Chokepoint Capitalism

1. Chokepoint capitalism: How big corporations siphon value from creators

"Chokepoint capitalism afflicts everyone from chicken farmers to professional wrestlers."

Corporate power concentration has created a system where a few giant companies control access between creators and audiences, enabling them to extract an unfair share of the value generated by creative work. This affects not just artists and writers, but workers across various industries.

Examples of chokepoints:

• Amazon's dominance in book sales and e-books
• Spotify's control over music streaming
• YouTube's monopoly on online video
• Live Nation's grip on concert promotion and ticketing

These chokepoints allow corporations to:

• Lock in users through network effects and high switching costs
• Make markets hostile to new entrants
• Force suppliers and workers to accept unsustainably low prices

2. Digital locks and DRM: Tools for corporate control, not creator protection

"By using DRM to raise the switching costs to a point where few readers are interested in moving elsewhere, Amazon keeps publishers locked in too."

Digital Rights Management (DRM) and anti-circumvention laws, ostensibly created to protect copyright, have instead become powerful tools for corporations to control markets and lock in both creators and consumers.

• DRM prevents users from moving their purchased content to other platforms
• Anti-circumvention laws make it illegal to bypass DRM, even for legal purposes
• This legal framework allows companies like Amazon, Apple, and Google to maintain their dominance in various digital markets

The result is a system where creators and consumers have less freedom, while corporations gain more power to dictate terms and extract value.

3. The streaming dilemma: More access, less pay for artists

"Spotify wants subscribers to listen as much as possible, and one way of ensuring that is to feed them 'streambait'—the kind of background music that can be left on all day without fatigue."

Streaming platforms have revolutionized how we consume music and other media, but they've also created new challenges for creators trying to make a living from their work.

Key issues:

• Per-stream payouts are fractions of a cent
• Algorithms favor certain types of content, influencing creative decisions
• Major labels and publishers often negotiate better deals, disadvantaging independent artists

While streaming has increased access to music, it has also:

• Reduced artists' control over their work
• Created pressure to produce more "playlist-friendly" content
• Made it harder for niche or experimental artists to thrive

4. Consolidation and vertical integration: Squeezing out competition and creativity

"Amazon shakes down publishers, and, in turn, publishers shake down their workers and authors."

Corporate consolidation across creative industries has led to a concentration of power that harms creators, independent businesses, and ultimately, cultural diversity.

Examples:

• Three major record labels control most of the music industry
• A handful of tech giants dominate digital distribution
• Live Nation's control over concert promotion and ticketing

Effects of consolidation:

• Reduced bargaining power for creators
• Less room for innovative business models
• Increased ability for corporations to dictate terms and prices
• Stifled creativity as risk-taking becomes less economically viable

5. Transparency and data: The power of information in creative industries

"When you know someone else is getting a better deal, that gives you leverage to demand more yourself."

Lack of transparency in creative industries allows corporations to maintain their power and prevents creators from negotiating fair deals.

Key areas where transparency is needed:

• Sales and streaming data
• Contract terms and royalty rates
• Revenue breakdowns and "black box" money

Benefits of increased transparency:

• Empowers creators to negotiate better deals
• Exposes unfair practices
• Facilitates collective action
• Makes markets more competitive by revealing true costs and values

6. Collective action: Uniting creators against corporate exploitation

"If we let this stand, it could set precedent to fundamentally alter the way copyright and contracts operate in the United States."

Organizing and collective action are powerful tools for creators to push back against corporate exploitation and unfair practices.

Examples of successful collective action:

• Writers Guild of America's fight against unfair talent agency practices
• Music artists uniting to demand fair streaming payouts
• Authors challenging exploitative audiobook practices

Collective action can:

• Force corporations to negotiate fairer terms
• Raise public awareness of exploitative practices
• Create leverage for policy changes
• Provide support and resources for individual creators

7. Reimagining ownership: Cooperative models for a fairer creative economy

"Why is it acceptable for a small and elite group of entrepreneurs to position themselves to capture the wealth generated by our collective creativity?"

