How Big Tech & Big Content Captured Creative Labor Markets - How We'll
Win Them Back
- by Rebecca Giblin, Cory Doctorow
| Amazon Review | Author Book Site | How Monopolies Gained Control |
| Captured by Billionaires | Art For Sale | How Creators Squeezed by Big Tech |
| We Should All Be Worried | Why We’ll All Lose Unless e Stop Them | Contents |
A call to action for the creative class and labor movement to rally against the power of Big Tech and Big Media. Corporate concentration has breached the stratosphere, as have corporate profits. An ever-expanding constellation of industries are now monopolies (where sellers have excessive power over buyers) or monopsonies (where buyers hold the whip hand over sellers)—or both.
In Chokepoint Capitalism, scholar Rebecca Giblin and writer and activist Cory Doctorow argue we’re in a new era of “chokepoint capitalism,” with exploitative businesses creating insurmountable barriers to competition that enable them to capture value that should rightfully go to others. All workers are weakened by this, but the problem is especially well-illustrated by the plight of creative workers. From Amazon’s use of digital rights management and bundling to radically change the economics of book publishing, to Google and Facebook’s siphoning away of ad revenues from news media, and the Big Three record labels’ use of inordinately long contracts to up their own margins at the cost of artists, chokepoints are everywhere.
By analyzing book publishing and news, live music and music streaming, screenwriting, radio and more, Giblin and Doctorow deftly show how powerful corporations construct “anti-competitive flywheels” designed to lock in users and suppliers, make their markets hostile to new entrants, and then force workers and suppliers to accept unfairly low prices.
In the book’s second half, Giblin and Doctorow then explain how to batter through those chokepoints, with tools ranging from transparency rights to collective action and ownership, radical interoperability, contract terminations, job guarantees, and minimum wages for creative work.
Chokepoint Capitalism is a call to workers of all sectors to unite to help smash these chokepoints and take back the power and profit that’s being heisted away—before it’s too late.
https://www.amazon.com/Chokepoint-Capitalism-Content-Captured-Creative/dp/0807007064
Defeat Chokepoint Capitalism to get Artists Paid - Author Book Site
A book about why creative labor markets are rigged – and how to unrig them
Competition is supposed to be fundamental to capitalism. Over the last four decades though, greedy robber barons have worked out how to lock in customers and suppliers, eliminate competitors, and shake down everyone for more than their fair share.
Creative Labor Markets are Borked
Google rules search, Facebook rules social media, and together they control nearly all the internet advertising wrapped around online media – power they’ve used to extract megaprofits that explain why the number of journalists has plummeted. Via YouTube, Google has captured the video streaming market, and (with Apple) the market for cell phone software, including video games.
Spotify dominates music streaming. Three companies control music recordings and music publishing. The ‘Big 6’ trade publishers became the Big 5 when Penguin glommed together with Random House, and that behemoth is fighting to make it the Big 4 by swallowing Simon & Schuster as well. Amazon controls the online market for a growing number of consumer goods: starting with books, then taking over ebooks, and now, via Audible, audiobooks too.
We deconstruct their playbooks (and those for news, screenwriting, games, live music, radio and more) to show how Big Tech and Big Content erect chokepoints between creators and audiences, allowing them to lock in artists and producers, eliminate competition, and extract far more than their fair share of revenues from creative labor.
A Big Tech/Big Content Disassembly Manual
While our book starts by dissecting the ways monopolists from the tech and entertainment sectors have cornered their markets, explaining the historical and structural factors that gave rise to this distinctly terrible form of extractive capitalism, we don’t stop there. Our main focus is action.
Chokepoint Capitalism is built around shovel-ready ideas for shattering the chokepoints that squeeze creators and audiences – technical, commercial and legal blueprints for artists, fans, arts organizations, technologists, and governments to fundamentally restructure the broken markets for creative labor.
How are Chokepoints Created?
Big Business creates anti-competitive flywheels that enable them to squeeze creators and creative partners, like independent publishers and record labels, to extract more than their fair share.
https://chokepointcapitalism.com/
How Monopolies Gained Control of the Content Machine
If you believe the term “rigged” is hyperbolic, Giblin and Doctorow bolster the point by citing a jaw-dropping Princeton study that reviewed nearly 2,000 U.S. policy outcomes. It found that when average citizens wanted legislation passed, they had “little to no independent influence.” However, when economic elites and groups representing business interests wanted policy changes, they had “substantial independent impacts.” In other words, the wealthy got the laws they wanted; average citizens did not.
