How Amazon, Spotify, Google and Facebook lock you in and rip you off

The world’s most powerful bookseller uses its muscle to push down the prices it pays publishers. In turn, the publishing industry consolidates into a handful of supercompanies that leverage their dominant positions to more than halve the advances they pay authors.

The world’s two most powerful digital-advertising companies use their control of the online market to siphon away most of the money spent on ads on news-media websites, driving down the revenues of news publishers and leading to widespread redundancies and a collapse in journalistic coverage.

Amazon, Google, Facebook, Spotify, Clear Channel, Live Nation and Ticketmaster have generated enormous revenues for their shareholders while slashing the incomes of writers, journalists, musicians and other creative workers from whose labour they profit

The world’s most powerful music-streaming service uses its market power to offer greater prominence on its service to artists who are willing to agree royalty rates that are even lower than the derisory sums they’d previously been getting. Many feel they have no choice but to comply, even if it’s only to promote their live shows.

When musicians plan those live shows they find themselves entangled with the world’s largest live-events promoter, which in turn owns the world’s largest ticket seller. Between them these two will simultaneously gouge music fans and crush any independent rivals. Ultimately, the musicians lose again.

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All of these companies – Amazon, Google, Facebook, Spotify, Clear Channel, Live Nation and Ticketmaster – have generated enormous revenues for their shareholders while slashing the incomes of writers, journalists, musicians and other creative workers from whose labour they profit. They’ve done this by capturing the market and engaging in the sort of abusive practices that inevitably come with monopoly power.

But it doesn’t have to be this way, say Cory Doctorow and Rebecca Giblin, who argue, as they explain in their new book, Chokepoint Capitalism, that it’s time to fight back against the power of big tech and big media.

The conversation with them that follows is an edited transcript of an episode of the Irish Times Inside Politics podcast.

HUGH LINEHAN Chokepoint Capitalism is an arresting phrase, but what does it mean?

CORY DOCTOROW It’s this idea that, through combinations of law and technology, large firms can corner audiences and put them into a sort of corral. And because creators need to reach those audiences, these large firms can take whatever it is you have of worth. There’s three giant record labels that own three giant music publishers, and there’s four giant movie studios and four giant publishers. In the United States we have one giant movie-theatre chain, and around the world there’s one giant ebook retailer and one giant audiobook retailer. These are the chokepoints that creators have to pass through in order to bring their work to market.

REBECCA GIBLIN In the last 40 years we have seen this shift. Say what you like about capitalism, but competition is supposed to be fundamental to it. But this idea took root that maybe monopolies are good and they’re efficient. They lower consumer prices. [The PayPal founder] Peter Thiel says out loud: “Competition is for losers.” That’s the orthodoxy taught in business schools now, that you should try and gate everything off so you can maximise your share. But what that means is that, in the creative industries and a growing number of other industries as well, the people who make the things and provide the services are getting less and less.

Some would say capitalism always tends towards monopoly unless there are regulations in place to guard against it.

DOCTOROW We had a political revolution that embraced a new orthodoxy, led by Robert Bork, who was Richard Nixon’s solicitor general. Bork really believed monopolies were presumptively efficient, and that the harms that arose from allowing a potentially bad monopoly to grow were much less than the harms that we would all suffer if we stopped a good monopoly in its tracks; that lurking out there were these Jeff Bezoses who were just waiting to have their special genius realised by accessing the capital markets and buying all of their competitors, doing predatory pricing to stop new market entrants, merging with their largest competitors and so on.

What is a “monopsony”, a word that crops up a number of times in the book?

GIBLIN It would have cropped up a lot more if our first readers hadn’t said, “Oh, that’s such an ugly word. Please, take some of it out.”

I liked it.

GIBLIN We’re determined to make monopsony sexy. This is a concept people are less familiar with than monopoly, because there’s no board game for this one. Instead of it being a seller that’s got a lot of power, it’s the buyer. One of the examples we talk about in the book is that Amazon, when it was starting out, created this “gazelle project” where it went after the weakest publishers and shook them down for greater and greater discounts.

The book has numerous examples of these issues with some of the most famous companies in the world. To me, the most shocking, the most egregious ones are from Amazon. And I speak as an Amazon customer. The book is really causing me to think again, or start thinking about whether I’m able to think again, about my relationship with Amazon.