Cooperative ownership models offer an alternative to corporate-dominated creative industries, allowing creators and consumers to have more control and receive a fairer share of the value they generate.

Examples of cooperative models:

• Stocksy: A stock photo platform co-owned by photographers
• Resonate: A music streaming service owned by artists and listeners
• Local initiatives like Chapel Hill's Tracks music platform

Benefits of cooperative models:

• More equitable distribution of revenue
• Greater alignment between platform goals and creator/user needs
• Increased transparency and accountability
• Fostering of community and direct artist-fan relationships

8. Beyond antitrust: New tools to combat corporate power

"Antitrust's failures are ultimately why we've ended up with such dangerously powerful corporations, but all kinds of other legal supports enable this accumulation of concentrated corporate power along the way."

While antitrust law is important, it alone is insufficient to address the problems of chokepoint capitalism. New approaches are needed to effectively combat corporate power and create fairer markets for creators.

Additional tools to consider:

• Mandated interoperability between platforms
• Limits on vertical integration in creative industries
• Enhanced rights for creators in copyright law
• Public investment in creator-owned infrastructure
• Regulation of data collection and use in creative markets

These approaches can help:

• Reduce barriers to entry for new competitors
• Give creators more options for reaching audiences
• Limit the ability of corporations to lock in users and suppliers

9. Minimum wages for creative work: Ensuring fair compensation

"By ratcheting down the rates they pay, investors make it difficult for creators to continue producing high-quality work."

Establishing minimum wages or fair compensation standards for creative work can help ensure that creators receive a living wage and prevent a race to the bottom in creative industries.

Potential approaches:

• Statutory licenses with minimum payouts for streaming
• Mandated minimum royalty rates for book and music publishing
• Fair compensation requirements for platforms using creator content

Benefits:

• Provides a baseline income for creators
• Prevents exploitative practices by powerful corporations
• Encourages investment in quality content rather than a focus on volume

10. Time limits on copyright contracts: Balancing creator and corporate interests

"If rights reverted to creators every twenty-five years, the artists who were signed to those 4 percent royalties in the 1950s would have been able to secure 10 percent rates by the 1980s, and then 20 or 25 percent rates in the 2000s."

Limiting the duration of copyright transfers can help creators regain control of their work and renegotiate better terms as their careers progress.

Key features of time-limited copyright contracts:

• Automatic reversion of rights after a set period (e.g., 25 years)
• Opportunity for creators to renegotiate terms or seek new partners
• Safeguards to prevent works from becoming "orphaned"

Benefits:

• Allows creators to benefit from the long-term value of their work
• Reduces the power imbalance between creators and corporations
• Encourages ongoing investment in and exploitation of creative works

11. Radical interoperability: Breaking down digital barriers

"Adversarial interoperability offers a gentler slope from the world of concentrated chokepoints to a world of pluralistic, decentralized, fairer creative markets."

Promoting interoperability between platforms and services can help break down the walled gardens that big tech companies use to lock in users and maintain their market power.

Ways to encourage interoperability:

• Legal protections for reverse engineering and compatibility efforts
• Mandated open APIs for dominant platforms
• Prohibitions on using DRM to prevent interoperability

Benefits of interoperability:

• Increases competition by lowering switching costs for users
• Allows creators to reach audiences across multiple platforms
• Reduces the power of individual corporations to dictate terms

12. A call for systemic change: Uniting creative workers with broader labor movements

"The death of the middle-class creator is part of the death of the middle class."

Recognizing common struggles across industries can help build a broader movement for economic justice and fairness in the face of corporate power.

Connections between creative and other workers:

• Exploitation through unfair contracts and working conditions
• Loss of bargaining power due to industry concentration
• Challenges from technological change and globalization

Potential for united action:

• Shared advocacy for policies like job guarantees and universal healthcare
• Cross-industry solidarity in bargaining and protests
• Collaborative development of alternative economic models

By joining forces with other workers and activists, creative workers can be part of a larger movement to reshape the economy in ways that benefit the many, not just the few powerful corporations at the top.

Last updated: October 10, 2024