CREATIVE DESTRUCTION BECOMES AN ANTITRUST VIOLATION?

Reason's Peter Suderman goes to Taylor Swift's movie and muses on predatory exercises of market power.  "The pop singer's new concert film inadvertently makes the case for big businesses with sweeping market power."  She's bundling the concert experience, if without the performer on stage, with the revenue from selling videos.

For nearly three hours, Swift performed songs from albums spanning her entire career, which now runs the better part of two decades. And the roughly 70,000 fans in the stadium—some equally sparkly—ate it up, screaming and crying and OMGing and tearfully, joyfully singing along.

In fact, the movie probably represents the efforts of more like 200,000 fans, since it was shot over three nights in August. Swift's tour stop in Los Angeles was even longer, playing for six nights; tickets reportedly cost hundreds or even thousands of dollars and required a Taylor Swift–like level of focus and effort to obtain. Tickets to the movie, which was released following a surprise announcement this summer, were not quite as arduous to acquire, but on opening weekend, screen after screen sold out, instantly making it the highest-grossing concert film of all time.

All of this, and not a legacy movie studio or social media company involved.

Mr Suderman starts thinking about antitrust violations.

As I took in the big-screen spectacle, I had many questions: Where does Swift get her stamina? Why is this movie nearly three hours long? How does one acquire so many sequins?

But mainly what I wondered was: What does Lina Khan think of all this?

Khan, of course, is the current head of the Federal Trade Commission (FTC) and one of the recent pioneers of the theory of antitrust that argues, essentially, that, when it comes to the economy, big is inherently bad. Since her days as a law student, Khan has led the charge against Amazon, arguing that its enormous size gives it market power that requires a forceful government response. In the widely read, influential 2017 law paper that helped boost her into a career as a federal regulator, she argued that Amazon had hoodwinked customers into using the service by charging prices that were too low. Today, as chair of the FTC, she is charging Amazon with abusing its power by, er, setting prices that are too high.

It doesn't make much sense, really. But in either version of the argument, the core of Khan's theory is that Amazon's dominance over the marketplace—its scale and inescapability in so many different domains—gives it an overwhelming power that it is using, and abusing, to sway customers and shape the structure of the market to give itself an advantage over rivals and competitors.

That's standard Section 2 Sherman Act stuff, and it might not be the best frame of reference for a music company integrating into the movie business.  He's right, though, in characterizing Commissioner Khan as a standard-issue William O. Douglas style trustbuster.  "If you're a Democrat, you find it more convenient to abuse the people who are working to provide people with stuff than to work the problem."  Yes, that was Justice Douglas, but he's famous on the east coast and notorious on the fresh coast for all sorts of creative rulings on how behaviors that might have looked, "to a naïve view," to be competitive behavior were in reality exclusionary.  There was a "leverage" theory of anticompetitive behavior more commonly raised as an argument that conglomerate mergers lessened competition, but it could also be used against a leading firm in one line of business using its resources to prey on another line of business.

Swift used her star leverage not only to sell tickets to her own movie but to reshape the rest of the market: After reportedly entering into talks with several Hollywood studios to distribute the film and coming away disappointed, Swift circumvented the usual distribution arrangements and struck a distribution deal directly with the AMC theater chain.

Not only did that deal cut out the middleman, it was extremely favorable to Swift, giving her the majority of box-office revenue from the movie. Studios didn't just lose out on making money from distribution, they also pushed some of their own releases from the release calendar, so as not to compete with the Swift cinematic juggernaut.

Swift, in other words, used her outsized market power to disrupt existing business models, harming competitors while keeping the lion's share of the box-office revenue for herself.

Judge Learned Hand or Justice Douglas would concur and find for the Commission.  Never mind that Taylor Swift and her fans have been angling for an antitrust investigation of Ticketmaster for years.  Apparently they've discovered a value proposition in building their own supply chain.