DOCTOROW That second formulation, thinking about whether you can think again about Amazon, is an important one. Because one of the problems with allowing monopolies to form is that they become very difficult to unwind; they become, as they say, “too big to fail and too big to jail”. It’s very hard to go around Amazon these days, although we do have some suggestions in the book. Of course, your personal choice to not shop on Amazon is not going to make much of a difference to Amazon. I mean, I made that choice.

I have never allowed my books to be sold on Audible. Audible has this mandatory policy where if you sell a book on Audible you have to lock that book to Amazon’s platform forever, using a kind of encryption called digital rights management, which means that your readers, if they quit Audible, lose access to the book, which means that every time you sell a book you give them a reason not to quit Audible, and Audible knows that.

It’s no coincidence that we also talk about a wage-theft scandal involving Audible that’s run to hundreds of millions of dollars involving independent authors. There’s some pretty simple, and then some much more complicated, ways that governments‚ both local and national, can intervene.

Right now it’s often very hard to identify exactly where you’re being ripped off, or who’s doing the ripping off between the three or four intermediaries between you and your audience. Often we’re told, “Well, it’s not the tech company, it’s the entertainment company. You know how badly those guys treat artists,” and then someone will say, “Oh no, it’s not the arts company, it’s the tech company. You know what rip-off artists those guys are,” but when you have actual transparency, when you can see the monetary flows through the system, then you actually can figure out who’s got their hand in your pocket.

Chokepoint Capitalism is not just about big tech, which lots of people are happy to beat with a stick at the moment. There’s collusion going on between tech companies and traditional media companies, what you call content companies, who’ve also been going through a process of consolidation over the last decade or more. So it’s not just about the Spotifys and the Amazons of this world. It’s also about the Disneys and the PenguinRandomHouses.

GIBLIN That’s actually where this book was born. The way the discourse is framed is you’re told to choose big tech or big content. We wanted to show that it’s not the platforms in and of themselves. The problem is, companies that have too much power exert to get more than their fair share, whether it is big tech or big content. But this is, ultimately, a very hopeful book: we show how you can actually widen those chokepoints out, so that, no matter who’s got the power, we can level the playing field a little bit more and allow creators to get paid.

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These are incredibly powerful, well-endowed companies. Here in Ireland they have a lot of political influence, because they employ a lot of people. I don’t see a huge appetite in the corridors of power in Dublin to get on board with the kind of proposals you’re talking about.

GIBLIN The politics are very, very tricky. Partly that is because the messaging is so murky. And, again, this whole creators-versus-users framing doesn’t work for getting creators paid, and it doesn’t work for getting access to knowledge and culture. But it does benefit big content, which likes to claim it’s on the creators’ side, and big tech‚ which likes to claim it’s on the users’ side. But we need to recognise that we do have some power here. The Writers Guild of America realised, despite it being a golden age of television, that the writers’ share was declining and their agencies, which had accrued an enormous amount of power, had structured the market so that they had an interest in deals that furthered their own interests.

[ The tragic twist in the golden age of television ]

In a single week, 7,000 Hollywood writers fired their agents, and they ground out their strike for 22 months, until even the worst of the worst rolled over and reformed their practices. We as humans, rather than just being what Cory calls “ambulatory wallets”, we also have the power within us to demand that things be different.

The book is very interesting on the question of copyright. Music representative bodies, for example, see this very much as a battle over asserting their rights in a traditional copyright sense. The newspaper industry, which has been stripped by the advertising giants of Facebook and Google, also often couches this in terms of copyright. But you argue that’s a mistaken and probably damaging way of thinking about the problem.

GIBLIN It’s a classic case of trickle-down economics. The big content companies assure artists that if they get more copyright then it is going to affect their bottom line as well. The analogy we use in the book is, if you’re sending your kid to school and they’re getting shaken down by bullies at the school gate every day for their lunch money, you don’t solve the problem by giving them more lunch money, right?

So more copyright rights can be desirable where they actually secure the rights to the creators, and we see that in the European Union’s digital single-market directive. It mandates that member states give artists and performers new rights over things like fair and equitable remuneration, rights to reclaim their copyrights in the event that they’re no longer being commercially exploited, and transparency rights, so that they do have an entitlement to information over how their works are being used, what revenues are coming in and how their pay is calculated. These are the kinds of copyright reforms that can really make a difference.

