The gargantuan movie budgets of some films is often employed by the IP apologist, it might sound something like this: ‘These films would obviously not be made without copyright’. They make this much money because they have control of the distribution of their movie. In other words, they can afford high costs, because they have high expected returns.
Today I debunk this notion using an example, the largest big budget film that has come out recently, Avengers Endgame, which had a budget of 356 million but ended up spending 535 million. To tackle this I explain that the counterfactual world without copyright would in fact lower not only the expected returns but also the expected costs.
The most obvious cost that the IP attacker can attack is marketing. Is a budget of 200 million in marketing really socially valuable? While it may be true that this budget can increase sales, it is not clear that there would be less value added than if the budget was say 20million. To see why, we need only understand that marketing is often zero sum. For instance, it may be that this audience of people would have simply gone to see another movie or it could be that they they would have gone to some other activity in it’s stead.
The second highest cost is the actors, at 200 million. Imagine that the payment of say… Robert Downey JR was brought from 80 million 500k for the 6 months work. Would the quality of the movie change? Not really. One may retort: But why would they do the movie if they only earned 500k in 6 months? But this is to not understand what the counterfactual without IP is. The reason they get paid this much is because they could be working on other projects that would earn them other amounts of money. The Avengers producers were bidding for these actors time and took them away from other projects, so their payment only needs to be RELATIVELY higher than the other projects. A world without copyright would result in the opportunity cost of Robert Downey Jr to be much lower, to such an extent that his best opportunity would STILL be the Avengers movie.
Production costs are more of a black box though the argument is very similar to the actors. The post production processors likely get paid exorbitant amounts of money and this could also be halved, could include musical composition, visual effect designers, etc. One would expect hotels and accommodations for this kind of thing to be the fanciest possible, needless to say, there is a lot of slack here too.
I would guess that in the world without intellectual property, the cost to make such a big budget film would in fact be orders of magnitudes lower. The payout would of course also be much lower, but I see no reason to assume that the profitability of the project would, in fact, be lower.