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Does the film industry have a monopoly problem?

October 25, 2022 | By Mike Thompson – Independent Media Reporter @MMThomp

The year 1948 saw a monumental Supreme Court decision that forever altered the business of moviemaking – and of moviegoing. Nearly 75 years later, as the movie industry struggles to recover from the brutal one-two punch of streaming media and the Covid-19 pandemic, one prominent film historian feels similar government intervention may be the best chance of saving film as we know it – but would also mean big changes for streaming platforms.

The impact of the Paramount Accords

Prior to 1948, movie studios were vertically integrated; they not just produced the films, they had actors, writers, and directors under contract, they marketed them, and they even owned the theaters in which the films were shown. But, in United States v Paramount Pictures, Inc., the Supreme Court ruled such a system violated U.S. antitrust laws. While the move was seen as a blow to the major studios, it proved a boon to independent filmmakers – as they were free to produce content without major studio interference – and also led to an explosion in independent movie theaters.

“We got more independent creatives, more independent picture houses, and the weakening of the Hays Code, an extremely puritanical self-censorship policy within Hollywood,” film historian G. Vaughn Joy wrote in a viral Twitter thread from September.

Joy is a History PhD candidate at University College London and co-host of three podcasts: Impressions of America, Joy of Star Wars, and Hollywood in Focus. For her dissertation, Joy studies the U.S. government’s infiltration of Hollywood in the early Cold War and the cultural ramifications this caused via a case study on Christmas films.

In that same Twitter thread, Vaughn pointed out the decision (the Paramount Accords) was reversed in August 2020, as the Department of Justice felt the decrees were outdated. The reversal had a sunset period of two years – a period that wrapped up this past August. And without that antitrust legislation in place, Joy argues in an interview with Digital Content Next, the future of film is pretty bleak.

The future of movies and media

“I, personally, think it will be grim,” Joy says. “I think we’re headed for even more monopolization and consolidation of power and properties by the major studios. If you’re concerned about independent filmmakers and smaller studios, the past few years already haven’t been looking amazing. And I do think relaxing antitrust legislation puts independents in an even more precarious position within the motion picture industry.”

Joy says part of what’s been making it rough on the indies is that, even when they do get deals with sites such as Netflix, their departments have been. “In May Netflix laid off 150 part-time and contracted workers,” she notes, “and had a second round of layoffs in June at around 300, largely independents or in diversity departments.”

She argues, repealing the Accords altogether was a step too far: “I believe new legislation should have and should still be made to regulate the streaming services and film studios against monopolization.”

Indeed, Joy maintains, it’s not too late for government intervention – intervention that, she feels, is vital: “I definitely think antitrust legislation for Hollywood is incredibly important and a pressing matter, as diversifying messages and perspectives in media is crucial for maintaining freedom of thought.”

Looking out for the little guy

The lack of sufficient antitrust legislation has already resulted in two major acquisitions that Joy feels should be illegal: the 2019 sale of 20th Century Fox to Disney, and the 2021 purchase of MGM by Amazon. “I believe both of these sales should have been stopped by antitrust legislation because that means, ultimately, that Disney and Amazon have a say over the films those studios are still producing and distributing,” Joy says.

Joy added that “one of the biggest issues” with the studio system was that eight major studios – the “Big Five” and the “Little Three”  – were producing most of the mainstream movies. This meant eight studio heads were deciding which movies would be made, how they would be made and by whom, where they would be shown, and more.

After the Paramount Accords, though, that picture slowly began to change. Whereas in 1949, the eight major studios controlled 96% of the market, by 1986 the combined share of the then-six majors (which at that point were Warner Bros., Columbia, Universal, Paramount, Fox, and MGM/UA) had fallen to 64%. So more small studios were definitely getting their feet in the door.

Joy noted the Department of Justice’s reasoning for repealing the Paramount Accords was to, as she puts it, “level the playing field” for major studios against the streaming services – and that, interestingly, it was sort of the inverse of the 1948 Supreme Court decision.

“We need to acknowledge that we’ve abandoned independents and smaller studios in favor of loosening restrictions for the major studios,” she says. So what is the solution?

Is government intervention coming?

“I think the only way to reform this would be for Congress to bring about legislation regulating the streaming services and how they operate,” Joy says.

Streamers should be formally acknowledged as movie studios – and it should also be acknowledged that they’re practicing the very type of vertical integration the major studios had in the 1930s and ‘40s, according to Joy. Therefore, similar restrictions should be applied to the streamers as were applied to the studios in 1948.

“The motion picture industry is vastly different from what it was in the 1940s, but the answer to that absolutely cannot be that we just abandon attempts to discourage monopolization,” she says. And unfortunately, Joy says, she does not see much reason for studios to change without government intervention.

There are things studios can do, she says, such as “selling their streaming sites, making a central streaming site for all content, [or] breaking apart their own holdings so one studio doesn’t own mountains of IP and back catalogues and entire other major studios as their subsidiaries.”

New legislation is not necessarily on the way – but there is something that gives Joy hope. In October, the American Economic Liberties Project, a nonprofit that pushes for more aggressive antitrust enforcement, launched a campaign urging the Department of Justice to undo the 2010 merger between Ticketmaster and Live Nation. Not only has there been price gouging of customers, AELP alleges, but artists and venues have been strong-armed into accepting unfavorable conditions. U.S. Rep. Bill Pascrell Jr., a Democrat from New Jersey, has also urged the overturning of the merger, “for the good of consumers and America.”

Democratizing content distribution

It’s not just the movie industry that has changed since the Paramount Accords were put into place. The internet has completely transformed how we all access content, and has allowed creators to take their movies, music, and shows directly to consumers.

Upstarts like InPlayer are already capitalizing on this trend. Studios and streaming services of all sizes could take a cue from companies like these and find ways to ensure independent voices are still heard and try to head off the possible disruption of government intervention or an entirely new business model.

About the author

Mike Thompson is a newspaper editor and freelance reporter living in Connecticut. He can be found on Twitter @MMThomp.

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