The authors’ decision to focus on creative labor markets—such as movies, music, and books—is an inspired one. This is because the “chokepoints” they discuss are particularly prevalent in culture and the arts.
They describe “chokepoints” as the middle of a horizontal hourglass, with customers at one end and suppliers and workers at the other, with a small number of corporations in between siphoning off as much value as they can. For example, a big record label locking an artist into a lengthy contract that forces the artist to pay back the cost of making the record before being awarded meager royalties. The authors highlight Prince’s fight with Warner Brothers (now Warner Records Inc.).
“Corporations have demonstrated particular ingenuity in finding ways of burrowing between audiences and culture producers to capture the value that flows between them,” the authors write. “That makes the culture industries an ideal microcosm to explore this phenomenon.”
Giblin, a professor at Melbourne Law School, and Doctorow, a professor of computer science at Open University, argue their case in a methodical manner. The book is thoroughly researched and logically constructed, with the first half using case studies to illustrate the problems, and the second half offering solutions. While readers may find some sections overly dense, the book is designed to inspire policy change and activism, so the authors are meticulous in analyzing the issues and examining approaches to solving them.
The case studies they highlight are infuriating—including Amazon’s takeover of books, Facebook and Google’s usurpation of news, how “Big Music” exploits recording artists, YouTube’s monopoly of online video, and the “chickenization” of live music. (This last one is a nod to Teachout, as “chickenization” is a term she uses to describe how businesses resemble modern poultry farming.)
[ Consumer Welfare Theory ]
The most resounding sections, however, are when the book focuses on a rigged economy. The authors highlight corporate consolidation because it has resulted in massive companies whose size and power allow them to more easily exploit creators. In covering antitrust law, Giblin and Doctorow note that consolidation began in earnest when the Reagan Administration stopped blocking large mergers—as long as the merger would lead to lower prices for consumers. This idea, known as “consumer welfare,” was born in conservative circles and it encouraged consumption at the expense of competition. It has been the rationale for consolidation ever since.
The solutions recommended by Giblin and Doctorow include improving corporate transparency, strengthening unions, time limits on copyrights, and minimum wages for creative work. Like the rest of the book, these chapters are well wrought and detailed. But the strongest chapter is the final one, in which the authors are explicit in explaining how chokepoints in creative industries relate to the broader societal issues at stake.
“We need to recognize that the strip mining of creative workers is part of a broader project in service of an oligarchy,” Giblin and Doctorow assert. ”It’s not just creators and independent producers who are being screwed over but almost everyone, as wealth keeps being inexorably funneled toward the rich.” They conclude: “The death of the middle class creator is part of the death of the middle class.”
There are signs that Americans are waking up to the danger posed by oligopoly and corporate consolidation. Federal regulators have indicated they are finally getting serious about the matter. President Joe Biden issued executive orders demanding that the Department of Justice and the Federal Trade Commission enforce antitrust law “vigorously,” and appointed Lina Khan, an antitrust scholar, as head of the Federal Trade Commission.
As a student at Yale Law School, Khan wrote an influential essay titled “Amazon’s Antitrust Paradox” in which she attacked the “consumer welfare” standard and argued that current antitrust law is ill-prepared to deal with anti-competitive platforms such as Amazon. As FTC commissioner, she has vowed to act with “fierce urgency” against consolidation.
In an interview with the Financial Times in June, Khan discussed industry consolidation in more dire terms. Citing an increase in mortality rates at nursing homes that had been gobbled up by private equity, she said, “There are just very real life and death consequences…that require us to take it very seriously.”
But if the past is any guide and Republicans retake Congress and the presidency, any momentum the Democrats have made toward a new policy of antitrust could be quickly stamped out. That’s why Chokepoint Capitalism is the book we need now. Comprehensive and accessible, stirring and enlightening, it is a roadmap for taking immediate action against the corporate chokepoints that are crushing our creative workers and, increasingly, the rest of the middle class as well.
https://progressive.org/latest/book-review-monopolies-content-machine-whitney-102022/
Cultural Industries Have Been Captured by Billionaires
This book speaks to a disenchanted present.
