Tuesday, June 10, 2003

Surowiecki and the FCC

Surowiecki has a typically good article on the recent FCC decision to relax media ownership rules. His point is that while the markets should produce the right incentives for good content, broadcast media collude.

He is quite right, but I would argue that broadcast media collude because they are competing for advertisers, not viewers, and the economics of that market leads to precisely the outcomes Surowiecki objects to. Remember, advertisers want to buy eyeballs from a *national* distribution network, and the type of consumer focused content folks dream of will not appear until there is viable pay-TV (and free, broadcast TV is gone). Given the falling unit cost of programming and the customer's desire for a single, national market, broadcast media will consolidate and collude. Surowiecki's argument that ownership of production and distribution is harming quality is contradicted by the facts: areas where producer/broadcasters (partially) own cable networks have higher penetration than where they don't, suggesting that they can somehow market better to consumers.

Until lots more spectrum is freed up and customers pay directly for their TV, you're not going to get the sort of competition Surowiecki hopes for.


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