The Difference Between a Monopsony and a Monopoly (and Why It Matters for Your Favorite TV Show)

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You’ve probably noticed your favorite streaming giants, Netflix, Hulu, and HBO Max—once lured by the freedom to create heavenly shows for creators that will never fly on broadcast TV—increasingly resorting to tactics like subscription pricing. There have been hikes and a shift to cheaper, more formulaic (aka “safe”) materials. some are also adding ad break, Why is this happening? The root cause can be described as monotony in action.

It’s not a typo—a monopoly is an economic concept different from a traditional monopoly, and it helps to have an idea of ​​what’s happening with streaming services in 2022. Here’s what you need to know about how Monopony works, and what it means in how you watch your favorite TV shows.

difference between monopoly and monopoly

Monopoly and monopoly both refer to situations in which a single entity controls a so-called free market; The difference is who is doing the controlling, the seller or the buyer. Monopolies are one seller and many buyers, whereas monopolies have one buyer and many sellers. Where a monopoly controls the market by preventing competitors from selling a product, in a monopoly, the buyer has all the power.

A textbook example of monopoly is a milk processor that becomes the only option for dairy farmers trying to sell their product; This forces those farmers to sell them for less. In more timely terms, Investopedia Makes the case for Amazon as a monopsony, as it has become the largest and often buyer only Some of the products which it then sells on its platform. Amazon can also easily be explained as a monopoly; The two words forget each other.

What does monopsony mean for TV streaming

Understanding how Monopony works helps us put words to a trend that’s affecting audiences: As corporations consolidate—Amazon buying MGM, Disney getting 20th Century Acquiring Fox, most recently the merger of Discovery and Warner Bros. Fewer people are making more decisions about the show. Streaming services, meanwhile, are feeling the pinch. fall in stock prices And huge debtsPulling back, canceling shows more quickly and placing fewer big bets.

Suddenly, the “sellers” (the people who make the show) are facing a market with fewer, more reluctant buyers. As comedian Adam Conover, who has created shows for both cable and streaming services, explained Washington Post“The only people who are going to make profits are the very few CEOs at the top who make deals, but everyone else is losing.” Creators are being paid less, less ambitious projects serving a diverse audience are taking off. Meanwhile, buyers—streaming services—seem increasingly inclined in favor of cheap, unwritten faresFurther narrowing the options for creators.

You may not care much about the TV Creators are being paid less, but the effect goes beyond that. When a handful of executives hold all the purchasing power for streaming content, they get to determine what kind of content viewers want, control the price, and set the terms. result, according to Washington Post: back catalog Clearing without warning, programming that carries less risk, and higher value for customers. In short, a monopoly doesn’t exactly nurture creativity nor provide the resources needed to make a groundbreaking TV.

In many ways this is nothing new. Actually getting a show on screen has always been a high bar. But in short, the demand for content explodes thanks to a host of new streaming services. Created a bubble market that operated mostly on speculation, as the network competes to land prestige talent, hopefully customers will follow. As the ongoing economic uncertainty subtract billions By market cap of streamers, They’re Feeling Too Selective—and only they are aware of the data that determines whether a show is considered a hit or not gets canceled after one season,

Bottom-line

The semantic differences between a monopoly and a monopoly are less important than the bigger picture: There’s no guarantee that the shows you’re actually interested in watching will stick to the service you’re paying for, Or that streamers will continue to be the green light on the variety of innovative shows that caught your attention in the first place.

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