In the 1930s and ’40s, five major Hollywood studios dominated the film industry and tried to lock up distribution and exhibition channels as well by taking over movie theaters across the country. Courts and regulators saw that allowing studios so much power up and down the film supply chain posed grave threats to the integrity of the industry and to viewer choice.
In 1938, the U.S. Justice Department filed an antitrust lawsuit charging that eight major motion picture companies — including Paramount Pictures, Twentieth Century-Fox, Loew’s Incorporated (the precursor of MGM), Warner Bros. Pictures and Columbia Pictures — were illegally fixing prices and monopolizing the market.
Eventually, the landmark set of Supreme Court decisions in 1948 known as the Paramount Decrees effectively outlawed that system and broke the hold of the big studios. This led to the creation of new local businesses, independent production studios, and more options for makers and viewers of film and TV.
There are eerie similarities between pre-1948 Hollywood and today’s streaming market. Dominant streamers own studios and commission “originals,” and are distributor-exhibitors as well. The top five streaming companies dominate this market.
Now a federal agency is investigating whether a proposed merger between Amazon and MGM will be positive or negative for the film industry. With MGM, Amazon would acquire a legendary studio with a deep library of 4,000 films and 17,000 hours of television, and distribution rights to seminal film franchises such as James Bond. This merger represents an opportunity for federal regulators to take a close look at how the streaming industry functions — for the filmmakers who fuel it and consumers who watch.
While Amazon is second to Netflix in the U.S. streaming market, it’s catching up fast. Unlike any other streamer, Amazon brings hundreds of billions of dollars in revenue and the power of a vast network of other lines of business to the fight. Amazon owns, among other things, a dominant streaming device — the Fire TV Stick. It is a major provider of internet back-end services through AWS: Amazon Web Services.
And Amazon can also leverage other parts of its multifaceted business to increase its market share.
The company, led by its billionaire founder, Jeff Bezos, used to maintain a streaming platform where independent filmmakers could directly post their work. The downsides were that it didn’t let them have any say in royalty rates for those submissions and even unilaterally lowered them on several occasions. Amazon also deleted thousands of independent films from the platform with no explanation or avenue of appeal. And then in February, it stopped accepting most independent submissions altogether. Filmmakers lost revenue but even more important, access to the platform.
These tactics work for the company. As Amazon’s founder, Jeff Bezos, has himself put it, “when we win a Golden Globe, it helps us sell more shoes.” But does it work for the rest of us? Some lucky independent filmmakers do get contracts with Amazon, especially if it looks as though they might win an Oscar or an Emmy. And some can catch the Amazon rep’s eye at a film festival. Most don’t. Those filmmakers who do get on Prime Video can’t find out basic information about who saw their films where, even though Amazon is surveilling viewer patterns obsessively. There are no Nielsen ratings, no box office records.
A lack of knowledge about viewership figures doesn’t just hinder filmmakers’ ability to negotiate. It also impairs their future because they can’t take that knowledge into their next project or use it to make an impression on a potential investor.
Would you like to watch one of these films in a public library? You can probably find a shelf of DVDs there. But you won’t find any electronic access to these movies. They’re trapped in individual subscriber accounts via Prime Video.
Amazon’s treatment of other media companies also should make you squirm. Are you a rival streamer who needs to get onto Fire Stick? Amazon has a price for that, and if you’re HBO Max, it might involve renewing your Amazon Web Service contract. And maybe you’ll just have to wait a year or so, as Peacock+ did, for negotiations with Amazon to work out.
Oh, and if you’re a small-fry streamer, the kind documentarians depend on? You just might be out in the cold. Ovid, a small streaming service that carries high-quality documentaries, can’t get a reply from Amazon, although it has repeatedly sought a channel on Amazon’s website. And there’s no one to ask why.
Amazon’s market power, which comes from not only its size but also its many overlapping businesses, is already cause for alarm among those who advocate for stronger antitrust laws. Adding MGM to their arena of power in the still-emerging streaming marketplace would further limit competition and innovation.
Indie filmmakers deserve a chance, and they may have found an ally in a coalition of the America’s largest labor unions, the Strategic Organizing Center, which also asked the Federal Trade Commission to block the deal. And the F.T.C. may be applying more scrutiny to “vertical integration” — a big company owning businesses throughout its supply chain, as when pre-1948 Hollywood studios also owned distribution and exhibition rights. That scrutiny is another good sign.
Consumers as well as creators need to embrace antitrust as a lever that can bring more diversity and competition into the streaming marketplace. Success could mean creators are better enabled to tell stories for a dynamic society. Inaction could mean propping up business models that just help companies can sell more shoes.
Patricia Aufderheide is a professor in the School of Communication at American University and the author of the book “Documentary Film: A Very Short Introduction.”
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