The heady days of internet 2.0, with its anarchic disruption, empowered prosumers, flat hierarchies and sharing economies, are well behind us now. So too is the glamour of start-ups and creative entrepreneurs, remaking the self through pure willpower while transforming capitalism from the inside out, one almond latte at a time.
The tone is set from the first:
Three massive conglomerates own the three record labels and three music
publishers that control most of the world’s music. They designed the
streaming industry, dominated by Spotify, which itself is (or was) partly
owned by those same three labels.
When Disney swallowed 21st Century Fox, a single company assumed control of
35 percent of the US box office. Google and Facebook have a lock on the
digital ads that are wrapped around music, videos, and news online. Google,
along with Apple, is the gatekeeper of everything mobile, giving it a
massive cut on games, books, music, and movies. Via Youtube, it controls
video streaming […]
Amazon has an iron grip on book, ebook, and audio-book sales, and dominates
ebook and audiobook production. The only publisher that might be able to
hold its own is Penguin Random House, and then only by gulping down as many
other big publishers as it possibly can.
And so on, through radio, live music, artists’ agents, games, apps, devices – the whole ecosystem has been captured by huge corporations whose sole purpose is to reduce costs and maximise profits.
“Ecosystem” has a benign ring to it, but, as Giblin and Doctorow argue, a corporation is more like an immortal colony organism that treats human beings as inconvenient gut flora. It doesn’t have a personality and it doesn’t have ethics. Its sole imperative is to do whatever it can get away with to extract maximum economic value from humans and the planet.
‘Chickenization’
Chokepoint refers to the mechanism by which this dominance is achieved. We now know that Big Tech’s business model is not “disruptive innovation”, but rather monopoly. It is Jeff Bezos’s “Get Big Fast” strategy, designed to drive competitors to the wall, lock in customers, and ratchet up prices.
But it is also a monopsony, in which big corporations are the only buyers. “If you can only sell your product to a single entity, it’s not your customer; it’s your boss.”
Giblin and Doctorow call the total control of the production process “chickenization”. Lock-in techniques pioneered by agribusiness corporations like Monsanto are being applied to live music and other cultural producers.
Once corporations are in a dominant position, they can afford to lobby governments to keep it that way. Big Tech’s billions can make sure that regulations are made in their favour – US radio not having to pay royalties for the music they play, for example (an arrangement the US shares only with Rwanda, Iran and North Korea). Or they can actually introduce legislation, such as California’s Proposition 22, which led to an explosion of gig working across the state.
These strategies combine to create an “anti-competitive flywheel” of great momentum. Rather than the “virtuous circle” of lower costs, lower prices, higher customer satisfaction, and industry growth, we have locked-in users, locked-in suppliers, competition eliminated, and reduced prices paid to workers and suppliers.
In creative industries, as elsewhere in the economy, there has been a huge shift in the returns to capital at the expense of labour, with wage stagnation the other side to an unprecedented accumulation of wealth among the elite.
The authors are clear as to the culprit – the Chicago School of economics, aka neoliberalism. Though its proponents are normally associated with a deregulated “free” market, a key move was their about-turn on antitrust legislation, spearheaded by the jurist Robert Bork. Monopoly was against competitive markets and so bad, right? Well, as it turns out, no. Efficient monopolies, Bork proposed, deliver good returns to consumers (in the short term) in the form of cheaper prices.
This argument provided the legal loophole that has allowed corporations to advance their monopolistic ambitions. As many historians of neoliberalism have shown, the pivot away from antitrust was crucial in getting major corporations to buy in to the neoliberal agenda, giving obscure right-wing think tanks the financial boost required to enter the mainstream of policy making.
Big Tech has been a prime beneficiary. Its locked-in suppliers and customers are regaled with the rhetoric of free choice, while the founders exercise the world-making and world-breaking freedom reserved for masters of the universe.
.......
The roots of the problem can be traced back to the 1960s, when culture began to be dominated by commercial companies. In the following decades, cheaper technologies, more education and a newly dynamic popular culture brought in a whole new range of producers, from gonzo journalists to punk rockers, street fashions and fanzines, indie labels and artists’ factories.
International agencies, such as UNESCO, began asking how to rethink democratic cultural policy when most production and consumption was taking place outside of the state-subsidised system. Cities from London to Melbourne, Manchester to Toronto, sought new ways to stimulate these new urban cultures and keep the proceeds in the local economy.