DOCTOROW Apropos the news, the underlying assumption is often that when social-media sites or online services allow people to talk about or summarise the news, or reproduce a headline, that’s a copyright infringement. I think as a technical matter it’s fair use. But I also think that to assert you’re not allowed to talk about the news is a huge mistake. It’s not the news if you’re not allowed to talk about it. It’s a secret. And when you look at what’s actually happening to the ad market, there’s something far more important going on than just people shifting how they buy ads. The tech platforms are stealing money from publishers by rigging the ad market. And this allows them to just trouser money that should rightly go to these publishers.

In addition, you have acts of huge fraud, metrics fraud, like Facebook’s notorious pivot to video, where it defrauded every publisher in the world by asserting that there was massive Facebook user interest in video, and that they should all retool to produce videos instead of text. They said the age of text is over, we have the metrics to prove it. It turned out it was just a lie. News publishers around the world went bust as a result. If news publishers stopped asserting that Facebook and Google were stealing their content – which is a controversial proposition to say the least – and, instead, leaned into the completely uncontroversial proposition that Facebook and Google are stealing their money, we would have a much more direct path to getting fair remuneration for news entities.

Say for a moment you’re speaking to my evil twin, who says: “I’ve got the world’s music in my pocket for €9.99 a month. I’ve got the world’s library on my laptop for more or less the same amount. I don’t give a damn about whether artists get paid well or not. And, anyway, the arts were always incredibly unfair: there were always a tiny number of big winners and a large amount of big losers.”

GIBLIN I think there’s actually very few people who feel that way. And that’s one of the reasons why these arguments in favour of more copyright are so powerful, because so many of us do really feel that the artists and creators who make so many of the beautiful things that make life worth living should be rewarded for that work.

But to the question of, “Okay, this is very convenient. We should have streaming, right?” The answer is, yes, we should make it easy for people to have legitimate widespread access to music, but we can definitely improve the way it works. And I think we should also be thinking very seriously about the other ways in which copyright locks customers in. So digital rights management is another thing that was supposed to be a benefit for copyright holders, but in fact it’s become a benefit for companies like Amazon. When Amazon locks all of its audiobooks in digital locks that are illegal to take away, and illegal for someone to help you to strip away, what that means is that Audible customers, if you are subscribing into that ecosystem, either have to sort of give up their library or maintain separate libraries or stay with Audible.

People might well want to make different choices about how they access their books, and certainly after reading the chapter on Audible in our book – which is the only part of our book that we made a stand-alone Audible exclusive – we show just how terrible the company’s practices are. I think if more people knew about that they would want to make different choices, if there was something like an authors’ co-op where you could buy directly from the authors, and a greater share of the money would go to that rather than the up to 90 per cent Audible sometimes takes on books that are fully financed by other people. So what we really focus on are practical, shovel-ready solutions that would actually make a meaningful difference to the money that ends up in creators’ pockets.

And for those who aren’t too concerned about the fact that people in the creative industries are not getting their fair due, a lot of these companies started in cultural areas and have expanded beyond that to control large swathes of the modern economy. In a postindustrial knowledge-based society, the kinds of models which have been applied to music, film and books, they’re probably coming for everybody at some stage, if we don’t stop them.

GIBLIN That’s exactly right. We wrote about this in the context of the creative industries because that’s what we know best; that’s what we’re passionately obsessed about. But we know that chokepointification is happening in an increasing number of industries. We got an email a couple of days ago from somebody who works in the global ornamental-plant business, to say thank you so much for writing this book, it’s exactly the same thing that’s happening in ornamental plants. We did see with Covid that a lot of white-collar jobs can be done just as easily from home as in offices. Which opens up the possibility of having those jobs outsourced to the lowest-paying bidder. And so, if everybody, no matter what kind of job you’ve got, wants to be able to have dignified work and to be paid fairly for that, we need to be concerned about this growing corporate power, because they are all playing by the same playbook, where they try to lock everybody in, in order to shake them down.

Chokepoint Capitalism, by Cory Doctorow and Rebecca Giblin, is published by Scribe