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How the Telecommunications Act of 1996 killed rock’n’roll.

Opinion: Music has gotten progressively worse.

Specifically, the music we get exposed to has gotten worse. From the mid 80’s – mid 90’s some of the rawest and most interesting music was not only created, but played on radio. With hip-hop, early grunge, punk, metal all finding their footing in the music industry and becoming mainstream genres which were widely listened to. It was an interesting time musically, which dealt with a lot of genuine issues from crazy songs like “Killing in The Name of” pushing anti-establishment messages, Nirvana’s opus Smells Like Teen Spirit becoming an unofficial anthem of teenage, and completely different experimental music such as Massive Attack – Teardrop  all being somewhat staple radio play despite their originality and nonconformity. So why is it, that I sit here in 2017 and almost every major radio station plays the exact same catchy major chord pop tunes with some slight variation? It all started with a little act called the 1996 Telecommunications act.

The Act:

“The goal of this new law is to let anyone enter any communications business — to let any communications business compete in any market against any other” Sounds great right. The freer the market the freer the people? Maybe not in this case. What this lead to was the forming of some serious communications giants, such as Clear Channel & Cumulus – who collectively own more than 15,000 radio stations world wide. Now why is this a bad thing?

In 2011 a study was done using MRI machines to monitor how the brain reacted to music. The study found that people responded most positively to music they had heard before, even though it may not have been in the genre or style which they themselves had claimed to enjoy. Interesting. What this basically boils down to is that if Radios continually play the same schedule of songs, people will become accustomed to them and start enjoying them. Trust me, I moved to the southern United States and now listen to country music by choice. Which in all honesty is some embarrassing anecdotal evidence.

If you think about the majority of music played on public radio it is generally individual pop-stars or small commercially manufactured pop groups or otherwise “easy to control” targets for media companies. The idea of starting a band in your garage with your friends, slowly growing, and then one day getting “scouted” and winding up on radio, is almost completely dead. Now days, large media companies simply pick someone good looking, with a small amount of talent, pair them up with a mass pop writer (possibly Max Martin), and play the shit out of it on the stations they own until you start liking it, and in turn buying it, and going to their concerts (where you also get screwed by automated ticket bidding – but that’s another story).  Almost all music-celebrites (I won’t call them musicians)  portray an “image” that lines up with what is easy to market – which has possibly in turn lead to the huge over sexualizing of women in music & the “extreme” masculinity and charisma portrayed amongst male pop stars.

Rap & Pop are now the two most played radio genres, I believe this is largely because it is easier to control an individual than it is to deal with a band of friends. Individual, conformity, and lack of talent put all the cards in the hands of the media giants, and they know it.

You may say that there are still good bands coming out, and to some extent I agree, but people who are into music, or passionate about a specific genre are less likely to find new music by listening to the radio, and more likely to find niche artists on free platforms such as soundcloud & youtube. It’s amazing how such a core part of our generations “art” as been force fed to us, and most have eaten it up & said thank you.


Rant over – kinda economicy?

Why Netflix makes better shows than Networks.

Ahhhh Netflix. Nothing quite says “hangover sunday” like mindlessly watching 3 seasons of Friends in your closed-curtain sweat-den. The disruptive video streaming company quickly became a house-hold name in the early 10’s, expanding it’s reach further every year and demolishing cable conglomerates as it does so. With it’s growing capture of market share, the now multi-billion dollar company has been churning out original content since the 2013 debut of Political Drama “House of Cards” starring Kevin Spacey. The lineup of netflix original shows now includes dozens of heavy hitters such as “Orange is the New Black”, “Stranger Things”, and my personal favorite 1930’s Brit-Grit series “Peaky Blinders.” But how is it that their good:shit ratio is so much better than networks like AMC, NBC and too a much lesser extent HBO? There’s a little bit of out-dated business practice here, mixed with some interesting behavioural economics.


Follow the dough yo.

Netflix has one source of income. You. Well not you personally, but the collective you’s paying your $10/per month to enjoy their audio visual smorgasbord. Cable networks, on the other hand, make their money in two ways. Firstly, they charge you a subscription fee as part of your TV package. Secondly, and to a greater extentthey are paid by advertisers. A 30 second advert on a national network during a popular TV show can range from $50,000 for almost unheard of shows such as CW networks “Supergirl” to north of an eye-watering $400,000 for a 30 second slot during Fox’s “Empire”. Those these figures seem huge, Empire’s weekly viewer base of just under 5,000,000 means that advertisers are paying less that 10c to force-show you a 30 second video – I’m not an advertising executive, so can’t tell you whether this is money well spent, but we will assume so. Say you pay $2.50 per week (or $10 per month) to get fox, exclusively to watch Empire. The show itself has a 42 minute run-time, with 18 minutes of adverts. For the 42 minutes of runtime that entices the viewers to watch, Fox receives 5,000,000 * $2.50 = $12,500,000, with a cost of production of $3,000,000 netting the network a gross profit of $9,500,000, or $3800 per second. Advertising on the other hand, can rake in $14,500,000 in just 18 minutes – or approximately $13000 per second, more than triple what the show makes. Now, these numbers are loose, but you understand my train of thought. TV advertising is BIG MONEY and the networks want to keep their advertisers around.

