Tragic Competition occurs when the service fragments between many service providers, and each charges a similar subscription. For example, you can currently subscribe to a music service provider who will give you “all music” for $10/month… imagine if this was replaced with multiple partial offerings at the same cost, for example each record label offering exclusive access to their artists.
Case study: No single buyer
Let’s take a look at Premier League Football, which became the subject of an Ofcom investigation related to the Competition Act 1998. If you were a hardcore football fan, you used to subscribe to Sky (because they had all of the Premier League live broadcast rights).
The next auction will include a ‘no single buyer’ rule, which means that more than one broadcaster must be awarded rights. At least 42 matches per season will be reserved for a second buyer, of which a minimum of 30 will be available for broadcast at the weekend.
The outcome of this no single buyer rule was that hardcore football fans had to continue paying their Sky subscription, and also buy a subscription from a second service provider, or miss out on live broadcasts of games. Overall, an additional 22 games were broadcast, but if you didn’t buy the second subscription, you made a net loss of 20 games.
What is competition?
The intention was to increase competition, but it is only real competition if the consumer benefits.
As we see subscription content evolving, and content creators making the tough choices about whether to offer content through other platforms, there is every chance we will see more tragic competition emerge. It’s becoming increasingly common to have Sky, Netflix, Amazon, and Disney subscriptions, which represents a massive consumer spend in the entertainment subscription business.
I hope that the music subscription industry doesn’t become fragmented like this as the end result is highly expensive sets of subscriptions that actually don’t benefit the subscribers.