Last week, it was my great honor to speak at the 2011 State of the Net 2011 event, where I participated in a panel discussion about the future of the online video marketplace. In an earlier essay, I mentioned how some of the discussion that day revolved around the Comcast-NBCU merger, which had just been approved by the FCC, but with unprecedented strings being attached. The heart of the panel discussion, however, was a debate about the future of online video and regulation of the video marketplace more generally. Also joining me on the panel were Susan Crawford of Cardozo Law School, William Lehr of MIT, Marvin Ammori of Nebraska Law School, and Richard Bennett of ITIF.
http://www.youtube.com/v/Och8X_8AYMQ?fs=1&hl=en_US
During my response time on the panel, which begins around 28:45 of the video, I made a couple of key points: Continue reading →
The Ticketmaster-Live Nation antitrust saga has come to a bittersweet end. Earlier this week the Justice Department finally approved the merger between the two firms, just shy of one year after it was announced.
While a number antitrust experts had speculated that the Justice Department might seek an injunction to block the deal outright, the DoJ ultimately opted to approve the deal while subjecting Ticketmaster-Live Nation to several conditions that are supposed to promote competition in the events marketplace. Under the terms of the consent decree, the combined firm will be required to license its ticketing software to competitor Anschutz Entertainment Group and divest Paciolan, a ticketing subsidiary of Ticketmaster. Ticketmaster-Live Nation also faces ten years of monitoring by antitrust officials to “prevent anticompetitive bundling of services.”
Ticketmaster has long been a controversial firm among concertgoers, frequently drawing consumers’ ire for charging hefty “convenience” fees and offering customer service that’s not exactly stellar. But it’s important to remember that today’s entertainment market is more fragmented than ever, and consumers have a huge array of choices for listening to music and viewing live events. Even YouTube is getting into the business of airing live events. The video site has broadcast several live events already, including U2’s Rose Bowl performance in October 2009, and is eyeing the pay-per-view live streaming market as well.
So it’s not hard to see why consolidation is taking place in the event ticketing and promotion markets. Economists have demonstrated that vertical integration, done properly, often results in sizable efficiencies, translating into overall welfare gains for consumers. Together, Ticketmaster and Live Nation are in a stronger position than before to offer value to event venues and promote concerts and shows. And as much we all hate service fees, in industries characterized by high fixed costs and declining marginal unit costs – like ticketing – big per-unit “markups” are often necessary to induce businesses to compete and innovate. While Ticketmaster may not be the most innovative company in the world, the firm faces an uncertain future as its contracts with venues come up for renewal. If Ticketmaster really is harming concertgoers – and by the way, there’s no clear evidence that it is – it will be disciplined not only by concert lovers, but by venues and artists as well. Derailing a potentially efficient business arrangement simply because it might not work out, whether in the event ticketing market or the cable television market, results in harm to consumers.
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Panel #2 at this year’s “State of the Net” pre-conference featured a lively debate about net neutrality and investment. It included a debate between Hal Singer of Empiris LLC and Michael Livermore of the New York University Law School. It also featured the comments of Markham Erickson of the Open Internet Coalition and Christopher Yoo of the University of Pennsylvania Law School. The panel was ably moderated by Susan Crawford. Here are some highlights of what proved to be a fun and feisty debate, which began with the comments of Hal Singer:
Hal Singer, Empiris LLC
- FCC wants to constrain pricing flexibility for networks
- Not clear we need price regulation for service delivery in absence of clear market power
- FCC offers novel “collective action” theory to justify regulation, but doesn’t make sense and doesn’t apply here
- Investment at edge of network will not decline in absence of Net neutrality regulation
- Outlawing priority delivery would discourage investment in new networks AND applications
- “Net neutrality would harm the very folks it seeks to protect”; end users will see price hikes
- Investment at core is crucial
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As someone who follows the federal regulatory process, I was amazed to see this in a recent American Spectator post about White House technology advisor Susan Crawford’s return to the University of Michigan Law School:
But White House sources say that she ran afoul of senior White House economics adviser Larry Summers, who claimed he and other senior Obama officials were unaware of how radical the draft Net Neutrality regulations were when they were initially internally circulated to Obama administration officials several weeks ago … In the end, the proposed regulations were slightly moderated from the original language FCC chairman Julius Genachowski, a Crawford ally, circulated.
Unlike regulatory agencies that are considered part of the executive branch, the Federal Communications Commission is an “independent” regulatory agency — which means the president cannot fire its five commissioners. Before executive branch agencies can propose a regulation, it must be reviewed by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA). No administration has yet tried to bring independent agencies like the FCC under OIRA review.
Typically, congressional and private watchdogs scream bloody murder when they see the White House trying to influence independent agencies. But I haven’t heard any barking about this one.
Personally, I think independent agencies’ regulations should be subject to OIRA review. I don’t mind letting the president and his advisors have their say on regulations proposed by people he appointed. But I’d like to see it happen through the formal OIRA review process, where the public knows it’s happening and knows what the rules are.
For example: If you want to know which proposed regulations OIRA has reviewed, go here. If you want to know the standards OIRA uses to review regulations, go here. If you want to know what outside parties have met with OIRA to discuss regulations, go here.
Another chapter in the seemingly never-ending saga of the Child Online Protection Act (COPA) of 1998 was written this week when the Third Circuit Court of Appeals upheld a lower court ruling striking down COPA, which would require Web operators to restrict access to large amounts of online speech and expression. [The Third Circuit’s full decision is here. And I penned a 3-part series on the lower court ruling by Judge Lowell Reed Jr., senior judge of the U.S. District Court for the Eastern District of Pennsylvania, here, here, and here].
The DOJ will likely appeal the decision, yet again, to the Supreme Court. I can’t be certain, but I know of no other free speech-related law that has made THREE trips to the Supreme Court for review. (If readers know of any laws that can match that record, please let me know). It really is quite amazing, and even a little outrageous, when you think about it. After all, just think of all the time, energy and money that has gone into this 10-year legal fiasco. I know it is the DOJ’s job to defend congressional enactments before the courts, but how might we have spent that time and money if all this litigating wasn’t going on?? Regulation always has opportunity costs and in this case those costs have been 10 years of wrangling among lawyers. Those resources could have been used to educate parents and kids about online safety; to create and disseminate more and better private screening tools; and so on. Alas, we instead have mounds of paper piling up in the courts and millions being spent with nothing to show for it.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.