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The vertical integration of the distribution of media and the production of media is extremely problematic because of the way copyright operates in this country

The vertical integration of the distribution of media and the production of media is extremely problematic because of the way copyright operates in this country. I think you have to examine vertical integration in copyright affected industries differently than you would in, say, the vertical integration of steel production with a company that consumes steel. The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate.

lotsofpulp 5y ago
> The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate. And addressing it via enforcing separate distributors and producers allows the copyright issue (the real issue) to go unchecked, since politically, it’s harder to attack it as a problem. It might even be politically necessary for people to feel the pain before we can get back to decent copyright lengths.
- ncallaway 5y ago
  To me, the problem with copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). So, from my perspective, any system that allows those powerful entities to continue to accumulate more power and wealth is always going to harm efforts to change copyright law. We need to weaken the power that companies wield over copyright law, and that's harder the more powerful those companies are.
  - huitzitziltzin 5y ago
    > copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). I fully agree w/ this criticism of copyright law. I do not think that has a substantial intersection w/ the competitive effects of this proposed acquisition.
    - ncallaway 5y ago
      > I do not think that has a substantial intersection w/ the competitive effects of this proposed acquisition My understanding is that MGM has a large holding of copyrighted media, and therefore substantial interests in protecting and extending the rights and terms afforded by copyright law. For example, they have led consortiums of large entertainment companies in the past to bring copyright lawsuits to the Supreme Court (MGM Studios, Inc. v. Grokster, Ltd). My other understanding is that Amazon is a very powerful corporation, that has complex interactions with copyright law already (they are a distributor of both physical and electronic media through Amazon Video and Amazon Music; they are a content producer through Amazon Games studios and Amazon Original Series [also already built on the back of other acquisitions]). This acquisition gives another significant interest in copyright protection to an entity that is already extremely powerful. We're going to M&A our way to another Mouse on the copyright front (which was also built largely on the back of "mostly-harmless-at-the-time-but-problematic-in-aggregate" acquisitions), until massive swaths of our cultural expression are owned by a very small handful of organizations. I suppose maybe a disconnect we have is there is a non-financial "consumer welfare" question that I don't see being asked. Consumer welfare is generally only approached from the financial perspective of: "what will the financial cost to a consumer be to obtain the rights to consume media"; I don't see anyone attempting to defend consumer welfare from a _cultural_ perspective of: "Which entities do we have to ask permission from in order to interact with important elements of our culture and society?"
glasscactus 5y ago
True, but this isn't vertical integration of delivery/production like the AT&T / Time Warner merger. Thank god AT&T is exactly as incompetent as we all thought they were. There's nothing to see here. Amazon is just expanding their existing footprint in a market segment where they are barely afloat.
kingsuper20 5y ago
To repeat myself in another post here, copyright is a funny thing in that it proposes a form of monopoly, just on the small scale. I think it's hard to avoid the conclusion that increasingly strong copyright holders (given all of the media mergers) implies increasingly strong copyright law. Add that to the expanding ability of parsing for copyright violations and I can imagine the Disney Police parachuting in to arrest you for that counterfeit Micky Mouse watch 150 years after Steamboat Willie.
- TeMPOraL 5y ago
  Don't forget about Disney Stasi agents standing behind you just now, tasked with protecting the good name of the House of Mouse.
usrusr 5y ago
Do you think consumers were better off back when cinemas and studios were one (MGM was Loew)? Was the United States vs Paramount of 1948 a mistake?
- bhupy 5y ago
  One glaring difference between 1948 and 2021 is that distribution is basically free now. Whereas in 1948, one's ability to consume media was dictated by their physical location, today there is close to zero marginal cost to deliver digital media and low barriers to entry for new entrants. Just consider how many streaming services there were 10 years ago vs today. No human consumes enough TV media to warrant subscribing to every single streaming service at the same time, and there's certainly a lot that can be improved to make the "a la carte" experience of selectively subscribing/unsubscribing to services on demand more seamless — but the way the industry operates across the entire supply chain is dramatically different today.
  - usrusr 5y ago
    The distribution argument would be true if pay per view was the dominant form, but subscriptions are. And in the studio days, how many people didn't have access to at least one theatre of each in range? I might be mistaken but I don't think that limited film choice in rural areas was the main concern back then. Now we have subscriptions. It would be as crazy as it sounds, we are almost at the point where a preference of Picard over Kirk could have an effect on which toilet paper you end up buying. But I agree in so far as that it is far from as bad as it could be if they tightened down on unsubscribe/resubscribe (which I think will inevitably happen one day). Still, I've been to that party that end with one room full of "Amazons", one room full of "Neflixers" and those left over wondering what they all talk about.
    - bhupy 5y ago
      > Still, I've been to that party that end with one room full of "Amazons", one room full of "Neflixers" and those left over wondering what they all talk about. I really like what you said here. A familiar analogy that I like to use is cable TV: Netflix and Amazon are just "channels", each with different shows. When one half of the room is full of "Amazons", that's just the half of the room that's interested in some subset of shows not too dissimilar from what it might have been like to be a regular viewer of a serial television series in the days of yore. However, whereas before, you had to subscribe to all of the channels in bulk. Today, you have the option to pick and choose the "channels" you want to pay for on any given month given the TV shows you care about. I think we agree that the experience to do this can be improved, but I think we also agree that it will inevitably happen one day.
