|
|
|
Ray Corrigan writes: I work for a rather large multi-national accountancy and business adivisory firm, so I have an interesting view on concentration of ownerships, or indeed market share, which is what it boils down to. So I thought I'd give this one a bit more concentration than a quick reply would warrent. Market shareI'd firstly like to explain what I mean by market share, because that is the real question which is being raised here. This is a fairly well understood concept in accountancy and business management, but not everyone is cursed to be part of that profession. Market share is simply the percentage of the people who buy your products actually buy from you. Take, for example, a village with 1,000 households in it, with three competing suppliers of the local newspapers; Village News, The Newspaper Shop, and News 'R' Us. If 500 households get their papers from Village News, 300 from The Newspaper Shop and 200 from News 'R' Us the Village News has 50% of the market share, The Newspaper Shop 30%, and News 'R' Us 20%. Simple. Unfortunately in the real world things are rarely that simple. As Oscar Wilde said, the plain and simple truth is rarely plain and never simple. Firstly you have to work out what your market is. Say you are supplying cat food in the same village above. You can't just count households, as not every household owns a cat. So you only count households which own cats. Well, that might be a problem if one of those households is a cattery, and on average houses 15 to 20 cats a week. This means that that one household alone could be worth more than 10 of the other cat owning households. So you have to count cats. I own two, and I have trouble counting them sometimes. In the real world you have to take a guess at which sort of people will be using your product, and how much of your product they will be using. This is normally done by census records. As an example, me and my partner live in a fairly common household. Both of us are working, we have a joint income over the £40k bracket, and we have a cat and no children. So, we would be measured against all the other couples in the country, in that wealth bracket, both working in fairly professional jobs. This is done so that the managers and marketing personnel can work out who is likely to buy their services, and who is not. <side issue>Personally I feel that this is just a sociological and economic form of horoscopes. Sorry, but I am not the same as every other woman. For a start I don't tend to watch television. Ok, we have a television in the house, but the only time I actually watch is when we are out at the curry house waiting for our takeaway. I'm not interested in makeup. We both have first class batchelors degrees with honours. We have two mortgages, yes we are a two house family. Neither I nor my partner are that interested in current 'popular' music (for further information see the folk section of this site, when I eventually get round to writing it I suppose). So, despite being similar in some ways, we are different in others, and lumping us in with the other people who happen to resemble us very slightly is, as far as I can see, offensive to all concerned.</side issue> So, the companies look at the number of people in the socioeconomic groups which they are targeting, and try and work out from their actual sales, what percentage of the are buying from and/or loyal to their particular company, and what percentage are going to their competitors. This then determines what 'market share' they are looking at, and who their main competitors are. <rant>From this bit of marketing mummery, they come up with a plan to make their offering exactly the same as every-one else in the same market, thus destroying the whole purpose of having competition to begin with.</rant> Lawrence LessigRay mentions Lessig's views on media concentration. What are his views? Well, according to his book, The Future of Ideas, he details the concentration in ownership that has occured in the media over the last half century or so. For example private market share of daily newspapers in the states has fallen from 80% in 1947 to 20% in 1989. The main market share of magazines was held by 20 companies in 1981, but only 3 in 1988. Music market share is the most concentrated, with 84% of it controlled by five companies1. Overall, "23 corporations control mos tof the business in daily newspapers, magazines, television, books, and motion pictures."2 From this we can see that a massive amount of change has occured. The major market share in the American media industry is now held by a few companies, which can be accused of forming a cartel (which Lessig is very careful not to state) to control the market place. In the UK, there is a strong history of antaganism between rival newspaper owners, and this gives us a situation where we do have some form of competitive market in newspapers. Similarly, BBC and ITV offer a very different sort of content, however they do have some similarities (Eastenders and Coronation Street are a good example). This is not necessarily the case in the states. The Recording Industry Association of America is just one case where the major market shareholders in the US have got together to ensure that, by working together, they make more money for themselves. Lessig does not go into the reasons for this decrease in companies holding large market share. He instead concentrates on the results. His main argument is that these companies are all offering similar products, and since this is the case, people who wish to product content for the market have two choices. Produce what the companies are promoting, and hope to get in with them, or produce what you like, but realise that you are not going to be heard further than the next door neighbours. Legislative changesRay points to three websites, each of which details changes in the American system. One from ABC, one from the Washington Post and one from the New York Times. Each of these deal with the apparent opening up of the media market. The plan is to relax current restrictions on cross-ownership of media, and limit the number of stations that can be held by one company or individual. The Federal Communications Commission (FCC) plan will allow large companies, such as Time Warner AOL, to become even larger, and control much more of the market share. Thus leading to more income for them, and less choice for the rest of us. In the UK, as mentioned above, we have a 'healthy' history of competition in our newspaper industry, which does not look like it is going to disappear. However we are tending to suffer a similar fate as our American cousins. The UK Government is already planning to go down a similar route3, including creating of a single regulatory body, instead of the current situation of multiple bodies for each type of media, and allowing american companies to purchase and own british media organisations. If you thought we only got the bad US programs, let me tell you, we haven't seen anything yet. Possible outcomesThere are, of course, a wide range of different outcomes from these changes that have happened, and are ongoing, in the media industry. We could see a new technology causing the 'big boys' to find themselves in the back seat. Or we could see the market place becoming further and further concentrated, till we have all our media controlled by a few core companies. The cynics amoung us will cite the later case, and then explain how this will lead to a potential tyranny, where the forces controlling the media become so powerful that they gain de facto control over the government. The optimists see the internet, or a new technology not yet found, leading to destruction of the current hold over media that the large companies now have. The market place opening up with freedom to create and innovate taking the first place. With the cynics then responding with pictures of a world with 10,000 TV channels, all of them showing drivel. Of course, the actual outcome will probably be a combination of these two opposing views. The large open source community will press for freedom, the companies for control, and somehow a balance will be struck between them. What that balance will eventually be is anyones guess. I would like to make one point, though. In the 1920's America passed a law prohibiting the consumption of alcohol. It didn't stop people drinking, it just made it into a criminal business. The number of people who currently break copyright law, and provide MP3s, or movies, show that the current legislation is not working. There is currently a clear link between black market copies of videos and other criminal activities. How long will it be before the mafia move into the mp3 black-market? Footnotes
|
