Someone once said that competition was central to capitalism, but what we are seeing are monopsonies, with chokepoints. This is one of the arguments of Recca Giblin and Cory Doctorow in the new book Chokepoint Capitalism: how Big Tech and Big Content Captured Creative Labor Markets and How’ll Win Then Back.
The book especially addresses how these chokepoints have affected creative markets and workers, focusing on companies such as Spotify, Amazon and Youtube. In addition, it offers possible solutions for the area, recognizing the limits of each one, from antitrust laws to platform cooperativism.
Rebecca Giblin, one of the authors, gave an interview to Rafael Grohmann about the book, addressing chokepoint capitalism, the music industry, the role of platforms and the possibilities and difficulties in building genuine alternatives.
DIGILABOUR: What are the differences between chokepoint capitalism and other terminologies regarding capitalism, such as surveillance capitalism or platform capitalism? What is the specific or the novelty here?
REBECCA GIBLIN: What we are really trying to get at is this phenomenon where although capitalism is, competition is supposed to be central to capitalism. What we have seen over the last 40 years has been declines in that, and even an approach to antitrust law coming out of the United States that even sort of presumes that monopolies are efficient and beneficial, and that less competition can be a good thing. We see Warren Buffett coming out salivating over companies that have what he calls wide sustainable moats. And what he means by that is they are able to stop competitors from coming in and whittling down their profits. We see Peter Thiel saying things like competition is for losers. That is the orthodoxy now taught in business schools, right? What they are all trying to do is trying to create these choke points. So instead of having a free flow between buyers and sellers or between audiences and creators, what they are doing is trying to create these hourglass-shaped markets that have got audiences or buyers at one end and creators or sellers at the other. Then sort of squatting predatorily at the neck, where they are able to extract more than their fair share of value. So what we’re getting at is to show that this is not capitalism. This is a predatory practice that is increasingly common throughout pretty much every market, but particularly obvious in creative labor markets. And they are being used to shake everybody down.
DIGILABOUR: In the book, you disagree that so-called platforms are the problem. Why?
GIBLIN: Let me unpack that a little bit. First of all, there are so many different things that I meant by platform and we talk about this in the book too. We get into that it is nonsensical to blame platforms because there are so many different kinds with so many different features, and everybody is talking about something different. If you are talking about the major tech platforms like YouTube, like Amazon and so on, then these are some of the major culprits in creating choke points that they are using to shake everybody else down, but so are record labels, Hollywood talent agencies, big radio in the United States, which uses its monopoly profits to support lobbying efforts that have defeated literally dozens of bills that would have been used to get recording artists paid for the use of their songs on radio. The United States is one of. Just a small handful of countries with Iran, Rwanda, North Korea that don’t do that. So it is a too narrow way of seeing things to say that platforms that are the problem and also too broad a way of seeing that because platforms encompass all kinds of different things. What we want to get at is predatory conduct, the anti-competitive conduct that is being used to extract more than a fair share. And certainly, as we explained in the book, we think that those big tech platforms are certainly the biggest culprits right now.
DIGILABOUR: What surprised you most during the research process for the book?
GIBLIN: I think what we were surprised by is that we knew things were bad, but we didn’t know how bad. In the first half of the book, we set out to persuade readers that it’s choke points that are the problem and demonstrate how they’ve been constructed across all of these different cultural industries. What we are hearing from people is that they are just so incredibly full of rage after reading this, because the big surprise wasn’t just happening to the extent we thought it was happening, but there is this systematic shakedown that is happening throughout the creative industries. Anywhere somebody’s got enough power to shake down creative workers, they are doing it and I think probably, probably one of the biggest surprises was the pure range of industries across which companies are using exactly the same playbook. If we look at Amazon, it talks about its flywheel, which some people will be familiar with, which it describes as this virtuous cycle. I think this is a really good way of understanding what’s going on, but also, the surprise about it being sort of across everything. They talk about having a lower cost structure, which leads to lower prices and that improves the customer experience and that drives traffic, which brings in more sellers, which increases selection but also contributes to that lowest cost structure. It’s delightful. Who can complain about this? It’s so efficient and wonderful. But we were looking at all of these different industries, and we look at books, ebooks, audiobooks, recorded music, song writes, music streaming, music ticketing, music promotion and so many others. What we were seeing is that they were all using that same playbook, but that is not what was really going on. What was really going on is that it was not a virtuous cycle but an anti-competitive one where what everybody is setting out to do is first of all luck in their users as much as they possibly can. Because of the nature of monopsony power, it’s a little bit different from monopoly and it can become problematic at far lower market concentrations. So 8% or 10% of the market can already give a buyer a lot of ability to control the terms. Once they have got some users logged in, they use that to lock in their suppliers and then to use the profits from that or the revenues generated from that or the access to capital markets that they have got through the prospect of being able to have everybody locked in to eliminate competition. Once this flywheel keeps turning, the situation is that they are forcing their workers and suppliers to accept unfairly low prices. The surprise was the universality of the playbook, but perhaps it should not have been surprising because as I talked about at the beginning, that’s exactly what is being taught in business schools.