The creative industries embraced markets, entrepreneurialism and disruptive tech as the markers of our progress to the next stage of economic development. Chokepoint Capitalism, a stroll round Dorian Grey’s attic, confronts us with the reality belying that fantasy.
Art For Sale - Review by the Guardian
From publishing to music, a revelatory insight into the way corporations are cashing in on creativity
In the early 1990s, Prince started appearing in public with the word “slave” scrawled across his cheek. The facepaint was a protest against Warner Music, who had signed Prince when he was just 18, and had the power to dictate the pace of his creative output as well as owning the rights to it. Prince managed to escape his original contract – partly by changing his recording name to an unpronounceable squiggle – but remained distrustful of the industry that had “enslaved” him until his death, hiding the master recordings of his songs in a secret vault beneath his Minnesota mansion, Paisley Park.
In this provocative book, Rebecca Giblin and Cory Doctorow argue that, today, every working artist is a bond servant. Culture is the bait adverts are sold around, but artists see almost nothing of the billions Google, Facebook and Apple and make off their backs. We have entered a new era of “chokepoint capitalism”, in which businesses snake their way between audiences and creatives to harvest money that should rightfully belong to the artist.
An early chapter sketches the growth of Amazon, a relatively straightforward example of the phenomenon. First the company got publishers hooked on its site by offering them great rates. Once it became apparent they couldn’t survive without it, Amazon reduced their cut of the cover price. The image of the chokepoint that recurs throughout this book is an evocatively gruesome one. There is just one pipeline through which authors can access their readers, and Amazon is squeezing it, dictating exactly which books make it to the other side, and at what price.
The problem with most books that have “capitalism” in the title is that reading them tends to induce apathy. The word itself is deployed in an unspecific, almost fatalistic way, used as a catch-all explanation for a variety of modern ills: inequality, the housing crisis, cookies that track your search history on the internet. Instead of trying to comprehend the details of how Google came to control the ad market we make vague references to the algorithm. There is something strangely comforting about relinquishing your agency in this way: if the workings of the algorithm are too complicated for you to understand, you’re off the hook. Why bother trying to fight it?
What makes this book so refreshing, by contrast, is that it never lets its reader off the hook. The authors remind us, repeatedly, that our ignorance is being weaponised against us. If we don’t understand how big business established its chokehold over us, how will we ever be able to wriggle free of its grip? As such, the first half is devoted to explaining precisely how corporations gain the whip hand over artists in the main creative industries: publishing, screenwriting, news, radio and music. Giblin and Doctorow’s analysis of the creative labour markets is highly technical, but that’s a deliberate choice. At the beginning of a particularly dense section about music licensing, the reader is explicitly warned that the next few paragraphs will be “mind-numbingly” boring, but we should try to pay attention anyway. Licensing laws have been purposefully designed to confuse the average creative. “The people getting rich from it while artists starve don’t want you to know how it works.”
What makes artists uniquely vulnerable to this kind of exploitation, is that they are liable to work for free
The level of detail in the book will make your eyeballs hurt, but it bears fruit. By unpicking precisely how corporations make their money, the authors are able to expose chinks in the enemy’s armour. In one of the most surprising chapters Giblin and Doctorow argue that big tech’s habit of surveilling you isn’t even particularly effective. Google and Facebook make billions selling advertisers the most intimate facts about your life – whether you’re depressed, or suffering erectile dysfunction, or thinking about cheating on your partner – but it is all a con. There is no hard evidence to show that harvesting a customer’s private information makes them any easier to sell to. There is something depressing about this (data-mining might not actually work, but Google will continue to sell your secrets for as long as advertisers keep buying them). But it’s liberating, too. We tend to think of big tech as an outsize, almost supernatural force, capable of building mind-control systems that can trick us into buying almost anything. One of the revelations of this book is that much of that power is illusory.
https://www.theguardian.com/books/2022/nov/24/chokepoint-capitalism-review-art-for-sale
Interviews
How Creators Are Squeezed by Big Tech
When I was in high school, making a mixtape for a friend was an act of devotion. I would sit on the green carpet in my bedroom next to my tape recorder and wait for my favorite songs to come on the radio.
The trick was knowing a song well enough that I could identify it by the very first few notes. That would allow me to hit the record button on the tape recorder as soon as it began. Hours of careful listening and fast recording would eventually yield a cassette tape with a curated mix of songs. If I wanted to own a song and not wait for it to be broadcast, I went to the record store and purchased a vinyl album.
