Friday, March 02, 2007

Media “Monopoly” as seen from the real world

You don't have to be an economist to intuitively know that close substitutes can act as very effective competition. Remember pop in glass bottles? When the only choice for diapers was to wash poopie cloth? When television news meant three broadcast networks? When music had to be distributed on vinyl?

The media debate du jour is whether a merger of two satellite radio providers, Sirius and XM, would create a monopoly. Regulators will need to determine the relevant product market. Is it the means of distribution—satellite—or the product: music and talk coming from speakers or earphone?

Weighing in on this debate is one Scott Stolz of Tarpon Springs, Fla (and therefore probably not the same Scott Stolz who is a sound mixer in Hollywood). This Mr. Stolz had the following letter published in yesterday’s Wall Street Journal. (sub required). I repurpose it without further comment.

XM and Sirius
March 1, 2007; Page B7

The thought that a merger between XM and Sirius could create a monopoly is absurd ("Making Radio Waves," Review & Outlook, Feb. 21). They would offer only one of many content options for consumers. It's a moot point anyway. By the time the merger is completed, satellite radio will have won the battle with radio but lost the war. When I subscribed to XM three years ago, I immediately quit listening to traditional radio. Satellite radio is simply a superior choice. However, now that my 927 favorite songs reside on my iPod, I have little need for radio of any kind. Why scan the dial in hopes of finding a song that I like when my iPod contains only songs that I like?

Scott Stolz
Tarpon Springs, Fla.

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