DIGILABOUR: About the music industry, what are the new challenges for musicians, especially indie artists and labels in a context of streaming services as Spotify?
GIBLIN: One of the things that we were by talking about the music industry and kind of its historical context and what is happening now. We are showing that the reason why one of the big reasons why musicians are in such a pickle now is because we have got three record labels that control almost 70% of the global recorded music market. They own the three music publishers that control almost 60% of songwriters, and those companies have used their outsized influence that those enormous copyright reservoirs give them to shape the future of the industry, even though they are no longer as relevant and necessary as they were in the pre-digital era. And then what we’re seeing is that that is resulted in streaming markets that were designed by the majors for the benefit of the majors and to disproportionately to exacerbate the winner takes all shape of this market. This is also resulting in these streaming giants. And Spotify, which is by far the market leader, is trying to also create its own choke points. It’s got such a big share of the market and it’s done such a good job of persuading audiences to outsource decisions about what goes into their ears. I will just go to Spotify’s RapCaviar playlist or I will just go and listen to this. Sort of they have worked really hard to train listeners to go to the playlist rather than the artist. They are very obvious play and we are seeing it happen now is to use that power to further reduce the amount that goes to artists. For example, we already know that per stream rates are incredibly low and what Spotify has done is said, we understand that you can’t really afford to pay for promotion, but we could amplify you, we could give you a greater chance of being playlisted. We could give you more discoverability by the algorithm if you wanted like to take a further discount on the royalty rate that you get. That people are so desperate to get discovered to be that one who breaks through in this incredibly noisy market that a lot of them are willing to take those deals, but then it’s just a race to the bottom. We know that creative workers are willing to perform creative labor for less than they’re willing to perform other forms of labor. Cultural economics shows us that people can be more willing to paint a mural for less money than they are willing to pay a fence. This why unions like the Screen Actors Guild have to like force everybody to enter into a collective pledge not to work for below union minimum rates and otherwise be punished by the whole group if you do, because they know that the temptation is so strong to work for very little or for nothing. Spotify and all of the companies that we talk about in this book take advantage of that. They seek to weaponize creators’ passion to facilitate their exploitation. This is one of the biggest challenges as these companies grow more powerful how do we find ways of widening those choke points out so that workers have a greater chance of sharing fairly in the rewards from their work.
DIGILABOUR: One of the main challenges in the second part of the book is how to build genuine alternatives. What the potentials, pitfalls and limits do you see in collective ownership in the creative sector?
GIBLIN: I will mention first about the structure of the book. Cory Doctorow and I were really determined that this was not going to be yet another of those books. We call them Chapter 11 books, where you have got 10 chapters about how terrible everything is. And then at the end, like one chapter that’s kind of like tidied up with a neat little bow and wave your hands around a little and have some very vague solutions. In the first half of our book, we do talk about the problem in that we’re making the case that it is this corporate concentration, these choke points that are the problem. But then the whole second half is diverted to solutions where we really get into some quite detailed shovel-ready solutions for widening these chokepoints out and that means building countervailing solutions that build countervailing power in creative workers and producers in directly regulating market power and in encouraging your entrance.
There’s really interesting potential for collective ownership. One of the biggest challenges is a lack of access to capital to get them started. It is really expensive to start something like this. And those costs are increased by the fact that music licensing arrangements are so incredibly expensive. And that creates another choke point. So Spotify complains about how complicated the licensing practices are, but it’s able to take advantage of that, because it has enough money to be able to do that whereas new entrants don’t. And so while, it might prefer that it was cheaper to enter a new market, it does prefer that they are able to do it and other people are not. That increases the capital cost that’s required to get into music streaming on any kind of large scale. The large scale is sort of what you need to do to get the network effects that bring a substantial number of people to your servers. We get pretty deep into the weeds on music licensing and some of the solutions that we could have things like reconceptualizing statutory licenses or compulsory licenses, so that they act as a floor rather than a ceiling.
That could be a form of minimum rights and minimum wages for creative workers. We talk about streamlining music licensing arrangements and also video licensing. How can you have platforms better compete with YouTube? We talk as well about the need to define the money where it exists. So there is an enormous amount of leakage in the revenues for music streaming and that’s, um, largely from problems with metadata and databases and particularly collecting society frameworks. It’s extraordinary that each country has their own database or databases and they have got all kinds of problems with them. Like very often you will have a collecting society that can’t even identify Beyoncé to get her paid. Or can just imagine how hard it is for everybody else and again, like the incentives are not right. They are not incentives to get this money matched up to individual artists. We really go after practical, possible like technologically possible solutions that would actually get more money into artist pockets.
DIGILABOUR: What is radical interoperability and how can it be a good solution for creative workers?
