I’m peeling this post off of a discussion I’m having on Facebook with Leora Kornfeld, who writes about Disintermediation as a Harvard Research Associate. I think this message is an important one for all independent creators to be thinking about as all content-based industries are changing around us.
Here is David Byrne’s Oped in The Guardian. In it, he argues that new media consolidation on the internet is squeezing the economic sustainability out of music broadcast.
And here’s my take on it:
I think he has a point about the economics of the new aggregators. It’s a little ironic to see a reference to the good old days of the record company fairness, since they were the posterboys of IP robber baronism.
Now, it’s the tech aggregators turn. It may be an even less fair arrangement, due to a confluence of factors. The end result will probably depend on whether the winner-take-all model topples, or whether it stands.
Also it’s probably more accurate to say that the new model is sucking the economic sustainability out of the middle and bottom rungs of a professional art form. Whether that translates to the “life” or not is a different question.
Of course, both of the above questions are linked. Do new disintermediation models spring up to get around the reintermediation™ of Amazon and Pandora? Jeff Goldblum would say that life will find a way.
You’ll see many people in the tech world shrug and say, “Get used to it.” But this ignores the fact that there is no one single natural order of things. The rules (laws) governing business practices set the playing field. And those rules are set by governments.
When radio was new technology, for instance, payola was outlawed. This law was instrumental in the development of music businesses in the radio age. Without these laws, the record companies would have had an even tighter stranglehold on the entire industry and could have required even more onerous contractual terms.
Monopolies deform the marketplace, generally to the detriment all outside stakeholders. Disintermediation is undermining the power of the existing content oligarchies, but reintermediation is apparently on track to bring an even greater concentration of wealth and power into fewer hands.
Along the way, these companies will work to bend the rules in their own favor. So I don’t think that stakeholders outside the new oligarchy should simply “get used to it.” Our laws are ill-equipped to deal with the challenges of the digital age. And we should not leave the law-writing only to those with the highest concentration of wealth and power. History teaches us that they will try to increase their power by tilting the playing field.
It’s possible that these companies will be prevented from becoming true monopolies through some market-based limiting factor, such as hubris, incompetence or outside competition. But it’s also possible that they win the winner-take-all game.
In that case, as with the monopolies of the last century, it may fall to governments to limit the power of these companies. It’s important for independent creators to stay informed and to advocate for their own best interests.