The West Video and the Free Market

Some people just can’t let go of things. Just yesterday, I was confronted by a progressive friend who corrected me when I referred to a certain airport in Washington, DC as “Reagan”.  For better or worse, they changed the name over a decade ago, and no amount of beating could possibly make that horse any deader.  I didn’t think much of Reagan, but I also don’t think any debate benefits from the sort of childish pushback-at-all-costs that seems to characterize so much public discussion in the US these days.  I don’t want to be one of those single-issue people.

Nevertheless…. there’s more to say about the West marketing video that features Bob Berring.  That’s an awkward way to refer to it, but it’s deliberate.  I think we can assume that West’s much-vaunted talent for selecting, ordering, and presenting information applies to video footage as much as caselaw.  In Paul Lomio’s class at Stanford the other day, I remarked that one thing the LII and West videos have in common is that neither of the front men were completely in control of the use and presentation of their words.  And in fact what I have to say here is more about the music than the lyrics, and the music would seem to be entirely West’s. So let’s at least move on from “Berring kerfluffle” to “West video”– while, I guess, remaining firmly inside “tempest in a teapot”, which is how one law librarian characterized it.   Teapot or no, they’ve opened the door for long-overdue and important discussion of a number of issues that have been waiting for attention, so… let the discussion commence.

I can think of at least three points raised by the video that need some serious attention from the library profession.  (That, folks, is a cheap rhetorical gimmick. On a sunny afternoon in November, with the leaves unraked, I only have time for one today. You’ll just have to remain in suspense on the other two until I can get around to them in some future post).  Today I want to talk a little about one of  the video’s anthems: the virtues of the free market, and the presumed triumph of muscular, well-funded capitalism over a bunch of uploadin’ hippies with short attention spans and no money. Heroic uploadin’ hippies, that is.

An historian might find in that song some odd resonances with the West of the mid-90’s, the one where Vance Opperman talked about “copyists” in much the same way that the video talks about “volunteers”, the West that wrapped itself in the flag as the “last American caselaw publisher” shortly before selling out to a Canadian company.  There is nothing so American, after all, as the free market, and few things as virtuous.  An ironist might wonder how sure the fire of that particular pitch is, nowadays.

But West lives in a distorted economic arena.  It sells its goods in a cul-de-sac separated from the agora of the free market by a series of barriers. Before the Internet came along, and even until quite recently, the hurdles raised by the difficulty of collecting source material were protection enough from competitors.  Government release of raw, bulk legal data threatens to remove many obstacles that discourage private-sector competition with West.  And despite what Professor Berring says, government is quite competent to do that, and has done so for many years in other venues, including some that feed West the grist for its mills. Second, West has historically protected itself from competition by vigorous pursuit of expansive claims of copyright in the apparatus of citation. Third, it has profited hugely from the conversion of the law creator’s “soft” natural monopoly in legal information into rigid commercial advantage via the economic alchemy of official publication  status (or, as it is now known, authenticity).   Fourth, in a turn our ironist would find amusing given recent events in the “free” market, West has benefited from the inattention of those who are supposed to regulate the market in which it operates. Finally, it exists in what is for all intents and purposes a duopoly market where pricing advantages depend hugely on a lack of transparency.  That does not suggest the same open competition normally associated with a “free” market.

There’s little more to be said on the first or second points. The relative ease of collecting legal data these days is evident, as is the scrappiness of potential West competitors like FastCase.   West’s use of copyright claims in official citation to prevent market entry by competitors is a matter well known to legal information professionals.  So is their bartering around official status; Peter Martin published quite a good paper that deals with it (among other topics) in 2000, and you can read one such contract from 2001 here (the interesting stuff appears under “other considerations”, and similar headings).  In 2009, the law library profession still struggles to find a position on authenticity that will avoid hardening the natural monopoly of legal information that law creators enjoy into rigid commercial monopoly by legal publishers.

The fourth point — that West has benefited from the inattention of regulators, particularly at the time of the West-Thomson merger — is perhaps more controversial.  But, as a 1997 article in the Connecticut Law Tribune explained, that merger got remarkably little scrutiny for one that, in the words of one amicus, converted a three-giant industry to a two-giant one.  The products that West and Thomson divested, most of which lay outside the integrated systems of books and databases that provide real utility to practitioners, were all sold to Lexis.

Which segues nicely to a final point.  To be sure, low-cost legal information providers like FastCase, VersusLaw, and LoisLaw are doing pretty well, and Justia.com and other open-access providers chip away at the edges of West’s business. But for all intents and purposes commercial legal information is a duopoly, as it has been for many years. And duopoly markets have very good reasons to avoid price wars, since theoretically these end with profits spiralling down toward marginal cost; that is the classic “gas war” between gas stations on opposite corners of an intersection. The price  of peace is that actual pricing has to be kept secret from the community of buyers and from the competition.  Otherwise, each competitor will attempt to undercut the other until the actual marginal cost is reached and there is no profit. This may explain, first, why West’s pricing agreements with large law firms are as highly confidential as they are, and second, why West would refuse participation in AALL’s price index, even at the expense of being barred as sponsors of AALL’s annual meeting.

Bob Berring believes in the market system.  So does West, for as long as the market system in play is one with externalities that protect it from the peskier aspects of competition.  And in such a scheme it is important to keep market barriers high by, for instance, restricting your competitors’ access to the raw materials needed to create competitive products.  Government may not be able to create the finished legal-research systems that West does.  But it can certainly release bulk data to those who can produce products that will compete with West, and in time it will.  Is the West video a sort of legal-info-Harry-and-Louise?  No.  But it would be naive to say that it is unaware of, or unresponsive to, serious competitive threats that West will face in the near future, from people who are not volunteering at all.

[ Note: this piece is part of a trilogy on the West video:  1, 2, and 3 .  Kind of like the Lord of the Rings, only longer, with a less confusing plot, and very few cute hobbits.]