huitzitziltzin 5y ago
Vertical integration in steel production could as easily involve intellectual property as it does here. As a hypothetical example, imagine if Apple had sourced the M1 chip from a third party which it now proposed to buy. There would be intellectual property at stake there too. This case is no different. And indeed, in the Apple hypothetical you could well expect consumers to be better off and for exactly the same reason: if Apple purchases an input (the M1 chip) from a monopoly supplier (the hypothetical non-Apple-producer), vertical integration removes one monopoly markup. I do not know exactly what will happen in this case, but it seems like Amazon's proposing to buy a single studio is very unlikely to result in harm to consumers. The copyright issues do not make the case relevantly different.
- NoSorryCannot 5y ago
  The measure of "consumer welfare" used by US antitrust is mostly concerned with prices, which I've always thought was a bit cynical but it is what it is. Do consumers stand to pay higher prices when a single company controls the production, licensing, and distribution of content? I would argue yes and the government has argued it, too, when they forced movie studios to divest their stakes in movie theaters.
  - bhupy 5y ago
    I think you're both arguing the same point: that monopoly markups can negatively impact consumer welfare. The central argument is whether Amazon specifically is a monopoly in any of the industries in which it operates, so as to be able to charge higher prices you speak of — that's not what's happening. In fact, the GP comment laid out exactly why vertical acquisitions often improve consumer welfare, in the case that the company being sold is itself a monopoly: > And indeed, in the Apple hypothetical you could well expect consumers to be better off and for exactly the same reason: if Apple purchases an input (the M1 chip) from a monopoly supplier (the hypothetical non-Apple-producer), vertical integration removes one monopoly markup.
- ncallaway 5y ago
  > Vertical integration in steel production could as easily involve intellectual property as it does here. I didn't say Intellectual Property, I said Copyright. Copyright—much more than other forms of IP—has a significant impact on our shared culture and cultural transmission. Yes, there may be other factors with IP that we should consider when dealing with mergers, but end-users and everyday people are harmed much much more often due to copyright issues than they ever are due to patent and trademark issues. > I do not know exactly what will happen in this case, but it seems like Amazon's proposing to buy a single studio is very unlikely to result in harm to consumers. Sure, and I do not know exactly what will happen when we place a straw on a camel's back. But in each case it seems like it's very unlikely that the camel's back will break. It's a sorities paradox in reverse: Which individual acquisition is the point at which network effects start creating problems. Each individual M&A is unlikely to be the one that causes the problem, and yet if you allow each one because it is unlikely, eventually the system stops functioning correctly.
kevin_thibedeau 5y ago
Why shouldn't they control the copyright on entertainment media they own? Can I help myself to your property any way I see fit?
- hannasanarion 5y ago
  The issue is owning copyright and distribution. This isn't some kind of new idea, in the 1930s the US government forced movie studios to be separate companies from movie theaters on antitrust grounds.
- ncallaway 5y ago
  I didn't say they shouldn't control the copyright. I said we shouldn't uncritically allow massive copyright holders to both produce and distribute their media.
- dehrmann 5y ago
  I have mixed feelings about this one because rightsholders essentially have a monopoly on their content. 5+ video streaming platforms is bad for consumers, and this exists because rightsholders are allowed to control their content. It doesn't happen in the music space because Spotify was there first, had everything, record labels had a stake, and record labels were desperate post-Napster, so the Warner Music App would be a joke. Hulu was the industry's chance to get it right and have a viable Netflix competitor, but content owners weren't desperate enough, so the landscape became balkanized. On the other hand, it is their content.
  - bhupy 5y ago
    > I have mixed feelings about this one because rightsholders essentially have a monopoly on their content. 5+ video streaming platforms is bad for consumers, and this exists because rightsholders are allowed to control their content. I find this to be sort of self-contradictory. On the one hand, monopolies are bad, but on the other, having 5+ platforms is bad. Which is it? My (perhaps unpopular) opinion is that having more and more streaming platforms ("balkanized", to use your term) is extremely good for consumers. The low barriers to entry and the near-zero marginal distribution costs make this the perfect industry for competition (and as a result, consumer welfare). It's a common misconception that having N streaming platforms necessarily means that consumers spend N * subscription cost dollars per month, but that's not a sensible user pattern. Nobody consumes from every single streaming service at the same time. Instead, we have a sort of TDMA style consumption of media that allows us to constantly subscribe/unsubscribe/resubscribe from services as we chew threw our respective TV show backlogs. Savvy consumers have benefited the most from this reality, and it's only a matter of time until we see subscription management products that extend this benefit to un-savvy consumers in seamless ways. One day, streaming services will look to consolidate so as to be able to extract monopoly rents. These are horizontal acquisitions that would be terrible for consumer welfare, and those are the kinds of acquisitions the US FTC would likely police.
WorldMaker 5y ago
Plus, the US has in the past busted vertical integration/monopolies, in this very industry. The "Paramount decision" may be almost forgotten today, and recent court decisions have argued it has "expired", but it absolutely set the precedent that there is a very public concern especially with entertainment media when the distributors are the producers. https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....