GIBLIN: That becomes relevant because one of tools that companies like Amazon in particular have used to lock in customers is digital rights management to lock in customers and to lock in suppliers. Those are the digital locks that get put on files, ostensibly to prevent copyright infringement. But the law prevents you from stripping away the lock or unlocking the lock and it’s not restricted to circumstances where that would prevent infringement. What we’ve got is, for example, Amazon insists on having digital rights management on everything on its audible platform. It’s not possible to have a book on audible without having it wrapped in DRM. And what that means is that people who’ve invested in an audiobook library over time, if they want to move to a different platform that pays artists better or that otherwise offers different features and they’ve got to either sort of split up their library so that it’s in different places, or well, they’ve got to split up their libraries in different places or just kind of walk away from the existing investment that they’ve made. And very few people want to do that, so we’ve seen the dangers with DRM. This is how Apple managed to take over the music download market with iTunes and the record labels eventually realized that this had been a terrible trap because they were completely locked in and had no choice except to accede to Apple’s demands. The way that they got out of that trap was by licensing their music to companies like Amazon, DRM-free so that it could be portable and moved anywhere. Book publishers were not listening when that happened. They did not heed that lesson and they insisted on DRM. That’s why so many people are locked into a sort of Kindle. You can’t just move your books, you can’t just migrate your books from Kindle to say, an author’s coop platform, because of the DRM and the laws around that.
So, radical interoperability is about saying it recognizes the dangers of that digital lock-in and recognizes that this is another way of creating a trick point, such that people are staying with your service not because it’s the best service or because they want to be there, but because they’re locked into it. What we are asking for is rights to be able to strip away DRM, where it’s not for the purpose of committing copyright infringement. This movement is been a big movement but it’s becoming increasingly powerful with the right to repair, and in particular because digital rights management is actually very rarely used now to protect against copyright infringement. It is used to protect against what Cory Doctorow calls felony infringement of the business model. We are seeing it in thin layers of DRM that are easily bypassed as a technical matter, but cannot be bypassed as a legal matter added to printers. So you can’t use other cartridges to tractors, so that farmers can’t repair them themselves to heart monitors, insulin pumps, like an enormous array of important consumer and agricultural goods in order to lock customers into particular suppliers and we increasingly sort of seeing right to repair laws being passed in different places and a growing movement recognizing the dangers of this.
DIGILABOUR: You state that antitrust laws are vital, but don’t save us. What’s the role of law and regulation in all this context?
GIBLIN: I should mention here that we certainly do think antitrust law is important in enforcing the law that’s already on the books and reforming it both important, but antitrust really struggles. It struggles in responding to monopoly, it really struggles in responding to monopsony, and monopsony is the biggest problem that we talk about in the context of creative workers. This is where it is the buyer who is got the power of sellers. Amazon is the buyer when it comes to publishers and authors. Hollywood talent agencies are the buyers when it comes to talent. Spotify is a very powerful buyer when it comes to smaller record labels, although it’s not as powerful and it comes to the majors and so on. We know that antitrust law does a very poor job of responding to monopsony and partly because of that difference I mentioned earlier about how it accrues at much lower market concentrations and partly because the remedies that are available in antitrust just are not really suitable. This is why we focus on other remedies that get at those three things. Directly regulating biopower that encourages new entrants into markets and that builds countervailing power and suppliers and workers. There’s lots and lots of ways that regulation can help that. For example, we talk about the model that’s been created in the EU digital single market directive that has provisions directly targeted at supporting creators. Member States, for example, has got to give artists and performers the rights, or authors and performers rights to reclaim their copyrights where they’re no longer being commercially exploited. They have to have the right to fair and proportionate remuneration and rights to transparency as well, to understand how their work are being used, what revenues are being generated and how their pay is being calculated. Outside of competition law, we can see right to repair laws, for example. Right-to-repair laws are a way of directly targeting excessive biopower and evening up the playing field. And the same thing, entitlements to strip DRM that you can migrate your libraries to another platform. That’s the kind of condition that would allow for the emergence of more author co-ops for platforms, for example. So we are very interested in the potential for evidence-based regulations that achieve those three things to help level this playing field.
DIGILABOUR: What do you see different in collective action and work organization in the so-called creative sector and what are the future directions for that?
GIBLIN: One of my favorite parts of the book is where we get to the section on how 7000 Hollywood screenwriters fired their agents in a single week. They did that because those Big 4 talent agencies had been shaking them down mercilessly, had rigged these markets in ways that meant that even in this golden age of television, writers’ share was declining precipitously. The writers saw how much danger there was if they allowed this to continue. And they all worked together, even though there were so many of them working on such a diverse range of shows at very different stages of their career, including people whose deal was made, who were incredibly successful in the market and didn’t have to worry about any of this stuff. They stood together and they ground this out for 22 months until they forced all of those talent agencies to reform their practices and get rid of those conflicts of interest and that shows the power of working together. And nobody could have achieved that individually except, as I said, like there are very few people right at the top of the tree who you know, such as Shonda Rhimes, and Krista Bernhoft, the showrunner for Grey’s Anatomy, for example, with enormously successful, but she stood to as part of this strike. What I’m trying to get at here is that we have been encouraged over this last half century of increasingly neoliberal economic policy to see ourselves as individual islands rather than part of a shared fight, and that has been enormously successful at hollowing out that sense of shared mission. But we need to recognize that we’re all part of the same fight, right? Nearly all of us are. I think the time for individualization is over and the time for understanding that we’re part of a shared fight and that we don’t have to tolerate these predations any longer is like rapidly coming upon us.