I am reading Tim Wu’s terrific new book on how information industries oscillate between decentralized and consolidated business models and the role that regulatory policy plays in that cycle. I highly recommend that you pick this up, and hope to organize an online symposium about this important book here on CoOp sometime soon.
There is something that bothers me about Tim’s analysis (or, at least, raises a question). There is no doubt that he is a fan of as much openness as possible, as demonstrated by his support for net neutrality. More or less, the bad guys in his story are monopolists (AT&T, RCA, Paramount) and the heroes are the rebels who fought them. In general, I agree with this narrative. As someone old enough to remember the Bell system, you weren’t missing anything. But I’m hesitant to embrace this openness norm completely.
The toughest case is the studio system for movies. The flaws of that vertically integrated oligopoly are not hard to describe. Actors were bound by long-term contracts that denied them the fruits of their labor (much like baseball players before free agency). Censorship was pervasive, as Tim correctly points out. And yet . . .
People still refer to this time as Hollywood’s Golden Age. Now I concede that movie tastes are not uniformly shared, but if you ask most people when better movies were made, would they say 2010 or 1939? (OK, that’s not an entirely fair comparison. 1939 was the best year of the studio system, and movies did not have the kind of competition then that they get now.) The point is that the studio system produced outstanding art. As a result, the issue of how regulatory policy should work (or stay its hand) for information industries is not so simple.