Now, of course, assembling a playlist is as easy as clicking a few buttons in Spotify or Apple Music, where vast amounts of music can be streamed for free or a monthly subscription fee. I and many others rarely purchase albums anymore—and this has caused a huge and painful transition for many musicians. For instance, a 2020 study in the U.K. found that 82 percent of musicians earned less than $270 a year from streaming music platforms.
Musicians are not alone. These days, most artistic products—such as movies, music, and books—are distributed by powerful tech gatekeepers that control artists’ access to audiences and determine how much money they will make. The control over distribution is occurring just as the cost of distribution is plummeting: It’s much easier to distribute digital music or e-books than physical records or books.
This change can be bad not only for creators but also for society. Consider libraries, which can be forced to pay as much as $27 per student to rent—not own—a copy of “The Diary of Anne Frank.” Just this week, a coalition of more than 300 authors signed a letter criticizing the publishing industry for supporting a lawsuit against the Internet Archive for lending digital books for free during the pandemic. The publishing industry, for its part, claims that the archive is not a library and its program is a mass copyright infringement.
Meanwhile, author and activist Cory Doctorow and legal scholar Rebecca Giblin argue that publishers and authors should stop fighting each other and instead fight against the gatekeepers that are keeping them both scrambling for scraps. In their new book, “Chokepoint Capitalism: How Big Tech and Big Content Captured Creative Labor Markets and How We’ll Win Them Back, Doctorow and Giblin lay out some strategies that they say could bring some equilibrium to creative markets.
Doctorow is a science fiction author, activist, and journalist. He is the author of many books, most recently “Radicalized” and “Attack Surface.” In 2020, he was inducted into the Canadian Science Fiction and Fantasy Hall of Fame. Giblin is a professor at Melbourne Law School and director of the Intellectual Property Research Institute of Australia, the Author’s Interest Project, and Untapped: the Australian Literary Heritage Project.
Our conversation, edited for brevity and clarity, is below;
Angwin: In your book, you describe a shakedown of the entertainment industry that has been enabled by Big Tech. Can you give us a summary of the topic and explain how this transformation is harming creators?
Giblin: To use the music industry as an example, there used to be only a few record labels that controlled the vast share of the world’s recorded music and song rights. They were also controlling distribution to stores, which was the only way music was getting out, as well as how it got onto the radio. Then, the advent of digital technologies and the internet meant that those markets widened and artists had alternative ways to make money from new sources. However, what we’re seeing now is that those markets are closing back up as tech and the music industry have become incredibly concentrated.
We wanted to write a book about these choke point markets, which are what you get when powerful entities create barriers that prevent the competition that is supposed to be central to capitalism. Choke points are what allow large players to take more than their fair share, and overwhelmingly what we see is that the money they are taking is coming from creative pockets.
Angwin: Can you talk a bit more about how tech has enabled these choke point markets?
Doctorow: It is really a combination of tech and law that has built these choke points. Tech has an intrinsic lack of choke points because the universal computer is a tool you can plug anything into. I wrote an essay about what it would mean if a co-op could take all of Amazon’s [product ID] numbers and correlate them to inventory in the stores in your neighborhood. Then you could write a browser plugin that, when you search for a widget on Amazon, instead of showing you a “buy it on Amazon” button, it would show you a “buy it from your corner store” button.
Hypothetically, we’ve got these wide-open markets, but what tech has figured out how to do is combine technology and the law in such a way that interoperability, while technically possible, is increasingly illegal. Between Digital Rights Management (DRM), patents, trade secrecy, and innumerable other legal maneuvers and strategies, Big Tech has been able to interrupt the super competitive cycle of tech. For example, if you cannot easily export a playlist that you love and bring it to a rival platform, then you get locked into Spotify. All of these things become a tool to lock in supply chains. Big entertainment companies and big tech companies can sometimes negotiate among themselves for resolution, but for the most part, when it involves creators, they are just left out in the cold.
Angwin: You use Audible as an example of a company that has created a really suffocating choke point market. Can you describe what it did?
