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Avoiding the 'Sony Schizophrenia' Bug
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2003-04-17
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When I first got wind of the rumored discussions between Apple & Vivendi Universal, my partner & MusicDish editor Sounni de Fontenay noted the age-old challenges confronting the merging of content & distribution. Sony's internal conflict between wanting to protect their recorded sound catalogue and sell more consumer electronic goods like mp3 players & CD burners illustrates the schizophrenia that often greets such marriages. Least we not forget that selling UMG would be the most glaring setback to Messier's vision of "converging" content & pipe.

The merging of content and pipe can also have drastic effects on speech. Much of the complaints surrounding Clear Channel's 'homogenized' playlists are a criticism of its merging content & pipe on such as scale. If the FCC imposed structural separation between the Clear Channel's corporate office & its local stations for example, much of the controversy would disappear overnight.

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Even in the cable TV sector, where content & pipe are intertwined, concerns over cable operators favoring its in-house or affiliated programmer over independent ones resulted in FCC must-carry rules. These rules force cable operators to allocate a certain number of channels on their systems to independent programmers in order to ensure that they don't leverage their pipes to monopolize content production. I myself had the opportunity to work on the subject in the context of rules governing telephone companies' distribution of video under the 'open video system' proposed by the FCC that sets aside up to 70% of channels for non-affiliated programmers. Telephone companies were also barred from offering 'enhanced' computer services at the dawn of networked computing, a primary reason why they have such a small stake in the ISP market today unlike their counterparts in Europe and Japan

So should we be concerned if Apple or Microsoft end up with the largest catalogue on the globe? In the case of Apple, it's more likely to be a case of "Sony Schizophrenia" rather than anything endangering speech or competition. Microsoft though is entirely a different issue. It's dominant position through the digital distribution system, from the server on to the player, would provide it with the ability & incentive to (i) limit licensing of works to MS-controlled properties such as MSN, (ii) inhibit competing formats by imposing its proprietary technology for all digital releases, (iii) restricting competitors works (say Warner Bros. Records) availability on MS-controlled properties, (iv) the list could go on & on.

If we apply the Bush Doctrine (Saddam is an eminent threat due to his prior bad behavior) to Microsoft, which has already been judged guilty of using its monopoly to unfairly restrict competition, any deal would be dead at the FTC & EU Commission doors on arrival.


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