lotsofpulp 5y ago

> The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate. And addressing it via enforcing separate distributors and producers allows the copyright issue (the real issue) to go unchecked, since politically, it’s harder to attack it as a problem. It might even be politically necessary for people to feel the pain before we can get back to decent copyright lengths.

ncallaway 5y ago
To me, the problem with copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). So, from my perspective, any system that allows those powerful entities to continue to accumulate more power and wealth is always going to harm efforts to change copyright law. We need to weaken the power that companies wield over copyright law, and that's harder the more powerful those companies are.
- huitzitziltzin 5y ago
  > copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). I fully agree w/ this criticism of copyright law. I do not think that has a substantial intersection w/ the competitive effects of this proposed acquisition.
  - ncallaway 5y ago
    > I do not think that has a substantial intersection w/ the competitive effects of this proposed acquisition My understanding is that MGM has a large holding of copyrighted media, and therefore substantial interests in protecting and extending the rights and terms afforded by copyright law. For example, they have led consortiums of large entertainment companies in the past to bring copyright lawsuits to the Supreme Court (MGM Studios, Inc. v. Grokster, Ltd). My other understanding is that Amazon is a very powerful corporation, that has complex interactions with copyright law already (they are a distributor of both physical and electronic media through Amazon Video and Amazon Music; they are a content producer through Amazon Games studios and Amazon Original Series [also already built on the back of other acquisitions]). This acquisition gives another significant interest in copyright protection to an entity that is already extremely powerful. We're going to M&A our way to another Mouse on the copyright front (which was also built largely on the back of "mostly-harmless-at-the-time-but-problematic-in-aggregate" acquisitions), until massive swaths of our cultural expression are owned by a very small handful of organizations. I suppose maybe a disconnect we have is there is a non-financial "consumer welfare" question that I don't see being asked. Consumer welfare is generally only approached from the financial perspective of: "what will the financial cost to a consumer be to obtain the rights to consume media"; I don't see anyone attempting to defend consumer welfare from a _cultural_ perspective of: "Which entities do we have to ask permission from in order to interact with important elements of our culture and society?"

