The Rise (and Fall?) of the Video Store

William B. Irvine

William B. Irvine teaches philosophy at Wright State University in Dayton, Ohio, and is a member of The Heartland Institute’s board of academic advisors.

The popularity of the video cassette recorder (VCR) has given rise to a new economic phenomenon: the video store. Video stores are simply private libraries that lend video-taped movies rather than books. They are funded and operated not by government, but by corporations and individuals who hope to make a profit.

Across the country, video stores have proliferated at an astonishing rate. A decade ago, there were no video stores in America; today there are perhaps 40,000. In 1986, the nation spent $3.4 billion renting video-taped movies. It is estimated that this year Americans will spend more on video rentals than at movie box offices.

Despite such bright beginnings, the video store industry is in jeopardy. It is facing increasing competition from public libraries that are beginning to lend movies as well as books. If this trend continues, the video store industry will be devastated.

America’s video store industry is slowly but surely being socialized, as the public sector takes over a service that is provided more than adequately by the private sector. If government tried to take over any other $3 billion industry, we would expect the move to be greeted by howls of protest. These howls haven’t been heard in the case of the video store socialization, however, because the process has been nearly invisible: instead of coming in one fell swoop as the result of direct action taken by the federal government, the takeover is coming one municipality at a time.

How badly might video stores be hurt by public libraries’ move into video loans? Consider the case of the Reverend Abiel Abbot, a key figure in the growth of the public book-lending library in America.

The Reverend Abbot was a firm believer in making books available to the masses. In 1833, he was instrumental in convincing the citizens of Peterborough, New Hampshire, to use state-provided money to start America’s first “true” public library, the Peterborough Town Library. At the same time, he was engaged in the for-marion of a privately funded “social library,” the Peterborough Library Company. In Foundations of the Public Library, Jesse H. Shera finishes the Reverend Abbot’s story this way:

Obviously, [Abbot] did not see the new public library as a competitor of the social library, but such competition began almost immediately. As early as 1834 dues in the social library began to lapse, and in 1853 the minutes of that institution record: “Since the establishment of the Town Library [the free public library], very few books have been taken from the Peterborough Library [Abbot's private library].”

It was not long thereafter that the private library closed its doors.

The lesson to be learned from this episode is that people will not rent something they can borrow “for free.” This is a lesson, I think, that today’s video store owners will do well to remember.

A case can be made that the growth of the public library in America slowed the growth of an otherwise thriving network of private libraries. Similarly, the growing willingness of public libraries to lend movies will likely stunt the growth of the video store industry. Indeed, I would not be surprised if in a decade video stores were as rare as private book-lending libraries are today.

Who Should Meet Consumers’ Demand?

Should public libraries stock video-taped movies? Or should private video stores be allowed to continue to satisfy the public’s desire for them?

There is widespread support for public libraries’ ventures into video lending. These supporters believe that the interests of a community will be better served if people can borrow movies from public libraries rather than rent them from video stores. Two reasons are given to support this belief.

First, many will argue that public libraries will improve the availability of “good” movies. These people point out that video stores tend to stock “slasher” and pornographic movies, while public libraries would stock “film classics.”

I am as depressed as anyone about the current selection of movies available at most video stores. Nevertheless, I think this is a temporary phenomenon. The owner of a new video store is likely to stock the films most likely to turn a quick profit—primarily “popular” movies. Once his store is on more sure financial footing, he is more likely to experiment with his selection of films.

It is wrong to assume that those who run video stores are opposed to “good” movies. They are not. And even if they were, they would not be likely to allow that opposition to stand in the way of profit. If a video store owner can make a profit by carrying a film classic, he will carry it.

It is similarly wrong to assume that public libraries will be more likely to carry “highbrow” movies than are video stores. My local public library, which is excellent as public libraries go, does a far better job of catering to popular tastes than of catering to highbrow tastes. If, for example, I want to read a novel by Louis L’Amour, I will find 28 (at last count) to choose from; if I want to read the novels of Turgenev, Balzac, or Zola, I am out of luck. Similarly, the Marx Brothers are far better represented in videos than is Karl Marx.

And there is another side to this availability argument. Private video stores respond to the public’s demand for convenient locations and hours far more successfully than do public libraries. How “available” is a video- taped movie in a public library if you must drive to a neighboring suburb during weekday office hours to borrow it?

A second argument made by supporters of video lending by public libraries concerns cost. Many will argue that it is cheaper to borrow a movie from the library than to rent one from a video store, and for this reason alone public libraries should get into the video business.

This argument is based on the false belief that movies can be borrowed “for free” from public libraries. There is, as economists like to remind us, no such thing as a free lunch; the patron of a public library, whether he realizes it or not, is paying for the privilege of borrowing books and movies. He is, most likely, paying in the form of local taxes.

It is far from clear that public libraries would provide movies to the public at a lower cost than video stores would. I need not indulge in statistics to suggest that, as a rule, private enterprise provides goods and services far more cost effectively than does the government—and I doubt that public libraries, if they entered the video business, would be an exception to this rule.

Even if public libraries could lend movies more cost effectively than do private video stores, public funding raises a serious question of fairness. Taxation would force everyone to fund a public video library, regardless of whether he uses it. Why should someone who doesn’t even own a VCR be forced to subsidize his neighbor’s movie viewing habits? If we rely on private video stores to satisfy the demand for video-taped movies, only those who watch the movies must pay for their entertainment—and this only seems fair.

Both reasons advanced to support video lending by public libraries are based on false assumptions. In addition, it is important to note that as the movie-lending business is socialized, private video stores will go out of business; when these stores go under, they will take their employees with them.

I believe the message is clear. Private video stores are likely to provide a better choice of movies to the public than would public libraries; private video stores can provide these movies more cost effectively and distribute costs more fairly; and allowing public libraries to lend videos would put a number of people out of work. Public libraries should stay out of the video business.

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