Giblin: Audible has a monopoly over audiobook purchasers, meaning Audible (the seller) has a lot of power over customers (the buyers). But Audible also has monopsony power, which is when a single buyer (Audible this time) has a lot of power over sellers (in this case, publishers and authors). That’s because, if they want to be able to make their audiobooks available to Audible’s huge share of the market, they have no choice but to go through Audible to do so.
Audiblegate is like a textbook example of Amazon’s flywheel at work. Amazon loves to talk about this as a virtuous cycle: They’ve got these lower cost structures that allow them to offer lower prices, which then attracts customers, which then drives traffic, which brings in more sellers, and so on. But what’s really going on here is not a virtuous cycle—it’s an anti-competitive cycle.
What we’re really seeing is that Amazon does everything it can to lock customers in. With Audible, for example, it’s DRM, it’s the system of monthly credits, and it’s an extraordinarily generous returns policy that encourages subscribers to return audiobooks, no questions asked, even if they’ve happily listened to the whole thing. Audible charged the whole amount of those returns to the independent authors who were using Amazon’s ACX platform [the platform that allows authors to upload their own audiobooks].
[An ongoing lawsuit in the U.S. District Court for the Southern District of New York, Golden Unicorn Enterprises, Inc. v. Audible, Inc., alleges that Audible’s accounting system has resulted in authors “being paid far less than 25% to 40% of the value of the Audiobooks it distributes, the percentages for which they contracted.” Audible has denied the allegations.]
Doctorow: This is how choke point capitalism works. There is a lobe on one side of the hourglass that’s full of customers and a lobe on the other side of the hourglass that is full of workers. At the pinch point, you have Amazon sticking its hand in workers’ pockets—able to take more than their fair share because each side has to go through them to reach the other.
Angwin: You propose multiple solutions in your book. Can you talk about a few of them?
Doctorow: One solution I like is making some small changes to the way that contract law works in respect to nondisclosures following audits. If you sign a contract for royalties, chances are it will include some clause that allows you to audit those royalties so you can find out whether or not your publisher or studio or label is paying you what it owes you. A lot of creators can’t afford to take advantage of this, but if you can, and you discover you are owed money, then generally, in order to get the cash, you have to enter into a settlement with the firm. These settlements include a mandatory nondisclosure clause which prevents creators from talking about the case. That means you can’t go tell similarly situated creators where they can go looking for the money that they’re owed: You have to stay silent. We talked to one source who found six figures missing but they couldn’t tell their fellows there might be buried treasure waiting for them too.
Because of consolidation, almost all of these contracts are consummated in either New York, California, or—because of Amazon—Washington State. This means that very small changes to the contract law in three states regarding nondisclosures covering material accounting errors that adversely affect people getting royalties could immediately put more money in the pockets of more creators than all the copyright expansions since 1976.
Angwin: I was really intrigued by your proposed solution of competitive compatibility, or adversarial interoperability. Can you describe this?
Doctorow: Historically, one of the things that made tech a dynamic marketplace was the fact that new companies could reverse-engineer the technologies that old companies had made. For example, you could create an IBM PC clone computer, and there was nothing to stop you from doing it. What has changed since then is that the law has made it much harder to build those new services. If you wanted to build a rival to Audible where the first step was to import all your old Audible books and put them in the new app, that would be illegal. If creators were allowed to make interoperable products, they could build new services that gave them a better deal. They could then explain to their fans that, if they followed their favorite artists to these new services, those artists would get a better deal and the only thing that would be lost would be the money currently being shuffled off to these intermediaries who were shaking them down.
There’s lots of ways that you can imagine doing this. For years I have operated my own online bookstore where, on behalf of my publishers, from McSweeney’s to Macmillan, I sell my e-books just like Amazon does. However, instead of getting the 25 percent of the 70 percent that the publisher gets, I get the 30 percent that Amazon would normally take, and I get the 25 percent that the publisher would normally send back to me. You could imagine allowing every author to build one of these websites and then just having a browser plugin that, as you shopped on Amazon, instead of seeing “buy it on Kindle,’’ it would say “buy it from the author.” The author would double their royalties by doing that.
As always, thanks for reading.