glasscactus 5y ago

True, but this isn't vertical integration of delivery/production like the AT&T / Time Warner merger. Thank god AT&T is exactly as incompetent as we all thought they were. There's nothing to see here. Amazon is just expanding their existing footprint in a market segment where they are barely afloat.

kingsuper20 5y ago

To repeat myself in another post here, copyright is a funny thing in that it proposes a form of monopoly, just on the small scale. I think it's hard to avoid the conclusion that increasingly strong copyright holders (given all of the media mergers) implies increasingly strong copyright law. Add that to the expanding ability of parsing for copyright violations and I can imagine the Disney Police parachuting in to arrest you for that counterfeit Micky Mouse watch 150 years after Steamboat Willie.

TeMPOraL 5y ago
Don't forget about Disney Stasi agents standing behind you just now, tasked with protecting the good name of the House of Mouse.

usrusr 5y ago

Do you think consumers were better off back when cinemas and studios were one (MGM was Loew)? Was the United States vs Paramount of 1948 a mistake?

bhupy 5y ago
One glaring difference between 1948 and 2021 is that distribution is basically free now. Whereas in 1948, one's ability to consume media was dictated by their physical location, today there is close to zero marginal cost to deliver digital media and low barriers to entry for new entrants. Just consider how many streaming services there were 10 years ago vs today. No human consumes enough TV media to warrant subscribing to every single streaming service at the same time, and there's certainly a lot that can be improved to make the "a la carte" experience of selectively subscribing/unsubscribing to services on demand more seamless — but the way the industry operates across the entire supply chain is dramatically different today.
- usrusr 5y ago
  The distribution argument would be true if pay per view was the dominant form, but subscriptions are. And in the studio days, how many people didn't have access to at least one theatre of each in range? I might be mistaken but I don't think that limited film choice in rural areas was the main concern back then. Now we have subscriptions. It would be as crazy as it sounds, we are almost at the point where a preference of Picard over Kirk could have an effect on which toilet paper you end up buying. But I agree in so far as that it is far from as bad as it could be if they tightened down on unsubscribe/resubscribe (which I think will inevitably happen one day). Still, I've been to that party that end with one room full of "Amazons", one room full of "Neflixers" and those left over wondering what they all talk about.
  - bhupy 5y ago
    > Still, I've been to that party that end with one room full of "Amazons", one room full of "Neflixers" and those left over wondering what they all talk about. I really like what you said here. A familiar analogy that I like to use is cable TV: Netflix and Amazon are just "channels", each with different shows. When one half of the room is full of "Amazons", that's just the half of the room that's interested in some subset of shows not too dissimilar from what it might have been like to be a regular viewer of a serial television series in the days of yore. However, whereas before, you had to subscribe to all of the channels in bulk. Today, you have the option to pick and choose the "channels" you want to pay for on any given month given the TV shows you care about. I think we agree that the experience to do this can be improved, but I think we also agree that it will inevitably happen one day.

huitzitziltzin 5y ago

Vertical integration in steel production could as easily involve intellectual property as it does here. As a hypothetical example, imagine if Apple had sourced the M1 chip from a third party which it now proposed to buy. There would be intellectual property at stake there too. This case is no different. And indeed, in the Apple hypothetical you could well expect consumers to be better off and for exactly the same reason: if Apple purchases an input (the M1 chip) from a monopoly supplier (the hypothetical non-Apple-producer), vertical integration removes one monopoly markup. I do not know exactly what will happen in this case, but it seems like Amazon's proposing to buy a single studio is very unlikely to result in harm to consumers. The copyright issues do not make the case relevantly different.

