The Master Switch

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.

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3 Responses

  1. A.J. Sutter says:

    You know, if you look in a few museums around the world, you find that much of the best art was produced under monarchies and empires. Censorship was pervasive, and the penalties a bit stiffer than what the studio moguls dished out (I don’t think Clark Gable had to worry about getting burned at the stake). You got your Michelangelos, Da Vincis, Coliseums, Versailles-es, and all those golden Buddhas, on the one hand, versus your Warhols, Schnabels, Hirsts, Las Vegas and Jeff Koons (not -es, fortunately). Shall we go back?

  2. Gerard Magliocca says:

    I must admit — an excellent comeback.

    Another way of looking at this is the difference between peer review (the analogy to monopoly) and student review (the open system) for scholarship. Law operates on an open system. That leads to the publication of a lot of poor articles, but also generates more diversity and a greater willingness to take risks. Most disciplines, of course, do not function this way. Are they wrong? I can’t say that unequivocally.

  3. Tim Wu says:

    My argument is that monopolies and integration tend to produce a kind of golden age that lasts for about 10 years. And then everything goes to hell.

    If film had stuck the way it was in the 1950s for decades… not so good.

    Second, the Golden Age was also marred by a level of censorship that I personally find unacceptable. For example, Warner Bros wanted to make a film about the threat of the Nazis in the mid-1930s — killed by Breen, a noted anti-semite.

    As for the argument that censorship and monarchy create great art I give you, in contrast, the period from say 500 AD to 1500 AD.