When we watch an advertisement, over and over and over again, we begin to subconsciously relate it to it’s surroundings. For some brands, this can work in wondrous, for example Dyson Vaccums, High level make-up brands, and Diane Sawyers books were all advertised a long side “Desperate Housewives”, and sales soared due to their synchronous target demographics, in turn appreciating the “advertising real-estate” and making the network a packet. Now this is all well when the advertisers and producers want to convey the same message, but what happens when they don’t? If a show starts promoting ideologies and lifestyles that do not convey the same message as the brands advertised in the ad-breaks, advertisers can (and will) back out of agreements – costing the network hugely. This burden limits the kind of shows the traditional networks will risk producing, where as advertising-free Netflix can operate without this burden.


All eyes on me.

The next key difference between the two mediums is viewer retention. A network wants you to watch their channel, right now, in an hour, tomorrow, all the time. Regardless of what is playing. They want to be the most appealing network to the most people possible at any given time, even though they are only playing ONE SHOW. If you don’t like what’s playing, you just change the channel and they lose your viewership. This causes them to produce easy to watch content, that sits somewhere between “Two and a Half Men” and “Greys Anatomy” – I’m not saying they are bad, I am just saying they are widely popular, predictable and safe. Think of all the idiots you meet,  all the terrible senses of humor and “instant gratification” that is now common place. Cable networks do not differentiate the tastes or quality viewers, only the number of viewers, and they always want more.

Netflix on the other hand has you in their clutches. If you are watching Netflix, and decide you don’t like what you are watching, you don’t go back to regular television and mindlessly channel surf, no, you find something else on Netflix and watch that instead. You never miss something, it’s always available. They have a much more captive audience than traditional cable channels, which allows them to cater to a much move varied audience, much more specifically. Series like the Pablo Escobar pseduo-biography “Narco’s” convey this point perfectly. It’s a high budget american-made series, that is 80% in SPANISH with English subtitles. If this was a network show it would be in English, without a doubt. Don’t believe me? The LifeTime series “Devious Maids” is about Latino maids, who speak almost exclusively in English. Spanish is only used to add emphasis and variety. A captive audience has allowed netflix to explore, hire creative directors, and get some highly compelling series made as a result. After all, Netflix is asking “Is this worth making” where as networks are asking “Is the the MOST worth making.”


Thanks for reading!



Sunglasses & Market Power.

A key principle of microeconomics is that of market competition. This is essentially a question of barriers to entry, where industries with high barriers to entry generally have higher profit margins than businesses with low barriers to entry. On one end of the spectrum we have monopolies (eg Monsanto – seed & pesticide multinational) and on the other we have businesses in perfect competition (eg gas station or corner stores.)

As a general rule, we can say that businesses with less competition have more market power, giving them the ability to inflate prices, push margins, and can thus be more profitable. For this reason we can see why it would be beneficial for a business to decrease competition within its industry, and inversely, why it is beneficial for consumers for company market share to be limited.


Not necessarily a brand name you know, but you likely own something which they produce. In the late 1980s Luxxotica began purchasing the rights to produce sunglasses for luxury brand names including Armani, Oakley, Ray-Bans and literally dozens of others. In the early 2000s it was estimated  that Luxxotica controlled up to 80% of the sunglasses market, although this exact number was questions by Euromoniter, the world’s largest business monitor,  who disagreed with this saying they only controlled approximately 10% of the world’s 950 Million pairs of glasses produced annually. Though their is some ambivalence and secrecy about the exact market share of Luxxotica, what is clear is that they are the largest producer in the market by a measure of magnitude, which can lead to price gouging – especially in areas where consumer demand is not flexible, such as prescription glasses.

The Essilor Merger.

In the past week it was announced that Luxxotica has planned $49Billion merger with Essilor, a French lens manufacturer.  Normally, business mergers like this are commonplace, as both companies can take advantage of the synergy between the two businesses – which make the businesses more valuable to each other than they would be to a non-related business. In this example Luxxotica benefits by receiving cheaper lens’ (and thus increasing profits) and Essilor benefits by becoming the go-to lens manufacturer for Luxxotica, no doubt also increasing their profits. Here are some numbers which explain the idea:

For a non-related company:

Company value = annual profit / % required return

Essilor Value = 5B/12.5% = 40B

For a company with synergy:

Company Value = (annual profit / % required return) + (annual value of synergy)/%required return.

Essilor Value = 5B/12.5% + 1B/12.5% = 48B

Though these synergy-mergers make a lot of sense, when you start dealing with companies of this size consumers can come out significantly worse off. Over the next 6 months the two companies both require regulatory approval, as well as shareholder approval. Largely this will rest on whether the companies are doing this to increase market size, and thus gain pricing leverage, or if they can indeed prove that synergy exists between the two companies to an extent where shareholders will benefit without significant pricing increases to consumers. So who knows, this time next year your Ray-Bans may no longer bare the Luxxotica mark, but rather the EssilorLuxxotica mark. Thanks for reading.