Net Neutrality Friday

This week I want to talk about the potential merger of AT&T and Time-Warner. On the surface, this does not look to have too many anti-competitive issues. Deeper down there are some really troubling trends here.

AT&T/Time-Warner would be the 2nd major ISP to have control over significant amounts of content. The other is Comcast as it owns NBC-Universal. Verizon has seemed to focus more on infrastructure, but Yahoo! does have a few popular content properties (particularly Yahoo! Sports). Google has a similar business. Many infrastructure properties but not a lot of direct content. Facebook is notorious for taking ownership of the user generated content posted on its site (which is why I don't post there originally). Apple is another company in the content infrastructure business. Amazon is starting to straddle the line by having original content.

Why should this trouble us? It smells a lot like the old movie theater days. The major studios owned the vast majority of the movie theaters. This meant that they controlled distribution as well as the content. By doing this, they limited independent competition. If you really want to focus on Net Neutrality, to me this is the fight. Can we have clear neutrality in content ownership and assure a wide distribution of original content.

I think (and this is my opinion) that Netflix will be the test case here. As large as Netflix is, they still address a pretty small market. They are starting to build a significant original content library. What will they do once those shows go out of production? Will they license the content to cable or other online or linear content delivery channels? The longer the content is on the shelf the less value that it has. One would think that they might want to capitalize on the buzz around their shows to make a bit more money.

And I hope this is what keeps content neutral. Locked up content loses value. If you own content, you want to maximize its value. Wide distribution is the best way to do that. Think about the ongoing value of Seinfeld or The Lucy Show.

But we shall see as things evolve. Have a great weekend!

Jim Sackman
Focal Point Business Coaching
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