Best, Julia Angwin The Markup
(Additional Hello World research by Eve Zelickson.)
https://themarkup.org/newsletter/hello-world/how-creators-are-squeezed-by-big-tech
Why We Should All Be Worried About Chokepoint Capitalism - Time
Chokepoint Capitalism is the title of a new book co-authored by Doctorow, an internet freedom activist, and Rebecca Giblin, a scholar at the University of Melbourne. The pair coined the term to describe what they say is the defining feature of the modern economy: corporations weaponizing their power to crush competition and lock in customers. The idea behind free market capitalism—that firms would compete fairly and thus drive prices down—has been corrupted in practice, Giblin and Doctorow argue. Chokepoint capitalism, they write, ultimately results in higher prices for customers and lower wages for workers. At the same time, the system diverts record profits to corporations, which they can reinvest to further cement their power.
TIME spoke with Doctorow and Giblin on Sept. 28 about the themes of their book. “Across so many different industries, workers are all getting shaken down,” Giblin says. “Even if you aren’t paying higher prices at the checkout, the fact that you’re having this downward pressure on your wages from this increased corporate concentration has the same end result: you’ve got less and less capacity to pay for the goods and services that you need.”
This interview has been condensed and edited for clarity.
TIME: What is ‘Chokepoint Capitalism’?
GIBLIN: Companies use all kinds of tools to erect chokepoints, to create hourglass shaped markets that have audiences at one end, creators at the other, and corporations squatting in the middle.
Really, everyone’s making the same play as what Amazon talks about with its self-described “virtuous cycle.” Amazon talks about having lower prices, which attracts customers, and then because the customers are there, more suppliers come, and that brings a better product range, and that attracts more customers. And it all sounds lovely, right? Who could complain about that? But we show in the book that corporations are actually doing everything they possibly can to lock in their customers, and then use that to lock in more suppliers. And these companies get more and more power as this—not virtuous, but anti-competitive—cycle keeps feeding itself. And the share that goes to workers, and suppliers, and creators, goes down.
The message we really want to get out in the book is to show that this is not a problem of people not working hard enough, or of there not being enough copyright. It’s a problem with power imbalance. But we don’t have to put up with it because once we understand the problem, there are interventions that we can make to widen out these chokepoints.
TIME: Why has it taken so long for people to begin to understand this was all part of the same problem?
DOCTOROW: Partly because it was very slow, but also because the symptoms were different depending on what sector you were in, so it was hard to recognize that it was all the same disease. If you’re angry that ships are getting stuck in the Suez Canal, it’s because there are three giant shipping conglomerates, which get economies of scale when they make the ships bigger, even though they also run the risk of getting the ship stuck in the Suez Canal. And they were able to kind of boss their regulators around, and impose the costs onto the public, because there’s just three of these cartels.
If you’re an American whose insulin prices have gone up 1,000%, it’s easy to think that you’re angry about pharma. But it’s really market concentration that allowed the pharma companies to, on the one hand, raise the prices without worrying about competitors, and on the other hand, suborn their regulators so they could get away with it. When people are atomized that way, it’s very hard for them to make common cause. Diabetics, or people who are angry about shipping delays, or artists, they’re just not big enough to be a political force on their own. But united they are a force to be reckoned with.
GIBLIN: It’s completely unsustainable. I think we need to have a fundamental rejection. And to achieve that, we need to see that we’re all part of the same fight. [The scholar] Jamie Boyle often talks about this parable about the origins of the term ‘ecology.’ There used to be people who cared about owls, and people who cared about the ozone layer. But it wasn’t until this unifying notion of ecology came about that everyone realized that they were in the same fight. And I think we’re really starting to see it. Even Republicans are showing that they’re unhappy now about the levels of corporate concentration. People are noticing and feeling it. And so we’re very close, I think, to being able to have a movement against chokepoint capitalism.
TIME: Right now, it looks like Western economies are heading toward tough times. What does chokepoint capitalism look like in an era of economic recession?
DOCTOROW: We might very well see what we saw during COVID relief, which is firms getting huge amounts of public money, still making their employees redundant, still squeezing their suppliers, creating huge bonus pools for their executives and then returning the rest in the form of special dividends and stock buybacks.
We have to recognize that these large firms are actually a drag on the economy, and not a source of pride. Shadowy shareholders, located in tax havens and behind numbered companies, can extract value from the American cultural sector [for example] at the expense of both audiences and producers.
TIME: What do you see as the logical end point for this system if it’s allowed to continue without a course correction?
GIBLIN: If you ignore policy, you don’t get positive outcomes, you get policy debt. And that debt has punishing interest. When the interest mounts high enough, you have a default, and those defaults are never pretty. And so I think we’ll see policy defaults all across the board, if we don’t address monopoly.
