The New Monopolies
This afternoon, I'm being interviewed by a law magazine, and they've asked me to state what I think is the most important copyright issue coming in 2008. I wrote some of my thoughts down, and here they are:
"The New Monopolies"
Unless rights-holders change, we only will have one major distributor of each kind of content: one youtube, one itunes, etc.
The reason, is that the Big Media companies are only willing to license their content to the largest companies (those most likely to make it worth their time) and this serves as a massive barrier to entry, preventing competition, especially preventing upstarts from challenging the incumbents. The highly concentrated media industry only works with a few massive partners, artificially and accidentally creating a monopoly.
The other way this often plays out is that an upstart does something totally "illegal" (re: youtube), hoping to get enough money quickly to defend itself legally and use the lawsuit as leverage to "go legal" and get the licenses they need: "please don't destroy us, give us a license and let's make money together". However, more often than not, the license terms are onerous (the rights holders over-exert their leverage) and the lawsuit simply destroys the upstarts, again minimizing competition.
We see this today with Television, for instance, where new companies like Joost are having a terrifically hard time getting licenses, despite having completely modeled their business and technology around the rights-holders business models and fears. Unless the rights holders change their attitudes, we will have nothing but single monopolies in each media category.
The solution? Aggregators, such as now exists for indie record labels, such as IODA and CDBABY, can do hundreds of deals and focus on nothing but rights licensing, enabling competition. 90% of the deals won't make money for the rights holders, but if the rights holders outsource the task, this doesn't matter. Amazon's mp3 store would never have gotten off the ground if it weren't for IODA and CDBABY, who provided DRM-free music for sale to a massive catalog, allowing Amazon to create a creditable competitor to iTunes.
The alternative scenario, if the licenses aren't granted, is piracy everywhere, with consumers obtaining all the content they want, illegally, and no revenue for the rights holders.
Monopolies or piracy everywhere? Certainly we want a 3rd alternative.
Posted by John Buckman on October 25, 2007 at 12:53 AM | Permalink
I think this is a good point. A rational aggregator or simpler clearinghouse for rights matters would make sense. The media giants, though, would have to show a pricing flexibility which involves a lot of new territory for them. Yet in the long run, some change is inevitable, and it's the media giants, rather than the consumer, who will suffer the most until they make that change.
Posted by: gurdonark at Nov 1, 2007 3:48:41 AM
Suffering is a relative term, of course. The artists are the worst off but is that a new thing?
I'm glad you believe that the monopolization is somewhat accidental.
Personally, I'm concerned about a new wave... I think that there is now so much free content out there that consumers can get all the content they want without having to pay for any of it. The perceived value of a piece of content is drifting ever closer to zero. Case in point - who, having youtube, needs a cable subscription?
But I read a good saying recently: "There is a point where ease of use beats free" and I think that some niche companies, magnatune, CDbaby, beatport, although they might not challenge the giants, can still do well through making it easy for people to find the best content.
Posted by: PXR8 at Feb 8, 2008 9:06:05 PM