fashion curve. This makes copying paradoxically valuable.

Copying also functions, in the fashion context, as a stand-in for something that many other creative industries depend on—improvements to their products. Cell phones clearly get more powerful and useful over time,
leading us to discard our perfectly good old phones for the amazing new ones. Clothes, by contrast, do not improve in any clearly defined way. Garment makers rarely can tout the great new features of their products as improvements—and indeed in practice, unlike cell phone makers, they do not claim this season’s offerings are qualitatively better than last season’s.
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For the most part, clothes just change, and that change is what drives buyers to the stores. In this environment, the rise of a new trend is the functional equivalent of a great new feature on a cell phone: the thing that makes a consumer discard a perfectly useful item and go out and buy something new.
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We call this process
induced obsolescence
—that is, obsolescence induced by copying. A design is launched and, for some reason that few can predict (or even explain), it becomes desirable. Early adopters begin to wear it and fashion magazines and blogs write of it glowingly. Other firms observe its growing success and seek to ape it, often at lower price points. As the now-hot design is copied and tweaked, it becomes far more widely purchased and hence even more visible. For a time, the trend grows. Past a certain point, however, the process reverses course. The once-coveted item becomes anathema to the fashion-conscious, and, eventually, to those who are somewhat less style-focused. The early adopters move on, and the process begins again.

The key point is that fast and free copying is fully legal—and the widespread copying that flows from this rule induces more rapid obsolescence of designs. Obsolescence would probably happen anyway, eventually. But the fashion cycle is driven
faster
by widespread and legal copying, because copying more rapidly erodes the positional qualities of fashion goods. The result has profound effects on the apparel industry. Piracy paradoxically benefits designers by inducing more rapid turnover and greater sales—a process we call the “piracy paradox.”