The sterling example of this is the climate emergency, where, year on year, we’ve known what was wrong. And year on year we’ve been paralyzed on action, even though we knew what we had to do. The climate emergency didn’t go away just because we decided not to do anything about it. In fact, it got worse. I’m supposed to speak at a conference in Miami in October, and now I’m wondering whether there will be a Miami Airport to fly into [due to Hurricane Ian].
TIME: Meta was once a poster child for monopolistic business practices, with its acquisitions of Instagram and WhatsApp. But now TikTok is really putting Meta’s business under threat. What would you say to the argument that the rise of TikTok shows competition is still possible in this economy?
DOCTOROW: It’s possible that you’ll still get a changeover of the giants in these extremely rare punctuated events. But I think this proves that [Meta CEO] Mark Zuckerberg’s dominance was not driven by his singular brilliance. It wasn’t that his insights allowed him to build a service that just out-competed all the rest. He bought his way to dominance. The thing that actually did finally challenge his dominance was a firm that wasn’t for sale. We could make lots of firms “not for sale” just by prohibiting anti-competitive acquisitions. That is the mechanism by which old firms are toppled by new ones.
TIME: This year, we’ve seen leaps and bounds in AI programs that can turn text into images. Many of these programs, which are owned by big tech corporations, look likely to further disrupt the livelihoods of all kinds of artists. What problems do you foresee with tools like Dall-E being owned by big tech corporations?
DOCTOROW: There are equitable and inequitable ways to arrange the outcomes of automation. This is the lesson of the Luddites. The Luddites were not anti-loom any more than Osama bin Laden was anti-aviation. The Luddites were organized around the inequities of the social arrangements surrounding the products of automation. And in the same way, there are equitable and inequitable ways to arrange the dividends that arise from machine learning-based creativity tools. The large firms that dominate this have a long track record of using automation to abuse workers rather than to share fairly with them. I think it would be naive to expect otherwise, this time around.
https://time.com/6219423/chokepoint-capitalism-doctorow-giblin/
Why we’ll all lose unless we stop Amazon, Spotify and other platforms squeezing cash from creators
Understanding Amazon’s motivation helps us understand a phenomenon we call chokepoint capitalism, a modern plague on creative industries and many other industries too.
Orthodox economics tells us not to worry about corporations dominating markets because that will attract competitors, who will put things back in balance.
But many of today’s big corporations and billionaire investors have perfected ways to make those supposedly-temporary advantages permanent.
Warren Buffett salivates over businesses with “wide, sustainable moats”. Peter Thiel scoffs that “competition is for losers”. Business schools teach students ways to lock in customers and suppliers and eliminate competition, so they can shake down the people who make what they supply and buy what they sell.
Cory Doctorow Wants You to Fight Big Tech
AN INTERVIEW WITH CORY DOCTOROW
https://jacobin.com/2022/11/cory-doctorow-chokepoint-capitalism-monopoly-tech
TABLE OF CONTENTS
PART 1: CULTURE HAS BEEN CAPTURED
CHAPTER 1 - Big Business Captured Culture
CHAPTER 2 - How Amazon Took Over Books
CHAPTER 3 - How News Got Broken
CHAPTER 4 - Why Prince Changed His Name
CHAPTER 5 - Why Streaming Doesn’t Pay
CHAPTER 6 - Why Spotify Wants You to Rely on Playlists
CHAPTER 7 - What the US Shares with Rwanda, Iran, and North Korea
CHAPTER 8 - How Live Nation Chickenized Live Music
CHAPTER 9 - Why Seven Thousand Hollywood Writers Fired Their Agents
CHAPTER 10 - Why Fortnite Sued Apple
CHAPTER 11 - YouTube: Baking Chokepoints In
PART 2: BRAKING ANTICOMPETITIVE FLYWHEELS
CHAPTER 12 - Ideas Lying Around
CHAPTER 13 - Transparency Rights
CHAPTER 14 - Collective Action
CHAPTER 15 - Time Limits on Copyright Contracts
CHAPTER 16 - Radical Interoperability
CHAPTER 17 - Minimum Wages for Creative Work
CHAPTER 18 - Collective Ownership
CHAPTER 19 - Uniting Against Chokepoint Capitalism
