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Monday, January 4, 2010

Fox vs. Time Warner vs. Customers

The Fox vs. Time Warner dispute is interesting. It's brinksmanship negotiating between two State-backed monopolies. This occurred last year with Viacom, but there was an agreement at the last minute.

Mainstream media corporations have the exclusive right to create programming. Even though there's 100+ channels on your cable TV, they're owned by a very small handful of corporations. Fox is part of the State-backed information cartel.

I can't start my own cable channel. There's nothing preventing me from getting a camera and making shows. However, I wouldn't be able to find a local cable TV monopoly willing to carry my show. If Fox wants to sell and promote a new channel, they have it easy. They just bundle it with the channels they already sell.

Local cable corporations have an explicit State-backed monopoly. If I want to lay my own cable and start my own cable business that's illegal. The problem isn't the technical difficulty of laying cable and signing up customers. It's explicitly illegal for me to do that. The local cable monopoly State contract explicitly says that competition is illegal. In NYC, you can get Time Warner in some areas and Cablevision in other areas. However, there's no overlap. It's several mafia gangs agreeing to not infringe on each other's turf.

Time Warner carries the same signal that Fox broadcasts for free over the air. However, they need permission from Fox to carry the signal. Time Warner executives want the fee to be $0.30 per subscriber per month. Fox executives want the fee to be $1.00 per month. Time Warner is arguing "We'd be forced to pass the $0.70 on to customers as higher prices." Fox is saying "Our content is valuable! It's worth it!"

Do you see the problem? Hint: Time Warner has a monopoly.

The problem is that Time Warner only sells bundled cable service. You sign up for a package of channels. I don't get to pick and choose what channels I want, or even which shows I want.

The problem is not that it's technically difficult to sell unbundled service. The problem is that the mainstream media corporations and cable channels like this arrangement.

If Fox wants to charge $1/month, then each individual subscriber should have the choice to keep or not keep the signal. If I had the free choice, I'd probably drop the channel and rely on the over-the-air signal. Neither Fox nor Time Warner want each individual subscriber to have the power to negotiate.

For example, I watch Comedy Central but not MTV. I don't have the option to buy just Comedy Central. I don't have the option to buy just the shows I like. I have to buy the 100+ channel package. Viacom likes this arrangement, because they get to sell a whole bunch of stuff whether customers want it or not. Time Warner likes this arrangement, because customers will pay a bigger subscription fee just to get a few channels they want.

What channels/shows do I watch regularly?
Comedy Central - The Daily Show, The Colbert Report, South Park, and a few other shows
Cartoon Network - Adult Swim
Boomerang - classic cartoons
CNBC - my father likes it, but I don't watch much
GSN - game show channel
BBC - Doctor Who (only a few new episodes per year) and Gordon Ramsay (British version)
CBS - The Amazing Race, Big Brother, and the occasional game show or sporting event
NBC - the occasional game show or sporting event
FOX - Gordon Ramsay and the occasional game show or sporting event
ABS - the occasional game show or sporting event
NatGeo - Dog Whisperer
G4 - Ninja Warrior (new episodes only twice a year)

I probably could pay $1 each for each of the shows I watch regularly, and it'd be less than my actual cable bill.

Mainstream media corporations do *NOT* want to offer unbundled service. "Stuff you want to buy packaged with stuff you don't want to buy!" is the behavior of a monopolistic seller collecting economic rent.

State parasites say "The Internet is ruining our business." It's much more convenient to download something via BitTorrent than to actually buy a "legal" copy. Your business model has a problem when for-free volunteer service is superior to yours. Remember that intellectual property is not a valid form of property.

The Internet changes this equation. On the Internet, you can only go to the websites you like. For example, if you don't like my blog, don't read it. "TV over Internet" is slowly chipping away at the mainstream media monopoly, but not quite yet. The three reasons that the Internet haven't completely eroded TV are:

  1. Bandwidth is too slow for live streaming in many areas. For example, on my DSL, I can't stream YouTube videos that fast. Sometimes, I have to wait for it to load. I don't have better than DSL because the cable monopoly and telephone monopoly are slow to roll out better service.
  2. Mainstream media personalities aren't making the move to the Internet. In many cases, a mainstream media employment contract prevents you from also self-publishing on the Internet.
  3. The advertising/revenue model hasn't been perfected yet. If you publish on the Internet, your only options are donations from viewers or ads embedded in your content. "Payments directly from fans" and "Self-publish without copyright restrictions!" seems like the most viable model.
The entire "Time Warner vs. Fox" debate is one big evil fnord. The issue is not "The fee should be higher!" or "The fee should be lower!" The real issue is "Customers should have the right to choose unbundled service, paying only for the shows or channels they want." It is a negotiation between two State-backed monopolies and not a real negotiation.

Only a monopolistic seller can force customers to buy things they want bundled with things they don't want.

1 comment:

Anonymous said...

An acquaintance of mine once defined what an alpha male is. Such people have a "SENSE OF ENTITLEMENT".

You can think of corporations as alpha males. Their sense of entitlement is directed towards getting a regular sum of money from little people and as much as they possibly can.

Fairness, what is right and morality does not come into it.

Witness the Public-Private Finance initiatives in the United Kingdom. Private companies don't do PFI for the good of it, they want a regular guaranteed rake-off of taxpayer money. Now because their clown companies have gone bankrupt and left the taxpayer footing the bill, train and bus fares in London have been increased.

The clowns have their booty. The taxpayer and the little people have to foot the bill.

They people are probably so stupid they don't know they have their riches because other people have to suffer.

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