Choke point capitalism and the audio industry

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Excerpt from an interview with Cory Doctorow, author of book “Chokepoint Capitalism” discussing the concept behind it.

What is “chokepoint capitalism,” and what distinguishes it from market monopoly or oligopoly?

Cory Doctorow: Well, chokepoint capitalism is about the other side of monopoly — it’s about monopsony. The corporate doctrine for the last forty years, and the state doctrine for the last forty years, has been that monopolies are okay provided they’re not raising prices on consumers. So, monopolists have figured out how to corral audiences or consumers within a walled garden — that’s made partially out of laws and partially out of technology — to make it hard for you to reach them as a creator or as someone who wants to bring something to market without going through them.

That is the chokepoint. And at that chokepoint, they extract from you whatever it is that you have to bargain with. This is the answer, we think, to the forty-years-long question, which is “Why do we keep making copyright bigger?” Why have we seen ever-longer terms, more subject matter, easier victories, higher statutory damages?
The entertainment industry is getting bigger and more profitable, and yet the share of income going to creators, both in real terms and proportionately, has just declined steadily over that same period. It’s because you have to go through a chokepoint with your copyrights in order to reach the audience. And whatever the person operating that chokepoint wants, you have to surrender if you want to reach that audience, including whatever copyrights you have.

There’s a good example in the book of how the extraordinary collections of long-lived copyrights in music that the three big labels have — Sony, UMG, and Warner — meant that when Spotify wanted to start, they could only do so with permission from those three companies, which gave them the power to bargain for whatever they wanted. They took big ownership stakes in Spotify. Then, they came up with arrangements for royalties that allowed them to get guaranteed monthly payments — a large portion of which they wouldn’t have to pay to any artist — and to suppress the price per stream so that the 30 percent of the market that they didn’t control would get so little from Spotify that they wouldn’t be able to make any money or grow or challenge them. This is a really classic example of how chokepoints ensure that whatever alienable right you give to workers will be taken away if the workers can’t take their labor to more than one place.
 
Excerpt from an interview with Cory Doctorow, author of book “Chokepoint Capitalism” discussing the concept behind it.

What is “chokepoint capitalism,” and what distinguishes it from market monopoly or oligopoly?

Cory Doctorow: Well, chokepoint capitalism is about the other side of monopoly — it’s about monopsony. The corporate doctrine for the last forty years, and the state doctrine for the last forty years, has been that monopolies are okay provided they’re not raising prices on consumers. So, monopolists have figured out how to corral audiences or consumers within a walled garden — that’s made partially out of laws and partially out of technology — to make it hard for you to reach them as a creator or as someone who wants to bring something to market without going through them.

That is the chokepoint. And at that chokepoint, they extract from you whatever it is that you have to bargain with. This is the answer, we think, to the forty-years-long question, which is “Why do we keep making copyright bigger?” Why have we seen ever-longer terms, more subject matter, easier victories, higher statutory damages?
The entertainment industry is getting bigger and more profitable, and yet the share of income going to creators, both in real terms and proportionately, has just declined steadily over that same period. It’s because you have to go through a chokepoint with your copyrights in order to reach the audience. And whatever the person operating that chokepoint wants, you have to surrender if you want to reach that audience, including whatever copyrights you have.

There’s a good example in the book of how the extraordinary collections of long-lived copyrights in music that the three big labels have — Sony, UMG, and Warner — meant that when Spotify wanted to start, they could only do so with permission from those three companies, which gave them the power to bargain for whatever they wanted. They took big ownership stakes in Spotify. Then, they came up with arrangements for royalties that allowed them to get guaranteed monthly payments — a large portion of which they wouldn’t have to pay to any artist — and to suppress the price per stream so that the 30 percent of the market that they didn’t control would get so little from Spotify that they wouldn’t be able to make any money or grow or challenge them. This is a really classic example of how chokepoints ensure that whatever alienable right you give to workers will be taken away if the workers can’t take their labor to more than one place.
Watched the Spotify movie on Netflix. Clearly shows how this works and how they manuvered through the loops. Nice watch.
 
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