Thursday, June 19, 2014

New slogan: "Don't be evil... That's what we have subsidiaries for"

Between abuse of monopoly/monopsony* power, media consolidation and beating up on the little guy, there's a lot of evil to go around here.

From NPR's All Things Considered:
Stuart Johnson, president of the Canadian Independent Music Association, says YouTube has put the independents on notice.

"What we're seeing is YouTube dictating terms to the independent music community with the proviso that if those terms are not agreed to or met, then the repertoire of that label will be removed from YouTube," Johnson says.

Johnson says YouTube has already negotiated with the three major labels: Universal, Sony and Warner. Neither the site nor the labels will reveal the specifics of the deal, but Rich Bengloff of A2IM — the American trade group for independent labels — says YouTube paid more to the majors than it wants to pay independents, despite the fact that independents account for more than a third of music revenues.

James McQuivey is an analyst at Forrester Research. He says there are parallels between this fight and the current dispute between Amazon and the publisher Hachette over the cost of print and eBooks. Amazon is delaying delivery of some Hachette titles and has eliminated pre-orders for others. [a pretty appalling story in its own right -- MP] McQuivey says it signals a shift in the Internet economy, which is now centered on the small number of players that get the most eyeballs.

"Digital aggregation creates power, and now these companies — after years of talking about a big, open Internet future — are finally starting to show when it comes to be tough in negotiations," McQuivey says. "They're willing to use their access point as a source of power."

Representatives at YouTube would not talk to NPR for this report, but McQuivey says it's clear that its planned subscription service will somehow incorporate music video and audio streaming. Since the site is a place where fans are already able to hear and watch videos for free, it may be hard to get them to pay. Meanwhile, McQuivey says YouTube, while profitable, has never made the kind of money its owner, Google, would like to see.
[Don't you just love the phrase "would like to see"?]

Not to put too fine of a point on it, but this is why we don't like to see high concentrations of money and power combined with and almost complete lack of competition. Google effectively holds monopoly and or monopsony power in a number of markets. It even has a ruling from a federal judge saying that Google has a first amendment right to use that power to destroy other companies.

This kind of power is always worrisome, but combined with a willingness to bully small players in the pursuit of rent seeking, it makes you wonder if we shouldn't consider dusting off the concept of anti-trust.

P.S. I spotted this relevant Business Week article just before I was about to post this.

* Unrelated to this story but the spellchecker on Blogger sucks.

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