Media scholar Jonathan Taplin, author of the new book Move Fast and Break Things, on the rent-seeking and regulatory capture of digital platforms.
HT: FT Alphaville's Further Reading post, 10.Mai.17In 2014, Silicon Valley venture capitalist Peter Thiel famously proclaimed that “competition is for losers” in an essay published in the Wall Street Journal and in his book (also published in 2014) Zero to One. “If you want to create and capture lasting value, look to build a monopoly,” he advised entrepreneurs, expounding on his view that monopolies are good for innovation and, ultimately, for society at large.Thiel’s proclamation has received a lot of attention since he made it, not just because it seemingly goes against the very notion of a competitive capitalism, but also because in the eyes of many, it perfectly captured the underlying philosophy behind the rise of digital platforms like Google, Facebook (whom Thiel was the first outside investor in), and Amazon.In terms of market share and profit margins, the big digital platforms, particularly Google and Facebook, enjoy an astounding level of dominance. Google, in effect the world’s largest media company, has an 88 percent market share in search advertising. Facebook (including Instagram, Messenger, and WhatsApp) controls over 70 percent of social media on mobile devices. Together, the two firms received 85 cents of every new dollar spent in online advertising in the first quarter of 2016. Amazon has an over 70 percent share in the e-book market. Along with Apple and Microsoft, they are now the most valuable companies (in terms of market capitalization) in the world.The rise of digital platforms has had profound political, economic, and social effects, not least of which on the creators of content. While the internet brought immense benefits to consumers of content, the so-called “creative class”—authors, journalists, filmmakers, musicians, artists—has been particularly ravaged by the digital economy.This ravaging, and its roots in the monopolization of content delivery and data in the hands of a few digital giants, are at the heart of the new book Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by media scholar Jonathan Taplin. In the book, Taplin explores the way in which the internet came to be dominated by a handful of monopoly platforms, and the subsequent capturing of regulators that has since all but ensured their dominance would not be challenged in court.Taplin, the Director Emeritus of the Annenberg Innovation Lab at the University of Southern California, is well versed in both the creative and the business side of media. Before he became an academic, he worked as tour manager for Bob Dylan and The Band and was a film producer who worked with Martin Scorsese and Gus Van Sant. As such, he has seen first-hand the damage that the internet economy has wrought on working artists like his friend, legendary drummer Levon Helm, who was forced to put on a series of concerts at his home at the age of 70, while dying from throat cancer, in order to pay his medical bills.Taplin, a former vice president of media mergers and acquisitions at Merrill Lynch, also experienced first-hand how easily entrenched incumbents can stifle innovation in the entertainment industry (it also helps that his father was an antitrust lawyer). In 1996, he co-founded an early video-on-demand company named Intertainer that was forced to fold after one of its shareholders, Sony, partnered with three other major entertainment companies to copy its idea for a rival service. (Intertainer later filed an antitrust lawsuit against the studios and the sides eventually reached an out-of-court settlement).In his book, part memoir and part manifesto calling for content creators to embrace antimonopoly, Taplin examines the contradictions embedded in today’s digital economy—in which YouTube makes $9 billion in annual revenues, but artists earn more from the sales of vinyl records than online streaming—through the lens of antitrust and the history of monopoly in the U.S.“The deeper you delve into the reasons artists are struggling in the digital age, the more you see that internet monopolies are at the heart of the problem and that the problem is no longer just for artists,” he writes. “Monopoly control of our data and corporate lobbying are at the heart of this story.”In an interview with ProMarket,1) Taplin discussed the rise of monopoly platforms and the part that rent-seeking and regulatory capture play in the digital economy today.Q: How did you become interested in antimonopoly?It was a very personal story. Levon Helm, who was the drummer for The Band, got throat cancer in 2000. He’d been making a decent living off of royalties from past records that he had made 15 years before, then Napster happened and that just ended. It just so happened that he got throat cancer at that very point. He had to pay for medical bills and he couldn’t go on the road because he could hardly sing....MUCH MORE