NoSorryCannot 5y ago
The measure of "consumer welfare" used by US antitrust is mostly concerned with prices, which I've always thought was a bit cynical but it is what it is. Do consumers stand to pay higher prices when a single company controls the production, licensing, and distribution of content? I would argue yes and the government has argued it, too, when they forced movie studios to divest their stakes in movie theaters.
- bhupy 5y ago
  I think you're both arguing the same point: that monopoly markups can negatively impact consumer welfare. The central argument is whether Amazon specifically is a monopoly in any of the industries in which it operates, so as to be able to charge higher prices you speak of — that's not what's happening. In fact, the GP comment laid out exactly why vertical acquisitions often improve consumer welfare, in the case that the company being sold is itself a monopoly: > And indeed, in the Apple hypothetical you could well expect consumers to be better off and for exactly the same reason: if Apple purchases an input (the M1 chip) from a monopoly supplier (the hypothetical non-Apple-producer), vertical integration removes one monopoly markup.
ncallaway 5y ago
> Vertical integration in steel production could as easily involve intellectual property as it does here. I didn't say Intellectual Property, I said Copyright. Copyright—much more than other forms of IP—has a significant impact on our shared culture and cultural transmission. Yes, there may be other factors with IP that we should consider when dealing with mergers, but end-users and everyday people are harmed much much more often due to copyright issues than they ever are due to patent and trademark issues. > I do not know exactly what will happen in this case, but it seems like Amazon's proposing to buy a single studio is very unlikely to result in harm to consumers. Sure, and I do not know exactly what will happen when we place a straw on a camel's back. But in each case it seems like it's very unlikely that the camel's back will break. It's a sorities paradox in reverse: Which individual acquisition is the point at which network effects start creating problems. Each individual M&A is unlikely to be the one that causes the problem, and yet if you allow each one because it is unlikely, eventually the system stops functioning correctly.

kevin_thibedeau 5y ago

Why shouldn't they control the copyright on entertainment media they own? Can I help myself to your property any way I see fit?

hannasanarion 5y ago
The issue is owning copyright and distribution. This isn't some kind of new idea, in the 1930s the US government forced movie studios to be separate companies from movie theaters on antitrust grounds.
ncallaway 5y ago
I didn't say they shouldn't control the copyright. I said we shouldn't uncritically allow massive copyright holders to both produce and distribute their media.
dehrmann 5y ago
I have mixed feelings about this one because rightsholders essentially have a monopoly on their content. 5+ video streaming platforms is bad for consumers, and this exists because rightsholders are allowed to control their content. It doesn't happen in the music space because Spotify was there first, had everything, record labels had a stake, and record labels were desperate post-Napster, so the Warner Music App would be a joke. Hulu was the industry's chance to get it right and have a viable Netflix competitor, but content owners weren't desperate enough, so the landscape became balkanized. On the other hand, it is their content.
- bhupy 5y ago
  > I have mixed feelings about this one because rightsholders essentially have a monopoly on their content. 5+ video streaming platforms is bad for consumers, and this exists because rightsholders are allowed to control their content. I find this to be sort of self-contradictory. On the one hand, monopolies are bad, but on the other, having 5+ platforms is bad. Which is it? My (perhaps unpopular) opinion is that having more and more streaming platforms ("balkanized", to use your term) is extremely good for consumers. The low barriers to entry and the near-zero marginal distribution costs make this the perfect industry for competition (and as a result, consumer welfare). It's a common misconception that having N streaming platforms necessarily means that consumers spend N * subscription cost dollars per month, but that's not a sensible user pattern. Nobody consumes from every single streaming service at the same time. Instead, we have a sort of TDMA style consumption of media that allows us to constantly subscribe/unsubscribe/resubscribe from services as we chew threw our respective TV show backlogs. Savvy consumers have benefited the most from this reality, and it's only a matter of time until we see subscription management products that extend this benefit to un-savvy consumers in seamless ways. One day, streaming services will look to consolidate so as to be able to extract monopoly rents. These are horizontal acquisitions that would be terrible for consumer welfare, and those are the kinds of acquisitions the US FTC would likely police.

WorldMaker 5y ago

Plus, the US has in the past busted vertical integration/monopolies, in this very industry. The "Paramount decision" may be almost forgotten today, and recent court decisions have argued it has "expired", but it absolutely set the precedent that there is a very public concern especially with entertainment media when the distributors are the producers. https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....